Marcus Lemonis, creator of CNBC’s The Profit, is a man who knows business. If you’ve never seen the show, Marcus is an entrepreneur who fixes small business.
He fixates on what he calls the 3 P’s of any successful business: People, Process, and Product. Marcus puts his own money on the line to save struggling small businesses and makes a profit while doing so.
He’s also the chairman and CEO of Camping World and Good Sams Enterprises, with over $3 billion in sales in 2013.
Here are 10 Success lessons from Marcus Lemonis – “The Profit” for entrepreneurs,
1. People, Process, Product
The baseline of Marcus’ philosophy, Marcus focuses on making sure these 3 areas are perfectly in sync. For People, he makes sure that everyone in the organization is in the position that is right for them, and that business has exactly the right amount of team members in exactly the right job roles – no more, no less.
From a process perspective, Marcus is totally committed to optimizing efficiency. This means minimizing waste, running numbers on equipment to see if its smarter to invest in better manufacturing products (it usually is), and really living by the time is money principle.
Lastly, the product has to be exceptional and unique. The synthesis of these 3 principles typically results in a successful business, and is repeated on pretty much every episode.
“If you guys can’t communicate as business partners, you can’t be in business together. If you can’t tell him what’s wrong, then you shouldn’t be in business together.”
It’s no question that communication is crucial for any relationship to succeed. But it’s even more important when running a small business. Because there are so many moving parts, you and your business partners need to be in constant communication. As Robert Kent, former dean of Harvard Business School has said, “In business, communication is everything.”
3. Eliminate inefficiency, Increase margin
Middle men, too many layers of management, old / cheap equipment, and trying to do something that someone else can do better are all things to watch out for.
Eliminating these inefficiencies can drastically improve margins, often times being the difference between losing money and making money.
While some can be an investment up front (specifically buying new equipment), the long term benefits are well worth it when you look at how much money you save over the long haul.
4. Be vulnerable
Marcus Lemonis believes that the key to success is through vulnerability. A leader who is able to establish a relationship and a connection with employees and customers will not only have a more successful business but a more successful and fulfilling life.
“The truth in life is about connecting to people through vulnerability,” Lemonis said at iCONIC LA. “Life is not—and business is not—just about business. It’s really about people. It’s about establishing relationships.”
5. Inspect what you expect
As an entrepreneur, it’s really easy to delegate and forget. This is where a process of checks and balances ensures quality control.
When entrepreneurs fail to actually look at the product before it goes out the door (either themselves or through a quality control system), that is when the product can become less than ideal. Always have a system and process in place to check the product before it goes out the door. Inspect what you expect.
6. Be passionate
“A successful business owner subscribes to one theory: They show up first, and they leave last”
When a leader lacks passion for their business, their attitude trickles down to the employees. Why would anyone want to work for a leader who is not even interested in their own business? This is a typical trait of the founders of a company.
But you may see this in the successors of a family business. In trying to keep the business in the family, you have fewer choices for your succession plan, and as a result you may end up handing over the company to a child or relative who lacks the passion to lead.
7. Know your numbers
Any entrepreneur that doesn’t know all of the core metrics of their business is bound for failure. First off, you need an accurate balance sheet. Secondly, treat cash as king, protect it and make sure your accounting and intake for payments is 100% accurate.
If you watch the episode “Planet Popcorn”, you’ll note that they do these first two terribly. Thirdly, know your numbers such as cost per acquisition, cost of goods / making your products, ideal profit margins for your industry, etc.
Other things to know are, if you’re looking at retail locations, what are the number of people in a 1-mile, 5-mile, and 10-mile radius (Standard Showdown). These are valuable items to know as well.
8. Care and be respectful of people
This is a given as a necessity in business, yet so many people fail miserably. An example that immediately comes to mind is the episode “Worldwide Trailers”, where the owners of the company got into a huge yelling match at the end of the episode, even bringing in the employees of the company to witness it! Not only did they disrespect each other, they disrespected their employees and their new partner as well.
Not to anyone’s surprise, Marcus walked out the door in the middle of the fight and called the deal off.
9. Business isn’t personal
“It’s not about a friendship, it’s a business. This is about putting people in the right place.”
Doing business with friends and family can be tricky business. In fact, many advise against it. Even being roommates with your friend can ruin your relationship, so it’s not surprising what would happen when livelihoods are at stake.
This is not to say that doing business with friends or family cannot be done. As long as they see each other as business partners and can take constructive criticism, it’s possible.
10. Some people just can’t be changed
Marcus has had to deal with entrepreneurs that were stubborn to no end. He was smart to leave all of those businesses, and while he had some financial losses incurred from being involved with those businesses, the fact that he cut those losses while they were still relatively low speaks to his business smarts.
You can change process, you can change product, but you can’t always change the people. And without the right people in place, the business will eventually torpedo.