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* It doesn't matterwhere I've been*
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* It doesn't matterhow I got this feeling*
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* I'll be alright*
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Lemonis:
I'm here in Salt Lake City,
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and I'm going to a business
that, quite frankly,
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I never thought I would come to.
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It's called Harvest Lane Honey,
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and it's
a multigenerational family
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that makes beekeeping kits
that they send to your home.
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But this is going to be anything
but a sweet deal.
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Rhonda: Keep your feet stomping
when we go over there.
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They do like to crawl
up your legs.
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Lemonis: Rhonda.
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[ Laughter ]
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Hol--
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The business
has lost $7 million.
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The business is insolvent.
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Mindy: Maybe I'm not
the right person to run this.
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Lemonis: To run the company?
Mindy: Yeah, I hate it.
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I hate being the C.E.O. of this.
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Lemonis: You do?
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Mindy: Yeah.
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Lemonis: Our deal doesn't
look like it's possible.
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I'm Marcus Lemonis,
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and I risk my own money
to help businesses.
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I love investing
in American businesses.
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Woman: These people are here
because they care.
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Lemonis:
It's not always easy,
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but I do it to create jobs,
and I do it to make money.
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Do we have a deal?
Let's rock and roll.
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Man: Yeah!
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Lemonis:
This is "The Profit."
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**
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Mindy: I am Mindy Waite,
and I am the C.E.O.
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and one of the founders
of Harvest Lane Honey.
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We manufacture all the hives
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and woodenware
for backyard beekeeping
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and we sell everything
that they need from the bees
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to the equipment
to the protective clothing.
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Lemonis: Like most businesses,
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Harvest Lane Honey's business
was born out of necessity.
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Mindy: My husband and my mom
were like,
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"Hey, let's be beekeepers."
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Rhonda: Mike and I are the other
half of the business.
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Jason and I just wanted
to pollinate the world.
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Mindy: We have 34 employees
working for us,
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but it literally started
in our garage in 2008.
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From there,
it's just grown rapidly.
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And we're in all 50 states
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and we're in six different
countries throughout the world.
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Lemonis: But as the business
grew, so did their debt.
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And now everyone is looking
to Mindy for guidance.
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Mindy: Dad and I have been
working on price increases.
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Jason:
Glad you're on it, then.
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She is a queen bee.
There's no doubt about it.
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Lemonis: But without a clear
plan or solution in place,
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they've now called me.
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You got to not freak out.
You got to not freak out.
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Now, we know there's
an environmental issue
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00:02:30,250 --> 00:02:33,353
around the world
with bees becoming extinct.
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What I worry about
more than that
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is how generational businesses
can also become extinct.
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Mindy: Hi.
Lemonis: How are you?
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Mindy: Nice to meet you.
Lemonis: I'm Marcus.
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Mindy: I'm Mindy.
Lemonis: Nice to meet you.
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Mindy: Yeah.
Jason: Jason. Nice to meet you.
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Lemonis:
Jason, nice to meet you.
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Mindy: Yeah.
Lemonis: Are you guys a couple?
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Mindy: Yeah. This is my --
This is my husband.
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Lemonis:
So, who started this business?
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Mindy: Jason and my mom started
it just getting into beekeeping.
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We actually sell the bees
and we sell all the equipment,
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everything that you need
to be a beekeeper.
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Lemonis: I mean, isn't there
enough bees in the environment?
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00:03:04,417 --> 00:03:05,919
Mindy: No. Go ahead.
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Jason: So the bees have been
declining over the years.
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Lemonis:
She gave you permission to talk.
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Clear that up, okay?
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Mindy: I felt so bad.
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Lemonis:
So who owns the business?
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Mindy: I do with my mom.
So we're 50/50.
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Lemonis: So your mom,
does she also work here?
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Mindy: Yeah, she is here.
Do you want to meet her?
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Lemonis:
I would love to meet her.
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Mindy: Yeah. Come on down.
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This is kind of our beginnings.
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We were selling direct
to the consumer there,
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and we pivoted in 2013
and began selling to retailers,
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farm and ranch stores
across the nation.
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True Value is one of them,
Tractor Supply.
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Lemonis:
Who runs the business?
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00:03:37,517 --> 00:03:39,319
Jason: Well, that'd be Mindy.
She's the C.E.O.
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Lemonis:
Oh, you are the C.E.O., okay.
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And you took that from your mom,
or your mom gave it to you?
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How did that work?
Rhonda: She's bossy.
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That's why she's got it.
Lemonis: I'm sorry.
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I heard somebody say something.
Rhonda: She's bossy.
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Lemonis: Who's that?
Is that the voice of God?
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Rhonda: It is.
Lemonis: You can come out.
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00:03:54,567 --> 00:03:56,135
[ Laughter ]
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Rhonda: So I said she's bossy.
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Lemonis: How are you?
I'm Marcus.
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Rhonda: I'm Rhonda.
Lemonis: Nice to meet you.
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00:04:00,506 --> 00:04:02,508
Rhonda: Glad to meet you.
Lemonis: So she's the boss?
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00:04:02,508 --> 00:04:04,210
You're not the boss?
Rhonda: Well...
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Mindy: I've got more
of the retail experience,
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00:04:06,379 --> 00:04:08,247
so Rhonda runs the finances.
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Lemonis: Do you call her Rhonda?
Mindy: Yeah.
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Rhonda:
We do in the business.
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Lemonis: I'm gonna call you Mom
while I'm here.
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Rhonda: You can call me Mom.
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00:04:13,720 --> 00:04:15,555
Lemonis: My first impression
of this family
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is that they have a lot of
energy and a lot of enthusiasm.
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I want to make sure
that all this excitement
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that they have is translating
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into the excitement
around the actual business.
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How are you, sir?
Mike: Good. Nice to meet you.
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Lemonis: How are you?
Nice to meet you.
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And what is your role here?
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Mike: Good question.
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Lemonis: Is this your husband?
Rhonda: It is.
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He does all the legal stuff.
Mindy: Yes.
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Lemonis: How long
have you two been married?
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00:04:36,142 --> 00:04:37,710
Mike: Not long enough.
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Mindy: Oh, good answer.
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Lemonis: Aww!
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[ Laughter ]
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00:04:42,148 --> 00:04:43,583
Rhonda: 45 years.
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Lemonis: 45.
Shall we take a tour?
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00:04:45,952 --> 00:04:47,687
Mindy: Love to.
Alright, well, go on now out.
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Lemonis: Apparently
you're the leader.
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We'll follow you.
Mindy: Okay, okay.
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00:04:53,092 --> 00:04:57,096
We bring our retailers in here
when we're setting them up.
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00:04:57,096 --> 00:04:59,766
The number-one-selling item
is this.
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00:04:59,766 --> 00:05:02,268
This is the kit.
So it's everything you see here.
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00:05:02,268 --> 00:05:04,070
Lemonis: Where are they
manufactured today?
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00:05:04,070 --> 00:05:05,438
Mindy: In the back.
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00:05:05,438 --> 00:05:07,573
Lemonis: So nothing
is manufactured overseas.
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00:05:07,573 --> 00:05:09,308
Mindy: Our iron tools
and our clothing,
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00:05:09,308 --> 00:05:12,545
they come from overseas, but
100% of the hives are made here.
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00:05:12,545 --> 00:05:14,313
Lemonis: What are the margins
on this SKU?
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00:05:14,313 --> 00:05:16,049
Mindy:
Were about 50% last year.
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00:05:16,049 --> 00:05:18,451
Lemonis: And how much revenue
does this SKU generate a year?
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Mindy: Like, I'd say
$700,000, $800,000.
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Lemonis: What prevents this
from being a $2 million SKU?
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Mindy: Capacity.
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00:05:25,491 --> 00:05:27,326
Lemonis: Just capacity.
Mindy: Capacity.
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Lemonis:
And just so I can clarify,
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what is this thing doing?
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00:05:30,663 --> 00:05:32,565
This is where
the action happens.
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Mindy: So this is --
underneath that plastic,
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there's the comb
that gets built on there.
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And so the bees
create that comb.
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Lemonis:
Oh, my gosh, it smells.
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Mindy: I know.
It's good, huh?
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Mike: Just scrape it off
and eat it.
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00:05:42,809 --> 00:05:44,110
Mindy: You could eat it.
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Lemonis: Your starter kit
is your flower.
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00:05:45,945 --> 00:05:48,414
You're trying to lure
the customer into the lifestyle.
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00:05:48,414 --> 00:05:49,782
Mindy: Yes.
Lemonis: Once they see
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how easy it is,
they become addicted to it
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00:05:52,151 --> 00:05:54,320
and then they bolt on
all the other stuff.
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00:05:54,320 --> 00:05:56,089
How much of your business
is online?
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00:05:56,089 --> 00:05:58,458
Mindy: They equate to, like,
less than 10% of our sales.
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It's an area we can go into.
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Lemonis: That sucks.
We got to fix that.
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00:06:02,528 --> 00:06:05,364
There is no magic formula
to how much business
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00:06:05,364 --> 00:06:08,034
they should be doing online
compared to what they wholesale.
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In order for this business
to get more profitable,
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I would expect them to do at
least 30% of their total revenue
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direct to consumer.
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That will change
the profit profile
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of this business overnight.
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I want to see the warehouse.
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Mindy: Oh, yeah. Yeah.
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**
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**
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Lemonis: Wow.
This is a lot bigger
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00:06:34,961 --> 00:06:36,162
than I thought it was gonna be.
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00:06:36,162 --> 00:06:37,697
Mindy:
It's a big facility, yeah.
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00:06:37,697 --> 00:06:38,965
Lemonis: How many square feet
is the whole building?
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00:06:38,965 --> 00:06:40,066
Mindy: 35,000.
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We'll go back to the back
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00:06:41,334 --> 00:06:44,604
and show you where
all the magic happens.
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When the lumber comes in,
they'll cut it down into planks.
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Lemonis: Can I do one with you?
Man: Sure.
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**
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00:06:56,549 --> 00:07:02,188
**
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00:07:02,188 --> 00:07:04,157
Lemonis: Step one.
Mindy: Step one.
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00:07:04,157 --> 00:07:05,658
Jason: So from this spot,
you have an operator
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00:07:05,658 --> 00:07:07,260
that measures it,
and then he comes over here
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00:07:07,260 --> 00:07:08,694
and cuts it to length.
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00:07:08,694 --> 00:07:10,530
Mindy: He's actually servicing
that, so it's down.
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00:07:10,530 --> 00:07:13,099
Lemonis: So you're stopped.
Jason: Correct.
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00:07:13,099 --> 00:07:14,700
Lemonis: Is this where
the QC happens?
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00:07:14,700 --> 00:07:17,069
Why aren't they QC'ing it
along the way?
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00:07:17,069 --> 00:07:18,237
Mindy:
It may have been good there,
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00:07:18,237 --> 00:07:19,438
but by the time they get here --
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00:07:19,438 --> 00:07:22,475
Lemonis:
You mean from right there...
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00:07:22,475 --> 00:07:25,478
to right here,
something happens to it?
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00:07:25,478 --> 00:07:28,181
It bothers me that
in the first 10 minutes
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00:07:28,181 --> 00:07:30,049
of being
in this fabrication shop
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00:07:30,049 --> 00:07:32,318
that you're able to see
the inefficiency
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00:07:32,318 --> 00:07:34,787
without a lot of science
or study.
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00:07:36,856 --> 00:07:40,359
When you first got here,
you were like, "Um..."
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00:07:40,359 --> 00:07:44,363
I'd even want to see it be
piece 1, 2, 3, 4, pop.
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00:07:46,399 --> 00:07:47,900
How did I know
which four to get?
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00:07:47,900 --> 00:07:49,302
Jason: Just size and length.
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00:07:49,302 --> 00:07:50,603
Lemonis: But they're
not organized that way.
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00:07:50,603 --> 00:07:51,737
How would I know?
211
00:07:51,737 --> 00:07:53,306
Jason: This is our
box assembly machine.
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00:07:53,306 --> 00:07:54,674
And it should be squared
and nailed.
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00:07:54,674 --> 00:07:57,510
And that's --
Well, couple misfires.
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00:07:57,510 --> 00:07:59,212
Some of the nails --
Lemonis: That wasn't me.
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00:07:59,212 --> 00:08:00,479
Jason: No, when this happens,
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00:08:00,479 --> 00:08:02,248
we'll manually shoot it
in the spot.
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00:08:02,248 --> 00:08:04,083
Lemonis: Efficiency
is about taking your time
218
00:08:04,083 --> 00:08:05,885
and understanding
how to get more out of it.
219
00:08:05,885 --> 00:08:07,253
But when we stood here
220
00:08:07,253 --> 00:08:08,855
and started talking about
how to crank it up,
221
00:08:08,855 --> 00:08:11,858
you can tell that they hadn't
really thought about it.
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00:08:11,858 --> 00:08:14,493
I really love what you guys
are doing here.
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00:08:14,493 --> 00:08:16,495
You're providing a lot of jobs.
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00:08:16,495 --> 00:08:19,665
You are contributing
to the health of the environment
225
00:08:19,665 --> 00:08:21,067
and crops and farmers.
226
00:08:21,067 --> 00:08:24,036
But it seems like there's
opportunity for...
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00:08:24,036 --> 00:08:25,137
enhancements.
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00:08:25,137 --> 00:08:26,539
Mindy: Oh, yeah.
229
00:08:26,539 --> 00:08:28,407
We're able to put out
about 400 boxes a day.
230
00:08:28,407 --> 00:08:29,709
Lemonis: What should it be?
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00:08:29,709 --> 00:08:31,611
Mindy: Probably need
1,000 boxes a day.
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00:08:31,611 --> 00:08:34,213
Lemonis: Is there enough demand
to support 2,000 boxes a day?
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00:08:34,213 --> 00:08:35,781
Mindy: Yeah.
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00:08:35,781 --> 00:08:37,717
Lemonis: The thing preventing
you from going from 100
235
00:08:37,717 --> 00:08:40,319
to 2,000 is in the process
and the equipment.
236
00:08:40,319 --> 00:08:42,054
Mindy: Yeah. Absolutely.
237
00:08:42,054 --> 00:08:44,156
Lemonis: And what's preventing
you from having more equipment
238
00:08:44,156 --> 00:08:45,524
and the right process?
239
00:08:45,524 --> 00:08:46,459
Mindy: Capital.
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00:08:46,459 --> 00:08:47,860
Lemonis:
In this particular case,
241
00:08:47,860 --> 00:08:49,629
I'd say capital's a contributor,
242
00:08:49,629 --> 00:08:52,465
but it's not the reason
that things are inefficient.
243
00:08:52,465 --> 00:08:54,867
They have to be able
to plan things out in a way
244
00:08:54,867 --> 00:08:58,471
that doesn't have the employee
buzzing around here.
245
00:08:58,471 --> 00:09:00,339
It's not as organized
as it could be.
246
00:09:00,339 --> 00:09:02,675
Can you run a second shift?
Mindy: Oh, yeah, absolutely.
247
00:09:02,675 --> 00:09:04,644
Lemonis: Do you run
a second shift?
248
00:09:04,644 --> 00:09:05,845
Mindy: Not right now.
Jason: No.
249
00:09:05,845 --> 00:09:07,580
It's hard to find employees.
250
00:09:07,580 --> 00:09:10,683
Mindy: Yeah, Utah's labor market
is 3% unemployment.
251
00:09:10,683 --> 00:09:13,319
Lemonis: Have you ever used
a tool like ZipRecruiter
or anything like that?
252
00:09:13,319 --> 00:09:15,321
I've had tremendous success
with ZipRecruiter.
253
00:09:15,321 --> 00:09:17,023
I think that's something
we can look at.
254
00:09:17,023 --> 00:09:19,058
I'd like to maybe just sit down
and look at the financial.
255
00:09:19,058 --> 00:09:20,660
Mindy: Okay, cool.
256
00:09:20,660 --> 00:09:28,401
**
257
00:09:28,401 --> 00:09:30,503
Lemonis: So let's just
go through '19.
258
00:09:30,503 --> 00:09:31,370
Mindy: Yeah.
259
00:09:31,370 --> 00:09:34,073
Lemonis:
$2.5 million of revenue,
260
00:09:34,073 --> 00:09:36,175
about a million dollars
of gross.
261
00:09:36,175 --> 00:09:37,710
Mindy: Yeah.
262
00:09:37,710 --> 00:09:39,478
Lemonis: And then your interest
and finance charges
263
00:09:39,478 --> 00:09:41,380
are half a million dollars?
264
00:09:41,380 --> 00:09:42,915
Mindy: That's where
our biggest problem is,
265
00:09:42,915 --> 00:09:44,183
is we're servicing heavy debt.
266
00:09:44,183 --> 00:09:45,451
It's very expensive.
267
00:09:45,451 --> 00:09:47,420
Lemonis: Okay,
the net income loss
268
00:09:47,420 --> 00:09:50,389
after interest expense
of $500,000
269
00:09:50,389 --> 00:09:53,326
is just over a million dollars
in 2019.
270
00:09:53,326 --> 00:09:55,294
Mindy: Yeah.
Lemonis: And then 2020 came
271
00:09:55,294 --> 00:09:56,963
and everybody wanted bees.
272
00:09:56,963 --> 00:10:00,733
Sales go from $2,498,000 in 2019
273
00:10:00,733 --> 00:10:02,568
to $4.6 million.
274
00:10:02,568 --> 00:10:06,939
Total operating profit in 2020
is a loss of $160,000.
275
00:10:06,939 --> 00:10:08,207
Mindy: Yes.
276
00:10:08,207 --> 00:10:11,277
Lemonis: $4.6 million
losing 160 grand.
277
00:10:11,277 --> 00:10:12,812
Mindy: Yeah, we need
to increase our margins.
278
00:10:12,812 --> 00:10:14,447
Lemonis: That's an option.
279
00:10:14,447 --> 00:10:17,083
What would your margins be
if you sold more online
280
00:10:17,083 --> 00:10:18,484
directly to consumers?
281
00:10:18,484 --> 00:10:22,221
Mindy: You'd have
like 75%, 65% margin.
282
00:10:22,221 --> 00:10:25,424
But we do so much more
with the foot traffic.
283
00:10:25,424 --> 00:10:27,626
We need that revenue stream,
as well.
284
00:10:27,626 --> 00:10:30,730
Lemonis: Do you?
Mindy: Yeah, for right now.
285
00:10:30,730 --> 00:10:32,365
Lemonis:
I mean, if you're losing money
doing it, why do it?
286
00:10:32,365 --> 00:10:33,799
Mindy: True. True.
It's just running a charity
287
00:10:33,799 --> 00:10:35,768
at that point, if you are.
Lemonis: Yeah.
288
00:10:35,768 --> 00:10:37,737
Let's jump to the balance sheet.
Mindy: Okay.
289
00:10:37,737 --> 00:10:41,040
Lemonis: So the total assets
is just over a million dollars.
290
00:10:41,040 --> 00:10:42,842
Let's go through
the liabilities.
291
00:10:42,842 --> 00:10:45,077
Current liabilities of $563,000.
292
00:10:45,077 --> 00:10:46,512
Mindy:
Personal friends and people
293
00:10:46,512 --> 00:10:48,347
that we've borrowed money from.
294
00:10:48,347 --> 00:10:50,616
Lemonis: Okay.
Rhonda: The bulk of that is me.
295
00:10:50,616 --> 00:10:52,685
Lemonis:
How much of that is you?
296
00:10:52,685 --> 00:10:53,753
Jason: $300,000.
297
00:10:53,753 --> 00:10:55,321
Rhonda:
Probably closer to $400,000.
298
00:10:55,321 --> 00:10:57,223
Lemonis: Is that separate
from money you've put in
299
00:10:57,223 --> 00:10:58,424
in other areas?
300
00:10:58,424 --> 00:11:00,059
Mindy:
You're closer to $800,000.
301
00:11:00,059 --> 00:11:02,728
Rhonda: Okay.
Lemonis: $800,000?
302
00:11:02,728 --> 00:11:04,163
Mindy: Yeah.
303
00:11:06,799 --> 00:11:07,800
Lemonis: Okay.
304
00:11:07,800 --> 00:11:10,069
Accounts payable
of $1.7 million.
305
00:11:10,069 --> 00:11:12,571
Long-term liabilities --
$5.7 million.
306
00:11:12,571 --> 00:11:16,909
Mindy: So our senior lender
is -- he's at $2 million.
307
00:11:16,909 --> 00:11:20,246
And then our mezzanine
is balance of about...
308
00:11:20,246 --> 00:11:21,580
Lemonis: $3.7 million.
309
00:11:21,580 --> 00:11:27,586
So the total liabilities
are $8,174,000.
310
00:11:27,586 --> 00:11:31,223
And the total assets
are $1 million.
311
00:11:31,223 --> 00:11:36,228
So we have a shortfall
of $7.2 million.
312
00:11:36,228 --> 00:11:38,798
All the things
that we talked about today,
313
00:11:38,798 --> 00:11:41,700
it almost seems inconsequential.
314
00:11:45,104 --> 00:11:46,906
The businesses is insolvent.
315
00:11:46,906 --> 00:11:53,112
**
316
00:11:54,280 --> 00:11:55,614
Jason: I don't like debt.
317
00:11:55,614 --> 00:11:57,550
We weren't in debt
before we got into it.
318
00:11:57,550 --> 00:11:59,652
Lemonis:
So why'd you allow it?
319
00:12:04,644 --> 00:12:10,450
Lemonis: So the total
liabilities are $8,174,000.
320
00:12:10,450 --> 00:12:13,719
And the total assets
are $1 million.
321
00:12:13,719 --> 00:12:18,191
So we have a shortfall
of $7.2 million.
322
00:12:18,191 --> 00:12:19,659
So where did all the money go?
323
00:12:19,659 --> 00:12:22,328
Mindy: Into inventory
and financing losses
324
00:12:22,328 --> 00:12:24,864
really is where it came in at,
is growing the business.
325
00:12:24,864 --> 00:12:26,833
Lemonis: You understand
that what you are saying
326
00:12:26,833 --> 00:12:31,070
without realizing it is that the
business has lost $7 million.
327
00:12:31,070 --> 00:12:32,205
Mindy: Yeah.
328
00:12:32,205 --> 00:12:34,273
Lemonis:
The business is insolvent.
329
00:12:37,310 --> 00:12:39,178
I want to be an investor here,
330
00:12:39,178 --> 00:12:42,148
but I can't invest
into a capital structure
331
00:12:42,148 --> 00:12:44,650
that has no end.
332
00:12:44,650 --> 00:12:46,285
It's hard, isn't it?
Mindy: It is hard
333
00:12:46,285 --> 00:12:48,221
'cause I feel a lot
of responsibility to that,
334
00:12:48,221 --> 00:12:49,622
'cause it's like
they listened to me.
335
00:12:49,622 --> 00:12:51,691
So I made the wrong decisions,
you know.
336
00:12:51,691 --> 00:12:53,359
Rhonda: She can't take
the full responsibility.
337
00:12:53,359 --> 00:12:54,794
Lemonis: Tell her that.
Rhonda: We all went into
338
00:12:54,794 --> 00:12:57,797
this thing with eyes wide open.
Mindy: I know.
339
00:12:57,797 --> 00:13:00,900
Lemonis: I genuinely want
to be a partner here,
340
00:13:00,900 --> 00:13:04,103
but we got to figure out how
this debt's gonna get reworked.
341
00:13:04,103 --> 00:13:06,072
Mindy: Okay.
Lemonis: I can invest
342
00:13:06,072 --> 00:13:07,507
if we can get it cleaned up.
343
00:13:07,507 --> 00:13:08,941
So we have three real problems.
344
00:13:08,941 --> 00:13:11,277
We have the past-due payables
of $1.4 million
345
00:13:11,277 --> 00:13:12,778
with the overseas supplier.
346
00:13:12,778 --> 00:13:14,113
We have the $2 million
347
00:13:14,113 --> 00:13:16,516
of let's help out a neighborhood
grant money.
348
00:13:16,516 --> 00:13:19,652
And then the third
is the subordinated lender.
349
00:13:19,652 --> 00:13:21,487
Lenders keep putting in
more money
350
00:13:21,487 --> 00:13:24,457
because they're almost trying
to fill the bottomless hole,
351
00:13:24,457 --> 00:13:27,059
thinking that money's
just gonna solve everything.
352
00:13:27,059 --> 00:13:28,728
In a non-small-business world,
353
00:13:28,728 --> 00:13:31,864
I'm sitting down with the two
lenders and I'm saying,
354
00:13:31,864 --> 00:13:33,766
"Okay, what do you want to do?
355
00:13:33,766 --> 00:13:35,234
I can throw you the keys.
356
00:13:35,234 --> 00:13:37,904
I can change the name
to Who Gives a Damn Honey.
357
00:13:37,904 --> 00:13:39,372
What do you want to do?"
358
00:13:39,372 --> 00:13:42,208
If something doesn't change,
the business is closing.
359
00:13:42,208 --> 00:13:45,444
I'd like to coach you
through the plan of action
360
00:13:45,444 --> 00:13:47,880
to solve the debt problem.
361
00:13:47,880 --> 00:13:49,549
Mindy: Okay.
362
00:13:49,549 --> 00:13:51,951
Lemonis: I don't know that I can
solve $7 million worth of debt,
363
00:13:51,951 --> 00:13:53,452
but I know it's worth a shot.
364
00:13:53,452 --> 00:13:55,988
You have a good business
with a lot of interest,
365
00:13:55,988 --> 00:13:58,457
with a lot of revenue
being generated out of it.
366
00:13:58,457 --> 00:14:01,093
And $7 million
is a daunting number.
367
00:14:01,093 --> 00:14:03,396
But to walk away
seems like the easy path.
368
00:14:03,396 --> 00:14:05,364
And I love the challenge,
to be honest.
369
00:14:05,364 --> 00:14:06,899
So we'll meet tomorrow
370
00:14:06,899 --> 00:14:10,036
and we'll -- we'll try
to figure something out, okay?
371
00:14:10,036 --> 00:14:11,070
Mindy: Okay.
372
00:14:11,070 --> 00:14:19,412
**
373
00:14:19,412 --> 00:14:27,353
**
374
00:14:27,353 --> 00:14:28,688
Lemonis: There you are.
375
00:14:28,688 --> 00:14:32,091
Any luck in gathering up
the loan documents?
376
00:14:32,091 --> 00:14:33,459
This is everything.
Mindy: Yeah.
377
00:14:33,459 --> 00:14:35,161
Lemonis: These folks.
Mindy: These folks here.
378
00:14:35,161 --> 00:14:37,530
Lemonis:
Let me go study this and I'll
see you in a little bit.
379
00:14:37,530 --> 00:14:41,968
* You know I just might be*
380
00:14:41,968 --> 00:14:44,470
* A hero sometimes*
381
00:14:44,470 --> 00:14:48,507
* I'll be strongwhen you're weak*
382
00:14:48,507 --> 00:14:50,843
* And I even might fly*
383
00:14:50,843 --> 00:14:52,311
What I'm trying to do here
384
00:14:52,311 --> 00:14:55,081
is map out
what the liabilities are.
385
00:14:55,081 --> 00:14:57,083
The total is just over
$7.2 million.
386
00:14:57,083 --> 00:15:02,021
The business is 100%,
no questions asked, insolvent.
387
00:15:02,021 --> 00:15:03,589
No question.
388
00:15:04,657 --> 00:15:08,494
Okay, so what I wanted
to walk you through
389
00:15:08,494 --> 00:15:11,330
is how I want to approach
this whole process.
390
00:15:11,330 --> 00:15:13,432
So over here is loan number one.
391
00:15:13,432 --> 00:15:15,468
It's a senior lender.
It's interest only.
392
00:15:15,468 --> 00:15:17,036
It's due in 2024.
393
00:15:17,036 --> 00:15:19,438
Loan number two is Salt Lake
City-based.
394
00:15:19,438 --> 00:15:21,173
Unsecured loan number three
395
00:15:21,173 --> 00:15:24,543
is the current supplier,
$1,290,667.
396
00:15:24,543 --> 00:15:28,814
Past-due payables is about
300 grand outside of this one.
397
00:15:28,814 --> 00:15:30,049
Mindy: Yes.
Lemonis: Okay.
398
00:15:30,049 --> 00:15:32,418
Credit card -- $105,000.
Mindy: Yes.
399
00:15:32,418 --> 00:15:35,054
Lemonis: Related-party debt --
$563,000.
400
00:15:35,054 --> 00:15:36,355
I can't remember what that was.
401
00:15:36,355 --> 00:15:38,157
Mindy: It's like Rhonda.
402
00:15:38,157 --> 00:15:40,259
Lemonis:
So that totals $7.2 million.
403
00:15:40,259 --> 00:15:41,927
It's probably gonna
have to get converted
404
00:15:41,927 --> 00:15:43,229
to equity or something.
405
00:15:43,229 --> 00:15:44,797
Something's gonna
have to change.
406
00:15:44,797 --> 00:15:46,432
Because of the amount of debt,
407
00:15:46,432 --> 00:15:49,769
there's a tremendous amount of
cash that's leaving the business
408
00:15:49,769 --> 00:15:52,271
because it has to service
the interest expense on it.
409
00:15:52,271 --> 00:15:54,073
In order for this company
to grow,
410
00:15:54,073 --> 00:15:56,876
you have to limit the amount
of cash leaving the business.
411
00:15:56,876 --> 00:15:58,477
And the only way
to really do that
412
00:15:58,477 --> 00:16:00,546
is to minimize
the amount of debt it has.
413
00:16:00,546 --> 00:16:03,349
I'd like to go back
to the current lenders
414
00:16:03,349 --> 00:16:04,817
that make up the debt
415
00:16:04,817 --> 00:16:07,720
and ask them to convert
their debt into equity,
416
00:16:07,720 --> 00:16:10,823
essentially turning them into
shareholders of the business.
417
00:16:10,823 --> 00:16:15,361
You turn in your note and you
receive shares back in exchange.
418
00:16:15,361 --> 00:16:17,763
You're so buried
in all that behind you
419
00:16:17,763 --> 00:16:19,332
that you can't see straight.
420
00:16:19,332 --> 00:16:22,134
Jason: It's sickening.
I don't like debt.
421
00:16:22,134 --> 00:16:23,903
We weren't in debt
before we got into it.
422
00:16:23,903 --> 00:16:25,371
Lemonis:
So why'd you allow it?
423
00:16:25,371 --> 00:16:27,406
Jason: 'Cause Mike and Rhonda
are in it so deep.
424
00:16:27,406 --> 00:16:28,941
They have so much money
invested.
425
00:16:28,941 --> 00:16:30,609
Like, I got to
keep moving forward.
426
00:16:30,609 --> 00:16:32,945
You can't stop 'cause I don't
want them to lose their money.
427
00:16:32,945 --> 00:16:34,313
I feel responsible, you know?
428
00:16:34,313 --> 00:16:37,283
If it wasn't my idea
to get us down this road,
429
00:16:37,283 --> 00:16:38,584
we wouldn't be here.
430
00:16:38,584 --> 00:16:41,354
We wouldn't be
$7 million in the hole.
431
00:16:41,354 --> 00:16:43,756
You don't go into business
thinking you're gonna
go in debt, you know.
432
00:16:43,756 --> 00:16:45,324
You're gonna say,
"Oh, we're gonna make money.
433
00:16:45,324 --> 00:16:46,625
We're gonna make
a great product."
434
00:16:46,625 --> 00:16:48,060
But a lot of heads
are counting on you,
435
00:16:48,060 --> 00:16:49,428
a lot of families
are counting on you
436
00:16:49,428 --> 00:16:50,763
to make the right decisions
all the time,
437
00:16:50,763 --> 00:16:52,865
and you don't want
to make the wrong choice.
438
00:16:52,865 --> 00:16:54,800
Mindy: My signature's
on every piece of paper,
439
00:16:54,800 --> 00:16:56,535
so I'm 50% to blame on it.
440
00:16:56,535 --> 00:16:59,438
Lemonis: It's nobody's fault,
but it's a reality.
441
00:16:59,438 --> 00:17:02,208
And now it's a matter
of digging out of the hole.
442
00:17:02,208 --> 00:17:04,276
Ultimately, the buck
stops with you,
443
00:17:04,276 --> 00:17:06,412
with the inefficiency
of the building.
444
00:17:06,412 --> 00:17:07,847
What has changed
in the warehouse?
445
00:17:07,847 --> 00:17:11,550
Mindy: So he took box production
from 150 boxes
446
00:17:11,550 --> 00:17:13,819
up to they can push
to 400 right now.
447
00:17:13,819 --> 00:17:16,455
Lemonis: Who's in charge
of production, ultimately?
448
00:17:16,455 --> 00:17:18,124
Jason: Me.
Lemonis: Why are you answering?
449
00:17:18,124 --> 00:17:19,625
Mindy: I don't know.
I don't know.
450
00:17:19,625 --> 00:17:21,394
Jason: No, no, 'cause I probably
just look to her
451
00:17:21,394 --> 00:17:22,661
and she just
fills in the blanks.
452
00:17:22,661 --> 00:17:24,363
Lemonis: Why are you
looking to her?
453
00:17:24,363 --> 00:17:26,399
Aren't you in charge?
Jason: Yes, but it's just habit.
454
00:17:26,399 --> 00:17:29,869
Lemonis: Well, I'm wondering if
that's part of the problem here.
455
00:17:29,869 --> 00:17:32,405
Mindy: It is 'cause I feel like
I have to answer for everybody
456
00:17:32,405 --> 00:17:33,806
'cause they always look to me.
457
00:17:33,806 --> 00:17:36,742
It's just they ask for my help.
Lemonis: Rhonda?
458
00:17:36,742 --> 00:17:38,677
Rhonda: She's overwhelmed.
She's got too much.
459
00:17:38,677 --> 00:17:40,279
Lemonis: Great.
Let's get to that.
460
00:17:40,279 --> 00:17:42,448
'Cause the biggest problem
that I see here
461
00:17:42,448 --> 00:17:45,050
isn't that Mindy wants
to control everything,
462
00:17:45,050 --> 00:17:46,552
because that's
what a leader has --
463
00:17:46,552 --> 00:17:48,854
like, their instincts
are to do that.
464
00:17:48,854 --> 00:17:53,292
The biggest problem
is that you guys allow her to.
465
00:17:53,292 --> 00:17:55,060
Mindy: They make me.
Lemonis: They made you do it?
466
00:17:55,060 --> 00:17:56,595
Mindy:
Well, that's how I feel.
467
00:17:58,264 --> 00:17:59,732
Lemonis:
I'm literally taking my body
468
00:17:59,732 --> 00:18:03,169
and I'm immersing myself
into a giant beehive.
469
00:18:03,169 --> 00:18:06,338
You got to not freak out.
You got to not freak out.
470
00:18:06,338 --> 00:18:07,840
Lord Jesus, please.
471
00:18:07,840 --> 00:18:10,443
If you're looking to take
your business to the next level,
472
00:18:10,543 --> 00:18:13,948
Lemonis: The biggest problem
that I see here
473
00:18:13,954 --> 00:18:18,250
Lemonis: The biggest problem
that I see here
474
00:18:19,151 --> 00:18:21,554
isn't that Mindy wants
to control everything.
475
00:18:21,554 --> 00:18:24,490
The biggest problem is that
you guys allow her to.
476
00:18:24,490 --> 00:18:26,759
Mindy: They make me.
Lemonis: They made you do it?
477
00:18:26,759 --> 00:18:27,927
Mindy:
Well, that's how I feel.
478
00:18:27,927 --> 00:18:29,495
Lemonis: Okay, so speak up.
479
00:18:29,495 --> 00:18:31,197
Mindy: Okay, so, like,
when you look at me for answers
480
00:18:31,197 --> 00:18:34,033
and you're not clear
on what you need,
481
00:18:34,033 --> 00:18:35,367
then I have to do it
482
00:18:35,367 --> 00:18:37,403
because I feel like
I have to keep it going.
483
00:18:37,403 --> 00:18:39,638
And it's an immense amount
of pressure for me.
484
00:18:39,638 --> 00:18:42,041
Lemonis: This is real.
What's the problem, Rhonda?
485
00:18:42,041 --> 00:18:44,410
Rhonda: We each need to get back
to taking our own pieces.
486
00:18:44,410 --> 00:18:46,445
Jason: Taking responsibility
and let her do her job
487
00:18:46,445 --> 00:18:47,813
and we can do our job.
488
00:18:47,813 --> 00:18:49,348
Mindy: Jason's got to focus
on the operation,
489
00:18:49,348 --> 00:18:52,184
and we have to get more out
in that square footage.
490
00:18:52,184 --> 00:18:54,954
Lemonis: Okay, what's
the number-one dead weight
491
00:18:54,954 --> 00:18:57,957
that's choking everybody
right now in this building?
492
00:18:57,957 --> 00:18:59,725
Mindy: Our debt.
The debt's keeping us --
493
00:18:59,725 --> 00:19:01,794
Lemonis: What's your job?
Mindy: To get it off the books.
494
00:19:01,794 --> 00:19:03,329
Lemonis: There you go.
Mindy: Okay.
495
00:19:03,329 --> 00:19:05,331
Lemonis: I leave here
today optimistic.
496
00:19:05,331 --> 00:19:07,766
The whole gateway
is on that wall.
497
00:19:07,766 --> 00:19:10,202
And I know you can do it.
You got this.
498
00:19:10,202 --> 00:19:11,704
Mindy: Okay.
499
00:19:14,573 --> 00:19:18,077
Lemonis: Hey, guys, can I just
grab you for like two minutes?
500
00:19:18,077 --> 00:19:19,912
In order for me to understand
501
00:19:19,912 --> 00:19:22,381
how this debt
is going to be handled,
502
00:19:22,381 --> 00:19:24,116
I have to figure out
how to improve
503
00:19:24,116 --> 00:19:25,885
the profitability
of this business.
504
00:19:25,885 --> 00:19:27,353
If there's things
that are missing
505
00:19:27,353 --> 00:19:30,389
that prevent the production
from meeting demand,
506
00:19:30,389 --> 00:19:31,657
we have to fix those,
507
00:19:31,657 --> 00:19:34,493
or it doesn't matter
what the debt gets down to.
508
00:19:34,493 --> 00:19:37,162
The business won't be able
to pay anything.
509
00:19:37,162 --> 00:19:39,365
So the number of orders
of retailers
510
00:19:39,365 --> 00:19:42,601
wanting the awesome product
that you guys make is stupid.
511
00:19:42,601 --> 00:19:44,537
Part of the problem is,
is that I'm hearing
512
00:19:44,537 --> 00:19:47,339
that we can't produce enough
to fulfill all the orders.
513
00:19:47,339 --> 00:19:49,108
So I need you guys
just for 10 minutes
514
00:19:49,108 --> 00:19:51,677
just to show me
how to make one box.
515
00:19:51,677 --> 00:19:53,312
And I want to time it.
516
00:19:53,312 --> 00:19:58,517
**
517
00:19:58,517 --> 00:20:03,556
**
518
00:20:03,556 --> 00:20:06,325
Remember, we're trying
to improve output,
519
00:20:06,325 --> 00:20:09,495
okay, so we got to be
really efficient.
520
00:20:09,495 --> 00:20:15,434
**
521
00:20:18,137 --> 00:20:22,508
Okay, so it took 5 minutes
and 43 seconds to make that box.
522
00:20:22,508 --> 00:20:25,844
If we had the right machinery
and the right labor,
523
00:20:25,844 --> 00:20:28,480
how much time
could we trim off of that?
524
00:20:28,480 --> 00:20:31,083
Man: At least two minutes,
two, three minutes.
525
00:20:31,083 --> 00:20:33,652
Lemonis: Let's say a minute.
Let's be conservative.
526
00:20:33,652 --> 00:20:35,120
For every minute you pick up,
527
00:20:35,120 --> 00:20:37,089
how many more boxes
should you be able to make?
528
00:20:37,089 --> 00:20:39,625
Man: 150 more.
Lemonis: 150 more.
529
00:20:39,625 --> 00:20:42,194
When you multiply what they'll
pick up on a daily basis
530
00:20:42,194 --> 00:20:44,096
by the number of days
they produce,
531
00:20:44,096 --> 00:20:47,366
they would make an additional
36,000 boxes a year.
532
00:20:47,366 --> 00:20:49,335
Now, when you sell
direct to consumer,
533
00:20:49,335 --> 00:20:52,938
they sell those boxes
for about $25 a box.
534
00:20:52,938 --> 00:20:56,241
That's close to $900,000
in additional revenue,
535
00:20:56,241 --> 00:21:01,380
and at a 50% margin,
that's $450,000 of gross profit.
536
00:21:01,380 --> 00:21:04,783
All of that's generated
by just one minute.
537
00:21:04,783 --> 00:21:06,285
Alright.
Thank you.
538
00:21:06,285 --> 00:21:12,191
**
539
00:21:12,191 --> 00:21:18,163
**
540
00:21:18,163 --> 00:21:23,068
**
541
00:21:23,068 --> 00:21:25,270
Jason: Ready for this?
Lemonis: Uh, sure.
542
00:21:25,270 --> 00:21:27,072
Jason:
We're gonna feed some bees.
543
00:21:27,072 --> 00:21:29,141
Rhonda: Keep your feet stomping
when we go over there.
544
00:21:29,141 --> 00:21:30,509
Lemonis: Why is that?
545
00:21:30,509 --> 00:21:32,645
Rhonda: They do like
to crawl up your legs.
546
00:21:32,645 --> 00:21:34,613
Lemonis: Rhonda.
[ Laughter ]
547
00:21:34,613 --> 00:21:37,683
Why didn't you
tell me this before we came?
548
00:21:37,683 --> 00:21:40,185
This feels like there's got to
be some sort of, like,
549
00:21:40,185 --> 00:21:42,154
line that we're crossing here.
550
00:21:42,154 --> 00:21:45,090
And I am fearful because I don't
know what the repercussions are
551
00:21:45,090 --> 00:21:49,161
of getting stung by 1,000 bees
at the same time.
552
00:21:49,161 --> 00:21:50,929
Jason: You want to take
your jacket off first?
553
00:21:50,929 --> 00:21:53,599
Lemonis: No,
'cause it's one more layer
554
00:21:53,599 --> 00:21:55,100
that the bee has to get through.
555
00:21:55,100 --> 00:21:57,469
But in order for me
to ask the business
556
00:21:57,469 --> 00:22:00,239
to make certain changes
that they have fear in,
557
00:22:00,239 --> 00:22:02,708
I have to prove to them,
or at least fake it,
558
00:22:02,708 --> 00:22:04,109
that I'm gonna do it.
559
00:22:04,109 --> 00:22:06,712
This is as fun for you
watching me do this
560
00:22:06,712 --> 00:22:09,682
as me talk about
your balance sheet.
561
00:22:09,682 --> 00:22:12,518
Well, we want to check
every possible opening.
562
00:22:12,518 --> 00:22:14,119
Mindy: They'll just get in,
and you're gonna be like,
563
00:22:14,119 --> 00:22:16,922
"Is that bee
on the inside with me?"
564
00:22:16,922 --> 00:22:19,725
Lemonis: Who thought
this was a good idea?
565
00:22:19,725 --> 00:22:21,093
I'm literally taking my body
566
00:22:21,093 --> 00:22:24,963
and I'm immersing myself
into a giant beehive.
567
00:22:24,963 --> 00:22:28,934
So am I scared?
Yeah, I am, to be honest.
568
00:22:28,934 --> 00:22:32,071
You got to not freak out.
You got to not freak out.
569
00:22:32,071 --> 00:22:33,772
You got to not freak out.
570
00:22:33,772 --> 00:22:35,607
Lord Jesus, please.
571
00:22:35,607 --> 00:22:38,110
Jason: So this is the bee yard,
one of them.
572
00:22:38,110 --> 00:22:40,079
Lemonis: These are the boxes
we make, right?
573
00:22:40,079 --> 00:22:41,180
Jason: Correct.
Lemonis: Okay, alright.
574
00:22:41,180 --> 00:22:42,347
So that top's gonna come off.
575
00:22:42,347 --> 00:22:43,916
Oh, my gosh.
I think I saw one.
576
00:22:43,916 --> 00:22:45,150
Jason: You good?
Breathe.
577
00:22:45,150 --> 00:22:47,853
Lemonis: Am I good?
No, I'm not good.
578
00:22:47,853 --> 00:22:49,421
Jason: [ Laughs ]
579
00:22:49,421 --> 00:22:50,522
Lemonis: But I'm here.
580
00:22:50,522 --> 00:22:53,425
Jason: Let me smoke them,
calm them down.
581
00:22:53,425 --> 00:22:56,128
Lemonis: Hol--
582
00:22:56,128 --> 00:22:57,663
Look at the honeycomb on that.
583
00:22:57,663 --> 00:22:59,164
Mindy: Mm-hmm.
584
00:22:59,164 --> 00:23:01,200
They're really driving,
filling that out.
585
00:23:01,200 --> 00:23:03,235
Lemonis:
I'm sorry to ask this question,
586
00:23:03,235 --> 00:23:05,037
and I'm probably
the only person in America
587
00:23:05,037 --> 00:23:06,438
that doesn't know the answer.
588
00:23:06,438 --> 00:23:09,074
Where does the honey come from?
Jason: Nectar.
589
00:23:09,074 --> 00:23:12,044
Lemonis: So they go to a flower
and they take out --
590
00:23:12,044 --> 00:23:14,046
Jason: They get pollen
and they get nectar, as well.
591
00:23:14,046 --> 00:23:15,881
Lemonis: They swallow it?
Jason: Yes, they'll swallow it.
592
00:23:15,881 --> 00:23:17,483
Lemonis:
And then what do they do?
593
00:23:17,483 --> 00:23:19,284
Jason: And they'll bring it back
and they'll regurgitate it.
594
00:23:19,284 --> 00:23:22,421
Lemonis: So they basically --
Honey is thrown-up pollen.
595
00:23:22,421 --> 00:23:24,089
Mindy: Literally.
596
00:23:26,458 --> 00:23:29,194
Lemonis: And you guys thought
this was a good business.
597
00:23:29,194 --> 00:23:30,863
Okay, well, I'm gonna buzz off.
598
00:23:30,863 --> 00:23:32,698
[ Laughter ]
599
00:23:32,698 --> 00:23:37,069
**
600
00:23:37,069 --> 00:23:40,139
Mindy asked me to go over
to a local retailer with her
601
00:23:40,139 --> 00:23:42,407
so I could see how the product
actually lives
602
00:23:42,407 --> 00:23:43,675
in a retail environment.
603
00:23:43,675 --> 00:23:45,077
Oh, wow.
Good display.
604
00:23:45,077 --> 00:23:46,345
Mindy: Yeah,
it's a very nice display.
605
00:23:46,345 --> 00:23:48,447
This is one of
the 12-foot displays.
606
00:23:48,447 --> 00:23:52,084
Lemonis: A 12-foot display
of any brand in America
607
00:23:52,084 --> 00:23:53,285
is a big deal in retail.
608
00:23:53,285 --> 00:23:56,155
So you see brands
like DeWalt and Honda,
609
00:23:56,155 --> 00:23:58,924
and you look at Harvest,
and they have 12 feet.
610
00:23:58,924 --> 00:24:00,425
I'm surprised how much space
they've given you.
611
00:24:00,425 --> 00:24:01,794
Mindy: Yes.
612
00:24:01,794 --> 00:24:03,362
Lemonis: Which means they're
getting good sell-through.
613
00:24:03,362 --> 00:24:05,063
Mindy: Yes.
Lemonis: Check it out.
614
00:24:05,063 --> 00:24:06,265
Mindy: Aren't they cute?
615
00:24:06,265 --> 00:24:07,866
Lemonis: Do you make boxes
for this?
616
00:24:07,866 --> 00:24:09,034
Mindy: No.
Lemonis: Could you?
617
00:24:09,034 --> 00:24:10,269
Mindy: Yeah.
Lemonis: Okay.
618
00:24:10,269 --> 00:24:11,670
So you really could have
a chicken division
619
00:24:11,670 --> 00:24:13,505
and a bee division.
Mindy: Oh, yeah, absolutely.
620
00:24:13,505 --> 00:24:15,040
Lemonis:
With the same materials,
621
00:24:15,040 --> 00:24:17,142
there's an opportunity
to actually grow the business
622
00:24:17,142 --> 00:24:18,610
with the same retailer.
623
00:24:18,610 --> 00:24:20,512
To me, I'm thinking,
"How do we make more money?"
624
00:24:20,512 --> 00:24:23,448
The fact that you brought me
here gets me more excited
625
00:24:23,448 --> 00:24:25,651
about the opportunity
to grow the business.
626
00:24:25,651 --> 00:24:29,488
Having the distribution already
set up with a retailer like this
627
00:24:29,488 --> 00:24:31,056
means the relationship is there.
628
00:24:31,056 --> 00:24:33,358
What's dawning on me right now
is I don't feel like
629
00:24:33,358 --> 00:24:35,727
they're utilizing
any form of commerce
630
00:24:35,727 --> 00:24:39,331
other than just selling and
relying on retailers to sell it.
631
00:24:39,331 --> 00:24:42,367
We need to sell more goods
online direct to consumer
632
00:24:42,367 --> 00:24:45,337
to be able to realize
higher margins.
633
00:24:45,337 --> 00:24:47,306
What I'd like to do
is turn this room
634
00:24:47,306 --> 00:24:49,942
into your online
fulfillment center,
635
00:24:49,942 --> 00:24:51,944
'cause we're gonna
crank this website up.
636
00:24:51,944 --> 00:24:54,079
Pull off the things that
you want to sell online.
637
00:24:54,079 --> 00:24:55,180
Mindy: Yeah, that's fine.
638
00:24:55,180 --> 00:24:56,748
Lemonis: In today's day and age,
639
00:24:56,748 --> 00:25:00,018
it's okay even if you are
a wholesaler to other companies
640
00:25:00,018 --> 00:25:03,522
to have a direct-to-consumer
distribution channel.
641
00:25:03,522 --> 00:25:06,191
You have to say to yourself,
"Now, wait a second.
642
00:25:06,191 --> 00:25:10,262
How am I only doing
$45,000 a year in business
643
00:25:10,262 --> 00:25:11,830
with all this product?"
Mindy: Yeah.
644
00:25:11,830 --> 00:25:14,132
Lemonis: I've hired
a third-party appraiser
645
00:25:14,132 --> 00:25:16,068
to give me some idea
of the range
646
00:25:16,068 --> 00:25:17,703
of what the business is worth.
647
00:25:17,703 --> 00:25:20,339
It's an outside source that
can give objective information
648
00:25:20,339 --> 00:25:22,741
based on data that they collect
from third parties.
649
00:25:22,741 --> 00:25:24,409
How are you? I'm like Marcus.
Ryan: Hey. Hey, Marcus.
650
00:25:24,409 --> 00:25:26,044
Ryan Hutchins.
Lemonis: Ryan, nice to meet you.
651
00:25:26,044 --> 00:25:27,546
Ryan: Yeah.
How you doing?
652
00:25:27,546 --> 00:25:29,414
Lemonis: Ultimately,
what the owners of Harvest Lane
653
00:25:29,414 --> 00:25:30,849
should want is a valuation
654
00:25:30,849 --> 00:25:34,319
that's higher than the amount
of debt that's on the books.
655
00:25:34,319 --> 00:25:36,521
Did they give you
everything you needed
656
00:25:36,521 --> 00:25:40,158
from a financial standpoint
to come up with your assessment?
657
00:25:40,158 --> 00:25:42,594
Ryan: Yeah, they did.
Lemonis: Let's head back in.
658
00:25:42,594 --> 00:25:45,197
If the debt today
is $7.2 million,
659
00:25:45,197 --> 00:25:47,399
you'd want a value
that is higher than that
660
00:25:47,399 --> 00:25:49,935
so they can have comfort
that there's equity
661
00:25:49,935 --> 00:25:51,169
in their business.
662
00:25:51,169 --> 00:25:52,471
Mindy:
This is our shipping department,
663
00:25:52,471 --> 00:25:54,273
and you'll see product
all the way down.
664
00:25:54,273 --> 00:25:56,541
Lemonis:
If the valuation comes in lower,
665
00:25:56,541 --> 00:25:59,578
that essentially means the
lenders really own the business.
666
00:25:59,578 --> 00:26:01,780
Alright, let's get to
the punch line here.
667
00:26:01,780 --> 00:26:04,016
What number
am I putting in here?
668
00:26:04,016 --> 00:26:06,118
I need this number to be --
669
00:26:06,118 --> 00:26:08,387
I need that number to be big.
670
00:26:11,189 --> 00:26:13,825
Mindy: Maybe I'm not
the right person to run this.
671
00:26:13,926 --> 00:26:17,954
Lemonis: Alright, let's get
to the punch line here.
672
00:26:17,965 --> 00:26:22,067
Lemonis: Alright, let's get
to the punch line here.
673
00:26:22,801 --> 00:26:24,036
What number
am I putting in here?
674
00:26:24,036 --> 00:26:26,538
I need this number to be --
675
00:26:26,538 --> 00:26:30,075
I need that number to be big.
676
00:26:30,075 --> 00:26:31,576
Ryan: We're looking
at a range of about
677
00:26:31,576 --> 00:26:34,313
$8 million to $10 million
from enterprise perspective.
678
00:26:34,313 --> 00:26:36,581
Lemonis:
$8 million to $10 million.
679
00:26:36,581 --> 00:26:38,250
I almost fell on the ground
680
00:26:38,250 --> 00:26:40,819
because it now gives them some
light at the end of the tunnel
681
00:26:40,819 --> 00:26:43,555
that says there's value
in this business.
682
00:26:43,555 --> 00:26:45,357
Rhonda: I just didn't know
what to expect.
683
00:26:45,357 --> 00:26:48,226
Lemonis: Is that a good number
or a bad number?
684
00:26:48,226 --> 00:26:49,928
Rhonda:
The $10 million would be good.
685
00:26:49,928 --> 00:26:53,065
[ Laughter ]
686
00:26:54,399 --> 00:26:55,500
Ryan: Obviously.
687
00:26:55,500 --> 00:26:58,437
Mindy: Well, obviously
more is better.
688
00:26:58,437 --> 00:27:00,038
More's better.
689
00:27:00,038 --> 00:27:02,307
Lemonis: The way that you
ultimately would look at this
690
00:27:02,307 --> 00:27:04,343
is that you would take
the enterprise value
691
00:27:04,343 --> 00:27:07,512
that the evaluator provided,
the $8 million to $10 million,
692
00:27:07,512 --> 00:27:10,549
and you would subtract out
the amount of debt that's there,
693
00:27:10,549 --> 00:27:12,017
coming up with a net number.
694
00:27:12,017 --> 00:27:14,152
In this particular case,
it looks like it's anywhere
695
00:27:14,152 --> 00:27:17,522
between $1 million
and $3 million, approximately.
696
00:27:17,522 --> 00:27:19,024
That gives me hope.
697
00:27:19,024 --> 00:27:21,226
I don't know what it's gonna
mean for the family.
698
00:27:21,226 --> 00:27:23,295
So what we have to convince
the debt holders of
699
00:27:23,295 --> 00:27:27,432
is they're actually hurting
their own equity value.
700
00:27:27,432 --> 00:27:28,667
Rhonda: Absolutely.
701
00:27:28,667 --> 00:27:30,068
Lemonis:
Thank you so much for coming.
702
00:27:30,068 --> 00:27:31,536
Ryan: Yeah. See you, Marcus.
See you, Mindy.
703
00:27:31,536 --> 00:27:33,205
See you, Jason.
704
00:27:33,205 --> 00:27:35,674
Lemonis: You got to go into
every one of these things,
705
00:27:35,674 --> 00:27:36,775
now that you have
that valuation,
706
00:27:36,775 --> 00:27:38,043
with your talking points.
707
00:27:38,043 --> 00:27:39,111
Be technical.
Mindy: Be technical.
708
00:27:39,111 --> 00:27:40,779
So by you converting your debt,
709
00:27:40,779 --> 00:27:42,147
it'll take the burden
off the company.
710
00:27:42,147 --> 00:27:43,582
Lemonis: What burden?
Mindy: Servicing.
711
00:27:43,582 --> 00:27:45,684
Lemonis: How much is it?
Mindy: $40,000 a month.
712
00:27:45,684 --> 00:27:49,121
Lemonis: So I'd slow it down
and I'd make it very simple.
713
00:27:49,121 --> 00:27:50,522
"If I didn't pay you $40,000,
714
00:27:50,522 --> 00:27:53,525
I would invest that $40,000
into inventory,
715
00:27:53,525 --> 00:27:56,228
and we turn our inventory
seven times a year."
716
00:27:56,228 --> 00:27:57,396
Mindy: Okay.
717
00:27:57,396 --> 00:27:59,398
Lemonis: And that's
the wholesale number.
718
00:27:59,398 --> 00:28:00,799
So $40,000 of inventory
719
00:28:00,799 --> 00:28:03,201
is really $80,000
of wholesale revenue.
720
00:28:03,201 --> 00:28:05,404
And if I turn it
seven times a year,
721
00:28:05,404 --> 00:28:07,672
$80,000 times 7 is...
Mindy: $560,000.
722
00:28:07,672 --> 00:28:10,675
Lemonis:
Okay, "$560,000 of revenue
723
00:28:10,675 --> 00:28:14,246
is how much I'm able to generate
of additional revenue
724
00:28:14,246 --> 00:28:17,849
every time you relieve me
of $40,000 of interest."
725
00:28:17,849 --> 00:28:19,384
Following my logic?
Mindy: Yeah.
726
00:28:19,384 --> 00:28:23,021
Lemonis: You got to have
the answer to his question
727
00:28:23,021 --> 00:28:24,623
before he asks it,
728
00:28:24,623 --> 00:28:27,426
'cause the more prepared you
are, what's he also gonna think?
729
00:28:27,426 --> 00:28:29,528
Mindy: That we're investable.
He's gonna be --
730
00:28:29,528 --> 00:28:31,163
Lemonis: You guys have
your stuff together.
731
00:28:31,163 --> 00:28:32,197
Mindy: Yeah.
732
00:28:32,197 --> 00:28:41,039
**
733
00:28:41,039 --> 00:28:42,607
Lemonis: So it's been
about two and a half weeks
734
00:28:42,607 --> 00:28:43,942
since I was in Salt Lake.
735
00:28:43,942 --> 00:28:45,310
I'm excited to find out
736
00:28:45,310 --> 00:28:47,045
how we're gonna move
this business forward.
737
00:28:47,045 --> 00:28:48,547
Hi.
Mindy: Hey.
738
00:28:48,547 --> 00:28:51,950
Lemonis: How are you?
Rhonda: Good. How about you?
739
00:28:51,950 --> 00:28:53,218
Lemonis:
Well, you're cheery today.
740
00:28:53,218 --> 00:28:54,219
Rhonda: I am.
741
00:28:54,219 --> 00:28:55,854
Lemonis:
Do you know why we're here?
742
00:28:55,854 --> 00:28:59,424
Mindy: To have dinner,
to meet, to chat.
743
00:28:59,424 --> 00:29:01,426
Lemonis: Well, I came
to get an update.
744
00:29:01,426 --> 00:29:04,329
So lender number one
has to extend their loan.
745
00:29:04,329 --> 00:29:05,497
Mindy: Yeah.
746
00:29:05,497 --> 00:29:07,065
Lemonis: Have you not
told them that yet?
747
00:29:07,065 --> 00:29:08,533
Mindy:
No, we've talked about --
748
00:29:08,533 --> 00:29:11,670
I've told him that, yes,
749
00:29:11,670 --> 00:29:13,638
that we need to do something
as far as extension.
750
00:29:13,638 --> 00:29:16,174
Lemonis: So what has to happen
at this point, Mindy, is,
751
00:29:16,174 --> 00:29:18,410
as the C.E.O. of the business,
752
00:29:18,410 --> 00:29:21,146
we're at a point where you
have to be super definitive
753
00:29:21,146 --> 00:29:23,181
and very matter-of-fact
with people.
754
00:29:23,181 --> 00:29:26,485
"Lender number one, I need you
to extend two more years
755
00:29:26,485 --> 00:29:28,854
and do something with the rate
for us to avoid bankruptcy."
756
00:29:28,854 --> 00:29:30,055
Mindy: Okay.
757
00:29:30,055 --> 00:29:31,623
Lemonis: Have you said that
to them?
758
00:29:31,623 --> 00:29:34,192
Mindy: No, I haven't had it
that direct with them, no.
759
00:29:34,192 --> 00:29:37,095
Lemonis: Okay, why didn't you
have those conversations
760
00:29:37,095 --> 00:29:38,430
in the last two weeks?
761
00:29:38,430 --> 00:29:41,399
Mindy: Well, I mean,
I guess I didn't --
762
00:29:41,399 --> 00:29:46,037
I mean, I figured that we were
waiting for lender number two
763
00:29:46,037 --> 00:29:49,674
to agree to, you know,
what they were willing to do.
764
00:29:49,674 --> 00:29:57,315
**
765
00:29:57,315 --> 00:29:59,050
Lemonis: I'm not sure
where we are today
766
00:29:59,050 --> 00:30:00,719
compared to, like,
two weeks ago.
767
00:30:00,719 --> 00:30:04,256
This is uncomfortable for you,
so you're staying away from it?
768
00:30:04,256 --> 00:30:05,891
Or are you just gonna
hand them your business
769
00:30:05,891 --> 00:30:08,927
because you don't want to what,
have conflict?
770
00:30:08,927 --> 00:30:10,228
Mindy: So what do you suggest?
771
00:30:10,228 --> 00:30:11,496
Lemonis: Unh-unh.
772
00:30:11,496 --> 00:30:13,431
I want to know what you
think we should do.
773
00:30:13,431 --> 00:30:14,666
You're the C.E.O.
774
00:30:14,666 --> 00:30:16,701
Mindy: Well --
Lemonis: And I'm following you.
775
00:30:16,701 --> 00:30:18,403
Like, you're our leader.
776
00:30:21,273 --> 00:30:24,042
Mindy: And maybe I'm not
the right person to run this.
777
00:30:24,042 --> 00:30:25,377
Lemonis: To run the company?
Mindy: Yeah.
778
00:30:25,377 --> 00:30:27,512
You want my honest truth,
I hate it.
779
00:30:27,512 --> 00:30:29,214
I hate being the C.E.O. of this.
780
00:30:29,214 --> 00:30:31,950
Lemonis: You do?
Mindy: Yeah.
781
00:30:33,218 --> 00:30:35,787
Mike: No, no,
you're qualified for this.
782
00:30:35,787 --> 00:30:38,990
There are some things you just
need to step over and do.
783
00:30:38,990 --> 00:30:40,325
I know you can do this.
784
00:30:40,325 --> 00:30:41,893
Lemonis:
Mindy, you're in charge
785
00:30:41,893 --> 00:30:43,929
because you're kind of
an in-charge person.
786
00:30:43,929 --> 00:30:45,163
[ Laughter ]
787
00:30:45,163 --> 00:30:46,431
Mike:
Make no mistake about that.
788
00:30:46,431 --> 00:30:47,832
Lemonis: I know
you have it in you,
789
00:30:47,832 --> 00:30:50,468
and I'm not sure
what's holding you back.
790
00:30:50,468 --> 00:30:52,671
Do you believe in the business?
Mindy: Oh, yeah, absolutely.
791
00:30:52,671 --> 00:30:54,940
Lemonis: Tell me that,
'cause remember one thing.
792
00:30:54,940 --> 00:30:57,008
Like, I have a checkbook, too,
793
00:30:57,008 --> 00:30:59,477
and you haven't convinced me
that I should invest.
794
00:30:59,477 --> 00:31:01,846
Never once in our journey
have told me
795
00:31:01,846 --> 00:31:03,648
that it would be
a good investment for me.
796
00:31:03,648 --> 00:31:06,284
Mindy: We believe in
the company, and we feel like
797
00:31:06,284 --> 00:31:07,786
with the additional
working capital
798
00:31:07,786 --> 00:31:09,588
and the restructure
that we're doing
799
00:31:09,588 --> 00:31:13,191
that we can take this company
to a $30 million company.
800
00:31:13,191 --> 00:31:14,693
What can you help us with
as part of that?
801
00:31:14,693 --> 00:31:17,729
Lemonis: Well, good news is,
I can write a check.
802
00:31:17,729 --> 00:31:19,531
Mindy: Okay, fair enough.
Lemonis: Ding.
803
00:31:19,531 --> 00:31:25,303
Okay, my offer is $1 million
for 33% of the business,
804
00:31:25,303 --> 00:31:27,839
contingent on you
getting the debt down
805
00:31:27,839 --> 00:31:30,709
to a final balance
of $4 million.
806
00:31:30,709 --> 00:31:31,810
Mindy: Okay.
807
00:31:31,810 --> 00:31:35,180
Lemonis:
And no more than $300,000
808
00:31:35,180 --> 00:31:37,716
can leave the company
with interest expense.
809
00:31:37,716 --> 00:31:40,318
I expect the e-commerce room
to be up and going.
810
00:31:40,318 --> 00:31:42,387
I'd like to see
some new products developed.
811
00:31:42,387 --> 00:31:45,357
And I expect the process
in the back to be up and going.
812
00:31:45,357 --> 00:31:47,092
Mindy: So you're valuing
at $3 million.
813
00:31:47,092 --> 00:31:49,294
Lemonis: You disagree?
814
00:31:49,294 --> 00:31:52,097
Mindy: I mean, I think
it could be a little higher.
815
00:31:52,097 --> 00:31:53,465
Lemonis:
What is your counter offer?
816
00:31:53,465 --> 00:31:56,234
Mindy: My counter offer
is $1 million for 25%
817
00:31:56,234 --> 00:31:57,969
because we'll build this brand.
818
00:31:57,969 --> 00:31:59,537
It's not just gonna be
a beekeeping brand.
819
00:31:59,537 --> 00:32:03,241
We have a woodworking shop
that is barely being touched
820
00:32:03,241 --> 00:32:04,776
on what our potential can be.
821
00:32:04,776 --> 00:32:07,078
So we have a lot of other
products that we can go into.
822
00:32:07,078 --> 00:32:08,446
Lemonis: She's doing better,
isn't she?
823
00:32:08,446 --> 00:32:10,382
Mike: Much better.
Lemonis: I'm listening.
824
00:32:10,382 --> 00:32:12,150
Mindy: We're going to
work with our debt.
825
00:32:12,150 --> 00:32:14,452
And we're also gonna just
continue to build the brand
826
00:32:14,452 --> 00:32:15,854
on our e-commerce side
827
00:32:15,854 --> 00:32:18,189
so that we're doing $1 million
of sales in-house
828
00:32:18,189 --> 00:32:20,158
and retain that higher margin.
829
00:32:20,158 --> 00:32:23,895
And if we can hit
$30 million at 25%,
830
00:32:23,895 --> 00:32:25,930
that's a pretty good return.
831
00:32:27,699 --> 00:32:30,969
Lemonis:
I'm not accepting 25%.
832
00:32:30,969 --> 00:32:33,905
I'll settle at 30%.
833
00:32:33,905 --> 00:32:36,608
Do we have a deal?
834
00:32:36,608 --> 00:32:38,076
Yes or no?
835
00:32:38,076 --> 00:32:39,344
We have a deal?
Mindy: We have a deal.
836
00:32:39,344 --> 00:32:41,212
Lemonis: Okay.
Mindy: Okay.
837
00:32:41,212 --> 00:32:44,416
Lemonis: This is the moment
where you need to be the leader
838
00:32:44,416 --> 00:32:47,352
for your family, and I know
you're capable of doing it.
839
00:32:47,352 --> 00:32:49,854
If I wasn't sure of it,
I wouldn't do this.
840
00:32:49,854 --> 00:32:51,222
Mindy: I will do that.
841
00:32:51,222 --> 00:32:53,091
I feel really good,
feel really confident.
842
00:32:53,091 --> 00:32:55,694
There's a pathway
of being able to move forward.
843
00:32:55,694 --> 00:32:57,462
So we're excited.
844
00:32:57,462 --> 00:32:59,631
Lemonis: Okay.
Mindy: Thanks, Marcus.
845
00:32:59,631 --> 00:33:04,369
* I'm not giving up,I'm not giving up*
846
00:33:05,170 --> 00:33:07,372
Hey, how are you?
Good.
847
00:33:07,372 --> 00:33:09,074
I feel like I've got a plan
moving forward.
848
00:33:09,074 --> 00:33:10,608
Just wanted to talk to you
about a few things.
849
00:33:10,608 --> 00:33:13,712
I think I've got some
difficult roads ahead with this.
850
00:33:13,712 --> 00:33:15,347
You take care.
Thank you. Bye-bye.
851
00:33:15,347 --> 00:33:17,382
Jason:
Got my marching orders.
852
00:33:17,382 --> 00:33:23,121
**
853
00:33:23,121 --> 00:33:28,626
**
854
00:33:28,626 --> 00:33:30,061
Lemonis: Look at the back.
855
00:33:30,061 --> 00:33:31,363
The one part of the business
856
00:33:31,363 --> 00:33:33,264
that I didn't really
fully understand
857
00:33:33,264 --> 00:33:35,133
is that they actually sell bees
858
00:33:35,133 --> 00:33:37,335
and they bring them in
from farms around the country.
859
00:33:37,335 --> 00:33:39,237
They come on the back
of a tractor trailer,
860
00:33:39,237 --> 00:33:41,172
and you can see them
swarming around.
861
00:33:41,172 --> 00:33:43,108
Jason: That's 10,000 to 12,000
in each package,
862
00:33:43,108 --> 00:33:44,709
and there's 930 packages.
863
00:33:44,709 --> 00:33:47,278
Lemonis: Remember that fear
that I had in the beginning?
864
00:33:47,278 --> 00:33:49,681
Well, that fear
still exists today.
865
00:33:49,681 --> 00:33:51,783
How much total inventory
is on here?
866
00:33:51,783 --> 00:33:53,485
Rhonda: $111,600.
867
00:33:53,485 --> 00:33:56,654
Lemonis: Okay, and how much
will you sell this for
868
00:33:56,654 --> 00:34:00,158
after you put in all the labor,
packaging and everything?
869
00:34:00,158 --> 00:34:02,394
Rhonda: We don't make margin
on this as far as good margin.
870
00:34:02,394 --> 00:34:04,028
Lemonis:
Do you make any margin?
871
00:34:04,028 --> 00:34:06,164
Rhonda: We do make margin
but not great margin.
872
00:34:06,164 --> 00:34:07,599
Lemonis: Why do you do this?
873
00:34:07,599 --> 00:34:10,235
Rhonda: Because this was
our niche into the market.
874
00:34:10,235 --> 00:34:11,736
Lemonis:
This is your loss leader,
875
00:34:11,736 --> 00:34:14,038
which means that you got to
make the right margin
876
00:34:14,038 --> 00:34:15,206
on everything else that you do.
877
00:34:15,206 --> 00:34:16,708
Rhonda:
That's right. Absolutely.
878
00:34:16,708 --> 00:34:18,243
Lemonis: Pull me up.
879
00:34:18,243 --> 00:34:21,045
I think as I spent this whole
time with this family,
880
00:34:21,045 --> 00:34:23,515
I now realize
that my temperament
881
00:34:23,515 --> 00:34:25,550
will determine my fate out here.
882
00:34:25,550 --> 00:34:27,185
Honestly, I'm relaxed.
883
00:34:27,185 --> 00:34:29,654
And the calmer I am,
the more relaxed I am,
884
00:34:29,654 --> 00:34:32,190
the less the likelihood is
I'm gonna get stung.
885
00:34:32,190 --> 00:34:34,726
And I guess it's no different
than thinking about business.
886
00:34:34,726 --> 00:34:37,462
The more you slow down
and you understand your numbers
887
00:34:37,462 --> 00:34:39,831
and you have a good grasp
knowledge of them,
888
00:34:39,831 --> 00:34:43,301
the more you're gonna be able to
have control of your business.
889
00:34:43,301 --> 00:34:45,870
It's kind of
a pretty simple correlation.
890
00:34:47,939 --> 00:34:50,775
What we're really down to
is the punch line
891
00:34:50,775 --> 00:34:52,444
for our entire time together.
892
00:34:52,444 --> 00:34:53,578
Right now, we're short.
893
00:34:53,578 --> 00:34:57,415
Our deal doesn't look like
it's possible.
894
00:35:07,153 --> 00:35:13,126
**
895
00:35:13,126 --> 00:35:14,561
Lemonis: So I'm back
at Harvest Lane Honey today.
896
00:35:14,561 --> 00:35:16,529
I'm not gonna lie to you,
I have a bit of excitement
897
00:35:16,529 --> 00:35:19,299
in one sense,
but I have a bit of nervousness.
898
00:35:19,299 --> 00:35:20,834
So can we start
in the warehouse?
899
00:35:20,834 --> 00:35:22,168
Mindy: Yes.
Lemonis: Let's go.
900
00:35:22,168 --> 00:35:23,703
The number-one thing
that I wanted to do
901
00:35:23,703 --> 00:35:26,573
is to really get inside
of that production facility
902
00:35:26,573 --> 00:35:28,141
and fix the production process
903
00:35:28,141 --> 00:35:31,211
and ultimately drive margin
through efficiency.
904
00:35:31,211 --> 00:35:33,179
Is it done?
I don't know.
905
00:35:33,179 --> 00:35:34,647
But I want to take a look.
906
00:35:34,647 --> 00:35:37,417
The last time we did the
stopwatch, if you remember,
907
00:35:37,417 --> 00:35:40,854
it was 5 minutes and 43 seconds.
Brad: Yeah.
908
00:35:40,854 --> 00:35:42,522
Lemonis: If we did it today,
what would it be?
909
00:35:42,522 --> 00:35:44,123
Brad: Three minutes,
910
00:35:44,123 --> 00:35:46,226
because of the two machines
that we were constrained on.
911
00:35:46,226 --> 00:35:48,962
These two machines
became the bottleneck.
912
00:35:48,962 --> 00:35:50,330
So we talked
to our wood supplier
913
00:35:50,330 --> 00:35:52,098
and said,
"Hey, could you cut it for us?"
914
00:35:52,098 --> 00:35:55,068
Now it comes in and skips
these two machines,
915
00:35:55,068 --> 00:35:56,503
which is really helpful
916
00:35:56,503 --> 00:35:59,072
because these two machines
can be used to build --
917
00:35:59,072 --> 00:36:00,740
Lemonis: Like this stuff.
Brad: Yeah.
918
00:36:00,740 --> 00:36:03,409
Lemonis: Machines two and three
were really slowing things down.
919
00:36:03,409 --> 00:36:06,446
So they went back to
the original raw lumber provider
920
00:36:06,446 --> 00:36:08,014
and they asked them
if they could cut
921
00:36:08,014 --> 00:36:10,283
the width and the length
for the boxes
922
00:36:10,283 --> 00:36:12,252
before the wood even arrives.
923
00:36:12,252 --> 00:36:15,221
And so while it may have
cost them 10% more,
924
00:36:15,221 --> 00:36:18,358
they were able to save
30% of time
925
00:36:18,358 --> 00:36:20,860
by not having to touch
those two other machines.
926
00:36:20,860 --> 00:36:22,729
As you go through
the actual production area,
927
00:36:22,729 --> 00:36:25,865
you can see and feel the energy
and how different it is.
928
00:36:25,865 --> 00:36:28,268
They also set up
an e-commerce fulfillment room
929
00:36:28,268 --> 00:36:29,903
that provides them more revenue
930
00:36:29,903 --> 00:36:31,671
and, most importantly,
more margin.
931
00:36:31,671 --> 00:36:33,139
New products
was the other thing.
932
00:36:33,139 --> 00:36:35,675
Mindy: Yeah, so we've got
the chicken nesting boxes.
933
00:36:35,675 --> 00:36:37,477
We've got the rabbit
nesting boxes.
934
00:36:37,477 --> 00:36:39,445
So the bunny goes into this one.
935
00:36:39,445 --> 00:36:43,917
The female would nest down
in here and lay their babies.
936
00:36:43,917 --> 00:36:45,752
So you do the chicken.
Jason: So the chicken...
937
00:36:45,752 --> 00:36:46,886
Oh, you go right there.
938
00:36:46,886 --> 00:36:48,288
Lemonis:
Isn't that too small?
939
00:36:48,288 --> 00:36:50,089
Jason: So every morning
she'll go in there.
940
00:36:50,089 --> 00:36:52,225
Mindy: She needs nest in it.
Jason: She'll need a little nest
941
00:36:52,225 --> 00:36:53,426
to lay her eggs.
942
00:36:53,426 --> 00:36:55,261
Mindy: Chickens are such
a big business already.
943
00:36:55,261 --> 00:36:57,463
We've already sold
2,000 of these.
944
00:36:57,463 --> 00:36:59,499
I think this could be
a million-dollar business
945
00:36:59,499 --> 00:37:00,500
between the both of them.
946
00:37:00,500 --> 00:37:01,734
Lemonis: Cost to make it?
947
00:37:01,734 --> 00:37:04,003
Jason: You're about,
oh, around $3.
948
00:37:04,003 --> 00:37:07,006
And we're selling for $7.50
to the retailers.
949
00:37:07,006 --> 00:37:08,675
Mindy: And we've already
got these in a retailer.
950
00:37:08,675 --> 00:37:10,043
Jason: Yes, already have POs.
951
00:37:10,043 --> 00:37:11,311
Lemonis: Just from the last time
I saw you?
952
00:37:11,311 --> 00:37:12,345
Jason: Yes.
953
00:37:12,345 --> 00:37:14,013
Lemonis: Look,
I'm super impressed
954
00:37:14,013 --> 00:37:15,515
with all the changes
they've made in their business,
955
00:37:15,515 --> 00:37:17,650
but there's one big issue
that needs to get resolved,
956
00:37:17,650 --> 00:37:19,152
or none of it else matters,
957
00:37:19,152 --> 00:37:22,088
and that's getting $7.2 million
down to $4 million
958
00:37:22,088 --> 00:37:23,590
and getting the interest expense
959
00:37:23,590 --> 00:37:26,359
down by several hundred
thousand dollars, as well.
960
00:37:26,359 --> 00:37:29,028
If those two things
can't be done,
961
00:37:29,028 --> 00:37:31,497
then the business
isn't gonna make it,
962
00:37:31,497 --> 00:37:33,733
no matter how many
processes they improve.
963
00:37:33,733 --> 00:37:36,536
What we're really
down to is the punch line
964
00:37:36,536 --> 00:37:37,904
for our entire time together.
965
00:37:37,904 --> 00:37:40,039
We started with $7.4 million.
Mindy: Yep.
966
00:37:40,039 --> 00:37:43,042
Lemonis: What did the debt
have to get down to?
967
00:37:43,042 --> 00:37:44,577
Read off what our deal was.
968
00:37:44,577 --> 00:37:47,213
Mindy: So, "$3 million
must convert from wherever.
969
00:37:47,213 --> 00:37:49,682
Loans must be extended.
Rates need to be reduced."
970
00:37:49,682 --> 00:37:52,352
Lemonis: So the first objective
was to convert how much?
971
00:37:52,352 --> 00:37:53,252
Mindy: $3 million.
972
00:37:53,252 --> 00:37:54,754
Lemonis:
So let's talk about that.
973
00:37:54,754 --> 00:37:56,255
What happened
with lender number one?
974
00:37:56,255 --> 00:37:58,358
Mindy: He will reduce
his interest to 6%.
975
00:37:58,358 --> 00:37:59,993
Lemonis: So that's high five
number one.
976
00:37:59,993 --> 00:38:01,494
Mindy: Yeah.
Lemonis: Lender number two.
977
00:38:01,494 --> 00:38:04,564
Mindy: He'll convert $1 million
of debt into equity.
978
00:38:04,564 --> 00:38:07,300
Lemonis: So you got $1 million.
That's one of the three.
979
00:38:07,300 --> 00:38:08,768
Mindy: Yep.
Lemonis: Okay.
980
00:38:08,768 --> 00:38:12,005
Mindy: Payables,
he'll convert $820,000.
981
00:38:12,005 --> 00:38:13,740
Lemonis: Okay, so now
we're at $1,820,000.
982
00:38:13,740 --> 00:38:19,078
Mindy: And then between
the family, it's $599,383.
983
00:38:19,078 --> 00:38:21,514
Lemonis:
So the grand total now is...
984
00:38:21,514 --> 00:38:25,752
Jason: $2,648,313.
985
00:38:25,752 --> 00:38:31,190
**
986
00:38:31,190 --> 00:38:33,793
Lemonis: You're at $2,648,000.
Mindy: Yes.
987
00:38:33,793 --> 00:38:36,663
Lemonis: $352,000 short.
Mindy: Yes.
988
00:38:36,663 --> 00:38:39,932
Lemonis:
Where are you at on the more
than $300,000 interest annually?
989
00:38:39,932 --> 00:38:42,068
Mindy: Number one
will be $120,000.
990
00:38:42,068 --> 00:38:44,437
And lender number two,
he'll be at $291,000.
991
00:38:44,437 --> 00:38:46,039
Lemonis: So what do those two
add up to?
992
00:38:46,039 --> 00:38:48,841
Mindy: $411,000.
Lemonis: So $411,000.
993
00:38:48,841 --> 00:38:52,912
So you're $111,000 away
on the interest
994
00:38:52,912 --> 00:38:56,683
and you're $351,000 away
on the debt conversion.
995
00:38:56,683 --> 00:38:58,151
Right now, we're short.
996
00:38:58,251 --> 00:39:04,982
Lemonis: So you're $111,000 away
on the interest
997
00:39:04,994 --> 00:39:09,128
Lemonis: So you're $111,000 away
on the interest
998
00:39:10,063 --> 00:39:13,766
and you're $351,000 away
on the debt conversion.
999
00:39:13,766 --> 00:39:15,435
Right now, we're short.
1000
00:39:15,435 --> 00:39:20,106
Our deal doesn't look
like it's possible.
1001
00:39:20,106 --> 00:39:21,474
We had a deal.
Mindy: Yes.
1002
00:39:21,474 --> 00:39:22,775
Lemonis:
And we didn't get there.
1003
00:39:22,775 --> 00:39:24,143
And I do think you've done a lot
1004
00:39:24,143 --> 00:39:27,280
to get the business
much healthier.
1005
00:39:27,280 --> 00:39:30,283
But if you shoot a free throw
and you miss it
1006
00:39:30,283 --> 00:39:34,487
and you got pretty close,
you still didn't make it.
1007
00:39:34,487 --> 00:39:37,690
I really like this business.
1008
00:39:37,690 --> 00:39:41,060
I do.
Mike: Good.
1009
00:39:41,060 --> 00:39:45,031
Lemonis: I think
that the biggest thing
1010
00:39:45,031 --> 00:39:50,236
that needs to be solved
is the vendor overseas.
1011
00:39:50,236 --> 00:39:52,939
I think clearing the deck
of your payables
1012
00:39:52,939 --> 00:39:54,607
is a huge accomplishment.
1013
00:39:54,607 --> 00:39:58,111
If you handed him $500,000,
would he just call it even?
1014
00:39:58,111 --> 00:40:00,113
Jason: Yeah, I'll call him.
Lemonis: Alright.
1015
00:40:00,113 --> 00:40:02,281
Jason: I'll go in my office.
Lemonis: Sure.
1016
00:40:02,281 --> 00:40:06,185
Getting the import distributor
and their payables off the books
1017
00:40:06,185 --> 00:40:08,488
is a huge milestone
for the company.
1018
00:40:08,488 --> 00:40:12,458
And it gets us much closer
to the $3 million debt reduction
1019
00:40:12,458 --> 00:40:13,726
that I was looking for.
1020
00:40:13,726 --> 00:40:15,261
But it also does something else.
1021
00:40:15,261 --> 00:40:17,230
The better the relationship
with the vendor,
1022
00:40:17,230 --> 00:40:19,265
the more freely
the product will flow.
1023
00:40:19,265 --> 00:40:21,267
And the more freely
the product flows,
1024
00:40:21,267 --> 00:40:23,770
the more opportunity there is
to generate revenue.
1025
00:40:23,770 --> 00:40:25,772
This business
has a ton of potential, Stephen.
1026
00:40:25,772 --> 00:40:27,240
You've been a big part of that.
1027
00:40:27,240 --> 00:40:29,742
And I will tell you
that your product not being here
1028
00:40:29,742 --> 00:40:31,344
is actually
hurting the business.
1029
00:40:31,344 --> 00:40:33,346
And so if you and I
are gonna be partners
1030
00:40:33,346 --> 00:40:34,947
in this business together,
1031
00:40:34,947 --> 00:40:38,151
I want to make sure
that we're buying product,
1032
00:40:38,151 --> 00:40:40,119
that you're getting paid
on time,
1033
00:40:40,119 --> 00:40:42,822
and that we don't ever have to
have this discussion again.
1034
00:40:42,822 --> 00:40:44,257
Stephen:
That was my hope, as well.
1035
00:40:44,257 --> 00:40:46,592
Lemonis: So here's what
I'd like to propose.
1036
00:40:46,592 --> 00:40:47,927
You'll convert $820,000.
1037
00:40:47,927 --> 00:40:51,798
I'll write you a check
for $550,000.
1038
00:40:51,798 --> 00:40:55,701
I'll provide you a letter
of credit of $400,000.
1039
00:40:55,701 --> 00:40:57,937
And you'll give the company
90-day terms.
1040
00:40:57,937 --> 00:40:59,105
Does that sound fair to you?
1041
00:40:59,105 --> 00:41:00,807
Stephen:
That makes sense to me.
1042
00:41:00,807 --> 00:41:02,175
Lemonis: Deal?
Stephen: Deal.
1043
00:41:02,175 --> 00:41:04,343
Lemonis: Okay, my man,
thank you so much.
1044
00:41:04,343 --> 00:41:05,878
Mindy:
I appreciate the line of credit.
1045
00:41:05,878 --> 00:41:07,647
We hadn't talked about that.
1046
00:41:07,647 --> 00:41:10,950
Lemonis: Well, I didn't think
about it until right now.
1047
00:41:10,950 --> 00:41:13,052
I always knew
throughout this process
1048
00:41:13,052 --> 00:41:14,320
that there'd be a moment in time
1049
00:41:14,320 --> 00:41:16,189
where I would have to
get involved.
1050
00:41:16,189 --> 00:41:18,157
But I wanted Mindy
to prove for herself
1051
00:41:18,157 --> 00:41:20,259
that she could get us
almost all the way there.
1052
00:41:20,259 --> 00:41:22,628
And it's okay to lean
on somebody else
1053
00:41:22,628 --> 00:41:24,063
to punch you over the goal line.
1054
00:41:24,063 --> 00:41:27,700
My investment now
sounds like it's $650,000 cash
1055
00:41:27,700 --> 00:41:30,336
plus $400,000
in a letter of credit.
1056
00:41:30,336 --> 00:41:32,638
So I'm expecting 25%.
1057
00:41:32,638 --> 00:41:34,740
Does that work?
Mindy: Yeah, that works.
1058
00:41:34,740 --> 00:41:37,510
Okay. We're good.
I'll get a --
1059
00:41:37,510 --> 00:41:39,278
Lemonis:
Is this our third handshake?
1060
00:41:39,278 --> 00:41:44,116
So my new deal is to invest
$650,000 of cash
1061
00:41:44,116 --> 00:41:47,520
and $400,000
in a letter of credit.
1062
00:41:47,520 --> 00:41:49,422
My total exposure's $1,050,000.
1063
00:41:49,422 --> 00:41:54,260
But I felt compelled to lower
my percentage from 30% to 25%
1064
00:41:54,260 --> 00:41:58,531
because the amount of cash
actually leaving my pocket today
1065
00:41:58,531 --> 00:42:00,366
is only $650,000.
1066
00:42:00,366 --> 00:42:02,935
This feels to me
like a better solution.
1067
00:42:02,935 --> 00:42:04,503
Rhonda: It does to me, too.
I mean --
1068
00:42:04,503 --> 00:42:07,573
Mike: Well, I like this.
This has been an integral part.
1069
00:42:07,573 --> 00:42:10,243
Rhonda: This was the answer.
You brought the answers.
1070
00:42:10,243 --> 00:42:12,812
Lemonis:
You guys brought the answers.
1071
00:42:12,812 --> 00:42:14,513
I just helped you
go down the path.
1072
00:42:14,513 --> 00:42:17,884
And I think that's really --
The four of you did the work.
1073
00:42:17,884 --> 00:42:19,652
And you made the changes.
1074
00:42:19,652 --> 00:42:21,087
What I am happy to tell you
1075
00:42:21,087 --> 00:42:23,923
is that the business today
is on fire.
1076
00:42:23,923 --> 00:42:27,927
Their revenue's up about 90%
in the last 30 days
1077
00:42:27,927 --> 00:42:29,562
over the same time last year.
1078
00:42:29,562 --> 00:42:31,063
What that tells you is
1079
00:42:31,063 --> 00:42:32,665
that with the right amount
of working capital,
1080
00:42:32,665 --> 00:42:34,901
debt being removed
from the business,
1081
00:42:34,901 --> 00:42:37,970
a process being installed
on the manufacturing line,
1082
00:42:37,970 --> 00:42:41,674
and them having a clear focus
on what their job is,
1083
00:42:41,674 --> 00:42:44,410
well, the sky's the limit
with this business.
1084
00:42:44,410 --> 00:42:52,318
**
1085
00:42:52,318 --> 00:43:00,259
**
1086
00:43:00,259 --> 00:43:08,167
**
1087
00:43:08,167 --> 00:43:16,142
**
81416
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