Damion its so hard for me because how hard ive worked to get here. Lemonis my name is marcus lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. Based in hilmar, california, kensington garden rooms manufactures handcrafted, custom gazebos fully fitted for outdoor entertaining. Owners damion merry and Simon Johnston learned their craft in england then brought it to california in 2012. While the quality of its product is topnotch, its high cost makes it a luxury item most people cant afford, leaving kensington struggling to achieve real growth. Simon we can keep doing this for another two or three years, and, you know, 4,000 or 5,000 bucks each a month, you know, keep all the customers happy, but whats the point . Lemonis these are not your gardenvariety gazebos. The fact that theyre built by hand from the finest wood gives them a real competitive edge. With the right process in place, i believe we can make kensington garden rooms a real leader in its field. [ riders screaming ] im in paso robles, california, at the mid state fair, where apparently kensington garden rooms sets up shop each summer. I was trying to understand why i was visiting a gazebo manufacturer at a carnival. Theres everything from carnival rides to fried fritters and games. But to buy a gazebo . It didnt make a lot of sense to me. How are you . Damion lovely to meet you. Damion. Lemonis nice to meet you. Damion nice to meet you, marcus. Lemonis is this your setup . Damion this is us. Lemonis wow this things beautiful. You guys build these from scratch . Damion everything. We design it, we manufacture it, and we install it. Lemonis oh, my gosh. What does Something Like this cost . Damion typically, between 25,000 and 32,000. Lemonis 32,000 bucks . Damion but thats with everything the furniture, the wine cooler, the fan, the heat lamp. Lemonis what is it made of . Damion cedar. Lemonis the quality looks amazing. I was blown away by the gazebo. I mean, i had never seen anything like this. Absolutely beautiful. Even the smallest of details were right. The craftsmanship was amazing. I mean, it was honestly a piece of art. What does it cost to make this . Damion its about 12,000 materials, and then the labor is about 2,000. Lemonis this gazebo that im standing in they sell between 25,000 and 32,000. It costs him about 14,000 to make it 45 gross profit. Those are amazing margins. But there arent a lot of people that can afford a 30,000 gazebo. If damion and simon can get their costs down, they could lower the price to the consumer and tap in to a much bigger market, all without sacrificing profitability. Damion so, the buckingham is the name of this structure. The belvedere is the name of the smaller structure. Thats my business partner, simon. Weve been best friends for 10 years. Lemonis simon, im marcus, by the way. Simon marcus, its a pleasure to meet you, sir. Lemonis nice to meet you. How many are you selling a year . Damion well, in our first year, we sold seven. In our second year, we sold 22. Lemonis okay. Damion at the moment, were close to 1 million. Lemonis so youll do 35 this year, roughly . Damion yeah. Lemonis 1 million in sales. Damion yeah. Lemonis with 45 gross margins. And, then, what are the operating expenses . Damion about 200,000. Lemonis so youre gonna make 250,000, which is a 25 net margin. Thats pretty good. Do you owe anything to any of your suppliers . Damion no. Lemonis so it sounds like you guys are doing pretty good. How much cash in the business right now . Damion 100,000. Im a Firm Believer of keeping as much money in the business as possible. We took very minimal money for the first year. Lemonis how about now . What are you making . Damion 4,000 at the moment. I have a wife. I have two babies. And theres another mouth to feed coming. Simon i have a pregnant girlfriend back in england. Lemonis how many employees total . Damion so, theres myself and simon, and then we have four guys in the workshop. Youll meet jack, and hes an amazing guy, and hes been with us from the beginning. Lemonis and who does the bulk of the actual manufacturing of this . Damion all of us. Simon i do. I control the manufacturing side. Lemonis you do . Simon yeah. I run all the guys, make sure all the guys know what theyre doing, make sure theyve got all the timber. Lemonis youre like the foreman . Simon yeah, im like the foreman. Lemonis youre sales and marketing . Damion i do absolutely everything i possibly can. Im in the workshop. Im sanding. Im oiling. Lemonis and, so, when you say you do everything, you feel like you do the bulk of the work in the company . Damion yes. Lemonis okay. Damion yes, because i have to deal with everything all of the customers, all of the shows, the marketing material. I have to help with the installations. I have to take care of a lot of things and not just the carpentry side. Simon [ chuckles ] i do the bulk of the work. I work seven days a week. Im in that shop from 10 hours a day, 110 degrees heat, every day. So i believe i work the hardest in the company. Lemonis its not about who gets the credit and who does more. With them, it is. It should be about how do we grow the business together, how can i help it . What can i give to our partnership to make it better . Damion i own a third of the company. Simon owns a third of the company. Lemonis who owns the other third of the company . Damion my investor, kab. Simon excuse me. Damion he helps with the website and the financial side. Lemonis and he invested how much . Damion 120,000. When we originally came over, we were vulnerable, young, english guys. He said, im gonna help you guys out, and i think we can grow it. He invested three years ago when we moved over from the u. K. Were from england, by the way. Lemonis oh, i didnt damion you didnt pick up the accent . [ laughs ] lemonis i thought you were faking it. Damion yeah. Im from texas originally. [ laughing ] yeah. Lemonis why did you come to the United States . Damion i was the top salesman for a company in the u. K. Selling gazebos. Simon said to me, i can make this. And i said, and i can sell this. And we said, lets put some money together, all of our life savings, 60,000. Lemonis between the two of you. Damion between the two of us. Lemonis how do you acquire your customers . Damion 99 of our business comes from these fairs. Lemonis is it typically people that just buy these for their home . Nobody buys them for commercial businesses . No vineyards, no parks, no city districts, schools . None of that . Damion 99. 9 is just consumer. Lemonis damions telling me that 99 of his business comes from fairs just like this. Its probably why they only sell a couple dozen gazebos a year. You have a product thats very nichey, and youre trying to massmarket it, as opposed to finding the audience where those nichey buyers will be and increasing your chances. Ill see you guys back at the warehouse. [ tools whirring ] when i walked into the warehouse, i expect to see some sort of Assembly Process and machinery lined up and some sort of really sophisticated process. Instead, it just looks like a garage on steroids. How are you doing . Simon how you doing . Lemonis good, buddy. How are you . Jack how you doing, marcus . Im jack. Lemonis jack, how are you . Nice to meet you. Jack really nice to meet you, as well. Lemonis hey [ claps hands ] how you doing, buddy . So you really are in the shop. Damion i told you. Lemonis i didnt know you guys were out in the middle of nowhere. Damion this is four acres of almonds. Lemonis an almond farm . Damion yeah. Its not really a livable space. We have to drive a mile down the road to use the restroom every day. Lemonis in order to start a business, you got to have some basic things. You got to have money in the bank. You should probably have a business plan. You should probably have a bathroom. Maybe i should add that to the three ps people, process, product, and how about we add potty . What machinery are you using . Damion we just have standard table saws, standard planers. We did it on a budget. This is the most basic tools you can buy. Its pretty difficult to work in here. Its hot, theres no airconditioning, theres no ventilation, and the space, were pretty limited. I mean, we had a big delivery of cedar this morning, and you can see theres not much room. Lemonis this warehouse is crammed, and its tight. Theres crap everywhere. What this warehouse should look like is the Ford Assembly line Raw Materials in one area, walk through all the different steps, and finish with the finished good. Simon process is not good. The organization of the whole shop needs to be sorted out. The whole material list needs to be redone. Lemonis is it like bolts and stuff that youre missing . Simon bolts. It could be timber. It could be plywood. Lemonis you go to home depot, and you get that . But isnt it the same things every time . Simon generally, yes. Lemonis so, like, why are you buying it retail . Why arent you getting pallets of it and saving money . If i came over here, you would do better if you had a stock of it all. Youre gonna save time on driving to the store. Youre not gonna pay retail at home depot. Youd be able to pick up how many hours of labor . Jack a lot. Lemonis when they told me that it costs them 14,000 to manufacture a gazebo, i now know why. No efficiencies. Theres no inventory. Theres no equipment thats gonna speed up the process. Youre not building rocket ships. Its a gazebo. Its wood and bolts. If you could be more efficient with your time, your margins go up. If you could be more efficient with your materials, your margins go up. Instead of making 10 a week, you can make 12 a week in the same amount of time. Jack one of the main problems we have is the tools we buy. We go through two green table saws a month. They cost 150 bucks. And we cut that many shingles, the motor gets burned out. Lemonis because youre buying a cheap one. Are you tight with cash to that extreme . This is a time and materials business. You need the right tools, and you need the inventory here. You could spend 50,000 and solve it. Jack yeah. Lemonis you have 100,000 in the bank. Why dont you go get the stuff . Simon well, we could, but, you know, damion is always, we cant spend the money. You know, i had to beg him to buy a chop saw. Damion the one simon wants to buy is 600 bucks. You can buy one for 300 bucks. Lemonis are they the same . Simon no. The one that i wanted, it can cut 12 inches. The one that i had to buy can only cut 6 inches. So i have to turn the timber over to cut it twice. Damion that was never explained. Lemonis why dont you trust him to make that decision . Damion i just dont want to buy the most expensive of everything. Simon im in the workshop, physically building everything all day. Hes sat in an office, at his home, with his wife and his child. My girlfriend and my unborn babys at home, and i dont get to see them. It takes its toll. Damion when im not at a show, am i not here . Simon well, he asked me, so i told him. Damion thats my wife. How can you complain that im at home . Simon im not complaining. Damion no, but youre making it out that you just sat back, drinking a whiskey, smoking a cigar with his wife. Lemonis did you just see what the [bleep] i saw . The fingerpointing thats going on between simon and damion right now, not only could it potentially derail the company, but it could potentially close it. These two guys are the heart and soul of this business. If they cant communicate, its making me question whether i even want to move forward with them. Damion thats what you do to piss me off. Patronize me like that thats what you do. Little things like that thats what pisses me off. Lemonis there are moments in time where going fast will kill you, and i dont want you running too fast with my money. This isnt the right deal for me. as a person who loves the finer things, this Holiday Season, ive asked for a luxurious new buick suv. fingers crossed. ring in the holidays with buick. Get up to 20 below msrp on most 2017 luxury suv models. Thats almost 7,400 on this Buick Enclave leather. Experience the new buick this Holiday Season for remaining 2017s. Experience the new buick every year we take a girls trip. Remember nashville . Kimchi bbq. Amazing honky tonk . I cant believe you got us tickets. I did. I didnt pay for anything. You never do. Send me what i owe. I got it. I mean, you did find money to buy those boots. Are you serious . Is that why you dont like them . Those boots could make a unicorn cry. Yeah, tears of joy. The bank of america mobile banking app. The fast, secure and simple way to send money. Wifiso if you cant live without it. T it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Damion thats what you do to piss me off. Patronize me like that thats what you do. Little things like that thats what pisses me off. Lemonis hey, jack, lets you and i take a walk. Okay, buddy . Jack im in the middle of, like, all of that and always have been. Ive made nearly every single gazebo the companys ever installed, working seven days a week, working through the night. Lemonis you feel underappreciated here . Jack definitely. Ive put as much time and effort as they have. The only thing i didnt do was invest the money at the beginning. Lemonis well, youve invested your time. Jack im 20 years old. I dont have a girlfriend. I dont have time to go out and meet girls. I cant afford to buy a car. Ive come down to at least 50 bucks at the end of each month. Lemonis and they got 100 grand in the bank. Jack and ive gone through arguments like that, and the tension is just building and building and building up. Lemonis im troubled by all the dysfunction that im seeing, and its a big red flag. But im still willing to study the financials and meet with the other partner, kab, who owns onethird of the business. Kab marcus, im kab. Lemonis nice to meet you. Im hoping hes the adult in the room. Kab theres a cashflow estimate over the next six months. Lemonis so youre projecting that by december 31st, youll have 248,000 in the bank . When i look at your growth, 2013, 164,000 of revenue. 2015, well on your way to 1 million or more. Hell of a job. Im in a real weird spot. By the end of the year, youre gonna have a quarter of a Million Dollars, and you have no debt. And so it doesnt seem to me like you need money. What do you need . Kab weve talked about how to expand this thing, try to open up a shop up in washington. Lemonis your own house is not in order, and you want to go build another one. You dont even have a place to take a [bleep] in this building, and you want to go to washington. Before you expand it. Kab yeah. Lemonis . Why dont you get what you have airtight . You guys came here. Youre kicking ass. Youre young guys. If 10 years from now, the business is making 425,000 a year, and you guys divided that up nicely and make 150,000, most people would kill for that. Damion i want more than that. For me, to trickle along, thats not very desirable. Lemonis thats trickling . You need to have some temperance about your growth. This idea of, like, we want to have factories all over the country, youre not general electric. Not yet. Why is there a sprint and not a marathon, and why not just do it the right way . Damion my initial thought was to have us collectively to be part of something amazing. Lemonis if you want to be a millionaire in this country, you shouldnt have the sole purpose of your business be to be a millionaire. You should run your business the right way, do the right things, treat your people the right way. And if you do that and you make a great product, it will happen. There are moments in time where going fast will kill you. Look, im disappointed in these guys. They want me to finance their fantasy where i just wave my magic checkbook around, and they get to take over the World Without some sort of business plan. Well, thats not gonna happen. This just isnt the right deal for me. I dont want to invest with you. Im worried that you want to run too fast, and i dont want you running too fast with my money. Damion [ sniffles ] simon i think he just had a lot riding on it. He had high hopes. Damion [ sighs ] for [bleep] sake. [ sniffles ] lemonis let me grab him for a minute. Simon okay. Damion [ sighs ] lemonis hey, talk to me. Damion [ voice breaking ] i dont get like this about nothing. Its so hard for me, because how hard ive worked to get here. And ive sort of used you in the last year as like a mentor studied, watched, love everything you do. I havent had, like, a father figure, and, i dont know, the way you do things thats kind of how i want to be. Lemonis i have an idea. Come on. Damion [ sighs ] lemonis i usually look at the three things the people, process, and product. Yeah, i could check the box on the product, but i could not check it on the process. And up to that point, i dont feel like i could check it on the people side. In that moment, hes showing me a level of vulnerability and humility that i like in business partners. Simon, kab. Come here, jack. What i see here is not what i thought i was gonna see. I didnt know that i was coming to the middle of an almond farm with a shop that is not healthy to work in. It isnt because you dont have money. Im willing to consider doing business with you guys, but something has to change, cause im not walking into this. If you really want me to be a part of this business, then i need you to take some of the money that you have and invest and prove to me that youre committed to it. You have to have a real professional plan. Find a few spaces that you think could work. In three weeks, if you guys have a plan, well move forward. If you dont have a plan, that will be it. And when i come back, i want to make sure that jack is feeling like hes not an employee anymore. Damion yeah. Lemonis because it tells me how you treat people. Okay . Simon yeah. Lemonis ill see you in a couple weeks. Simon okay. Thank you. Lemonis thank you. I gave them an ultimatum. You invest in your process and your equipment and your people and they get out of this mess of a facility that theyre in. Im not gonna prop up this business by myself. I need partners i can count on. So ill come back in three weeks, but there are no guarantees. What has kab done . Simon hes been in mexico for the last two weeks. Since the day you left, i physically have not seen him. Lemonis what value is he adding to the business right now . But they never i always loved me back. Otatoes, so i came up with o, thats good comfort sides with a nutritious twist like mashed potatoes with yummy cauliflower, but youll only taste the love. See what i mean . O, thats good if yyour todo list is crazy. Which is why the Online Finance application at carmax. Com is so convenient. Get some of that finance stuff done from wherever you are, like at the doctor, karate or. Back at the doctor. Ha ha ha, yay kids 3 toddlers wont stop him. And neither will lower back pain. Because at a dr. Scholls kiosk he got a recommendation for our custom fit orthotic to relieve his foot, knee, or lower back pain, from being on his feet. Dr. Scholls. Born to move. When youre clocking out. Im the one clocking in. Sensing your every move and automatically adjusting to help you stay effortlessly comfortable. I can even help with a silent night. Does your bed do that . I dont actually talk, but i can tell you how you slept. Im the new sleep number 360 smart bed. Lets meet at a sleep number store. Im gonna get ya, get ya, get ya, get ya one day maybe next week, im gonna meet ya im gonna meet ya, ill meet ya lemonis im heading back to kensington after three weeks to see if these guys have actually done the tasks that ive asked them to. On a scale of 1 to 100, 100 being the most confident and 1 being not confident at all, im like a 20. Simon i think i prefer this one because you got so much space. Lemonis hey, guys. Remember me . Damion how can we forget . Lemonis how are you . Damion good, thank you. Lemonis the place looks different. Whats changed . Simon cut all the timber up so its all in a racking system. Lemonis parts and pieces are in the right place. Simon exactly. Lemonis and so you spent some of your money on building some stock. Damion yeah. Simon and we bought this new machine. This was the machine that we were spending 750 bucks on every time we were getting some curves cut. The guy wanted about 6,000, and we got him down to 2,000. Lemonis whats that on the board . Damion thats the workshops that i found. So you can basically see what weve got and the potential. So, this is just under 5,000 square feet what were working in at the moment. This one is 6,800 square feet. Lemonis and theres a working restroom here now . Damion two. Lemonis going into this warehouse this time, everythings organized, its in its right place. They were smiling, and it seemed like there was less tension in the air. You two havent killed each other yet . And how did that happen, that all of a sudden, you guys just decided to kumbaya . Damion everything that ever needed to be said, it came out what simon doesnt like about me business wise, what i dont like about simon business wise. Now i trust him. Lemonis you seem like a calm, cool cat now. Simon oh, yeah. Damion [ laughs ] he was quite agitated, but part of that was because he was doing 105 jobs. Simon ive delegated roles. I feel a lot better. Damion we got a reality check, which we needed, and were friends again. Lemonis simon and damion seem to be more on the same page, and the unity between the two of them gives me some comfort to potentially do a deal. Hows jack feeling . Damion weve upped jacks wage, and we also agreed that jack deserves 5 of the company. Got a new bookkeeper, and she said shes gonna figure out deductibles that kab would have never even knew. Lemonis what has kab done . Both uh. Damion so, weve put together a business plan. Kab did the financial side of it, and apart from that. Simon hes been in mexico for the last two weeks. Damion and his wifes posting on facebook, saying, you know, my poor hubby deserves his sleep in a cabana. When we saw that picture, i had my hands in that toilet, scrubbing at those bathrooms like you wouldnt believe. Simon since the day you left, ive physically not seen him. Lemonis youve seen me sooner than youve seen him. Simon correct. Lemonis and remind me of the equity layout. Damion 33 each. Lemonis what value is he adding to the business right now . Damion it was financials. Lemonis right now. Damion nothing. Lemonis nothing. I understand that kab has less of an active role than damion and simon do in the business. But over the last three weeks, they really needed his help, and he was nowhere to be found. And that doesnt sit well with me. Why dont you show me the warehouses you guys found . Chet marcus, im chet. Nice to meet you. Lemonis how are you . Nice to meet you. Is this your building . Chet it is. Lemonis its got nice curb appeal. Can we see the inside . Chet absolutely. Its on a halfacre. The building is actually 9,000 square feet. Next door, we own the property there. Lemonis so that buildings part of the property . Chet absolutely. Lemonis so that helps. So you could do storage there and manufacturing here. Damion and simon found a more than acceptable space. They improved their process, and they did right by jack. So im prepared to make an offer. Hi, guys. Hey. How are you . Good to see you. Damion marcus. Lemonis i feel differently about the business than i did the day i left. Im kind of a big believer in life about grand gestures. What simon and damion did were a number of grand gestures. Simon thank you. Lemonis the business is gonna make good money this year. Next year, it could probably make about half a Million Dollars in profit. And the return on capital is pretty good. Yes, its risky, but if youre gonna bet on somebody, i would bet on you two guys. Kab im impressed, too. Ill just tell you, marcus, im their biggest cheerleader. I really am. Lemonis you agree with that . Damion um. I think the day when we saw the picture, the one of kab in mexico in a cabana when we were scrubbing the toilets that sort of killed us. Kab i told you i was gonna be out of the country. This is the first time ive heard that you were upset about it. Damion knowing how important that three weeks was, be there and just help us. Simon now can you understand where were coming from . Kab hmm. No, because i thought it was pretty clear. Lemonis i dont look at kab as i sit here as an equal partner. He didnt do [bleep] in the last three weeks. And so what i have to be careful of is to make sure that i structure this deal in a way that protects my money. The risk that i see in this deal is simon, damion, or jack being diluted because when somebody doesnt have a ton of skin in the game, its easy for them to think about other options. Jacks contribution is worth more than 5 . For me to do a deal, they cant be diluted, so they have to remain at 33 , and jack would have to be at 10 . I want to make an offer. Id like to offer two scenarios, and you guys are gonna figure it out. My offer is 150,000 for 12 , but all of the dilution comes from you. In order for that deal to work for me, you have to contribute. Kab okay. Lemonis the other option is that i write a 150,000 check and i buy your position. Im gonna put 150,000 on the table. Its either gonna go to kab so he gets a return on his investment and i buy his shares, or im gonna put 150,000 into the company, and kab and i will share 24 . Which option would you like . If your business is in trouble and you need my help, log on to. Really . Really . Really . Really . Really . See zero in a whole new way. Get zero down, zero deposit, zero first months payment, and zero due at signing on select volkswagen models. Now with the people first warranty. You wont see these folks they have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. 107. 00 at. Doggie lovers warehouse . [woman] an alert from wells fargo . No. I would never. Doggie lovers . Please you know me. I dont even know where that is look, im replying deny. See . Oh, come on [phone rings] hello . Wells fargo. I did not make that purchase. I didnt do it im so glad you caught that. Uh huh. [burke] abstract accident. Seen videoit. Covered it. C we know a thing or two because weve seen a thing or two. We are farmers. Bumpadum, bumbumbumbum firstthen you put yourselfareer. Through school. Got the degree. Youve given it your all, to reach the goals youve set. Dont let student debt hold you back. Refinancing Student Loans with sofi can save thousands. So you can get where youve always been headed. Sooner. See how much you can save with sofi. The leader in student loan refinancing. Lemonis im gonna put 150,000 on the table. Its either gonna go to kab and i buy his shares, or im gonna put 150,000 into the company, and kab and i will share 24 . Which option would you like . Simon we had our concerns. We voiced them. We expect you to do a little bit more, and if you can do that, then we can all move forward as a team. Damion id like you to be in the company. Simon hes been our only mentor over the last two years. Lemonis he took a chance on you when nobody simon exactly. Lemonis kab, whats your choice . Kab i want to be in the business. Whats your choice . Lemonis my choice is to have everybody feeling like things are fair. Do you feel like youre being treated fairly . Kab yeah. Lemonis okay. Ive thought a lot about how to really drive the business. Fixing the process and fixing your guys relationship is a component. The way you market your business of just going to fairs still feels elementary. We need to be smarter about how we sell. I want to think about the business in three different marketing components mass marketing, target marketing, and then commercial. Number one is mass marketing, like theyve historically been doing. The second is target marketing for people who are actually in the market, like at homeimprovement stores. And the third is commercial companies, like vineyards or boat and auto dealerships. Ill have 12 of the business. Kab will have 12 . Im still gonna be 100 in charge, okay . Damion yeah. Lemonis so we have a deal . Youre okay with it . Kab im good. Lemonis youre happy with it . Kab yeah. Lemonis all right, guys. Damion over the moon. Simon thank you. Lemonis thank you. Do you smile much . Simon i do. Lemonis you do . Simon i just dont want to give too much away. Thats all. Ive got a question. Lemonis yes, sir. Simon what happens when i go home in like a week . Lemonis to take care of your family and have your baby . Simon yeah. Lemonis we will overcommunicate, and we wont make any changes in your Department Without you knowing about it. Simon okay. Lemonis you know what id like to do . Lets call jack. Lets tell him whats happening. Id like you, actually, to tell him. Simon [ chuckles ] youd like me to tell him . Lemonis yeah. Simon id like you to tell him. Lemonis no. Youre not in charge, remember . Simon [ chuckles ] [ ringing ] hello, jack. Jack hey there, si. Simon marcus has done us a deal. Marcus has said that he would like your percentage to be a little bit more than 5 , so you now own 10 of kensington garden rooms, and i would like to congratulate you. Jack, you deserve it, buddy. Jack all i can say is thank you so much, all of you, seriously, for giving me the opportunity here and putting me in this position. Lemonis see you tomorrow, buddy. Simon good job. Byebye. Damion bye. Lemonis lets go make some gazebos. Damion yeah. No. Its got to go this way. Beautiful. Lemonis today, were moving into the new building, and its very exciting, cause were getting all the new equipment, and theres plenty of room to spread out. Look at this place. The new warehouse its like a Long Assembly line. Picture making a car. At the front of the warehouse would be all the Raw Materials. Along the way, there would be all the necessary machinery to make each part and each piece. And at the end, you would assemble it and have the finished good, and it would go out the back door. Nice and clean, nice and efficient. More efficient, more margins. More margins, everybody makes more money. Simon this one has a big, 24inch blade. Press your foot voom lemonis double as fast. Ive asked damion to fly to chicago for a meeting with true value, the homeimprovement giant. Its our First Step Towards target marketing. Historically, kensington would go to these fairs where they would see 20,000 people just to be able to talk to 10. Were about to get way more efficient. Im giving you a chance to pitch about the ability to set up your gazebos at True Value Stores throughout california. You can talk to people that you know are into their home, and theyre into improving their home. This is 4,000 stores around the world. Damion okay. Lemonis your a games required. All right. Im a little nervous about damion, because he has to realize that hes not selling to consumers at a fair. Hes selling to a very Large Corporation that wants to know how theyre gonna make money and how their customers are gonna get taken care of. Heath thanks for coming in, guys. Lemonis yeah. Thanks for seeing us. Damion so, id like to show you our garden rooms and our gazebos. We use only the finest materials Canadian Western red cedar for our timber, goosedown back pillows. Youve got memory foam for the bottom cushions. Our buckingham, which is a 13 x 19, is our biggest seller, and that one would sell for close to 30,000. Angelique i think the products beautiful. Sarah its beautiful. Angelique no question about that. I think the question is, does it fit with our store . I can see actual pure space just being an issue. Wed have to convince them that it was worth it to build out one of these. Damion on that point, people dont just have a gazebo. They buy throw pillows. They buy lighting. They buy a barbecue for outside. Theyre perfect for upselling Everything Else they have in store. Heath the biggest challenge is its certainly at a price point significantly greater than where most of our retailers are at. Lemonis what is that typical price point . Heath bought around 5,000. Damion some of our customers say to us, weve been contemplating a 1,000 costco gazebo, and theyre happy to spend 30,000 with us because they have everything they could possibly need. We actually look after our customers, which is id say 9 out of 10 of our customers actually say thats the reason they bought it. Lemonis the starting price point, the most affordable entry level, is what . Damion 15,500. Lemonis i would like to ultimately have it also be known as the true value gazebo. Angelique well, it sounds like the direction that you want to take is very compatible with what we like to do at true value. I think it makes a lot of sense. What are you thinking . Heath yeah, i mean, i would say that we would be absolutely open to that. I think its a good fit. Lemonis well, thank you very much. Really appreciate it. Heath yeah, thank you. Lemonis im excited for the partnership. True value was impressed enough with the pitch to take on the entrylevel gazebo as the true value gazebo. But i also know that 15,500 is too pricy for true value, so im gonna do something about that. So, i want to challenge you with one thing something that can retail for 9,995. Damion okay. Lemonis hitting that under 10,000 marks gonna be a very big deal. Damion what would you want us to make it for . Lemonis if you can get to 5,000, you know, go there, but dont compromise quality. Damion okay. Lemonis your guy right here i was sitting at this meeting in chicago. His pitch was airtight. I left there, and i was like, i think im gonna use this guy for some other sell. [ laughter ] hows kab doing . Damion so, we met at the restaurant, and we all shook hands. You asked us, are you happy with this . I know he said he was happy. A couple of days after, he sent us all an email, complaining that he wasnt happy. Lemonis do you have a copy of it . Damion okay. Lemonis to be honest, im still feeling like i got thrown under the bus. The whole negotiation was a joke. Nobody else had to negotiate anything. Why do i feel like im getting screwed . Did marcus put you up to this . Put you up to what . Damion if youre a man, have the balls and just say, this is not the deal for me. Just be honest. Just say it. Lemonis what do you think he really wants . Damion he said, its gonna have to be more than 150,000. Lemonis so is he coming here today . Damion yeah. Lemonis good. He could have actually picked up the phone and called me after and said, i dont think its fair, instead of just whispering to the boys. Were supposed to be the adults here helping these guys. Thats our role in this process. It feels like were getting a little greedy here. Kab how are you, marcus . Lemonis how have you been . Kab good. Lemonis everything goo . Kab yeah. Lemonis so, they mentioned that you had some concerns over the last time we met, and so i thought we could just iron them out. I wanted to hear from you man to man. Kab yeah, the whole meeting felt like i was kind of thrown under the bus. Simon i was just upset at the fact that you shook on the deal, and then you went back, and you said that you werent happy about it. Damion i honestly felt, the way you described it, it was fair. As i said, without kab in the beginning, we wouldnt be here. But at the same time, ive sold every single gazebo. Simons made every single gazebo. I think our value of the company is a lot more than yours. Lemonis i know that on the surface, you feel like you got a raw deal. I wouldnt have made the investment without them having more equity, because i cant take the risk of them being a flight risk. I need them to be so stuck to the tar that they have a lot to lose. The goal in my mind was to make sure that the people that were doing the work financially benefited the most and the people that were just investing would not get the same kind of return. Kab the offer to buy out, but i considered the value of the company was too low, and so it wasnt really an option. Lemonis so what are we doing . Kab i think i want you to buy me out. Damion do you think theres any carpentry methods that would reduce this price . Simon no. To reduce the price, its gonna look bad. This is it. Theres no more of getting it down. when it comes to holiday shopping, my wife loves style, my son is all about technology and my daughter . 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Tell your doctor if you have liver, kidney, or heart problems, high blood pressure, high cholesterol, diabetes, or hepatitis b or c, if you smoke, drink alcohol or if you are, or planning to be, pregnant or breastfeeding. Some medicines may interact with triumeq, so tell your doctor about any medicines or supplements you take. The most common side effects include trouble sleeping, headache, and tiredness. Im moving forward. With triumeq. To learn more, get this free kit at positivestepskit. Com. And ask your doctor if triumeq is right for you. Ffer to buy out was too low, and so it wasnt really an option. Lemonis so what are we doing . Kab i think i want you to buy me out. Lemonis ill write you a check for 250,000. Kab okay. Lemonis i was being gracious in offering him 250,000 just to make the situation go away. Hes not worth 250,000, but if he doesnt want to be here, i dont want to be in business with somebody that doesnt want to be in business with me. Kab my son has put together all the website and done all the work on that and all the changes, and i think the company should do something. Lemonis im sorry, but im not following this. This is new information to me. Kab hes done a lot of work. Lemonis well, you just got 250 grand. Why donyou pay him . Kab why dont you guys pay him . Lemonis he did it as an extension of you. Thats one of the things youre bringing to the table, just like you were doing the accounting. And so now after youre walking away with double your money, youre now telling them to write a check. Youre getting 250,000. Dont bring up your son getting paid after. It feels uncomfortable to me, cause im overpaying you for shares that i dont think are worth 250,000 just to get you the [bleep] out of here. And so if you have to take a couple grand and give it to your son for doing some work for a business that you owned a third of, it doesnt seem, like, totally ridiculous to me. Does it . Kab a little bit, just as an integrity thing. Lemonis now its an integrity issue . Damion i believe you took him to hawaii for the work that he did on the website. You paid for him and his family to go to hawaii. Kab lets go to kab and just take everything from him. Thats how i see marcus working a little bit here. Lemonis thats how you see marcus working . Kab a little bit. Lemonis i can make this really simple for you. Deals off the table. Were gonna stick with the original deal that everybody shook hands on. Youre gonna have 12 , im gonna have 12 , and these guys are gonna go work and make us more money. You got greedy. You were offered 250,000, and you then come back and tell them that they dont have integrity cause theyre not paying your son. A ton of respect for you until that moment you asked for them to pay a bill for a company that you are a shareholder of. Lets move on. Lets get back to work. Kab okay. Lemonis i want you to make a gazebo that will cost you between 5,000 and 5,500 to manufacture, but i want you guys to make it together. Communicate. Damion yeah. Lemonis so lets get that paper and get that sketch done. Simon okay. Damion i want us to work with getting the price down with plyboard on the underside. Simon i just wonder how bad its gonna look. Damion i want us to start doing it smart now. Simon yeah, but dont jeopardize on the quality. Its the one thing that we stand by. Damion do you think theres any carpentry methods that would reduce this price . Simon no. To reduce the price, its gonna look bad. You understand what im saying . This is it. Theres no more of getting it down. Hold on a minute. Let me just think. We could pin all the deck boards down, which would reduce the labor cost. Damion so have them just pin, pin, pin. Simon exactly. Its gonna take maybe an hour to do the deck boards instead of maybe three hours. And then we can probably use the thinner fill, and its still watertight. That one is literally half price. So effectively, we can make it quicker and for cheaper. Damion still sticking by the quality. Simon yeah, exactly. Damion so if we just say 5,400, thats a good number. They can sell it for 9,400, 9,900. Lemonis all right. Im happy that im seeing the guys finally communicate. But for me, the real test is what happens when im not here. How you doing, my man . Jack hey, marcus. Lemonis im heading back to kensington today to check on the progress of their lowerpriced gazebo for true value. You had your baby. Simon yes, i did. Lemonis congratulations, my man. Whats happening . Damion myself and jack got the true value gazebo ready, built. Lemonis you did . Damion ill show you it if you like. Lemonis okay. And so what changed . Damion the furniture and the inside of the roof. Lemonis and i love the way that looks. Whats the inside of the roof . Damion so, before, it was the tongueandgroove boards, like this, and now weve done a weatherproof, marine plyboard. Lemonis what did simon think of it . Damion he wasnt over the moon about was lemonis thats too much of a cutting of a corner. What happened since i left . Damion we were all on board, and simon goes to england, so i had to run the business, get these made. Lemonis did you communicate with him . Damion yeah. Sent him pictures. Lemonis he ignored you . Damion he could have just checked in a bit more. Lemonis were getting back to the same issue we had before, which is that you guys arent communicating. Hey, si. Simon yeah . Lemonis hey, buddy. So, i want you to explain to simon what you said to me. Were gonna work this [bleep] out so we dont ever have to do this again. Damion im just annoyed that there wasnt as much contact as i would have hoped for. I think the one person i was looking for contact from was you. Simon its difficult to keep a conversation going. Its like a text here or there. You know, i speak to him every four or five days, and he sent me a picture of one of the instores that hed done, and i was talking to him about it. Ive done my best. I mean, i was trying to balance everything, you know . Lemonis youre not even listening to what hes saying to you, are you . Damion i am. Lemonis i can see it. Youre not even really listening to him. You started looking around. Youve totally checked out of the conversation. Im not letting you off the hook right now, cause i dont believe you. I just dont believe it. Theseare heading back home. Y oil thanks to dawn, rescue workers only trust dawn, because its tough on grease yet gentle. I am home, i am home, i am home my doctor recommended i switch to miralax. On, stimulant laxatives make your body go by forcefully stimulating the nerves in your colon. Miralax is different. It works with the water in your body to hydrate and soften. Unblocking your system naturally. Miralax. Lemonis youre not even really listening to him. You started looking around. You totally checked out of the conversation. If this relationships gonna work, you guys have to be able to look at each other eyeball to eyeball and say something, and it is kind of on you for not communicating. And you have to stop thinking about communication like conflict. If you guys dont communicate, this whole thing crumbles. Damion yeah. Simon yeah. Lemonis i didnt like the wood in the ceiling in there. Simon i dont like it, either. Lemonis were gonna go back to the right way. I want you to do it together, and i want it to be perfect. Damion we could possibly put something in with a solid cedar wall at the back to give it that really nice, highend finish. Simon yeah. That would be good. Damion so if we use the solid canvas, which can be rolled up and down, thats gonna save us another 150. Simon one thing would be using nails instead of screws. The labor cost and the time is gonna be quite significant. Damion time to start saving money. Simon im gonna get on with it. Lemonis im headed to true value in northern california. Im gonna see the new prototype gazebo for the first time. Guys, what do you think about how this came out . Damion love it. Lemonis i mean, the attention to detail is fantastic. Damion thank you very much. Lemonis from what i saw that damion had originally put together for the prototype and what im seeing right now, its totally different. The attention to detail that makes this thing worth 10,000 comes when simon puts his hands on it. The edges are straight. The corners are meeting in the right place. The wood is smooth. The roof looks lined up properly. You can tell that an expert put this together. I want to go through the economics, and so give me our manufacturing costs. Damion so, its 2,000 in lumber, plus another 500 for the roof, 1,000 for the labor and the delivery. Lemonis im impressed by what these guys have been able to do. I gave them a target manufacturing cost between 5,000 and 5,500. Theyve been able to hit a target of around 3,500. Thats allowing them to wholesale the product for less, subsequently allowing the retailer to retail it for less. All of that means more volume. If three a month sell here, it could generate a whole business worth of revenue. Damion yeah. Its worth it. Lemonis well, why dont we greet some customers and kind of get some feedback . Welcome to kensington garden rooms. Simon im simon. Dawn dawn. Simon nice to meet you. Lemonis isnt it coollooking . Woman very cool. Lemonis so, this is all handmade. Damion and we include things like this umbrella canvas, all of the furniture. Lemonis have you ever thought about having a gazebo . Woman absolutely. Lemonis we have an arrangement with true value where this one will sell for under 10,000. Woman oh, wow. Woman 2 ive always wanted a gazebo, actually. Lemonis theres been more people in the first halfhour of standing at true value than there was in four hours standing at the fair. The number of buyers that could potentially buy this product tripled, quadrupled, times 10. How are you . Rick im rick. Lemonis im marcus. How are you, sir . Im marcus. Nice to meet you. What do you think of the product . Tom its gorgeous. Lemonis okay. Tom what id like to do is keep it with our Nursery Products outside. Lemonis thank you. Were ready. Lets move it. Im excited. Simon watch the roof. Were gazebo surfing. Jack where we are today, kind of start pinching yourself every day. If there is an issue, we speak about it. Theres no raising the voice. Theres no argument. Its exciting. Damion i feel sophisticated. We were making these in our garage, and now its paid off big contracts, beautiful workshop, new business partner. Its unreal. Lemonis i think the only thing that i ask of the three of you, other than you run a Good Business and take care of the customers, is to treat each other with respect. Communicate. If you have an issue, sit down and discuss it. Just be a team. When i first met you, nobody was respecting you, and you two were killing each other. You control what happens, and if this business is gonna be successful, its gonna be because of what you guys do, not because of whit do. We appreciate you. Jack thank you, marcus. Simon thank you. Lemonis be good. Dont kill each other. Damion we wont. Lemonis all right, my man. Be good, okay . This business went from being in an almond field to being in a real warehouse in a real company in a very short period of time. And the boys theyre communicating properly. And thats the thing that im happiest about. Damion im happy to be in business with you both. Simon and me. Were almost there, my man. Tonight, on the profit, i go inside athans motors, a used car dealership started by a guy with no car experience. I dont have cars, but i have a Good Business. But you dont have cars that the business no, im done arguing with you. He spent so much money building the most opulent dealership i have ever seen that now he cant afford to buy cars or pay bills. If i cant stop the wasteful spending. Whatd you spend on these walls . 100,000. Wow. And sell some cars. I wont sell it. That cars worth 30 all day. Athans motors will be out of business. My name is marcus lemonis. I fix failing businesses. This month you lost 150,000. I make tough decisions. Youre not gonna come behind every Single Person and change the deal. I didnt agree to this [bleep]. And i bac