Camping World CEO Marcus Lemonis might not seem the most likely person to host a reality show but his program The Profit tells a different story. Now in its fourth season on CNBC, The Profit finds Lemonis visiting small businesses across the country with the hopes of making an investment not only in the companies but also in the entrepreneurs themselves. As he says in the opening of each episode, he does it to save jobs and he does it make money.
Like any human, Lemonis is not infallible and sometimes gets burned by his well-intentioned investments. However, that doesn’t mean that he doesn’t know what he’s doing. In fact there are many lesson to take away from Marcus’s teaching that go beyond his “people, process, and product” mantra.
Here are five important lessons that Lemonis and The Profit have to teach small business owners:
1) Know your numbers
You’ve probably heard it said again and again from Marcus Lemonis, to the investors on Shark Tank, and many others: knowing your numbers is key to running a successful business. Unfortunately, it doesn’t seem like all of the entrepreneurs Marcus meets on The Profit got the memo, as many are unable to answer his fundamental financial questions. In fact some of the owners on the show don’t even fully realize how much trouble their businesses are in.
When running a business it’s essential that you know how much money you’re making and how much you’re spending. For example a common question that Lemonis will pose to owners is how much it costs to make each of their various items and what the profit margin is. Along that same line you should also have an idea of what items are your best sellers (with any luck the high-margin items will also be the best sellers). If you don’t know these answers, now is the time to learn them.
It’s also critical that you keep track of all of your profits, losses, and debts. However business bookkeeping is not something to be taken lightly so don’t feel like you need to do it all by yourself. If you do need to hire some accounting help, go for it — just be sure to follow up with that person often and make sure you’re well informed about how the business is performing.
2) Invest in efficiency
As mentioned, one of Marcus’s three P’s is “process” and being efficient is a big part of having a successful process. Many times The Profit features entrepreneurs who have let their equipment fall into disrepair in an effort to save money or who have put off buying a more powerful piece of machinery that would allow them to scale production because they were scared of the upfront cost. Similarly the show often finds businesses that keep pushing products that aren’t selling, while failing to capitalize on the ones that are.
Efficiency comes in a lot of shapes and sizes. For one it’s essential that you and your team have the tools needed to do your jobs. This means that obsolete or malfunctioning equipment should be replaced as soon as possible. It may be a big expense up front but making the investment will often pay dividends in the long run. In fact, before committing to a big purchase, take the time to calculate the ROI (return on investment) you can expect and how long it will take for the purchase to “pay for itself.”
As mentioned earlier, knowing which of your items are selling and which aren’t is a major priority when running a successful business. Because of this you’ll also want to invest in POS software that allows you to track this information easily and allow you to make decisions about what stays and what goes. Putting time and money into products that aren’t selling is inefficient, wasteful, and could ultimately doom your business.
3) Have a clear chain of command in place
Too many times Marcus has arrived at a business only to learn that no one is being held accountable for operational shortcomings due to a confusing chain of command. Sometimes you can even see him cringe when someone tells him they “do a little bit of everything” or an employee says they don’t know whom exactly they’re supposed to report to.
In the early days of a new venture many small businesses operate under an “all hands on deck” approach, which may require everyone to simply do what they can to keep things afloat. While camaraderie and flexibility are always appreciated, it’s important to set up a managerial hierarchy and define the roles of your partners and employees in order for your business to function properly. Your team will need to know whom to turn to when they have questions, need help, or have suggestions. Additionally, when problems do arise, knowing who is responsible for fixing them is a must so that issues don’t get overlooked or go unresolved.
It should also be noted that your chain of command doesn’t have to be set in stone. If something isn’t working, feel free to make adjustments — just make sure to let everybody know. Remember: when it comes to running a business, communication is key.
4) Taking on a partner or investor isn’t for everybody
As Mr. Lemonis’s track record shows, not everyone is fit for having a partner in their business (at least not one who’s “100% in charge” every time). In addition to the handful of times when an entrepreneur butted heads with Marcus, forcing him to walk away, there have also been occasions where Lemonis has had to find a way to sideline or buyout a toxic partner who invested before he did. Unfortunately these are some of the realities of letting other people into your business.
Of course there are also successful business partnerships but they take work. First its important that you and any potential investor discuss more than just money — you need to talk about your business principals, what you need help with, and what they’ll bring to the table aside from a check. In some cases you might prefer a “silent partner” who trusts you to run the business your way. On the other hand you might choose a strategic partner who can help fill in some of the gaps in your knowledge. Either way it’s paramount that you find what you’re looking for before entering into what is essentially a business marriage.
5) Explore expansion carefully
Obviously when Lemonis goes through the applications for The Profit one of the things he’s looking for is major growth opportunity. As a result he often features businesses with multiple locations and even some franchises. However, as he tends to find out, just because those stores are open doesn’t mean they’re succeeding. More often than not we the viewers soon learn that part of the company’s problem is that they expanded too quickly and are now on the hook for those fledgling locations.
When a new business is successful it can be tempting to double (or triple, or quadruple, etc.) down by opening additional stores or locations. While that line of thinking might make sense to some, the truth is that there’s probably more work to be done on store #1 before a company is ready to expand. You should also keep in mind that, just because one location succeeds, doesn’t guarantee another one will.
Before you decide to expand or franchise your business, make sure your current location is functioning at 100%. Only then should you consider what your next steps should be in terms of franchising or opening more stores.
While things might not always work out his way, there’s no doubt that Marcus Lemonis is a business expert. As a result his CNBC show The Profit is much more than a reality show — it’s a free education in entrepreneurship. If you can master these five lessons that the show teaches, you’ll be on your way to making your small business that much more successful.
This article was written by Jonathan Dyer from Business2Community and was legally licensed through the NewsCred publisher network.
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