[ cackling ] he's my ride home. how much can the snapshot discount save you? call or click today. how using customers and expects can help you fine tune your business. how to take an online business and turn it into a brick and mortar business. that's coming up next on "your business." small businesses are revitalizing the economy. american express is here to help. we are proud to present "your business" on msnbc.

hi there, i'm j.j. ramberg. welcome to "your business" where we give you tips and advice to help your business grow. most entrepreneurs do their best to avoid blunders. not all mess-ups are good ones. one is testing theories and learning from results. >> our philosophy is to try to test and learn quickly. >> lindsey says everything about her business is an education. the founder and ceo of marbles

the brain store is running her business based on a flexible philosophy. >> people don't think about all the opportunity you might have. >> her approach is best described as test and learn. the concept, test out ideas and learn from results. >> my thought and i hope my team's thought is let's test it out. we try to be efficient and try things quickly and move off them quickly. >> part of the plan is testing products to promote brain health. >> they have a very clear mandate. >> it has to be something that will be engaging and fun for people. second, it has to be high quality. >> before it ends up on their shelves, they are tested by a panel of experts to ensure their authenticity. employees check out products as well. >> this is a neurologist,

psychologist, a group of people we have worked with to make sure it stimulates the brain. >> i spend time playing with it myself and put it in front of friends and families. >> in the store, all products are open for customers to try. that idea has been key to marbles mission from the start. it hasn't been bad for the bottom line, either. >> 50 things open for people to try. those are the things that sold the most. we knew that, you know, we tested that and saw that worked. when i bring a new product in, i spend time not as an employee, but a customer. i know quickly how a product will do based on how people engage with it. >> once they engage, it's up to the employees to teach them to use the product. >> our sales technique isn't you have to buy this now. we are going teach you how to use it. we can speak to the product as

to how it does improve the brain and works different parts of the brain. >> as they were developing their product line, they learned the original customer focus may have been too narrow. >> we thought we were going to have products that were primarily for seniors or baby boomers. as people were in the store, they enjoyed it for themselves and they might be 30-year-old individuals or teenagers or they were younger kids and kids love it. >> that forced the company to verse fi their offers. >> we have learned how to grow from watching the customer in the store. sometimes in a business you aren't able to do that as much unless you have retail stores. >> the most expensive and riskiest projukt involved real estate. the goal was to see what could make the most money.

>> the idea was because we want to have a good plan for growth. you can say the first store was a downtown location. let's get in all downtown's across the country and expand that way. it's not a big thought. what we wanted to do was test a suburban mall, suburban main street. that's what we did in the first year. it's expensive to do that. >> while the idea isn't necessarily cost effective, she says the long-term goal is to save cash and better position marbles for expansion. >> we made the decision to hope 15 downtown locations and we should have been suburban mall concept. we got into short-term leases. we are doing everything short term. we are now getting into longer term leases to secure the position as we grow. >> after figuring out which locations are best for business, the idea is now being applied to stores in illinois and minnesota. >> the main street location

suburban and downtown could be great stores for us. we hope they are successful, but they are not as repeatable. a suburban mall, there are a lot of those. that's what we did in 2010. they are all mall locations. >> opening in malls means more foot traffic, which is what they need to get people in the door. >> we don't have a huge marketing budget. we are paying for the real estate. when someone walks by intrigued and see the name. they say ha is this place? i want to go into the brain store. >> it's not something she could have done in the corporate world. >> you have the opportunity to test a million things because you have control over it and you can get in touch with your store manager and have them try something. >> she and other marbles leaders try to keep their test and learn philosophy in check.

>> we have to hold ourselves back to not create operational anxiety over the country. we want to try new bundles of products and try different display ideas. >> they would rather make the necessary missteps now rather than have problems in the future. >> you learn from your mistakes. you have to set yourself up to go through those mistakes and if you are so naive to think that you are brilliant and never make mistakes you are doomed. sometimes learning from our mistakes can help take a business to the next level. let's turn to this week's board of directors. author of the book, "the wall street journal" a fantastic

book. a firm that provides financing and advice to businesses owned by minorities and businesses. nice to see both of you. >> nice to see you. >> the first thing that struck me, when she said when i was at a big corporation i couldn't do this. at a small business it is. >> she involved her employees, too. it's a special thing to do at a small company that doesn't exist at a large company. it helps to motivate them when they are involved with the products. >> we talked about throwing spaghetti at the wall and see what sticks. >> it's a focus group. a grass roots focus group. they are not assuming you know everything. you ask your customers and see what their experience is and what they think about it. >> sometimes you might see an effect and contribute it to the wrong cause. you have to be careful. >> i'm hearing a lot from people

doing the idea of testing rather than writing a business plan. i interviewed successful entrepreneurs that say rent the runway. they believe in testing, testing, testing. they have focus groups to test demographic, pricing. i don't think you should throw the business plan out the window, i think you should still have that. this is a smart approach. >> is there a point you can test too much? >> you can. then you never launch anything. you become in limbo. the whole question about the testing piece is that i do think that some people, in terms of the business plan should think about brand. brand order can be very broad like colleen is suggesting. a whole graph of different people and not thinking of it from this is what my growth will look like. >> thanks so much you guys. we know all about the mass market stores that built their

brand names as brick and mortar businesses before going to the internet. in today's your online business, we look at a business owner that did it the other way around. he developed a business online, then opened a brick and mortar location. >> thanks for coming in. i'm john. >> john of seattle has a dream of opening a retail store. what he didn't have was cash. >> wonderful. looks like we have office supplies. >> instead of quitting his job, taking out a loan and piling on stress, he tested the waters online. >> starting on the internet, i could do it while teaching. i had to have less inventory than if i wanted to fill up a store front. it was less money out the door if you just have to set up a website and ship things every day. >> being online in a trendy

industry brought other challenges. >> i didn't know if anybody would sell to me. i'm a guy in my basement selling items on the internet. a lot of lines we carry, we were the first people to put them online. >> to convince them to give the sight a chance, he offered some of them something most brick and mortar stores can't. the formula worked. web customers flocked to the sight. his company, velocityartanddesign.com took off. >> it's virtual. you don't have to worry about if the doors were locked and what the cash is in the cash drawer. >> velocity was making good money. it could have been enough. for him, it wasn't. >> it was always in the plan, to start the website first, build up enough clientele that it would support a retail store.

>> thank you so much, have a good day. >> he was red dou invest the time and money it takes to open a brick and mortar store even though it wasn't easy to do. >> that one only comes in that size. >> there's so many places where someone could go wrong in an environment like this. overstocking, understocking. over staffing, understaffing. a lot of people don't want the perceived headaches of a brick and mortar store. it's a lot of work to run a physical location. online, we make more money. >> they don't bring in the high profits the website does but this isn't -- >> interact with the people that loved design. i wanted to meet them, in person. >> they generate credibility. it brings bigger media attention and that brings in bigger revenue. >> having a brick and mortar store helps the national press feel and trust we are a

legitimate source for design items. the more word of mouth that's out there, the more people know of the store and the sight. the more people that are going to go to the website when they are not in seattle. >> he feels he's hit a winning combination. the buzz brings buyers. >> click and mortar is what we like to call it. it's a wonderful synergy. every dollar counts in this unpredictable economy. here are five common bookkeeping mistakes to avoid. number one, neglecting sales tax. a mistake in the collection or reporting of sales tax leads to big fines. two, not classifying employees correctly. if you hire an independent contractor, be aware of the tax implications. set up a system to track who is spending petty cash and report

the process. four, not reconciling your bank accounts. check your accounts on a regular basis to spot irregularitieirre. five, reimbursable expenses. track and fill their expenses in a timely manner. still to come -- where's the money. looking for funding, based on how much you need and the size of your small business. martha stuart, look out. the well rested dog in the house. this is my band from the 80's, looker. hair and mascara, a lethal combo. i'm jon haber of alto music. my business is all about getting music into people's hands. and the plum card from american express open

helps me do that. you name it, i can buy it. and the savings that we get from the early pay discount has given us money to reinvest back into our business and help quadruple our floor space. how can the plum card's trade terms get your business booming? booming is putting more music in more people's hands. president obama's proposed budget for 2012 has a 45% decrease in small business funding. how it could affect small business owners seeking loans. in this week's where's the money, we want to look at other alternatives based on how big your business is. mitch is the ceo of a financing network for small businesses

unable to qualify for traditional loans. thanks for being with us. if you are a business and you are small, you have less than $150,000 in revenue, where do you go? there's a category of businesses just getting off the ground. they have revenue and customers. they should look at community development financial. these are organizations that have the time and people to spend a lot of time developing the business plan and doing the things necessary for somebody at that stage in their business to access their first loan and first capital to grow the business. >> it's not just money. it's consulting. >> there's a lot of hand holding involved that's needed. >> let's take it to the next level. you have between $250,000 and a few million. maybe $5 million of revenue. this is where you come in. >> this is the most exciting time in terms of capital access for these businesses.

finally, technology is having a huge impact in the options available. it's super exciting. if you are a business that serves other businesses, you have large receivables, now you can go online to the receivables exchange, auction your receivables and generate cash flow right away. >> it's expensive. >> discounts, a penny or two is right in line with other factors. in a lot of cases, the automation is reducing the overall cost. the option looks different to the business owner. >> i want to talk about what you do. you go in, get a loan and your credit score is not good, the business is doing well. it's frustrating. >> it's usually frustrating. it's affecting millions of mainstream businesses across the united states. if you run a restaurant or local service provider, typically you are getting measured on your credit score. it's too expensive to underwrite

a $50,000 loan. they tap into the business data that they general rat naturally every day and creates an overall health profile of the business. then the business is finally able to access capital based on the performance of the business. >> my credit score is terrible, i run an ice cream shop generating a lot of cash. how long do i need to be in business and show or how long does it have to do well to go to you to get money? >> typically, we look for a year of activity. not for long. the other thing, too, is stop worrying about your credit score. it's irrelevant to the performance of your business. what matters, are you generating customers in your shop? if you are, you should be able to access capital. >> this is all online. i apply online.

give you my fancials. >> we have 500 distribution partners in the united states. you can go to ondeckcapital.com. our system pulls thousands of pieces of information to create the full financial credit. >> up to $100,000. >> up to $100,000. the interest rate is higher than at a bank, but shorter term loan. >> shorter term and it's paying down every day. they need something where they can borrow, pay it down and ready to borrow again. costs substantially less. >> in the long term. all right. thank you so much. we appreciate it. >> thank you for having me. >> today's elevator picture wants to let sleeping dogs lion

her doggie sheets. >> hi, i'm maria, the creator of doggie sheets. they are fitted made here in the usa of 100% earth-friendly cotton. >> machine washable, convenient, easy to use. protect the bed from wear and tear, keep it clean. 77 million owned dogs, 50 million households own a dog. last year $48 billion spent on pet products. due to the trend we expect that our product has great potential. currently we are selling the product online and we want to branch into retail. looking for $100,000 investment for marketing and inventory. we are women-owned business and have a patent pending. >> good job. >> your spokesperson here is wandering around. let's hear what our panel thinks. did she get everything in the pitch she needed to?

>> she did though i'd like to have an idea of what the plan is for utilization of the $100,000. >> what about you? >> i thought was great. machine washable, appeals to people, i'd like to hear how many sold and i didn't hear that. i'd like hear a track record. >> i ooh forgot that part. >> why is this defensible? something that i would have wanted to hear in the pitch. would you take another meeting? >> i would. people are crazy about pets. this is a nice product. i don't think there's many competitors out there. i would take another meeting. >> great. >> i have two vizslas, by definition, we need this product and can't find it anywhere. >> people love pets, so you get in on that part of it. you did a fantastic job. >> thank you so much. good luck with everything. thank you for all of your help. if you have a for or service and you want feedback from our elevator pitch panel on your chance of getting interested investors, send us an e-mail

yourbusiness@msnbc.com. include a short summary of what your company does, how much money you're trying to raise and what you intend to do with the money. somebody watching the show might be interested in helping you. it's now time to answer some of your business questions. colleen and tim with us once again. here's a question about which employees to hire first. >> i want to make my company to the next level. i have infrastructure all set up, five employees, we want to go to the next step. time to hire sales or marketing first? >> whatever you need. >> i would say, before she starts hiring employees make sure she has a good sense office cash flow and support employees' salaries, this keeps business owners up at night, when to mike payroll. next, if she's got infrastructure in place, allesa is where she wants to hire because she needs to sell products. >> sales is something you can

outsource, right? hire a contractor or maybe what you do, look at your staff now and can those people in a pinch sell or market or -- >> next i'd say is something different. what's your plan? what is it that your going after? where do you want to grow? and that should then inform you in terms of specific people you need to bring on board. it may be cfo, she's got her infrastructure what does that really mean? in terms of interface with the customer, maybe another thing to look at it, better off investing dollars in a website, for example. >> in terms of outsourcing, i don't know if she should outsource at this stage if she is trying to build a sales team, because she wants people who intimately know her product and services. best to keep it in house at that time. >> so does tim, he's shaking his head. >> i agree with that. i think that it's better to control all of the key functions yourself. and outsourcing is way more

spengsi spencive than you realize and you have a problem interfacing with the customer. >> right. let's move on to the next within. a question about the possibility of losing sales to a cheaper product. >> how do you compete using american technology, higher quality, but it's located in america and then we compete with the same product being manufactured in china, which is a lower quality? >> we did a story about this exact question a couple of years ago. a soap manufacturer lost 50% of his business by having one client leave and go to overseas manufacturer. he made it work but in general, how do you compete with that? >> you have to be sure you have a proposition where the customer base wants to pay a premium for something that's of higher quality. and who's saying it's higher quality? what does that mean? do you understand what it it is that you're competing with? on that end, perhaps it's the

quality of the customer experience, customer service, which would be very different from having that from a manufacturer that was offshore. >> i guess that's a point, if it is higher quality, how you market it? how are you sure it's something people care about having higher quality for. >> i was going to say it sounds like the business owner fill lo philosophically he wants to create it in the u.s., and that's something to use in marketing and that does resonate with consumers and he might be able to recoup costs with the marketing. weep were talking about this, outsourcing sounds great, having your product made in china, -- >> it's hard. >> yeah. it does work for some people. some businesses are able to save money that way. but if you run into quality issues, you've got a language barrier, time zone differences it can be a headache. so you know, i would say maybe not think of outsourcing as

something you're losing out on. >> in his case, maybe he'll pick up customers where competitors failed because of this. thank you for your advice. if any of you have a question for our experts, go to our website. address is openforum.com/yourbusiness. there, hit the ask the show link to submit a question for our panel. openforum.com/yourbusiness. e-mail us your questions or comments address yourbusiness@msnbc.com. colleen and tim had some really helpful advice about how to improve your business. let's get great ideas from small business owners just like you. >> being able to identify what's the new thing, how your brand can fit with it but have retail chan that can move it was a big learning curve for us. i've been working hard at getting our group internally to move fast, react quicker and come up with stuff before other

people have it on the market. >> one of the things that helped us to save money, one of the things we found, i could say in one word, skype. we're able to skype and work with people internationally on all phases of development. >> i would love for people, small business owner that have a great idea to seek out the local incubators at universities and colleges. i'm part of the ecf incubator, it's amazing resources that you can utilize on a college campus. >> if you're running a small business you may not have time to read all of the day's small business headlines. if so our website has an alternative for you. t theris therise,tothetop.com updated with web soeds to cover a variety of issues.

click on openforum.com/your business. you'll find all of today's segments and web-exclusive content with more information to help your business grow. become a fan of the show on facebook. we look forward to getting your feedback. also follow us on twitter. it's @msnbcyourbiz. if you want something done right, you've got do it yourself. does that work when you get celebrities to endorse? >> there is cameron diaz wearing my bag, huge picture standing like this with the clutch. i jump up out of my seat -- i'm next to a stranger -- hit the ceiling, freak out, and i was so excited. >> find out how this small business owner gets a-list stars to be photographed with her products and it doesn't cost her a dime. until then, i'm j.j. ramberg. remember, we make your business our business.

this is my band from the 80's, looker. hair and mascara, a lethal combo. i'm jon haber of alto music. i've been around music my entire life. this is the first alto music i opened when i was 24. my business is all about getting music into people's hands. letting someone discover how great music is, is just an awesome thing. and the plum card from american express open helps me do that. i use it for as much inventory as i possibly can. from picks...to maracas... to drums... to dj equipment... you name it, i can buy it. and the savings that we get from the early pay discount on those purchases has given us money to reinvest back into our business and help quadruple the size of our floor space. and the more we expand, the more space we have for instruments and musicians to come play them.