Recently, I caught a few episodes of The Profit. The show centered itself around an investor, Marcus Lemonis, who has had experience in buying out over 100 businesses. So the premise is looking at struggling businesses whom he can invest in with the potential to profit.
What’s interesting is he mentions three criteria to look at within every episode:
Mr. Green Tea
The first episode I watched focused on Mr. Green Tea, a Keyport, New Jersey family-owned ice cream business. They have been around since 1968, and their customers have primarily been Asian restaurants.
Unlike the other businesses in which Marcus had invested in, they were pretty good with their financials. However, the dynamics between the father and son within Mr. Green Tea made it clear why they were never able to come to a decision when it came to expansion.
On one hand you have the young businessman with grand ideas. On the other, you have a traditional businessman who looked closely at the numbers as a compass. Hence, Marcus being the mediator or what I call the intervention allowed both men to meet somewhere in the middle.
The deal was an investment of $600,000 and 35% of the company. The elder businessman did not readily agree at first. However, the tactic is something which I have noticed Marcus does within each episode. He acts on the opportunity quickly and does not give the business owner time to think about other options.
Surprisingly, the family agreed to the offer. Now after the offer has been accepted, another theme throughout the show is how Marcus would take over the business for a whole week.
Here is where it gets interesting.
If we go back to the three criteria mentioned earlier, Mr. Green Tea had good people, a great product but needed sprucing up on its process.
Moreover, I’ve learned that when you let co-packers do the production for your business, depending on how many other clients they’re taking on at the same time, expansion would be a matter of where you are in line.
So in the end, you’re losing money rather than making profits if you did the production yourself. Hence, in Mr. Green Tea’s case, Marcus was able to turn the production in-house. This allowed the owners to test out new flavors within the same facility without the added costs.
This saved the business money which they would then be able to pocket.
I won’t go into more of the episode. However, I think you’ve gotten a good idea of what you can potentially learn from a struggling business through The Profit. While I don’t know much about the ice cream business, I was able to take away a few general questions to think about.
- Do you know your numbers when it comes to expanding?
- Can the margins increase if you did production in-house?
- How can rebranding the company increase its potential vertically? Horizontally?
What are your thoughts?
Until next time, talk soon!