Before this business crumbles and dozens of employees are out on the street. You dont know how to manage this place. Well. [blathers] my name is marcus lemonis, and i fix failing businesses. I want 25 . Youre gonna make a decision now. I make tough decisions. Youre being demoted. Back them up with my own cash. Its not always pretty. Get your ass back here right now. This is business. I do it to save jobs, and i do it to make money. This is the profit. [upbeat music] jacob maarse florists is a pasadena institution. For 52 years he was the goto florist. The business made millions supplying flowers for president ial inaugurations, celebrity events, and the annual rose bowl parade. When jacob died in 2010, his son hank took over the business. Its been a very tough transition. Hank has struggled to lead. Therell be some growing pains. Um. So, well, first of all, im on the top, im the president , im the owner. Just three years later, revenue is down and those profits have turned into losses. Last year maarse generated 3. 6 million in revenue but still showed a loss of 20,000. Between the prices and the disappointing product, i dont know that i would keep coming back. To keep the business up and going, hank took a 200,000 loan from his mom and borrowed another 100,000 from the bank. I would agree were not making money. Right. Hank hasnt made a profit in three years, and hes 300,000 in debt. Thats not a good sign for the 30plus employees who depend on this company to earn a living. The flower industry generates 6. 5 billion a year, and i want a piece of that. If hank maarse is willing to follow my lead, i know i can turn this place around and show profits within a very short time. There is so much stuff in here. The layout of the store makes absolutely no sense to me. I mean, there is merchandise everywhere. Seems like a lot of stuff. [laughs] like, you dont even know where to look first. I see candles, i see greeting cards, i see lotions. How could you possibly sell anything if the customer cant find what they actually need . Confusing your customers is an absolute guarantee that you will lose money. Burnedout bulbs and cobwebs. Its filthy. Its dirty. This is ridiculous. No arrangements here. Nothing. Ive been here for over five minutes, and i dont see an employee anywhere. Anytime i go into a business and they dont greet me within the first five minutes, i turn around and leave. Hi, guys. Well, there you are. Hello. Im marcus. David. Theres barely any flowers on display. And the floral designers, well, its like theyve hidden them in the back. Why wouldnt you want to put your most important asset front and center . Do you know where i find hank . As i walk through the store, i dont understand where hank is. Does anybody know where hank is . This guys supposed to be the Business Owner . Hes asked me to come, and i cant find him anywhere. Probably has his hands full with something. If this was my business, id be out front and center, especially if somebody like me was coming to help. Im accustomed to the old school. We had a very good management. Some of the reviews i was reading online is that the business really changed after jacobs passing. Yeah. People come in here and say, whats happened to jacob maarse . Would he have allowed that . No. No. Hello, im marcus. Hi. Marina. How are you . Both nice to meet you. Youve been here how long . Close to ten years. Ten years . I love working in the store. I grew up here. I mean, i got married here, i had a child here, its a dear place to me, and jacob was a wonderful man. Are you responsible for the showroom . Yes. So why would all the bulbs be burned out . Weve been working on getting new light fixtures. And the cobwebs, those are from halloween . Probably. Left over from halloween. Some of these things are definitely long overdue. So anything thats gonna make the business a lot more successful and give a different twist to it, im all for it. You think theres too much stuff in here . Yeah. Do you guys think you have good Inventory Management . Inventory managementum, as far as knowing whats coming and going . When i meet a general manager, i expect them to understand the fundamentals of business, especially inventory. You have to know what you have, how much it costs, what youre selling it for, how old it is. All those things add up to making money. If you dont know it, how are you supposed to make money . Hank, im marcus. Marcus, nice to meet you. Nice to meet you. How are you . Thanks for coming by. Doing well. Thank you. Youve got a beautiful shop here. Thank you. Lot of history. A lot. By the way, thats a killer picture of your dad. Thank you. When you took over officiallyyour dad passed two years ago . Yes. Is that when you officially kind of stepped in . Yeah. How much money will this business lose this year . 100,000 . No. Less. And last year . How much did it make or lose . Last year was 20,000. 20,000. And the year before . A loss of 20,000. 40,000. And if you had a couple bad months and you ran out of cash, what do you do . Get a loan from the officer. Your mom . Yes. Okay. And how much would you say shes put in here in the last. Three years . Probably close to 200,000 as loans. Is that the only debt on your books . And weve used our line of credit at the bank. How much is that . 100,000. Thats tapped out . Yeah. Over the years ive met a lot of secondgeneration Business Owners. What im concerned about here is hanks mother continues to write checks to keep this business open. When you walk in the front door, if i said to you, okay, what is this place . , how would you describe it . Flower shop. You would say a flower shop. And gift shop. [laughter] and what else . And candle shop. Is selling flowers the most profitable . To be honest with you. I dont know. You know you got to know these numbers, right . Yeah, i know i do. Okay. Does your mom ever ask you . No. Okay. Oh, my goodness. There is so much inventory in here. What do you think this is . Yeah. The warehouse looks like theyve stockpiled five years worth of inventory, and its unorganized. You know how many are in this pallet . Uh. Uh. Hank has no idea whats going on around here. There is merchandise thats been here since hanks dad was running the place. How do you keep track of all this stuff . Do you have a good Inventory System . We have a book that we go along with. Handwritten . Oh, yes. So none of this stuff is in a computer or any sort of Inventory System . No. No. Wow. When you have inventory sit around for years and years, while its depreciating, its just like burning money. Is there a location in l. A. . There was. When did this one close . Ten years ago. You closed ten years ago and you havent taken it off yet . Now wheres the phone number . Or who do you call . I didnt like having the phone number on it. You dont want anybody to call . Mmmm. No, cause that would mean business would go up and youd have to work harder. Right, and then id have to work more and buy more flowers. Okay. Yeah. Hank is so lax about how he runs his company he cant even be bothered with putting a simple phone number on his van. He jokes about it, but, if he doesnt change his ways, more than 30 people could lose their jobs. Maarse does over 3. 6 million a year in sales. And flowers account for 3 4 of that. And since most of it is delivered, i need to get out and see if this delivery process is actually working. I went online to learn more about this business, and the one thing i noticed, there are a lot of complaints about the deliveries and the products once they got there. How many miles on this, do you know . This van . 116,000. Hows it run . It runs pretty good. Does the air work . The air in the van doesnt work, and youre in Southern California . How are you supposed to deliver Fresh Flowers in 90degree heat . No wonder people complain. So are we going the right way . I believe so. Chris, we cant do it that way. We needwe need to know where were going. Im kind of an old school, analog guy, so a map book provides an overview of the area as opposed to just turn left, turn right, turn left kind of stuff. Their delivery process is extremely archaic. This isnt legal, but im doing it anyway. They have no gps. They use a map when theyre gonna leave the store. They have no routing system. No wonder these deliveries are late. Is this it . No. This is 69. So we passed it . We did, cause i was too busy yapping. Maarse spends over a Million Dollars a year buying flowers, and 10 of that, 100,000, is thrown away. A better delivery process and working coolers will cut that number in half. Dont hit the cat. El gato. [meowing sound effect] jacob maarse is marginally unprofitable today, but it wouldnt take much to return it to its glory days. A few small changes, and this place would be wildly profitable again. So you have a business that has a broken process, a good product. Your mom puts money in the business, and you have to run most of the decisions by your mom . Yes. And youre 49 . Yes. Hows that sound to you . It sounds pretty [bleep]. Um. Lets pretend for a minute that your mom didnt want to write any more checks. What would happen to this business in a year . I dont know. Running a successful business requires the three pspeople, process, and product. And maarse has a great product. But their process is lacking. I think its a direct result of the people, especially hank. And people could be the hardest thing to fix. So do you agree that you need a Financial Partner thats not your mom . Yes. Do you agree that you could use a Business Partner thats not your mom . Mm, i dont know that i would want to have a partner. You have one now. Well, my parents, yeah. But i would like to maintain 100 ownership here. Hank called me here because he wants my money, but what he really needs is my expertise. But this business can only succeed if hanks willing to change his ways. Hank, let me be very clear. You need some help, and you need it now. Youre gonna keep calling your mom every time you have a problem . Am i wasting my time here, or are we about to get down and get to business . Which one is it . Coming up. Marina, look, i dont think hank is making this very clear. Youre being demoted. And later. You have no idea about your inventory. This pile of stuff is sitting here, and we still dont know what were gonna do with it. We love our new home. Theres so much space. We have a guestroom now. But, we have aunts. Youre slouching again, ted. Expired, expired. Expired. Thanks, aunt bonnie. Its a lot of house. I hope you can keep it clean. 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Hanks not the decisionmaker here. Very nice to meet you. To meet you. He may own 100 of the stock, but he doesnt even own 1 of the decisionmaking. In my brief day herei was asked to come here by hank. I want to be very clear about that. Ive concluded that this business is a total mess. And, mrs. Maarse, i wish jacob could be here, because im sure jacob would throw me out. But the difference is is that i dont think things would be this way if jacob was here. Hank, look, if you continue to do the same thing, your business is gonna close at some point. I know that she can afford to write checks forever because she doesnt want her husband and her name absolutely. Okay, mrs. Maarse, what im telling you is, if you continue to write the checks on a monthly basis, he will never have to fend for himself. He needs someone like me to hold him accountable for poor performance. I dont think youre willing to do that, and i understand why. But i have to tell you that thats not the way to run the business. So im gonna give you my offer. Okay. Okay . Im gonna give you a check for 100,000. For this 100,000, i want 25 of the profit so that im incentivized to help you grow your business with you side by side. I was thinking more of 20 . Hank, look, my time is valuable. I dont have time to be doing this all night. 25 is really the number that i need that incentivizes me to do the things that i think need to be done. Investing in businesses is always a risk. But i always gear my offers towards minimizing my risk. Theres over 400,000 of inventory here, so my 100,000 offer is safe. If this deal goes bad, i know for certain ill get my money back. And you understand, for the next week, im 100 in charge. Last year, maarse lost 20,000. But i know with a few tweaks, we can go from losing 20,000 to making 1 2 million very quickly. Im so confident that i can make a difference, im writing a check. Is this a now or never deal . Youre gonna make a decision right now. All right. Im okay with that, for one week. But all i ask is that you dont screw me. You dont take my money. Were not the type. Yeah, you wont find anybody that well, why did it take you a while to say that to me . Your mom said it right away. Why did you have to think about it . Im just surprised you would even Say Something like that. Well, sure, you have to say things like that. Yeah. We have a deal . This is all done on the handshake . Is your handshake not good . Mine is. Yours is good . Always. Okay. We have a deal . Deal. Now that theyve shaken my hand, im done being a nice guy. Im gonna test them and their businesses in ways theyve never been tested before. Lets get to work. All right. Thank you. Thank you again. Could all of you join us . Were gonna have a store meeting. Profitable businesses need three things the right process, a great product, and good people. Here, they need help with all three. My name is marcus lemonis, and some of you have seen me around. And im here to help fix this business, so people dont lose their job. There are 32 employees relying on this business for their livelihood. And ever since jacobs passing, theyre starving for leadership. For the next week, im in charge. So what were gonna do is were gonna make some massive changes, and, at the end of this week, were gonna have a grand reopening. Were gonna let our customers tell us if weve gotten it right. I need to get rid of excess inventory, make timesaving changes, and i need to organize whats left. In order for that to happen, i need to put in the right system, like a barcoding system. This building looks terrible. Maarse has a viable product here, but, in order to make it good, we need to display it to the customers in a way thats appealing. They need to see it, and it needs to be presented in a lesscluttered, lessdisorganized manner. The entire store needs to be remerchandised. Were gonna become profitable together. So, marina, you have something youd like to say . I am extremely excited to see whats gonna happen. And the fact that we are gonna honor jacobs name is extremely close to the heart. Hank. Um, i dont know. Im just excited that were gonna actually live up to the legacy that they began. That you began, your family. That my family began, yes. Okay . So lets go get to work. Thank you. What i want to do is have you guys understand what i think is the single biggest reason that the place loses money today. I want to actually make an arrangement. This simple exercise that im asking hank and the team to do isnt complicated. I want them to take a typical arrangement and break it down into parts and pieces so we know what were selling the product for and how much each piece costs. This is the thing that will help us go from the red to the black in one month. Marcus has a good reputation as far as a businessman, but i dont know that he necessarily knows the flower business. So thats yet to be seen. Somebody called in a 75 order. Well, im dothis is 85. 85, okay. Its an actual order. So theres two things that go into this arrangementraw materials and labor. How much is the bowl . Ten. How much is your time . 15 minutes. 15 minutes at 20 bucks is how much . 5. So now were up to 15. Okay, keep going. How much are the hydrangea . The hydrangeas are 3 each for the white. So now were at 33. How much are the tulips . 15 a bunch. Okay, so now were at 48. One bunch of hyacinths, theyre 15 a bunch. Okay, now were at 63. Im gonna do garden roses. How much is that . 2. 50 each. 7. 50 . Were at 70. 50 right now. Three stems of lilac. Lilac is 60 a bunch. So well call it 3 for this discussion . Sounds good, yeah. So were at 81 in cost. So if youre selling this for 85, you know what, good job. We just made 4. Pricing at jacob maarse hasnt changed in years. The cost of materials has gone up, but they havent raised the price to the Retail Consumer at the same time. So if you look at a simple arrangement, and the cost used to be 75, and now the cost is 85, you cant price it at 85. You have to move the numbers up appropriately. These margins arent acceptable. We cant make money that way. Can you grab this with me . Were all working to get this warehouse cleaned up. And i want all hands on deck to get ready for this regrand opening. Is raul here today . He was asleep. He kind of forgot. Hes coming right now. Employee tardiness costs business thousands of dollars each year. Not only is it bad business, its not gonna happen on my watch. I talked to erick about raul. Mmhmm. Whos not here. Right. People can kind of not show up, and they would just kind of get away with it . As general manager, marina needs to set the tone. And showing up for work late i