we're here in california's napa valley to find out how one hot air balloon keeps its flying. that's next on "your business."

it's not just any business, it's "your business," that's why american express open is proud to present "your business" on msnbc. hi there, everyone. i'm j.j. ramberg, and welcome to "your business" where we give you tips and advice to help your business grow. this marks our 200th episode. and as we always talk about on this program, it can be difficult to make your product or service stand out from the rest. no matter how unique it is. that's why a hot air balloon company in california's napa valley had to decide how they

were going to rise above the competition. look up in the sky on any clear morning in california's napa valley, and this is what you see. hot air balloons flying high above. to anyone on the ground, these balloons and the rides taken in them seem indistinguishable. but the pilots and the owners know exactly who is who. >> those are some of the balloons -- one we call bat b. >> nielsen rogers and his wife founded the company in 1979 and started working at it full-time soon after. >> i used to have a real job. and then after the merger and acquisition, you know, you either paid too much or know too much you get fired. >> when they began, there wasn't much competition, only one other company.

today, there are six. and any tourist looking to book a ride can find a bunch of fliers that frankly don't look that different from each other. carol ann says she works very hard at making above the west stand out. >> actually think that's one of the hardest things to do. from a marketing point of view. >> early on, the rogers decided that they were not going to compete on price. that that was just a losing battle. >> we realize that if we lowered our price $5, they'd lower theirs $5. >> the problem with having price be the only thing that differentiates you is that there will always be someone who is less expensive than you are. >> today, they're the most expensive company in the area. they charge one flat, n nonnegotiable rate. >> everybody is able to move right under us with their stated price, but then they discount under that to get more people. >> they say that their price

make turn off some people, but those aren't the customers they're after. >> the passengers that come with us, i think they are more interested in value than in price. >> because of the high prices, they're able to offer a more customized experience. taking up fewer passengers, only doing one trip per balloon a day, which limits waiting time. things that endear them to others around the area. shirley quick is the manager of a high-end hotel nearby. >> we feel confident when we recommend their company that they're going to get the same level of service they would get from us. >> reporter: all of these choices. the pricing, limited rides have all limited the rogers' ability to grow the company. >> were we to decide to get really big, well would have to change what we do. we -- we are the size we are because we want to be the size we are. and we think that's the best way to offer really excellent

experience to our passengers. >> carol ann admits that there are times they look across the sky and have a moment of wondering. >> sometimes you do look at someone else who maybe is flying more people and you think, well, gosh, they're, you know, maybe we should just do what they do. >> but then she says she comes back to her senses. >> you have to think long-term. because there's a lot of short-term marketing strategies that could change things for you a little bit, but then have consequences for you in the long run. >> and knowing that you have a strategy that you're going to stick to gives you time to focus on what this is really all about. >> i enjoy it. i enjoy it. so what we take from this piece is that you want to stand out, but not necessarily because of your price. so let's turn to this week's board of directors to see what else we can learn.

rafe mohammed is the fouauthor the book "the 1% windfall." rod kurtz is the executive director of aol small business, and the founder of obsidion watch. you've got to write a book, ron. >> i know. it's coming, it's coming. >> i love this piece. pricing is so tricky. i was saying to this, would it make sense to be the second most expensive? because you're just going down the list and saying i want to go on a balloon ride, i don't want the cheapest because it's probably not that good. i don't want the most expensive because i don't need it. i want to go to the second most expensive. how do you decide? >> i think they've done a great job of creating a premium product. it's one hop, perhaps longer, they have a long reputation, and they've done a great job. and the key to pricing is to think like a customer. if i'm a customer looking at various balloon rides and i see they have a premium all of these

great attributes, i'm willing to pay a premium. it was a good idea. >> you need to have a way, then, to market that premium. >> exactly. that's the key thing. and philosophically i think this is such an interesting thing. it's a challenge for every entrepreneur. and i tend to think that entrepreneurs should not try to one on price. the problem with this industry in particular and the reason i thought it was interesting they got into the hotel recommending them is your customer is really a one-time customer, a tourist who is out there. they're not going to do a whole lot of research and they're not going to see from the experience they got great value, they're going to come back. it's not a repeat business type of business. it's interesting they've been able to make it work because it is a challenge when it's a fly-by-night customer. >> there's a sort of famous story of a woman trying to sell a piece of turquoise jewelry in the store. she made it half off, accidentally she made it double and it sold. >> the lesson is, there's always a guy willing to lose his shirt faster than you.

but here's the opportunity. go after specialized clients and offer something to them. so many wedding couples want to go to an event. now you have a wedding package where it's not just the balloon event, but you have it land at a special hotel and have it set up on a mountain top or something. go after specialized customers with specialized needs, you can dictate a big premium. >> that gets to your point. >> there's a couple strategies they can use that really any small business that has capacity constraints can use. first of all, okay with the high premium. but you might want to offer peak versus off-peak prices. and the next thing is much like broadway, have a last-minute deal. so if we have the capacity tomorrow, we might be able to, you know, lower price. and finally again to your point, every company should have a good, better, best strategy. and so they really didn't have a best with champagne or in-flight video. and these types of techniques you can literally put into place on sunday evening and the next day you can start making higher profits. >> can i ask you a question about your last-minute strategy?

>> sure. >> part of me feels like if you are offering the premium service, having a last-minute strategy might downgrade the service, might give the impression that, oh, it's actually not worth the $500 that i just paid because i could've gotten it for $350 if i waited until the last minute. >> it segments people. people are coming out to napa, read it. people want security, they're willing to do it. but having the last-minute strategy, you get price-sensitive people. and this is often done, for instance, at major hotels. top-notch hotels with a luxury reputation. have prices that vary throughout the year. sometimes as much as five-time differential, you know, between different months. >> and i think it's napa, they should throw in a bottle of wine. >> they do throw in a breakfast. >> you mentioned with the tiering structure, or add-on sales. sometimes you can upgrade them. so they have a responsibility. when you sell them at a lower cost point, just invite the

customer to consider alternative items that are more expensive. they may do it because it's an additive cost. >> just to bring back the psychology of it for one minute, i think it's so interesting. there's also that other study about when people who look at a wine list, what wine do they choose? most people choose the second to the lowest. >> not the lowest -- >> they don't want to seem cheap. still not pay a lot of money and not feel like a cheapskate. >> so much of pricing is about perception. grey goose vodka came out, oh, people will think it's got to be good. >> they did back that up with the value, we're from france -- >> for the perception of value. >> well, depends on how people value that. >> we could talk about this forever. i love this topic. thank you for being our experts on this. >> we try. they are everywhere this holiday season. the pop-up retail phenomenon is

booming. particularly in the current economic environment. that's because there are distinct advantages to being able to come and go. >> pop-up is basically a store that pops up for a limited amount of time and then disappears. >> pop-up shops, stores with short-term leases lasting anywhere from a few hours to six months are the latest trend in retail. >> this pop-up concept is perfect for the way i think about my business. >> lisa perry, a designer of '60s-inspired clothing and accessories, in soho. a firm believer in location and spontaneity, she'd rather pop than stop in any one place. >> isn't it a lot of work, though? having a store that comes out of nowhere and goes away for a few months or a few weeks later? >> i don't think i could do it

if i didn't have this vision for the space. i think about it a lot. you know, with this space we took possession on a monday, we got my team in here painting and wednesday we brought all the stuff in, and on thursday, we were open. >> so you opened your store in four days? >> yes. >> so you're paying per month less than you'd be paying if you had a long-term lease? >> a lot less. a lot less. i'm pretty sure it's half price. >> when you look at the value of this, do you think of it as a sales tool or marketing tool? >> i really think of it as both. you know, for me, i was my design studio and showroom was on the second floor. and for me to get down to street level made all the difference in the world. so it's great for brand awareness. and it's great for sales. you know, i have just triple, quadruple the amount of traffic here. >> photographer matt schwartz has also raisedd awareness of hs company by opening a pop-up in the a & gmerch.

>> i've been doing it for a couple of months. and it's been the best thing that i've invested in towards my business. >> matt is just one of the emerging designers exhibiting his wares in the home furnishing store. >> a & g is an area we created for local artists and businesses to sell their own product in their own way but also be a part of a & g. for the designer or the business person who's aging out of a flee market and not yet ready to open their own store. so it allows them to have their area, have signage, price everything the way they want to. >> it appears she may be on to something. also anticipating the pop-up phenomenon are the folks at open house gallery. a pop-up retail location and events venue in new york. they bought a 4,500 square foot

white-walled space two years ago and have been operating it as a revolving store front ever since. >> we established the business at a time when the economy was unstable. and a lot of these -- not just the smaller brands, but even bigger brands, you know, would pull back from signing a lease on a new store or, you know, launching an ecommerce site because everyone's being a little bit more conservative. >> open house allows entrepreneurs the space to test the waters with little risk. and if a concept works there, it may be time to call the real estate broker. >> there's only one way that you'll be able to know if your business model is setuccessful, and that's to test it. now is a time when people are holding back and being conservative. but from my opinion, you know, any time is a good time to try something new.

2010 is winding down and that means tax season is rapidly approaching. here are five tax-saving tips courtesy of gene marks for the "new york times." number one, be mindful of the tax cuts deal. this week, president obama outlined a plan to extend tax cuts for two years. the outcome will affect some small business owners' income taxes. two, look into writing off capital purchases. the jobs bill increased the maximum capital expenditures deduction to $500,000 for qualifying small businesses. three, write off unnecessary inventory and receivables. take some time to identify items that you know are not going to sell and review outstanding invoices. four, take advantage of startup expense deductions on new business investments. the jobs bill increased the maximum value from $5,000 to $10,000. and number five, look into a

simplified employee pension plan, which provides similar benefits to a traditional retirement account with deductible contributions. still to come on this 200th episode of "your business," 'tis the season to give. so how do you get family and friends to invest in your small business? and today's elevator pitcher has a product that will help your achy back and save a trip to the chiropractor. i'm bob kearn, president of coit cleaning services. these pictures are the history of my family and they're also the history of coit. we've been in business for 60 years and our greatest asset has always been our people. we use the plum card from american express open to purchase everything we can and with the savings from the early pay discount, we were able to invest back into our business by hiring more great people like ruben here. how can the plum card's trade terms get

your business booming? booming is a new employee named ruben. getting funding to start or expand your business is no easy feat. and that's why many entrepreneurs turn to family and friends as a financial resource. in today's "where's the money," a serial entrepreneur and most recently founded of minted.com tells us how to approach people you know personally in a professional manner. ♪ but you've got to have friends ♪ >> mixing business and pleasure's always a little bit tricky. and i think to preserve relationships and make sure that you're not overly worried during the course of the business, which we know start-ups are up

and down roller coaster rides sometimes, i would suggest two things. one, make sure that you've set expectations up front that the start will be risky and there is -- there is, you know, chance of success as well as a chance of possible failure. second, the -- it's important to set expectations that -- or to find out whether the person that you're talking to can afford to take financial risk. my rule of thumb would be take money from those who could only afford to lose their entire investment without major impact on their lives. that's going to help you avoid undue stress. a gateway angel is someone who tends to invest alongside other investors. and that can be very, very valuable. in the case of minted, we found one gateway who led to about 1/3 filled out by his friend. ♪ try to pre-qualify people. do your research ahead of time.

make sure you know the person is interested in doing the kind of investing that -- you know, investing in the sector that your company is in. that way you avoid unnecessary hits to your morale as well as a waste of your time. so, you know, really i would recommend spending at least an hour to two hours of research time for every hour you spend with meeting with investors. >> even if it is a friend or a friend of a friend, be prepared. treat it like a professional institutional firm that you're raising money from. come with the business plan, a presentation that outlines your market size, your competition, what you're going to offer that's different and your expected revenue. countless people suffer from back pain. today's elevator pitcher has developed a product that he says is a holistic way of strengthening the spine. >> hi. i'm paul hagan, ceo and

co-founder of the back-upractor. the person lies on the product, aligning their spine, lift their knees to their chest one time exc expelling air and creating pressure. that does three things. it lengthens the spine, die lla the blood vessels -- it's a safe, affordable treatment that can be used at the home or office, any time you need relief from back pain. 26 million people in the u.s. suffer from back pain and go to the doctor every year. and this is a safe, natural alternative. we are seeking $500,000 to bring this product to market. -- as fast as we can. we are currently in full production mode, we are patented, and we are registered with the fda. >> all right, paul. thank you so much. and to your lovely assistant.

mora, thank you so much for coming down and joining us -- >> i've never seen that in an elevator. i don't know what kind of building we're in. >> you haven't seen that? >> let's start with you, mike. >> my first fear, it seems a little bit gimmicky. i'm not saying it's a gimmick. how do you get passed the gimmick barrier? >> i'll let you respond in one sentence. >> we offer a 90-day no questions asked moneyback guarantee and you can look at the dozens of testimonials that have been flying in the past six months. >> you read my mind there, i think testimonials are key with this thing, whether it's trainers or doctors. getting people with some credibility behind this because i do think it's an industry where there's a lot of gimmicks that people are naturally a little suspicious of. so having that stamp of approval would help. >> was the pitch as it was enough to pique your interest? >> it definitely piqued my interest. i think there's definitely a market for this. i think you would want to get

into how much this cost to make. i could see making a lot of money in return. talk to investors and talking dollar signs with them. >> the one thing i'd want to hear is how does this complement what's already out there. are you going to compete or complement? if you're competing, makes me nervous. if you're complementing, maybe i want to invest in it. >> good luck with everything. great to meet you. mora, thank you again so much. it's freezing outside, go put a sweater on. thank you so much, guys. appreciate it. and if any of you out there have a product or service and you want feedback on your chances, just send us an e-mail. the address is yourbusiness@msnbc.com. please include a short summary of what your company does, how much you're trying to raise, and what you intend to do with the money. and you never know, somebody out there watching the show might be interested in helping you. it's time now to answer some of your business questions.

ron and mike are back here again. the first question came in an e-mail from esther. if i don't want the money now but do in the future, do i risk the investor getting tired of me by the time i want to actually ask for the funds? >> what do you think? >> how much are you trying to raise? if you're trying to raise a lot of money, you have to wait to have proven revenue you can show to these investors. if you're looking for a small amount, you can't start too soon, because you want to start networking, getting out there, pull the trigger when you can. >> that's my feeling. going out and looking for a job when you don't have a job is the best time to look for a job, right? so get the word out there. >> depends on the type of investor you're talking about. if it's friends and family, you can hit them up early in the process. but i got a very similar question this week, actually, about the same kind of thing about press coverage. when is too early, too soon to get press coverage? and i think you have to have your company at a point where it's in a position to actually take advantage of in this case the money or the press coverage. if you get all of this money and your company isn't mature enough

to use it, there's really no point in asking for it. everyone likes the idea of getting money, but you have to be practical and figure out what you're going to use it for. >> maybe the advice is, don't ask for it, but start networking. >> yeah. >> and recognize raising capital, i've done it, takes six months to a year to do. it's not going to happen overnight. >> this is a question about hiring. >> one of the things my industry struggles with is getting young talent in the technical fields. young domestic talent. and my question is, how do we attract that talent? >> it's an interesting question, especially right now when everybody's looking for jobs. >> i think whether it's a technical field or whatever it may be, i think the hiring fundamentals are the same. you want to work in concentric circles. start with people you know, the current technological people you know. do you know anyone? have any recommendations? and sort of expand your circle and network. and the reality is, you don't need 1,000 resumes across your desk, just one good candidate. >> i've got a secret tip you're going to love. i've had to do this. >> now you're sharing it with

the world. >> no longer secret. between me, you, and 100,000 people. this is the trick. i need young, talented people, everyone wants them, they're cheap labor, work very hard, very smart. the thing is a supply/demand issue. everyone's coming after them. you have to get to them sooner. and here's the trick. i called the professors for all the technology groups that they had in these colleges and said i'd love to get your best students in here. i'll give an internship, get some exposure, build a resume. the professor started sending me the best people. i was hiring them when they were the first semester seniors. >> it's like building a farm system in baseball. you've got to recruit them early. great idea. >> that's smart. this is a question about trying to get a business partner to sign on the dotted line. >> when you're in negotiations with a potential client, what is the most important thing to keep in mind when you're trying to close a deal? or when you're negotiating a deal? >> there's so much to keep in mind when you're negotiating, right?

>> one thing when it comes to selling the customer. you have to ask. think about a snickers bar, if you're starving you'll buy it, there's a different reason. so you have to find the benefit they're trying to derive from your product, find out that primary benefit, and sell to that constantly. that makes the sale. >> and when it comes to negotiating, there are two paths. you can be a killer and be a tough negotiator. i find i found a lot of success with sincerity, believe it or not. i think a lot of times if you, definitely don't show all your cards and you want to still negotiate. but i think if you come at it in a genuine way and sort of, you know, wear that on your sleeve, it tends to resinate with people because they know you're not trying to be a killer. >> the other thing too, if it's going to be an ongoing relationship. that's a nice way to start a relationship with someone. >> don't burn bridges. finally, an e-mail from ellen. she writes an employee of mine is very good at her job but has trouble prioritizing. how do i get her to prioritize better without micromanaging her? >> so i think there's so much

talk about this topic. and people prioritize upon due dates. that's serving urgent, but not important. i have a trick to tell this person. put a dollar sign next to the three things that will bring revenue to her job, capacity, or your company. don't worry about the due dates. it'll get rid of all of the stuff that's not important, not urgent and then you'll focus on the important stuff first. >> you have to think this may not bring direct money in, but it will do something that would provide money later on. >> yeah, i usually go window. on mine i'll put a 30 to 60-day window. if it's due tomorrow not going to bring in revenue, it gets shelved. >> that's open-book management. the more they know about the bigger picture, the more they understand it's not just a random list of to do items. >> all right. great. mike and rod, thank you so much for all of your advice. and if any of you out there have a question for our pexperts, go

to our website openforum.com/yourbusiness. there just hit the ask the show link to submit a question for our panel. again, the website is openforum.com/yourbusiness. or if you'd rather, you can e-mail us your questions and your comments. the address is yourbusiness@msnbc.com. loyalty cards can be a great way to encourage repeat business. but physical cards aren't always needed anymore. our website of the week can help you get started. mycardstar.com provides loyalty card services for smartphones. businesses can set up a loyalty program allowing shoppers to scan a bar code on they smartphone at the time of purchase. the site can help you manage coupons, send messages to loyalty card holders a provide shopper analytics. pricing plans are based on the size of the business. to learn more about today's show, click on our website, it's openforum.com/yourbusiness.

you'll find all of today's segments plus web exclusive content with more information to help your business grow. and don't forget to become a fan of the show on facebook. and we look forward to getting some of your feedback. you can also follow us on twitter@msnbcyourbiz. next week, to license or not to license. two spin-off products from the same holiday movie being sold by two different entrepreneurs with two different strategies. >> i'd say probably 75% of our business is actually online selling licensed merchandise from "a christmas story." >> i knew already that you couldn't patent or trademark a pink bunny suit. it's a pink bunny suit. >> walking the fine line between what's required and what's not. till then, i'm j.j. ramberg. and remember, we make your business our business.