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These are the user uploaded subtitles that are being translated: 1 00:00:07,173 --> 00:00:08,775 * It doesn't matter where I've been* 2 00:00:09,876 --> 00:00:13,213 * It doesn't matter how I got this feeling* 3 00:00:13,213 --> 00:00:15,281 * I'll be alright* 4 00:00:15,281 --> 00:00:16,750 Lemonis: I'm here in Salt Lake City, 5 00:00:16,750 --> 00:00:18,518 and I'm going to a business that, quite frankly, 6 00:00:18,518 --> 00:00:19,986 I never thought I would come to. 7 00:00:19,986 --> 00:00:22,122 It's called Harvest Lane Honey, 8 00:00:22,122 --> 00:00:24,057 and it's a multigenerational family 9 00:00:24,057 --> 00:00:27,560 that makes beekeeping kits that they send to your home. 10 00:00:27,560 --> 00:00:31,498 But this is going to be anything but a sweet deal. 11 00:00:31,498 --> 00:00:34,300 Rhonda: Keep your feet stomping when we go over there. 12 00:00:34,300 --> 00:00:36,770 They do like to crawl up your legs. 13 00:00:36,770 --> 00:00:37,871 Lemonis: Rhonda. 14 00:00:37,871 --> 00:00:39,172 [ Laughter ] 15 00:00:39,172 --> 00:00:42,108 Hol-- 16 00:00:42,108 --> 00:00:45,278 The business has lost $7 million. 17 00:00:45,278 --> 00:00:48,047 The business is insolvent. 18 00:00:48,047 --> 00:00:50,650 Mindy: Maybe I'm not the right person to run this. 19 00:00:50,650 --> 00:00:53,353 Lemonis: To run the company? Mindy: Yeah, I hate it. 20 00:00:53,353 --> 00:00:55,188 I hate being the C.E.O. of this. 21 00:00:55,188 --> 00:00:56,856 Lemonis: You do? 22 00:00:56,856 --> 00:00:58,691 Mindy: Yeah. 23 00:00:58,691 --> 00:01:03,129 Lemonis: Our deal doesn't look like it's possible. 24 00:01:05,131 --> 00:01:06,733 I'm Marcus Lemonis, 25 00:01:06,733 --> 00:01:09,369 and I risk my own money to help businesses. 26 00:01:09,369 --> 00:01:11,538 I love investing in American businesses. 27 00:01:11,538 --> 00:01:13,573 Woman: These people are here because they care. 28 00:01:13,573 --> 00:01:15,341 Lemonis: It's not always easy, 29 00:01:15,341 --> 00:01:18,445 but I do it to create jobs, and I do it to make money. 30 00:01:18,445 --> 00:01:19,913 Do we have a deal? Let's rock and roll. 31 00:01:19,913 --> 00:01:22,115 Man: Yeah! 32 00:01:22,115 --> 00:01:24,551 Lemonis: This is "The Profit." 33 00:01:24,551 --> 00:01:29,389 ** 34 00:01:29,389 --> 00:01:32,325 Mindy: I am Mindy Waite, and I am the C.E.O. 35 00:01:32,325 --> 00:01:34,427 and one of the founders of Harvest Lane Honey. 36 00:01:34,427 --> 00:01:36,596 We manufacture all the hives 37 00:01:36,596 --> 00:01:38,965 and woodenware for backyard beekeeping 38 00:01:38,965 --> 00:01:41,534 and we sell everything that they need from the bees 39 00:01:41,534 --> 00:01:43,903 to the equipment to the protective clothing. 40 00:01:43,903 --> 00:01:45,505 Lemonis: Like most businesses, 41 00:01:45,505 --> 00:01:49,108 Harvest Lane Honey's business was born out of necessity. 42 00:01:49,108 --> 00:01:50,310 Mindy: My husband and my mom were like, 43 00:01:50,310 --> 00:01:51,845 "Hey, let's be beekeepers." 44 00:01:51,845 --> 00:01:54,414 Rhonda: Mike and I are the other half of the business. 45 00:01:54,414 --> 00:01:56,716 Jason and I just wanted to pollinate the world. 46 00:01:56,716 --> 00:01:58,685 Mindy: We have 34 employees working for us, 47 00:01:58,685 --> 00:02:01,387 but it literally started in our garage in 2008. 48 00:02:01,387 --> 00:02:03,389 From there, it's just grown rapidly. 49 00:02:03,389 --> 00:02:05,592 And we're in all 50 states 50 00:02:05,592 --> 00:02:07,961 and we're in six different countries throughout the world. 51 00:02:07,961 --> 00:02:10,797 Lemonis: But as the business grew, so did their debt. 52 00:02:10,797 --> 00:02:13,700 And now everyone is looking to Mindy for guidance. 53 00:02:13,700 --> 00:02:16,102 Mindy: Dad and I have been working on price increases. 54 00:02:16,102 --> 00:02:17,537 Jason: Glad you're on it, then. 55 00:02:17,537 --> 00:02:19,639 She is a queen bee. There's no doubt about it. 56 00:02:19,639 --> 00:02:22,976 Lemonis: But without a clear plan or solution in place, 57 00:02:22,976 --> 00:02:24,644 they've now called me. 58 00:02:24,644 --> 00:02:27,847 You got to not freak out. You got to not freak out. 59 00:02:27,847 --> 00:02:30,250 Now, we know there's an environmental issue 60 00:02:30,250 --> 00:02:33,353 around the world with bees becoming extinct. 61 00:02:33,353 --> 00:02:35,288 What I worry about more than that 62 00:02:35,288 --> 00:02:39,392 is how generational businesses can also become extinct. 63 00:02:42,262 --> 00:02:43,596 Mindy: Hi. Lemonis: How are you? 64 00:02:43,596 --> 00:02:45,131 Mindy: Nice to meet you. Lemonis: I'm Marcus. 65 00:02:45,131 --> 00:02:46,533 Mindy: I'm Mindy. Lemonis: Nice to meet you. 66 00:02:46,533 --> 00:02:47,600 Mindy: Yeah. Jason: Jason. Nice to meet you. 67 00:02:47,600 --> 00:02:49,202 Lemonis: Jason, nice to meet you. 68 00:02:49,202 --> 00:02:50,637 Mindy: Yeah. Lemonis: Are you guys a couple? 69 00:02:50,637 --> 00:02:52,338 Mindy: Yeah. This is my -- This is my husband. 70 00:02:52,338 --> 00:02:54,107 Lemonis: So, who started this business? 71 00:02:54,107 --> 00:02:57,343 Mindy: Jason and my mom started it just getting into beekeeping. 72 00:02:57,343 --> 00:03:00,179 We actually sell the bees and we sell all the equipment, 73 00:03:00,179 --> 00:03:02,148 everything that you need to be a beekeeper. 74 00:03:02,148 --> 00:03:04,417 Lemonis: I mean, isn't there enough bees in the environment? 75 00:03:04,417 --> 00:03:05,919 Mindy: No. Go ahead. 76 00:03:05,919 --> 00:03:07,754 Jason: So the bees have been declining over the years. 77 00:03:07,754 --> 00:03:09,289 Lemonis: She gave you permission to talk. 78 00:03:09,289 --> 00:03:10,757 Clear that up, okay? 79 00:03:10,757 --> 00:03:13,226 Mindy: I felt so bad. 80 00:03:13,226 --> 00:03:14,494 Lemonis: So who owns the business? 81 00:03:14,494 --> 00:03:16,429 Mindy: I do with my mom. So we're 50/50. 82 00:03:16,429 --> 00:03:18,131 Lemonis: So your mom, does she also work here? 83 00:03:18,131 --> 00:03:19,299 Mindy: Yeah, she is here. Do you want to meet her? 84 00:03:19,299 --> 00:03:20,333 Lemonis: I would love to meet her. 85 00:03:20,333 --> 00:03:22,402 Mindy: Yeah. Come on down. 86 00:03:22,402 --> 00:03:23,803 This is kind of our beginnings. 87 00:03:23,803 --> 00:03:25,838 We were selling direct to the consumer there, 88 00:03:25,838 --> 00:03:30,743 and we pivoted in 2013 and began selling to retailers, 89 00:03:30,743 --> 00:03:33,246 farm and ranch stores across the nation. 90 00:03:33,246 --> 00:03:36,082 True Value is one of them, Tractor Supply. 91 00:03:36,082 --> 00:03:37,517 Lemonis: Who runs the business? 92 00:03:37,517 --> 00:03:39,319 Jason: Well, that'd be Mindy. She's the C.E.O. 93 00:03:39,319 --> 00:03:40,920 Lemonis: Oh, you are the C.E.O., okay. 94 00:03:40,920 --> 00:03:43,590 And you took that from your mom, or your mom gave it to you? 95 00:03:43,590 --> 00:03:45,391 How did that work? Rhonda: She's bossy. 96 00:03:45,391 --> 00:03:46,926 That's why she's got it. Lemonis: I'm sorry. 97 00:03:46,926 --> 00:03:49,696 I heard somebody say something. Rhonda: She's bossy. 98 00:03:49,696 --> 00:03:52,532 Lemonis: Who's that? Is that the voice of God? 99 00:03:52,532 --> 00:03:54,567 Rhonda: It is. Lemonis: You can come out. 100 00:03:54,567 --> 00:03:56,135 [ Laughter ] 101 00:03:56,135 --> 00:03:57,370 Rhonda: So I said she's bossy. 102 00:03:57,370 --> 00:03:58,805 Lemonis: How are you? I'm Marcus. 103 00:03:58,805 --> 00:04:00,506 Rhonda: I'm Rhonda. Lemonis: Nice to meet you. 104 00:04:00,506 --> 00:04:02,508 Rhonda: Glad to meet you. Lemonis: So she's the boss? 105 00:04:02,508 --> 00:04:04,210 You're not the boss? Rhonda: Well... 106 00:04:04,210 --> 00:04:06,379 Mindy: I've got more of the retail experience, 107 00:04:06,379 --> 00:04:08,247 so Rhonda runs the finances. 108 00:04:08,247 --> 00:04:09,482 Lemonis: Do you call her Rhonda? Mindy: Yeah. 109 00:04:09,482 --> 00:04:10,950 Rhonda: We do in the business. 110 00:04:10,950 --> 00:04:12,352 Lemonis: I'm gonna call you Mom while I'm here. 111 00:04:12,352 --> 00:04:13,720 Rhonda: You can call me Mom. 112 00:04:13,720 --> 00:04:15,555 Lemonis: My first impression of this family 113 00:04:15,555 --> 00:04:17,690 is that they have a lot of energy and a lot of enthusiasm. 114 00:04:17,690 --> 00:04:20,126 I want to make sure that all this excitement 115 00:04:20,126 --> 00:04:21,928 that they have is translating 116 00:04:21,928 --> 00:04:24,897 into the excitement around the actual business. 117 00:04:24,897 --> 00:04:26,499 How are you, sir? Mike: Good. Nice to meet you. 118 00:04:26,499 --> 00:04:28,101 Lemonis: How are you? Nice to meet you. 119 00:04:28,101 --> 00:04:29,669 And what is your role here? 120 00:04:29,669 --> 00:04:31,170 Mike: Good question. 121 00:04:31,170 --> 00:04:32,505 Lemonis: Is this your husband? Rhonda: It is. 122 00:04:32,505 --> 00:04:34,173 He does all the legal stuff. Mindy: Yes. 123 00:04:34,173 --> 00:04:36,142 Lemonis: How long have you two been married? 124 00:04:36,142 --> 00:04:37,710 Mike: Not long enough. 125 00:04:37,710 --> 00:04:38,911 Mindy: Oh, good answer. 126 00:04:38,911 --> 00:04:40,546 Lemonis: Aww! 127 00:04:40,546 --> 00:04:42,148 [ Laughter ] 128 00:04:42,148 --> 00:04:43,583 Rhonda: 45 years. 129 00:04:43,583 --> 00:04:45,952 Lemonis: 45. Shall we take a tour? 130 00:04:45,952 --> 00:04:47,687 Mindy: Love to. Alright, well, go on now out. 131 00:04:47,687 --> 00:04:49,088 Lemonis: Apparently you're the leader. 132 00:04:49,088 --> 00:04:51,190 We'll follow you. Mindy: Okay, okay. 133 00:04:53,092 --> 00:04:57,096 We bring our retailers in here when we're setting them up. 134 00:04:57,096 --> 00:04:59,766 The number-one-selling item is this. 135 00:04:59,766 --> 00:05:02,268 This is the kit. So it's everything you see here. 136 00:05:02,268 --> 00:05:04,070 Lemonis: Where are they manufactured today? 137 00:05:04,070 --> 00:05:05,438 Mindy: In the back. 138 00:05:05,438 --> 00:05:07,573 Lemonis: So nothing is manufactured overseas. 139 00:05:07,573 --> 00:05:09,308 Mindy: Our iron tools and our clothing, 140 00:05:09,308 --> 00:05:12,545 they come from overseas, but 100% of the hives are made here. 141 00:05:12,545 --> 00:05:14,313 Lemonis: What are the margins on this SKU? 142 00:05:14,313 --> 00:05:16,049 Mindy: Were about 50% last year. 143 00:05:16,049 --> 00:05:18,451 Lemonis: And how much revenue does this SKU generate a year? 144 00:05:18,451 --> 00:05:20,853 Mindy: Like, I'd say $700,000, $800,000. 145 00:05:20,853 --> 00:05:24,157 Lemonis: What prevents this from being a $2 million SKU? 146 00:05:24,157 --> 00:05:25,491 Mindy: Capacity. 147 00:05:25,491 --> 00:05:27,326 Lemonis: Just capacity. Mindy: Capacity. 148 00:05:27,326 --> 00:05:29,228 Lemonis: And just so I can clarify, 149 00:05:29,228 --> 00:05:30,663 what is this thing doing? 150 00:05:30,663 --> 00:05:32,565 This is where the action happens. 151 00:05:32,565 --> 00:05:36,469 Mindy: So this is -- underneath that plastic, 152 00:05:36,469 --> 00:05:38,104 there's the comb that gets built on there. 153 00:05:38,104 --> 00:05:39,305 And so the bees create that comb. 154 00:05:39,305 --> 00:05:40,473 Lemonis: Oh, my gosh, it smells. 155 00:05:40,473 --> 00:05:41,674 Mindy: I know. It's good, huh? 156 00:05:41,674 --> 00:05:42,809 Mike: Just scrape it off and eat it. 157 00:05:42,809 --> 00:05:44,110 Mindy: You could eat it. 158 00:05:44,110 --> 00:05:45,945 Lemonis: Your starter kit is your flower. 159 00:05:45,945 --> 00:05:48,414 You're trying to lure the customer into the lifestyle. 160 00:05:48,414 --> 00:05:49,782 Mindy: Yes. Lemonis: Once they see 161 00:05:49,782 --> 00:05:52,151 how easy it is, they become addicted to it 162 00:05:52,151 --> 00:05:54,320 and then they bolt on all the other stuff. 163 00:05:54,320 --> 00:05:56,089 How much of your business is online? 164 00:05:56,089 --> 00:05:58,458 Mindy: They equate to, like, less than 10% of our sales. 165 00:05:58,458 --> 00:06:00,326 It's an area we can go into. 166 00:06:00,326 --> 00:06:02,528 Lemonis: That sucks. We got to fix that. 167 00:06:02,528 --> 00:06:05,364 There is no magic formula to how much business 168 00:06:05,364 --> 00:06:08,034 they should be doing online compared to what they wholesale. 169 00:06:08,034 --> 00:06:10,069 In order for this business to get more profitable, 170 00:06:10,069 --> 00:06:14,941 I would expect them to do at least 30% of their total revenue 171 00:06:14,941 --> 00:06:16,375 direct to consumer. 172 00:06:16,375 --> 00:06:18,277 That will change the profit profile 173 00:06:18,277 --> 00:06:20,313 of this business overnight. 174 00:06:20,313 --> 00:06:21,614 I want to see the warehouse. 175 00:06:21,614 --> 00:06:22,849 Mindy: Oh, yeah. Yeah. 176 00:06:22,849 --> 00:06:28,387 ** 177 00:06:28,387 --> 00:06:33,559 ** 178 00:06:33,559 --> 00:06:34,961 Lemonis: Wow. This is a lot bigger 179 00:06:34,961 --> 00:06:36,162 than I thought it was gonna be. 180 00:06:36,162 --> 00:06:37,697 Mindy: It's a big facility, yeah. 181 00:06:37,697 --> 00:06:38,965 Lemonis: How many square feet is the whole building? 182 00:06:38,965 --> 00:06:40,066 Mindy: 35,000. 183 00:06:40,066 --> 00:06:41,334 We'll go back to the back 184 00:06:41,334 --> 00:06:44,604 and show you where all the magic happens. 185 00:06:44,604 --> 00:06:48,508 When the lumber comes in, they'll cut it down into planks. 186 00:06:48,508 --> 00:06:50,676 Lemonis: Can I do one with you? Man: Sure. 187 00:06:50,676 --> 00:06:56,549 ** 188 00:06:56,549 --> 00:07:02,188 ** 189 00:07:02,188 --> 00:07:04,157 Lemonis: Step one. Mindy: Step one. 190 00:07:04,157 --> 00:07:05,658 Jason: So from this spot, you have an operator 191 00:07:05,658 --> 00:07:07,260 that measures it, and then he comes over here 192 00:07:07,260 --> 00:07:08,694 and cuts it to length. 193 00:07:08,694 --> 00:07:10,530 Mindy: He's actually servicing that, so it's down. 194 00:07:10,530 --> 00:07:13,099 Lemonis: So you're stopped. Jason: Correct. 195 00:07:13,099 --> 00:07:14,700 Lemonis: Is this where the QC happens? 196 00:07:14,700 --> 00:07:17,069 Why aren't they QC'ing it along the way? 197 00:07:17,069 --> 00:07:18,237 Mindy: It may have been good there, 198 00:07:18,237 --> 00:07:19,438 but by the time they get here -- 199 00:07:19,438 --> 00:07:22,475 Lemonis: You mean from right there... 200 00:07:22,475 --> 00:07:25,478 to right here, something happens to it? 201 00:07:25,478 --> 00:07:28,181 It bothers me that in the first 10 minutes 202 00:07:28,181 --> 00:07:30,049 of being in this fabrication shop 203 00:07:30,049 --> 00:07:32,318 that you're able to see the inefficiency 204 00:07:32,318 --> 00:07:34,787 without a lot of science or study. 205 00:07:36,856 --> 00:07:40,359 When you first got here, you were like, "Um..." 206 00:07:40,359 --> 00:07:44,363 I'd even want to see it be piece 1, 2, 3, 4, pop. 207 00:07:46,399 --> 00:07:47,900 How did I know which four to get? 208 00:07:47,900 --> 00:07:49,302 Jason: Just size and length. 209 00:07:49,302 --> 00:07:50,603 Lemonis: But they're not organized that way. 210 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. 212 00:07:53,306 --> 00:07:54,674 And it should be squared and nailed. 213 00:07:54,674 --> 00:07:57,510 And that's -- Well, couple misfires. 214 00:07:57,510 --> 00:07:59,212 Some of the nails -- Lemonis: That wasn't me. 215 00:07:59,212 --> 00:08:00,479 Jason: No, when this happens, 216 00:08:00,479 --> 00:08:02,248 we'll manually shoot it in the spot. 217 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. 222 00:08:11,858 --> 00:08:14,493 I really love what you guys are doing here. 223 00:08:14,493 --> 00:08:16,495 You're providing a lot of jobs. 224 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... 227 00:08:24,036 --> 00:08:25,137 enhancements. 228 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? 231 00:08:29,709 --> 00:08:31,611 Mindy: Probably need 1,000 boxes a day. 232 00:08:31,611 --> 00:08:34,213 Lemonis: Is there enough demand to support 2,000 boxes a day? 233 00:08:34,213 --> 00:08:35,781 Mindy: Yeah. 234 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. 240 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 strong when 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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