the business became more than she could handle so she found herself a ceo to run it. what you should look for when choosing somebody to steer the course. plus, getting your start up to go from zero to 60. it's coming up next on "your business."

hi, there, everyone. i'm j.j. ramberg. welcome to "your business" where we give you tips and advice to help your business grow. there comes a time in the life cycle of any business where the founder takes a look and says i may have done a great job building this company, but am i the right one to build it now? it's a difficult question for many. for the owner of one clothing company, the answer was perfectly clear. ♪ >> when people think of the clothing line, it's no surprise they think of the founder, julie. >> i have been doing this for the better part of 17 years. you know, who i am and what the

company is are very inner twined. >> she launched the company in 1994 with an mba, it didn't take long for the brand to become successful. >> the first store we shipped was barney's new york. it took off from there. the next thing we knew, we were in all the best stores of the country. it was a short period of time before we were a well known brand. >> for 13 years the company florished. julie ran herself ragged. she was burning it at both ends. >> you are exhausted. you aren't motivated. you aren't making the best decisions. i think that ultimately, it's setting it up for failure. >> unwilling to keep up the pace with two young children at home, julie did the unfathomable. at the peak, she pretty much shut down her company. >> it really was overwhelming.

there was a lot going on in my personal life, with the company, i decided the best thing i could do is back away. >> now, julie is back in the office, but when people in the industry think of them today, there's someone new they think about as well. david. >> i ran into david at a trade show. i very casually said to him, hey, i'm looking for a new ceo. >> i said it might be interesting. maybe it can be me. she said yeah, right. >> you have to be kidding. that's genius. >> i said seriously, this may happen. >> we continued the conversations and it just made sense. >> david is the new ceo of the company. >> david will make the company bigger than i could on my own. >> it's a common story, the company grows up and bring in somebody else to run it. in many cases, it's disastrous. for them, it's been a dream.

>> i realized he and i see things very similarly. not always the same. we come from the same place. >> the vision is the same. >> this move didn't come without risks for david. an entrepreneur himself, he left his own company to join her. >> you have incredible security. the only person that could get rid of me was me. >> when it came time to do the deal, it had to be good enough to get him to join. >> it comes down to the art of the deal. what does it look like, not just compensation. if we were to sell it, what happens? >> there's upside incentive for him. if he succeeds, there's more. it's on his shoulders to do that. >> they both said the deal making was surprisingly easy. the more important part was if they could work together. after many, many conversations, david came over for a 40-day trial. >> it's kind of like dating.

you date someone you see one side. get married, it's different. waking up with the same person every day is a different thing than dropping them off at the doorstep. she was able to see how i behave, how i react, how i look at things. >> david also needed to know julie would step aside and let him truly run the company. >> i was accustomed to dealing with julie directly. >> she's been here for 11 years. she said the transition was pretty seamless. >> i think i've been able to rewire my brain into going to david. >> i know what they saw was how julie deferred to david. so, when julie deferred to david, it brought everyone -- it made the transition so much easier. >> this is not to say they don't disagree but how they do that is key to the company's success. >> what do you do, you are in a

meeting, david is in charge and he tells somebody something you disagree. what do you do? >> i will step back and wait to discuss it with him after. if i get in his way and contradict what he's doing, i'm undermining him and i don't want to do that. >> they are keenly aware of where each other's strengths lie and play with that. when it comes to meeting customers, it depends on who speaks up. >> sometimes david works with them because there's negotiations on the back end stuff. on the front end, i work with the bigger stores so they understand the product and he and i both get involved in that conversation. >> their partnership has been nothing but a dream come true for both of them. julie is involved in her company but has a personal life. david has gotten a chance to build a brand he believes in into a powerhouse. >> we ran into each other when i

needed him and he was looking for a new place to hang his hat. timing is everything. this story was particularly interesting because i went through the same exact thing when my brother and co-founder hired a ceo to run our company. we had a fantastic experience, but not everybody does. what does this week's board of director have to say? les mckeown and david anderson is the president of learn to lead an international sales and leadership consulting company. great to see you guys. i loved doing this story. i went through the same thing. it was so interesting to me to hear about the conversations they had and how it went. it went easy for us, but i think we were all really open and fair about our conversations, which, i think a lot of people aren't. what do you think are some of

the biggest pitfalls people approach when hiring a ceo? >> i think, in this situation, you need to make sure you share the same values, the same vision and mission. you can't be on separate pages there. you can debate the strategy and tactics but if you can align in those areas, it's a key to sustaining a great progress. >> how do you figure that out? is it in a conversation? for me, it's a feeling. i sense this is a good guy and i trust him. >> figuring it out is a step past where the real brilliance because the brilliance is deciding we need to do this. i think it's a lot less usual than you might think. a third of the ceos that i work with shouldn't be ceos. >> they can't give it up. >> only 5% more. i think it's the recognition. then it's getting the roles right. the thing i loved here was they clarified the roles clearly.

get at least one of the big dogs in the company, employees to come right on sight earlier. everybody is watching to see if it's going to take or not. i think they did a magnificent job with it. >> it was easy for the employees to defer because julieid and they followed suit. one of the issues, what to do if we disagree? we had that, too. we would be in a meeting and i would speak my mind. you have to step back. it's not between you and the employees, it's you and the ceo. >> it's differentiating and it's hard. it's unfortunate that often the person coming in is coming in not as an owner of the business and spends the first number of months saying can i push myself forward? she did well stepping back. >> if you are going to bring in

somebody to lead your company, to give them ownership. >> it's huge. it's a great incentive to do so. it's getting to the point where you recognize it. ego is the number one part of not doing this. >> ford saved his company by giving up his ceo position and bringing in alan, the ceo of boeing and he took a risk by coming over. bill says it's the best thing he did. he gave alan the reigns. it brought the company to a new height. >> it's absolutely right to have ownership as part of the deal. defer it and make sure it works, first. give it a year. then it's really, really hard to unwind. >> all right. great advice. this is again, a fun story to do. >> sending paper bills to your customers can take a bite out of your profit margins.

optimize the use of bill matching. if you send fewer envelopes, you spend less in postage costs. make sure all bills are sent in one envelope. fix your uncertified address. nearly one quarter of mail contains an error. if the address is not recognized, it's mailed at full rate. leverage postal discounts. the usps grants significant discounts for preparing and sorting mail. maximize marketing opportunities. this can be an effective way to bring in more revenue? convert to electronic billing. sending your bills is the most effective way to avoid the costs of u.s. mail delivery. you may have a start up business with a great product, a brilliant team and amazing

technology, however you need to know the right process to turn your insights into a great company. here to share tips to accelerate your business is air rick reese. he's a blogger who advices other entrepreneurs on business strategies. he's the entrepreneur at the harvard business school and author of "the lean start up". >> thanks for having me. >> congratulations on your success. your book is a hit. >> thank you. >> we want to get your tips for accelerating your start up business. you have all the pieces to the puzzle there. how do you make it grow now? the first thing is identify activities that create value. do you find a lot of people are spending time on activities that don't create value? >> it's the curse of entrepreneurship. if you are trained in a functional specialty, we make stuff efficiently.

the problem is, they are making the wrong stuff. they are driving a car off the cliff, but bragging about the great gas mileage you are getting. >> what do you do to identify this? how much money is it bringing in. >> oftentimes, the start up is too small. you can't tell which is profitable and not. think of it as an experiment to learn whether we are on the path to a sustainable business. when we make that switch, we ask ourselves what is this helping me learn and is there a way to get that learning faster? >> that's a good idea. use the power of small batches. this is to your point of testing. >> right. instead of the biggest version, we create the minimum viable product. it can start the process of learning. this is something they learned in manufacturing in toyota. supply chains everywhere.

the smaller the size, the less work you do at the time and the faster the feedback. >> put it out there. don't wait for it to be perfect, perfect, perfect. >> it's better to have bad news that's true than good news that's made up. >> exactly. we do make up a lot of good news in small businesses. everyone is going to love this just because you love it or are invested in it. >> every idea seems genius in the shower. >> employ -- >> instead of worrying object how to make the company grow once it's successful, we want to do less of that and respond just in time. the key is, we need to change our mind set from trying to prevent problems that might happen to learning to respond to the problems that actually do happen. when we have a chance to invest in process or architecture, invest not in prevention, but

fast response. >> explain that to me a bit. a lot of times, people are building things for, i'm building this now because when we are a $50 million company, this is the way it can work and we should be building it for now? >> yeah, in the software business, we have this. millions of people are going to flock to it. servers are going to crash. we have to be ready to handle that. most of the time, nobody wants the product and it crashes. when the problem happens, how will we know and detect we have a problem. how can we respond quickly. >> got it. you could waste a lot of money on building something for 20 million people. >> exactly. >> identify your pattern of growth. how do you do that? >> we have engines of growth. sustainable growth, not a ponzi scheme or one-time pr stunt. sustainable growth means the new customers come from the actions of past customers through viral

growth or through what we call sticky growth, they come back to the product over and over again or paid growth meaning we reinvest the revenue into advertising into whatever is needed to get the new kous mers. that is the mechanics of sustainable growth. the quality where customers are providing resources to get more customers. >> it's great. a lot of people spend a lot of time getting new customers when they are growing because of current customers. they are wasting money on new people. >> i wish we could talk for a half hour or more. unfortunately, it's the end. everybody should read your book, the lean start up. it's very helpful, thank you. >> thanks for having me on. still to come, small business owners tell us what they think about the president's job to answer questions. the owner of a spa for dogs, plus, today's elevator pictures

have a solution about what to do with all of your bags when you have more shopping to do. shazi: seven years ago, i had this idea. to make baby food the way moms would. happybaby strives to make the best organic baby food. in a business like ours, personal connections are so important. we use our american express open gold card to further those connections. last year we took dozens of trips using membership rewards points to meet with farmers that grow our sweet potatoes and merchants that sell our product. vo: get the card built for business spending. call 1-800-now-open to find out how the gold card can serve your business.

the future of president obama's jobs creation plan is unclear after failing a procedural vote in the senate. they could vote on individual parts of the package to pass it in stages. the president remains committed to the plan. we asked small business owners at an entrepreneur gathering what they think of the president's jobs plan. here is some of what they said from the floor. ♪ >> republicans say one of the most important things we can do is cut taxes. then they should be for this plan. this jobs bill would cut taxes for virtually every worker and small business in america. every single one. >> i did not hear obama say anything about creating jobs through entrepreneurship and small business. where was that part of the job package? everything seems to be about

spending money and putting money out in the economy. >> i think that anything that is going to promote tax cuts like the payroll tax cuts, there's benefits for small businesses. it's critical. we need to grow at this time. if we can get more people, it gets done faster. i would like to see it better than it is. >> i don't think it goes far enough in terms of job growth. payroll tax cuts are not going to help hire people. i don't think extending unemployment benefits do anything to help people get back into work there. >> i would like to see the jobs package focus on the smallest, individual voter, the single entrepreneur, the companies that are one to ten employees. we don't have the political power and pacts to get the big chunks of money. >> i would say that if any of the small businesses were to receive $30 billion on the table, it's a benefit.

the tax increase credit would be beneficial for small businesses to increase wages. by increasing wages, you increase motivation. >> have you ever been out shopping and gotten bogged down with the bags you are carrying? they have a solution for the excess baggage. >> good morning, my name is sean and this is paul. we are the co-founders of cubby. it's a retail service company that stores bags just like this. two years ago, we met in college and found new yorkers carry too much stuff with nowhere to put them. we built a pop-up store and a mobile application for android and ios that allows people to book ahead of time. we have worked with hotels, restaurants and we are making relationships with other retail partners to expand our reach. >> we have only been open in three weeks but took in 125

customers and created 10% of them with virtually no advertising. we are looking for $650,000 for expansion. in the next 18 months, we plan on opening four locations partnering with restaurants and retail locations generating $750,000. go to gocubby.com for more information. we hope to take care of your stuff soon. >> you forgot the important part that you won a business plan in college. congratulations. >> thank you. >> in the real word, what do you think? >> it's a great idea. i have no doubt four or five years from now, we'll see whatever version of cubby. i was go for am bik witty. you are going to be everywhere fast. you are doing the right thing partnering with other people. they are the marketing and spread and retail locations.

here is what i would ask myself, what do you have that is special that prevents the people you are partnering with from saying this is good, but i'm going to do it. i would work hard at a competitive advantage. >> what about you, dave? >> you have to get big and get big fast. >> how was the pitch? >> i am interested. i'm interested in lodgist cal network. once you have that set up, there's a huge first mover advantage, reduce cost scales and i'm excited about the services you can have. over time, they can make up a majority of your revenue so yes. >> you would take another meeting, i'm gatt gathering? >> i would recommend them to a few close friends. >> i know i have been bogged down with bags, i needed you guys. good luck. >> if you have a product or

service and want feedback and your chances of getting interested investors, send us an e-mail. the address is yourbusiness@msnbc.com. send us what your company does, how much money you are trying to raise and what you intend to do with the money. it's time to answer some of your business questions. les and dave are here to answer them all. the first is from judy. she said we are a year-round hydrothermal massage service with an indoor pool for dogs. we have over 200 loyal customers. we raised our prices in january, 2010 from $25 to $30 for a half hour. we would like to raise it to $45. is this too much of a jump? should we wait until january, 2012? it's a big jump. they just raised them.

>> she's almost doubling them in two years. that sends a message you are greedy or inept. there's something wrong there. you have to justify that type of increase. i have a friend with a karate studio. it was time to raise the dues, but offered another class. now, in their mind, i'm getting something for the money. the point is, they feel like their price increase is justified. i would be careful there and fix that business model. they have to create an increase that there's something wrong with the model. >> if she's going to do it, think long term. this is going to last me for the next five years. should she wait until january, 2012? >> depends on the capacity. sure, go ahead and do it. she'll lose people, but her net will still go up. i would say she needs to start planning ahead and get projections and look at a regular scale of increases once

or twice a year at a percentage people will accept. tell them, i raise my prices january and june. we keep up with inflation of 3% or 5%, whatever it is. there's a plan rather than dumping it on people. >> the next question is about finding investors. >> being based in south florida, you know, there's a real lack of venture capitalists down here. what is the best way to reach out to venture capitalists in the industry. >> i like this question. a lot of times people say network, you go meet somebody. if you are someplace, not in new york city, network with whom? >> unfortunately, getting on an airplane is the only answer. o cationly you have to find out where people are. you can actually do yourself a lot of good by calling ahead saying i'm coming up from wherever it is.

you are putting an effort in. get yourself an agenda of meetings for three or four days and work it like crazy. it means you are almost certainly going to up your game as well. plan it and decide where you are going to go. work it like crazy. >> yeah. i agree. they are websites that help link investors with venture capitalists and help you set up that initial meeting. you have to do your homework. you don't have to stick with your own neighborhood. as les says show the gumption to get up and follow through and show why you are worthy of that investment. >> the next one is a question about credit. >> how do service businesses create collateral and business credit for their business? >> any ideas? >> when we started the business, we had no products to sell. we were a service business.

we got credit and were able to get hundreds of thousands of dollars based on the fact we had good credit personally. you are not going to get an unsecure loan. however, it's good to use receivabl receivables. there are companies that will loan on that as well. >> any other ideas? >> longevity using personal investment you have. it's what we have to do. i would emphasize the customer side of o things. you have the educate customers to pay early or in advance. >> and put policies into place? >> right. if you don't do it right away, you feel you need the money, you go for it. you have to start right early on and educate your customers from the beginning. happy to do this, we need 50% or 75%. >> thank you for this advice. very, very helpful. if you have questions for the panel, all you have to do is e-mail us.

it is yourbusiness@msnbc.com. or, if you would rather go to openforum.com/yourbusiness. hit the ask the show link to submit a question for the panel. looking for a way to streamline your online marketing strategy? check out the website of the week. constantcontact.com provides tools and training for your online marketing needs all in one place. you can make professional newsletters to e-mail or use it as an online events planner for your business. keep track of your social media accounts and use the internet as the ultimate marketing tool. to learn more about today's show, click on our website. it's openforum.com/yourbusiness. you'll find web content with information to help your business grow. become a fan of the show on

facebook. we love getting your feedback. follow us on twitter. next week, a speshd edition of "your business." we'll devote the entire show to the single issue we hear about, how to get customers. we'll follow a salon owner, a dry cleaner who knows the benefits of rewarding customers and we'll find out how a school lunch provider sells itself to potential customers. until then, i'm j.j. ram berg. remember, we make your business our business. sam: i'm sam chernin. owner of sammy's fish box. i opened the first sammy's back in 1966. my employees are like family. and, i want people that work for me to feel that they're sharing in my success. we purchase as much as we can on the american express open gold card. so we can accumulate as many points as possible.