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. Have you any wool . Eep, no sir, no sir, some nincompoop stole all my wool sweaters, smart tv and gaming system. Luckily, the Geico Insurance agency recently helped baa baa with renters insurance. Everything stolen was replaced. And the hooligan who lives down the lane was caught selling the stolen goods online. Visit geico. Com and see how easy it is to switch and save on renters insurance. Witness katy perry. Witness katy perry become a legal witness. Witness katy perry and left shark. Or a card shark. Grandma . Witness katy perry work. Witness katy perry firework. Witness katy perry swish. Witness katy perry. Aaaaaaw look at that dog katy perry with music videos and behind the scenes footage, xfinity lets you witness all things me. 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 . Whenstuff happens. D. Shut down cold symptoms fast with maximum strength alka seltzer plus liquid gels. Only have a sore throat . Get longlasting relief for up to 6 hours with new alka seltzer plus sore throat relief. Hey steve check out this guys leg. Yeah looks like a real nasty moving back in with his parents. What . No. I just broke my leg. No, this is a full blown move in to the basement, youre gonna be out of work without that money from. Aflac you might miss your rent. Aww i just moved out. Bummer man. Hey i used to have my own place. Yeah . No, no i live with my mom, but its cool. Health can change but the life you love doesnt have to, keep your lifestyle healthy with. Aflac i am so busy. So chase sapphire reserve cardmembers a