good morning, coming up on "your business," this michigan ferry service had more customers than they could handle it was sir -- sinking their business. the changes they had to make though ensure calmer waters for the future. >> and the tell tale signs that an employee is bem bezeling money for your company. when this comes to making choices for your business. we have your back and that is coming up next on "your business"

hi there, everyone, i'm j.j. ramberg and welcome to the beginning of the 13th season of "your business." the show dedicated to helping your growing business. picture this. one of your competitors gets bought out and suddenly new customers are giving your company a shot. sounds fabulous, right? not always. the family who owns a michigan ferry company really thought they were ready to navigate the big busy summer travel season last year, until passengers started showing up in droves and they realized that there was some rough waters ahead.

>> it was a wake-up call. it was everything from a slap in the face or a kick in the butt. we tried to organize ourselves but did we really nail it? no. we didn't. >> the summer of 2017 was one for the record books at shepler's macina island ferry in northern michigan, but not in the way the family had hoped. >> did we ever think it would be like this? we never thought it would be like it is. >> it was the point that we thought, holy crow, we've never seen this. >> we scrambled and did our best to take care of everybody, but on busy days sometimes things fell through the cracks. >> passengers felt it and they were blunt about their disappointment in what the company calls first class service. >> she looked right at me and she said i just expect more from shepler's talk about hitting you right between the highs and right in the heart. how do you answer that?

and i said, ma'am, my name is chris shepler, i'm the president, what can i do for you. and she goes nothing, i just expect more from you. >> it is the first time only two ferry companies were serving macina island, a third company had been sold. still chris shepler and his sister and brother billy thought they were ready for the influx of passengers riding the family's boats. they were wrong. >> it exploded. it was just crazy, the whole time you were going full tilt every day last summer. >> the three siblings who run the company with their ceo father bill saw the trouble almost immediately. with the season already in full swing, there wasn't enough time to tackle all of the problems they suddenly faced. >> it was quite evident that the end of june and the beginning of july is like, oh, we have our hands full. we kind of dealt with the growth on a day by day basis. when you think that it's over or it is easing up, it is not the case. it basically downshifts and

keeps on going. >> the number of visitors jumped 23%. only adding to the turmoil. >> i think we talked about it, did it really sink in and did we really understand what that increase would do and how it would impact us from a day-to-day basis in a six-month or a year company? uh-huh. no. >> the company which started in 1945 by chris, patty and billy's grandparent has had a following for generations. seeing customers issues firsthand was incredibly upsetting. knowing their personal reputation was on the line with the family name on the side of every boat. >> that pressure of only seeing them twice maybe every year, or maybe every other year, you only get those two chances to make an impression and if we don't do it right, will they come back? they might come back to macina island but will they ride the ferry service? maybe, maybe not. >> not having parking in a dirt

lot and forcing a paper copy of a ticket after waiting online was a few problems and they were missing consistency and the confusion hurt customer relations. >> you could never complain about growth but that growth can't complain about you. you think about what is not best for the company, what is best for the guest and then that turns into being what is best for the company. >> community leaders didn't like the problem shepler's was having either and chris was taken to task for it. >> the city called us into the principals office and a couple of times and met with the city manager and the chief of police and they said, what are you going to do about this congestion and i said i don't have an answer for you, right now. i really don't. but i will. we have failed in areas that we will try to get better at. >> they were getting complaints from all sides with no relief in sight. if they made any changes, they risked losing long-term customers and if this did he nothing there was a chance the brand would be hurt in the future.

the company had little choice. they made more than $4 million worth of improvements by using their own cash and borrowing money. a newly paved parking lot alone cost over a million dollars, including better signage and trams to bring passengers to the dock. these money matters kept chris up at night knowing if you could build it, customers might not come. >> every little decision on what we were going to spend, whether for a lawnmower or a new parking lot was greatly scrutinized as well as do we need a new boat. no, we're not done figuring it out. >> the improvements helped but there was no way the company could have survived last season and eased into this one without the staff. >> if you think you can grind your cast members to a pulp throughout the summer, i think that is the wrong way about running a business. they're just as important as i am. and we couldn't do what we were doing without them. >> there is still plenty of work to be done. staying on top of customer feedback is one way to see what is working and what is not. >> some of them tell you about

their experience and some of them don't and the ones that don't scare me the most because we don't know what they are thinking. >> as hard as it was at the time, shepler's needed to hit the re-set button and they made a promise to themselves. they refused to let customers down again. >> we did get slapped in the face and we needed it. what used to be busy is now a normal day. what is busy is now just trying to keep the -- everyone in between the white lines. there always curve balls. don't fight it. go with it. if you don't have that mindset going into every year, yes we're going to do this and yes, this is great, it is going to be a great season, then i think you're doing the wrong thing. but it is important for us all to be ready for whatever is to come. if a stranger came at you with a gun and stole money from your business, you would be angry to say the least. you would probably call the cops and quickly out how to figure out with the loss but for many

small business owners theft is not so simple. it is a trusted accountant or a bookkeeper and not a stranger at all and that is why you might be reluctant to call authorities and that is a recipe for catastrophe. we want to know what you can do to protect yourself and so we went to atlanta to find out the answers. >> if you steal a quarter of a million dollars from me, you're going to jail. >> ruth king is an atlanta-based business adviser who can't stand to see entrepreneurs getting ripped off. >> i feel sick to my stomach to be perfectly frank. >> she said she's been through this so often she can spot a fraud before the business owner has even noticed. >> i could walk into a business and smell it, now. they know something is wrong, as a general rule, they don't know what it is and something need to -- needs to figure it out. >> our accounting system was having difficulties, or at least our bookkeeper claimed we were having difficulties and things weren't matching up. >> brian spencer is a second

generation owner of atlanta based spencer heating and air-conditioning. he said he was so focused on clients, that he never worried about small glitches with his trusted bookkeeper marianne. >> she was the grandmother of the company. she would watch after our guys and make sure they were eating healthy. she was the perfect bookkeeper. she looked after things like it was her own. and took full responsibility for all of the finances. >> if there is always an excuse that you can't get the financial statements on time, for somebody who supposedly knows what they are doing, that should be a warning sign that goes, excuse me, what is going on here? and dig into it. >> it wasn't until the company switched over to online banking that he started examining the bank statements. >> we knew the signature were not mine. she had no check writing privileges. but she was signing my checks. so there was no doubt what was happening. >> first thing that we'll do is

create a report. >> detective fran foster of the duluth police department of the atlanta suburbs see this all of the time. >> it is quite common. >> and she said victims like brian face painful decisions after confronting the thief. >> she fell on the floor on her hands and knees and begged us not to prosecute. >> i'll pay you back and please don't call the police and ruin my life. i've got kids and a wife or a husband and family. >> detective foster doesn't buy what she calls sob stories. >> i've found in every single case that i've worked, every single one, there is a back story to this person's theft and usually it started from another employer who didn't call law enforcement. >> we learned after this that she had done this in new york and that she had stolen from a company and they said they would not prosecute if she paid it back. she paid them back, came here,

and it happened again. >> in brian's case, he fired marianne immediately and then he called the cops. >> it turned out she had written about $180,000 worth of checks to herself, to friends, to family and other places. >> are you afraid that any of your employees will steal this? >> nobody wants flu pipe. >> they admit to stealing from employers. >> ruth has written a warning to business owners called the ugly truth about cash. we fix what is problem and then they have cash again. >> she said there is no foolproof way to prevent theft but if you set up simple checks and balances, you could make your company a much more difficult target. first rule, only you should sign the checks. >> giving your bookkeeper check signing authority is insane. >> so you have an accounts payable person and their name is

on your checking account. so they have access to your checking account. they have your permission to write checks. >> rule number two, have the company bank statements sent directly to your home or computer. don't let anyone intercept it before you read it. >> people go why do i send my bank statements home? well the reality is this, a lot of times there is automatic payments made to somebody you don't know and more often than not, that is to the embezzler's checking account. number two is if you remember signing a check for $100 and it is a thousand dollars is what is taken out of your checking account, warning signs should go off something is not right here. bank could have made a mistake, not likely. >> final rule, keep track of your monthly finances. >> if your balance sheet is not balancing, somebody is playing games. that is number one. and number two, you look at your p&l and if you see negatives where they are not supposed to be, why. you go back to the bookkeeper and ask. your job is oversight. so if you could spend 15 to 30 minutes a month, that is all you have to do as an owner.

>> bottom line, let everyone know you're watching. >> and if something doesn't look right, circle it and bring it into the bookkeeper and say give me the back up for this. >> while it is important to trust your staff you need to verify. >> there has been many embezzlers that i've found afterwards who start working for a company and then finally they can't steal from them and they go to the next company and then that is where the theft happens. >> and if this sounds a bit harsh, ruth just might say you feed to be harsh. i am here in chicago at the internet retail conference and exhibition. so much is changing in the retail industry so we decided to come here where all of the experts are getting together to find out what is coming new and today i have dara meeks. so good to see you. vice president of the communo group. thank you for stopping by. i know you're busy. >> thank you for having me. >> and we're going to talk about payments. i remember the first time i used

my phone to pay for something and it was amazing or the first time i went into the apple store and they brought an ipad and i paid in my seat and not having to go to the cash register and this is just the beginning. >> this is just the beginning. there is so much happening, the world is changing quickly and there is an endless ability and mobility is part of that and as we grow in an industry, it is in retail and every part of your f -- future. >> so as a retailer, small or medium or growing to be very large retailer, do i need to be forward-thinking about this or can i just follow the big guys and that actually will work better for me? >> i think it is a combination. it is what you have as yourin t -- your internal forward-thinking and expand your customer base. >> so facial recognition is something that is coming. so i'm on my phone, buying something and i don't have to

put my credit card or anything -- paypal or just look at it and it is paid for. >> it is one of the new things coming out. it is already taken such attraction over satisfy -- over saes where they could support this. it will carry over into the u.s. and other countries where people look for this. this is a customization. >> is this just something that i use almost like how retailers use paypal now, will this just be a third party software, something that i use to put on my site or in my store so i don't actually have to do that much myself, i just have to incorporate it. >> right. that is correct. there are applications that people will do trials with and figure out where they could put it on to. is it going to be like you said apple or google, is it a samsung phone. but once they get that down pat and figure out who is using it and what they will use it for, it is going to be explosive and just go across all of the streams. >> facial recognition is one. >> yes. well there is all kinds of

things. identification of fingerprint is the biggest and safest and most secure thing out to coming into the facial recognition. there is other payment industries that are coming out like bitcoin. bitcoin is one of those unsure things but with new progress there, you might see other transitions and then the question is does paper go away? so these are all the things that are factoring in or is there a different type of paper in there. >> what was fascinating over the holiday season, i saw a chart of the stores accepting bitcoin and then with ico, there is other kinds of currency out there. >> it is incredible. bitcoin with the wallet selection, people are more secure about it. i think the phase the initial scare is kind of over and people are trying to embrace it and figure out that is the next new thing. anything where they are doing a simple and fast and secure is the way of the future. >> so how do you pars all of this out as a business owner and figure out what you should be following or offering. >> sure. it is tough.

what you first have to look at is who are you trying to target and what is your customer base and your goals for the future. are you running a brick and mart or or online and then figure out with that target base, what is going to appeal to them to have them keep coming back to you. and as you do that, you'll find the right solutions. go out and do your research, find out who you want to do partnerships with, bring them in, see what connects and what you can do in very simple with your administrations and move forward. >> and how quickly is this going to change? >> oh, it is rapid. it is every day. i look at new partnerships and i read about every day in the news and i talk to people going out and doing new experiments. the world is changing. >> so in a year from now do you think i'll be paying for most things with my face -- >> it is very possible. people change and have that desire, then the company will change along with it, and yes, i think things within the next year to two will be facial recognition, mobile 90% of it. one application that helped us early on was called clerky,

it allows you to use templates to incorporate and provide legal advice early on. it is used as a way to incorporate a delaware c corp and it was hassle free and allowed us to do it in about half of the amount of time. >> the one thing that helps me as an entrepreneur is the broadcast faster. and jason demkin started it and interviewing different founders and sass businesses and it is about metrics and about business planning, or just quite different than other companies for example in the consumer space so that meps me and i listen to it regularly. >> love to use ser o.com for my bookkeeping needs. they are cheap, $30 a month and they spent two hours helping me spent everything up and my accountant loves that i use

them. so much easier than quickbooks. >> so start up fund.com has been a great help to the company. it allows us to put our business plan up online and to reach out to investors and allow investors to see us and tell us how we're doing, if they're interested in investing in our country they could reach out and we'll have a meeting but it is great to have everything consolidated into one place that could be accessed anywhere around the world and they say can i see and you have your mobile phone. and not everybody has a computer but everyone has their phone. so it helps with that. >> i'm here with this week's elevator pitcher trevor bayock to tell us about a great service. it is called -- >> free your arms. >> you have got props with you. i'll let you do the pitch in there. but tell me how old is the company? >> a little bit over three years old. >> and have you raised money yet? >> no we're bootstrapping. >> so are you used to doing pitches to investors or

partners. >> this is my first. >> how do you feel? >> i feel good. >> you've been practicing. >> yes. my mentors make sure i practice. >> fantastic. let's roll your suitcase and tell me who you are pitching to. two really fantastic be pitchin fantastic entrepreneurs. the first is the ceo and founder of the wellness company ind moo body, an incredible success story. the other one is the founder and ceo of wheels up, a private aviation company. maybe you'll be using it when you sell your company for a billion dollars. let's introduce you to them and see how you do. >> hi. my name is trevor. i'm the founder of free your arms. we are new york's original mobile luggage storage. i want to share with you how we give hotels a competitive edge. as travelers, we all have a common problem. sometimes we arrive way before your check-in, so we waste valuable time stowing our bags as opposed to going directly to the theater, museum,

sightseeing, a business meeting, you name it. free your arms solve these problems. we meet the traveler at the airport, at the train station, anywhere in the city. we pick up your bags and deliver it directly to the hotel. now, we've been existence for a little bit over three years. our prices are very reasonable, $ $19 $19.99 per bag. let me show you how to take a load off your schedule, and free your arms. >> i love free your arms at the end. nice job, trevor. good job. i'm going to give you two this board. i need from 1 to 10, first, what do you think of the product, so the service in this case, and the second, what do you think of the pitch. 1 through 10. >> i'm ready. >> okay. so i give you an 8 on the product. i think it's an innovative idea.

you're attacking a problem that's real. it looks like you've proven yourself, you've actually done it, demonstrated it. defending that might be a challenge because there's other services that might be able to disrupt it. the pitch, yeah, it was a pretty good pitch. i think you could work on it a little more, give more examples of how a business traveler, for example, might use it in addition to somebody who's on vacation. >> ken? >> my big reveal. product, nine. we're in the gig economy, so, you know, people making lives easier, you look at uber, air b airbnb, and with uber you can't leave your bags with a car service. you have to put them somewhere. time is money. >> and you deal with travelers all day long. >> all the time. we sell convenience, so i can relate to the idea of freeing your arms but more important freeing your mind. ♪ free your mind the pitch is an eight.

if i was giving you advice on the pitch, i would be very relaxed. this is in your body. it's in your bones. you're doing this. the passion needs to come through a little less rehearsed and a little more from the heart. that will retz nasonate with entrepreneurs, anyone you're looking to do funding with. >> my bags are down stairs. >> we appreciate you coming and giving your advice. helpful. thank you. when we come back, we talk about patience. why you need to take your time before releasing a new product and why you have to pace yourself with scaling your business. don't forget that the past can speak to the future. ♪ ♪ i'm going to be your substitute teacher. don't assume the substitute teacher has nothing to offer...

same goes for a neighborhood. don't forget that friendships last longer than any broadway run. mr. president. (laughing) don't settle for your first draft. or your 10th draft. ♪ ♪ you get to create the room where it happens. ♪ ♪ just don't think you have to do it alone. ♪ ♪ the powerful backing of american express. don't live life without it. we have this e-mail from rajiv, who wrote, how do you deal with the art of patience when scaling a business? >> that's a great question. i still don't think i have any. but i can say over the years from my first entrepreneur to now, what i've learned is when i didn't have a long-term plan, i didn't have any patience. i wanted everything right away. the longer term your plan is, the more you know where you want to go, the easier it is to take a breath and allow time for things to come together, so

patience for me has grown over time based on the longer-term planning cycle and as i've scaled my business. by the way, i'm still impatient every day. >> we now have the top two tips you need to know to help you grow your business. rick and kenny are back with us once again. you've given us some good advice. both of you guy s started companies from nothing that blew up. how big is mind body? >> about $250 million in revenue this year. >> crazy. it's the back end to every gym i go to. >> about 6,000 businesses running on it. >> tell me something everyone should follow, something you learned along the way. >> i advise a number of entrepreneurs. sometimes you'll see an entrepreneur get ahead of themselves. they're thinking about marketing strategies and they haven't proven a product market fit. number one thing you have to do the prove you've built a product or service somebody wants like trevor that just gave us that

pitch. most important part is he's been operating and has proven he has customers. >> i didn't think this was just for entrepreneurs. if you have an ongoing business and you're launching something new, it's so easy to sit in a room and say i know our customers are going to love this. you have to get back in that early entrepreneurial mind-set and say does anyone want this? >> release erate often, find that perfect fit. entrepreneurs have thought through the whole structure of the company, how they're going to leverage social media and market it and they don't have customers yet. that will come, the infrastructure will come, you have to get the product market fit. >> marquee jets, then berkshire hathaway and you've started another company, same space kind of, amazing track record. >> wheels up, we're trying to be more netflix than net jets, a little more of a subscription model. five years in, really excited.

i would say that we're definitely proof that anything's possible in america. >> well, good. yeah. that's good to remind ourselves, especially in these days. tell me one thing you've learned. >> i learned that you can't be scared to pivot. no business plan -- i know in your business, the people that you interview, the people that hit it are the ones who can move. there's no straight line in business. you have to pivot. and i think if you don't pivot and you're too hard core to your original plan, you're not going to get to the rainbow, to the gold at the end of the rainbow. >> what was your scariest pivot? >> i wouldn't say any of them are scary. i want's more scary not to pivot. we were focused on the 25 to 50-hour flier wheels up. the real imagine nick the space is the 0 to 15-hour flier, a person just getting into the space. that person is much bigger. >> congratulations to both of you, all of your success.

good to see you both. >> j.j., if you get stuck anywhere, you call us. >> you'll be the first call i make. we are going old school with this week's "your biz selfie." it's from t.j. and brandy who own and run the asheville pinball museum in asheville, north carolina. i recently heard about this. it is a mecca for players who want to experience the classic game. they also buy and sell these pieces of arcade entertainment. take a selfie of you and your business and send it to us. don't forget to let us know your name, the name of your company, and where you are. thank yo so much for joining us today. we love hearing from you. if you have any questions or comments or just want to say hi, send an e-mail to yourbusiness@msnbc.com. and visit our website.

we put up everything from today's hoe show and more. and don't forget to connect with us on our digital and social media platforms as well. one last thing, check out the podcast "been there, built that." it's been so much fun to do. i've had interesting conversations with founders and ceos. download it from free from tune in or wherever you get your podcasts. remember, we make your business our business. don't forget that the past can speak to the future. ♪ ♪ i'm going to be your substitute teacher. don't assume the substitute teacher has nothing to offer... same goes for a neighborhood. don't forget that friendships last longer than any broadway run. mr. president. (laughing)

don't settle for your first draft. or your 10th draft. ♪ ♪ you get to create the room where it happens. ♪ ♪ just don't think you have to do it alone. ♪ ♪ the powerful backing of american express. don't live life without it. hey, everybody. this morning, the current president on the hunt zeroing in on who he thinks wrote that op-ed. >> well, i could think of four or five. >> a former president on the attack using his strongest language yet. >> it did not start with donald trump. he is a symptom, not the cause. >> and some possible future presidents trying to make a mark. >> this is about the closest i'll probably ever have in my life to an i am spartacus moment.