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7 Leadership Lessons from ‘The Fixer’ 27 Marcus Lemonis

The American Dream can quickly turn into a nightmare, as proven in CNBC’s The Profit, which has achieved a somewhat cult-like status since airing in 2013. In each episode, host Marcus Lemonis acts as a “fixer,” investing his own money in floundering small-to-medium sized businesses.

Unlike the business-themed reality show Shark Tank, which focuses mostly on tech-driven startups looking for investors, The Profit spotlights family-owned or closely held businesses that need investment not only for the company, but also for the entrepreneurs themselves.

In each episode, Lemonis, who is the chairman and CEO of Camping World and Good Sams Enterprises – which generated more than $3 billion in sales in 2013 – demonstrates his entrepreneurial savviness through a number of leadership lessons.

“People want to be led, and the fact that the employees don’t know who’s in charge makes the company like a rudderless ship.”

In the beginning days of a company, it’s very likely that everyone is wearing multiple hats in an “all-hands-on-deck” kind of culture.

When there are too many middle men and women and no clear chain of command, however, quality control is often sacrificed in the production process. As the business grows, someone needs to be held accountable, or problems will begin slipping through the cracks.

In an episode spotlighting Pennsylvania-based design company Precise Graphix, Lemonis realized that there was no clear leadership since the company’s two co-founders – brothers Dean and Keith Lyden – each owned 50 percent of the company. As a result, employees weren’t clear on who they should report to and the business wasn’t able to function efficiently.

“Your balance sheet is upside down, your process is a disaster, the warehouse is a mess, and accountability is missing in this business,” Lemonis said in the episode.

In order to turn Precise Graphix’s situation around, Lemonis put the brothers in charge of different parts of the company – Keith running the business side and Dean leading the design team. This created accountability and forced each brother to take ownership of their respective tasks within the company.

“Don’t disrespect your people.”

A leader who is able to establish relationships and gain people’s trust will go far. In one episode on the The Profit, Lemonis visits tech accessory startup The Casery in what he called “one of the most explosive episodes” he’s ever done.

In the episode, CEO Matthew Harlow “does whatever he pleases,” Lemonis said, and refuses to consider others’ perspectives – even his co-owners Skyler LeCroy and Charlotte Hennington. Not surprisingly, by the time Lemonis comes to the rescue, the two already feel demoralized by Harlow.

“If the company is going to grow, you have to be able to hire people and respect what they’re doing,” Lemonis said. “Because, ultimately, what you’re going to do is you’re going to break morale. And once morale breaks, particularly in the design department, there goes your creativity.”

Another insidious way of disrespecting employees and ruining morale is micromanaging your team. In another episode, Lemonis visits men’s clothing company Tankfarm & Co. in southern California and discovers that John Anderson, one of the brothers running the business, was unable to give up control over many aspects of the company. In fact, John’s overly controlling management style broke the business and contributed to its suffering sales. In one instance, Lemonis witnessed John cutting off his co-owner and brother, Mike, mid-sentence while both were speaking to a client.

In the end, it all comes down to respect. When bosses micromanage their people, it can create a work environment where employees feel undervalued. This quickly becomes toxic and ruins morale and productivity, which ultimately hurts the business’s bottom line.

 

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“It’s not about a friendship; it’s a business. This is about putting people in the right place.”

In a stress-inducing episode, Lemonis visits all-natural cleaning product company, Eco-Me. The company was started by two life-long friends and grew from one small do-it-yourself cleaning kit to a line that includes 17 products sold by major retailers such as Whole Foods Market and Target. While the company generated a half a million in sales with only six employees, it also acquired nearly $1 million in debt.

After making some transformations to the production process, Lemonis concluded that one of the co-founders, Jennifer Mihajlov, who heads up the sales team, was not qualified for the job. After his suspicions were proven right during two occasions when she failed to impress when presenting Eco-Me’s products in sales events, Lemonis informed the two co-founders that Mihajlov was not the right person for the job. The conversation got heated until Lemonis reminded the two life-long friends that business is about putting the right people in place. The three agreed that Mihajlov would receive more sales training. At the end of the episode, they saw the company positioned for future growth.

“If you guys can’t communicate as business partners, you can’t be in business together.”

There’s no getting around it: good communication is critical in any relationship. In business, communication is everything. In an episode in season 1, Lemonis stepped in to fix a broken process in New York-based CarCash, which pays customers cash, on the spot, for their used vehicles.

The business thrived when it opened in 1977 with Bruce Baron in charge, but since the 2007 recession and after Bruce passed away, his sons Jonathan and Andrew struggled to keep the business in profit-generating margins. By the time Lemonis entered the scene, CarCash had $200,000 in losses, $200,000 in debts and sales were down 70 percent compared to the previous year.

Lemonis discovered the reason behind the business’s struggling numbers: the two co-owners and brothers, who each owned a 50/50 stake in the company, had a hard time communicating. In fact, the older brother, Jonathan wasn’t even open to hearing his younger brother’s ideas, which put a strain on their relationship.

“Integrity is the only thing in business. So, you can be very wealthy and you can be very smart, but if you don’t have your word (and) you don’t have integrity, none of the other stuff is worth a damn thing.”

In a service-first world where customers trust word-of-mouth reviews more than advertisements, a business owner’s word is their everything. In one episode, Lemonis visits multimillion dollar business Planet Popcorn, which has a huge contract with Disney. The company was started by Sharla Mcbride in 1999 with $250 and a single cart. By the time of Lemonis’s visit, the company had 30 employees, three flavors and annual revenue of $2.5 million. Still, it struggled to turn a profit and was currently in debt.

While Lemonis found it strange that a company that generated so much in revenue and had $400,000 in profits had no cash to show for it in the bank, he loved the products and advised Mcbride to consider launching an organic brand and a website. However, after discovering that Mcbride attempted to buy the website domain that he had already acquired, Lemonis decided to walk away from the deal, stating that he questioned Mcbride’s integrity and without it, nothing else mattered.

“If you don’t know your numbers, you just don’t know your business. If an investment is going to be made, numbers are everything.”

It doesn’t matter how well your business is doing or how deep you’re in the trenches on a daily basis — if you don’t know your numbers, you don’t truly know your business. That’s one of the first things Lemonis does in every episode of The Profit: getting the numbers right so he can identify which products are selling. Next, he gets rid of inventory that isn’t selling and creates an inventory system to track orders and improve process flow.

The episode featuring Mr. Green Tea is different from many others on The Profit in that Mr. Green Tea isn’t struggling. Launched in 1968 by Danto Emanuele, the family-run ice cream business that supplies to Asian restaurants in New York generates $2.5 million in revenue, and Danto’s son, Richard (who now runs the business with his own son, Michael), lives a comfortable life.

While their business is safe for now, Lemonis believes that there comes a time when calculated risks are necessary to stay ahead of the competition — and he believes it’s that time for Mr. Green Tea.

Lemonis advised Richard and Michael to invest in their own factory. While Richard prefers to play it safe, Michael is willing to take risks so their small business doesn’t get pushed out of the competition by bigger corporations.

In order to persuade his father to take some risks, Michael presents Richard and Lemonis with estimates for a factory renovation. However, when the architects and engineers started working, the actual costs were closer to $1 million — a lot more than the $600,000 Michael originally estimated. In this episode, we see Lemonis advising Michael on how important it is to know your numbers, especially when you want to take smart, calculated risks.

“A successful business owner subscribes to one theory: They show up first, and they leave last.”

Owning and running a successful small business is no easy feat. There are a lot of late nights and early mornings. You’re going to have to sacrifice a lot of rest and important moments in your life. The only way you’ll be able to keep going is if you, frankly, love what you do and that the people you hire are inspired by your vision.

How does this work? According to Lemonis, passion is trickled down to employees when leaders get in the trenches themselves. If you’re not willing to do the dirty work yourself, don’t ask other people to do it.

In one episode from season 1, Lemonis visits high-end florist and gift shop Jacob Maarse Florists in Pasadena, Calif. It’s been a successful business since opening in 1961, but since namesake Maarse died in 2010, it’s failed to turn a profit. The business is also several hundreds of thousands of dollars in debt, despite generating $3.6 million in revenue.

In order to implement Lemonis’ suggestions to upgrade delivery vehicles with the latest technology and adjust the price of flowers, the shop closed for some time and planned for a grand re-opening. On the day of the reopening, everyone was hard at work except for Jacob’s son, Hank, who was nowhere to be found. Lemonis considered Hank’s actions to be disrespectful, and believed he sent a message that he didn’t believe in the business. How can you expect others to believe in your endeavors when your actions suggest you doubt yourself?

The bottom line

Whether you’re running a mom-and-pop shop or the next big app, the American Dream involves good leadership. Without it, employees may lose sight of the vision for the business and have difficulty staying motivated and performing their best. Good leadership also provides purpose behind the business and communicates to customers why you do what you do, which can give you a huge leg up on the competition.

For Lemonis, these leadership lessons are usually fixated on themes surrounding what he calls the “3 P’s”: people, process and product.

 

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