she sunk her life savings to start a successful business and then risked it all when she decided to change the company's direction and where's the money? an update on washington's efforts to regulate equity based crowd funding. that's coming up next on "your business." ♪ money money >> small businesses are revitalizing the economy and american express open is here to help. that's why we are proud to present "your business" on msnbc. ♪

hi there, everyone. i'm j.j. ramberg and welcome to "your business." the show dedicated to giving you tips and advice to help your small business grow. i'm often asked which small business owner i've met over the past seven years has inspired me the most and my answer is always the same, kim benson. she to me embodies what it is to be an entrepreneur. she's risk taking but calculated, she believes so wholeheartedly in her ideas, and is willing to change paths when she sees a better one. and that is exactly what she did when she turned her company which made low fat bagels into a business that helps people lose weight. ♪ changes ♪ changes >> kim, i cannot believe this is your company. >> i can't either. >> how big is this place?

>> 7500 square feet. >> when i first met kim benson in 2010, she was working out of her home running her company kim's light bagels. she's come a long way since then. >> it's incredible. i look at the space i have to pinch myself to really believe it's here. >> in 2008, kim's husband mark was laid off from his job and because of an illness, couldn't get a new one. they had some savings, $18,000, but with all of their expenses it wasn't going to last long. it was, as she describes it, a pettry fiing time. >> very scary. it was -- we have four children, a mortgage, middle-income america. >> what did kim do? get a job? nope. she took that money and invested most of it in an idea she had to make low fat bagels. a gamble to say the least. >> here was our one opportunity and it was either sink or swim, do or die. >> of the two outcomes, you certainly would have been safer betting on failure. kim had no business experience

and did not have access to deep pockets. but what she did have was a keen sense of the market. she had lost more than 150 pounds and had become a bit of a celebrity to others wanting to do the same. >> what matters is the only way you're never going to lose weight is if you stop trying. >> she had an amazing won't take no for an answer kind of at today. she knocked on door after door until someone finally said they'd sell her bagels. by the time i met her, the company was doing well. but it was early days. her son's room was the stock room. well, that was then. ♪ >> and this is now. >> trying to enlist this incredible change in our lives that we all really want to go from somebody who's not healthy to somebody who is healthy. >> this is kim's weight loss center in shelton, connecticut. complete with meeting room, private dietitians, a commercial

kitchen and a cafe. when i walked in, the first question i had was -- where are the bagels? >> it's really hard to be the little guy in a big sea of bagels or other products. i wasn't getting personally from it what i get now. and that's really important in keeping yourself going. >> kim had made a drastic change in the direction of her company. and the same kind of self-confidence combined with the knowledge of the market that propelled her to start the bagel company, inspired her to put those same bagels on the back burner. >> i don't know the food business that well. weight loss, it's in every pore of my body literally. >> you are doing something wonderful for you. >> while she still makes the bagels and other low fat packaged goods kim concentrates on helping others go through the same journey she went through. >> that's donna. wave. what's your total weight loss? >> 112.4 pounds. >> 112.4 pounds. >> and sue, you've lost?

>> 45. >> it was a nerve-racking transition from primarily selling bagels to building up her weight loss customers. >> there was a big lag there between being able to get the business coming in for the memberships and losing -- as the food business was going down. it was a scary time. but i guess i've always done things by what i feel in my gut and i couldn't not do the other. >> as you watch her in action though, you can see why she believes she could do it. >> we want to eat this way and we want to look this way and it's impossible and we're torn in two. >> kim is just a terrific motivational, you know, personality. she's just great. she cares so deeply about people and their lives and what they want and helping them achieve their goals. >> it feels to me that you believe so wholeheartedly in your company and in your mission that people almost can't help but believe in it too. >> i know. i agree. i do believe it with all my heart and it's infectious.

>> do you ever doubt yourself? >> not really. like i question and i ask. i've got great supporters, counselors. >> her enthusiasm has spawned a community of people who depend on each other. >> we exercise together, we eat together, we have an on-line community that we talk to each other on-line. >> and spread the word about the company. >> in ohio, when marie goes to the doctor and he looks at her and he says, you're in a healthy weight range, what are you doing, and she tells him about it and he e-mails me and asks for some information, he starts referring to all of his clients. >> her struggle now is how it to keep up with the growth and deciding where to invest her profits. in the meetings, on-line, the packaged goods, or building out her premade meals business? >> it takes more time and it takes planning ahead, but if you're willing to sacrifice that you get to save money. >> and during the day she spends a lot of time thinking about

those decisions. except when she's up in front of her meetings. then all business issues move aside. >> when i'm standing up in front of everybody it's really all about them. i want you to know what it's like. i want you to feel how good it feels. i want you to know it's not easy but it's really simple and you can do it. >> she makes running a business seem that simple too. buzz word terms, what kim did is called a pivot. she changed the direction of her company when she saw a better opportunity. let's turn to this week's board of directors. eric is the editor in chief of "inc" and julie is a cereal entrepreneur and investors. >> great to be here. >> i said it before on the show but this woman is my favorite, my favorite entrepreneur i've met in the past seven years. she's so inspirational. it was almost summed up in that question of do you ever doubt yourself and no. she really believes that. >> it reminds me of something

that richard branson said recently, he said, no matter how good your idea is when you're starting up, 99% of people will tell you it's going to fail. it's easy to think of reasons it will fail. every entrepreneur has to have that belief because it's not easy but you have to get through it by yourself. >> julie, you are in the land of the pivot, silicon valley, where everyone starts one company and a year later the company is a totally different company. what does it take? in her case, her business was actually pretty successful. she said i can't compete with the big guys. my company will only go to here. what does it take to have the guts to say i know revenue is coming in but i'm leaving it alone and going to do something else? >> i loved seeing this because she's the embodiment of an entrepreneur to me. she is a high-risk tolerance. the pivot is essentially about having i think one of the hardest things that an ent entrepreneur has to possess is the combination of passion and

dispassion. so enough passion and belief that when people say your idea is not going to work, you charge ahead and you have that risk tolerance to do it. and enough dispassion to step back and look at the market and say, is this going to work. is it going to be a mediocre business, am i sideways and a bigger opportunity? the other thing i love, she honored kind of something -- what was deeply personal, to me the mark of a great entrepreneur, when doing something deeply personal to them. that becomes your unique insight, your unique advantage. she's the embodiment of her business. she lives and breathes it. when she says i couldn't not do this, it also speaks to something that great entrepreneurs have, which is when they have a calling they feel like it's not a choice for them. they -- they're obsessed with it and have to do it and so she really kind of just struck on all those marks. >> and yes, for her selling this, she's not selling it. she's speaking from her heart

and that's what makes it so infectious as we say. these people just want to follow her because she believes it so much. if you have a company that is not like this, something she says that's in every pore, if you have a company that you've started and you want that, you want what -- you want what kim has, but it's not in your heart the same way that is, not all entrepreneurs get to have that, how can you in essence fake it until you make it. how do you get that if it's not as internal? >> you have to find the part of it that you can focus on. whether it's who you serve, the fact that, you know, that you identify with your customers in some way or that you're doing it for your kids or your families or like some people, because someone told you you couldn't and you need to prove them wrong but you have to find that spark. this is too hard to do otherwise. >> you guys stick around. we need you a lot mr in the show. we use our smartphones for a lot of our small business needs

but is your information safe? here now are five ways to protect yourself from cyber attacks courtesy of small biz trends.com. one, set a password. this will make your data more difficult to access if your phone is ever lost or stolen. two, check your phone bill. be on the lookout for unusual behavior. this could include suspicious charges to the phone bill or suddenly decreased battery life. number three, download from trusted sources. make sure the app is coming from a legitimate provider and compare the app sponsor's official website with the app store link. four, understand permissions before accepting them. be careful about granting access to personal information on your phone. make sure to also check the privacy settings for each app before installing it. and number five, wipe data on your old phone before you donate, resell or recycle it. erase any information and reset your phone to its initial

factory settings. on april 5th, 2012, president obama opened up a whole new source of funding for small businesses when he signed the jobs act. in it was a provision to let small business owners crowd fund. let me back up for a second. crowd funding has been around for a while but there is a difference between the current form of crowd funding and the kind that was made legal through the jobs act. right now, you can list your company on a crowd funding site. for example, if you're hoping to raise $50,000 you may give people the ability it to give you anywhere from $10 to $20,000. and in return, you give them some sort of prize. not equity. a prize. a few years ago on this show we did a story on a guy who put his jellyfish tank company on the site kick starter and in return for providing funds the founder gave people one of the tanks or other prizes based on how much money they gave. well the jobs act opened small business up for a new kind of crowd funding. where instead of getting a prize you give equity in your company.

so for anyone interested in this, april 5th was an excitinging day. it's gotten less exciting because you still can't do it. the s.e.c. was supposed to come up with regulations to put this provision into effect by the end of last year. they missed their deadline and we still don't know exactly when they'll be done. sherwood nooes is the co-founder of crowd fund capital advisors that advises businesses, private equity groups and more about the ins and outs of crowd funding and eric and julie are back with us. great to see you, sherwood. >> great to see you, j.j. thanks for having me. >> a deadline has been missed, other deadlines have been missed. does it seem like this will be done by the end of 2013? >> well, we're hopeful that it will be done by the end of 2013. mary shah peer ro was never quite a fan of the jobs act or crowd funding in particular, and now that we have a new commissioner coming in, we think that it's going to cause a little bit of a delay. we know that the proposed rules are there so our goal assen

industry -- as an industry is to show up in washington, d.c., meet with mary joe white and help her get these goals out for public comment. >> do you have any sense of public timing on this? >> it depends when she's confirmed by the senate. we need to wait and see when the senate takes that up and we need to get in washington, again, and make sure that this is a priority for them. >> is there a deadline, sherwood? could this go on for five years? >> that's a really good point. congress did put 270 days in there. the s.e.c. has a reputation for missing deadlines. they've worked really hard, the staff, to get this, the proposed rules done, but it's really a political game. and it comes down to what the commissioners want to put on their plate and put out there for public commenting and when they want to do that. >> okay. julie, i want to ask you, because you've started companies, advise companies, when this does become available as an entrepreneur, do you think it's a good way to get money? >> it could be very effective way of getting money. the way i think about it, it's

the way democratizing access to capital and amplifying something that's happening in silicon valley, which is kind of an angel investing process or what we call friends and family where you kind of recruit people in your network who believe in you because when you're starting a company it's really about you and your idea. and so it's really more about people investing in you. this allows kind of access to this broader market of people. where you can not only kind of amplify through friends and family, but through a big peer to peer network. >> is there any downside? i know on the investor side there are a lot of worries investors might be fooled into giving money for something not real. for an entrepreneur who has a legitimate company, is there any downside. >> i would make crowd funding a low priority in my funding search. if you go to a seasoned angel along with giving up equity you get a lot of expertise, a network of seasoned people who probably have deep ties in ur

why industry -- in your industry to be rooting for you. with crowd funding you get mom and pop investors who probably don't know much about, aren't able to help you in a board of directors way a seasoned angel can, and you have a lot of owners you have to share ownership of your company with. you know, that may be the -- your best shot, but if you have another option, i would take that first. >> well, but there's two things. i mean there's crowd funding -- there's debt based crowd funding and equity based crowd funding. if you look at what's going to be happening in main street america, a lot don't qualify for equity based funding. it's an opportunity to go to their customers and look at them for loans. that's where i think -- >> debt based crowd funding exists with the lending club.com. ? >> and that's -- that's what [ inaudible ] does as well. >> right. but in a limited capacity. what the jobs act does is open it up for more people to participate. >> and what is the limit again?

a million dollars you can raise? >> it's a million dollars per year. >> okay. so for anyone who has the kernel of an idea, hoping this gets through the s.e.c., what should they be doing to prepare themselves, assuming they don't have access or don't want to angels, think they want to use this? what should they be doing to prepare themselves? >> you can't crowd fund without a crowd. the number one thing you need to start doing is building your social network if you haven't already done so. the way in which you're going to get people to these platforms, is by linking in your facebook, your twitter, linkedin accounts to them and solicit them. you need to build a robust crowd to raise capital from them. >> exactly what julie said as well. sherwood, thank you for joining us. i'm sure we're going to be speaking to you a couple more times before this gets through the s.e.c. >> i hope so. i look forward to this going live. >> when we return, we answer some of your business questions on the topic of funding including getting second and third round financing and

finding investors when going from wholesale to retail. and, for fat tuesday, today's elevator pitchers say let the good times roll with their line of fatty s ty sunday pretzels. we've all had those moments. when you lost the thing you can't believe you lost. when what you just bought, just broke. or when you have a little trouble a long way from home... as an american express cardmember you can expect some help. but what you might not expect, is you can get all this with a prepaid card. spends like cash. feels like membership.

earlier in the program, we profiled a woman who launched a company called kim's light bage bagels. today's elevator pitchers took the exactly opposite marketing stance when naming their product fatty sunday. >> hi. i'm ali, ceo and co-founder of fatty sundays and could. >> thank you. >> i'm lauren i'm a cfo and another co-founder. >> can we eat these. >> absolutely. these are for you guys. >> thank you. >> my sister lauren and i sell naturally flavored chocolate covered pretzels. we've been able to reinvent the sweet and salty snack with flavors as peanut butter and toffee crunch. this snack makes the perfect event favor or corporate gift and can be customized. retails for 6.25 and purchased at our on-line store.

and just closed up our first successful pop up so shop at the union square holiday market. our pretzels can be found at the trump hotel in chicago chicago and the king & grove in williamsburg, brooklyn. >> we're seeking an investment of $300,000. this is for employees to expand our operations and a food broker. you can learn more about us on our social websites and also right now our sale's going on at fab.com so go ahead and check that out. >> you guys did a good job promoting these pretzels right here in brooklyn? >> they got everything in the pitch and in the pretzel. it's really good. i have to say whenever i think about a company that's starting something like this, i think krispy kreme, i'm going to lose all my money. the problem with doughnuts or

with chocolate-covered pretzels as good as they may taste see're basically talking about dough to dip in something. a lost companies can do it including bigger companies. so what i would want to see in a pitch is some kind of asset that you have that is unique, that would keep anyone else out like a distribution chain that you have locked up like maybe this hotels thing. the other thing i would like to see is how am i going to make money as an investor? presumably you'd sell the company in the future and to whom and what company would about buy you to make chocolate-dipped pretzels themselves. >> julie, knowing an elevator pitch is often quick, is there anything they could have done there in a sentence or two. >> you struck on all the measures i usually look for. people, your energy's good. you clearly love your product. the product's great. a lot of companies forget to actually demo their product.

you did that right off the bat, which is great. customers. you've got really nice customers and distribution. what i would have loved to have heard is how well you're doing, how far you've gotten on how little. how capital efficient. and what you're going to do with the 300k, how far it's going take you and the biggest thing is how big is this going to get and to underscore eric's point, competition. when you talk about your product, you want to talk about what's unique, what's the sustaining differentiation, why if someone doesn't knock off our product hor we go yobld that, or do we expand in brand. >> the moment of truth, base odden what you heard today, would you take another meeting or what you tasted today? >> yes. as long as they brought the pretzels. >> you were going to say the same thing?

>> did o'. >> thanks for coming on our show. if you want feedback on your chance of getting interesting investors, you know what to do. send us an e-mail at 'em 'em. please include a story of what you do. you never know, smeb out there watching the show may be interesting in helping you. it's time now to answer some of your business questions. eric and julie are with us again. the first is about switching gears and heading in a different direction. >> we've been 25 years in the wholesale liquidation business and we're spearheading into retail and i need capital investment and being that it's a different industry, i don't really know where to start. >> any ideas? >> well, it can be tough to get funding when you're moving into a new industry. so rather than try to convince a

lender based on what you think is going to happen, try to borrow against what you have. asset-based lending. ford actually came back to the way it was fwh 2007. so there's going to be demand for that. on the equity side, maybe he can partner with someone who knows that retail business and that can be a big help. >> any other suggestions? >> i think that in the earliest stages when you've got a source of revenue business, finding a way to fund the early stages through that until you've sort of taken the early risk out of the equation and understand the market you're in and that gives you the leverage to go. >> that's exactly right. improve yourself. okay, let's move on to the next one. this is from camp he writes where do i get a second and third round financing at reasonable rates? why are you both landing?

>> it's kind of no man's land out there. it's the dead zone. but, look, i would go back to the people who gave you the first round company. they know you. your company is stronger. if it isn't, make sure you pretty it up before you ask for second round funding. >> we did a story who just assumed the bang would give them another loan. they got the first loan, paid it on time, and the bank said number but you're still both laughing. but basically the answer is it's hard. >> it's hard. back to reasonable rates. whether you're raising venture money or money from a bank, the only way to get a best deal is let the market price it. creating a market, understanding what your sources of capital are and beating the streets. and it's tough because what's happened is a lot of things have gotten funded in the market and now the second and third stage investing can -- the investors

can step back and kind of say, okay, we're the breakout winners, so we'll invest in those. if you get a lot of money and others are left hanging. >> moving on to the next question. >> when you're spending marketing dollars or two different channels, when should you start the shift investment from one versus the other, what type of data points should you be looking for? >> this is all about measuring, right? if you're measuring, it will be very clear. how much better does one have to be before you say, okay, i'm moving all of my money over? >> we live in a world of multi-channel marketing. so i don't think it's about one versus the other and we have a highly measurable way of measuring efficacy. diversified approach to channel marketing is really important and the more measurable, the more attractive because you know how you're spending your money. i think it's less about that and more about what's performing.

sometimes you'll find your business lends itself to one particular channel that's real breakout and then you say i'm going to put all of my dollars behind that. >> that's interesting, right? really it's not that this is better than this. it's just that you have the wrong message there. >> that could be. that could be. you know about the old saying, i know half of my advertising dollars are wasted, i just don't know which half. make it your business. you need to be intimately familiar with your metrics. if you don't have a website, ask your customers every time they come in your door, find out what wrought you here. >> thank you, guys for all of your advice. this is really helpful. if any of you have questions for our experts, go to our website. the address is openforum.com/yourbusiness. once you get there, hit the hink. again, the address is

openforum.com/yourbusiness. or i'm us at yourbiz@msnbc.com. the logistics can be everything. check out our website of the weed. the resume tore.com helping you. it has free online boards and promotes your vacancies. you can easily track, rate, and organize from start to finish all from one clean interface. to learn more about today's show, just click on our website. it's openforum.com/yourbusiness. don't forget to become a fan on the show. next week it all started when two mothers offered to help

their daughters decorate their school lockers. >> on the first day of school the phone started ringing from other parents wrrks do you get that stuff, great, now my daughter wants it. >> today they've got national distribution, factories in china and millions in sales. next week find out how they did it step by step. until then i'm j.j. ramburg. and remember we make your business our business. we've all had those moments. when you lost the thing you can't believe you lost. when what you just bought, just broke. or when you have a little trouble a long way from home... as an american express cardmember you can expect some help. but what you might not expect, is you can get all this