And do you make this bag still . Chris no. Lemonis youre, like, no, no, no. Its too much revenue. Hes lost faith in his skills. Chris i did a sketch once for my factory, and they laughed at me. Yeah. Lemonis now hes about to lose everything. Chris ive dealt with bullying. Im just built more sensitive. Lemonis if i cant help him regain his confidence. Meredith is this a backoff moment . Chris a backoff meredith thats fine. Chris no, no. Well, i mean. Lemonis . Diaper dude will disappear. Chris [ sighs ] we got to take that sign down. Say goodbye to diaper dude. 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. Lemonis lets go to work. Lemonis . Is the profit. Some people may wonder why im interested in diaper bags. Yeah, its a niche product, but bags arent. Its a giant market. And quite frankly, with chris creativity, i think he could do a whole lot more. As we know, dads are more involved in raising their kids than ever, and the fact that one person had an idea to address the market, well, thats interesting, and i want to meet him. Hello . When i arrive at diaper dude, i walk into this giant space, and it almost looks like theres not even a business here anymore. Made me think that i found the wrong suite. Hello . Chris hey lemonis hi. Im marcus. Chris marcus, its a pleasure. Lemonis what is your name . Chris chris. Lemonis chris, nice to meet you. Meredith im meredith. Lemonis meredith, how are you . Chris its so awesome to have you here. This is diaper dude headquarters. This is where we inventory, fulfill, and ship out. Lemonis diaper dude. Do you have a bag i could see . Chris oh, my god, yeah, of course. This is actually what started the brand 15 years ago. It literally is just a messenger bag that you can now hang from a stroller cause its a popular thing to be able to hang it from the stroller. Its compartmentalized. It can be messengerstyle. So you essentially can be handsfree. Lemonis dads on the go, right . Chris yeah, exactly. Lemonis whered you get the idea from . Meredith its a funny story, actually. He tells it well. Chris so, we have three children. Our oldest is 18, our youngest is 13, and then we have a 16yearold. Lemonis how long have you guys been married . Meredith 20 years. Chris when she was pregnant, she was at a sample sale and came home with literally, like, a dozen flowery diaper bags, and they were leopard print and all different stuff, and i asked, wheres my bag . And she said, take your pick. And i said, no way. I did not want anything like that. So i just searched for bags in the marketplace. There was nothing out there. Meredith you really created a category for men. Lemonis what were you doing at the time . Chris i had my own dogwalking business. Lemonis okay, dog walker. Thats cool. By the way, this is a cool dogwalker bag. Poop bags, leashes, treats. Chris totally utilitarian. Lemonis i hate the material, though. Meredith well, its, like, the canvasy lemonis feels like a cheap canvas, though. Theres this one. Chris this one is this one is currently selling at buy buy baby. Lemonis oh, it does . Chris yes, yeah. So, like, buy buy baby is one of our big accounts, and theyre part of bed bath beyond, essentially. Meredith so its, like, the baby version of it. Chris a lot of the diaper bags meredith it just didnt exist before that, you know lemonis do you guys Work Together every day . Meredith yes. Chris no, no. Basically, i mean, i run everything by her and meredith um, no, well. No. But its a Family Business because its our business, right . And we run and bounce off ideas all the time. Chris and the point of where we are meredith this is really chris business. This is really chris business. Lemonis okay. How much revenue will you do a year . Chris well, at our height, we were almost 2 million. Lemonis how much will you do now on an annual basis . Meredith were in a huge deficit. I mean chris yeah, its just under 5. Sales have dipped tremendously. Like, one of my buyers has been rejecting a lot of my product, which has been really frustrating the past two years. Lemonis a big, mass customer . Chris yes, yes. So thats made it a little more challenging to keep things running smoothly with income. This was the first bag i started out with, along with this bag. Lemonis this is how the Company Started right there . Chris yeah. Lemonis and these sold well . Chris they did, and they still do. Lemonis who designs the bags . Chris like, this one, i put together. Plus, our messenger bag, and then, i ended up hiring two designers that i work with. Lemonis how much of the 2 million came from these three items . Chris i would say the majority came from these. Lemonis and if you designed these, why did you get away from designing . Chris because it was not necessarily my forte. Like, i [ laughs ] lemonis i mean, maybe it wasnt your trained. Chris right. Lemonis . Skill, but if you made a bag that generated several million dollars, maybe you should not be dog walking anymore. Chris [ laughs ] lemonis and do you make this bag still . Chris no. Lemonis youre, like, no, no, no. Its too much revenue. Chris no. Lemonis i dont want it anymore. Get rid of it. Chris but this is i wish. No, this is one of my favorite bags. But what happened is lemonis but whyd you stop . Chris because the price point in the market was becoming it was too high for my newer buyer. And she thought i was too trendy, too hip. Lemonis this bags frigging awesome. Chris designs actually sold, and they sold very well. And then, one day, he just stopped designing cause he met a buyer that didnt like it. It seems like he should just trust his instincts and go with what brought him to the success that he got to. Theres one common theme, in my opinion, that is throughout. Its the quality of the materials. Is it a lowergrade canvas . Chris its a 600d, so it is more of the lower version, as opposed to, like, 1,000d and things like that. Lemonis and so, what would this bag cost to make . Chris 15. Lemonis and if you upgraded the quality of the material . Chris it would probably go up at least close to 1 minimum, depending on lemonis 1. What would you sell this for . Chris 64. 99. Lemonis and 65 retail . Chris yes. Lemonis with design on products like this. Chris yeah. Lemonis . The last dollar you spend is the most important dollar. Its 1 to increase the fabric, and its another 1 to increase the zipper, and theres Little Things you could do put an extra 3 in it and you go to 18. Cost is still a 72 margin. Chris amazing. Lemonis id rather have a low cost to operate and a slightly slimmer margin because i invested it into the product to separate myself without separating price. Chris right. Lemonis before you launched, did you get feedback in the marketplace . Meredith i mean, yeah. You run it by we have a lot of people in our community, i think, that we would. Chris right. Meredith . Run ideas by that we trusted. Lemonis nothing formal . Chris no. I ask her, and if she says yes, then. Lemonis but what is all this . Chris these were all my attempts to get new product into the market. This is what we call dapper dude, and its two skinny ties for two cool guys. Its for dads with kids. We also did baby carriers. Lemonis is that what this is . Like. Chris yeah, thats part of, i think, a hood for the top. Lemonis what is this . Chris this is a bottle holder, insulated bottle holder. Lemonis are these for beer cans . Meredith they could be. See . Multifunctional. Chris so, this is an idea of, like, a pacifier pouch. Lemonis these additional product extensions that chris tried to come up with, candidly, makes no sense to me. I mean, it was almost like he just threw a bunch of crap against the wall and saw what stuck. Chris there was a lot of competition in these areas, so they didnt perform as well. So lemonis well, they didnt perform. Chris i mean, theyre lemonis theyre also sort of. Chris cheap. Lemonis yeah. Lemonis and so, how do all these ideas come to be . You started with something that had, like, meaning and substance and a story behind it. And then, you had a little bit of success, and then youre, like. Chris i was just trying to meredith buyers. You were trying to please the buyers. Lemonis those are desperation products. A buyer says, do it, you do it, and it ends up right there. Meredith weve invested money, even in people, where it was almost like empty promises. Chris to give you an example, i had a Marketing Company that i worked with and came up with the concept of true dude. And true dude is a brand described as a lifestyle brand designed to honor todays men who leave a positive impact. Lemonis did you write that . Chris no. Lemonis you hired them to do this . Chris correct. That was, like, a huge 200,000 investment that was supposed to help revitalize the business and basically flopped. Lemonis one of my biggest complaints with companies is how they prioritize how theyre gonna spend their money and their working capital. And when youre just starting out, you want to invest all that you have into the people and the product and the process, instead of spending 200,000 with a Marketing Firm to design a campaign about your image. Look, its fine if youre procter gamble, but not if youre diaper dude. Chris i envisioned, when i started the company, eventually as we started to grow, expanding the brand. Meredith hes the most inventive person, im telling you, since ive met him. Its, like, you name it, hell be, like, if only this you just need capital. Lemonis look, theres no question that meredith is her husbands biggest advocate, but she always takes over the conversation and speaks for him as if she doesnt have confidence in what hes about to say. The bigger problem he lets her do it. Do you listen to her when it comes to business . Chris yeah. Meredith yes, he does. Chris shes really wellread, knowledgeable, and so meredith well, i get frustrated if i knew something to begin with. Im, like, unhunh, i dont this is not a good idea to put the money. Lemonis does he listen when you say, unhunh, its not a good idea . Meredith yeah. How is it gonna monetize . Show me the money. Lemonis so you thought all these were good ideas . Meredith some of them i mean, i was annoyed that he was having this issue with the buyer, and he kept having to go. Lemonis and did you say to him, stop . Meredith no. Lemonis how much money do you think you wasted over the years in ideas and ties and bottle holders and sample bags and space that you didnt necessarily need . How much is the rent . Chris its 3,500 a month. Lemonis this is a big space, but right now, it looks like you guys are kind of locking up. Chris if i could keep this going, nothing would make me more happy and passionate and excited to continue the brand, but ive exhausted all of my capital and resources cause its all been personally invested in. Lemonis if this business doesnt make it, what does that mean to him . Meredith it means everything to him. I mean, we started in our garage. It came from the idea of having a baby. Its, like, you birthed this idea at the same time that we had a new experience at becoming parents. And so there was so much meaning behind that, and its our family. If you look around, these are all our kids. Lemonis these are your kids . Meredith yeah. Lemonis is that you . Meredith thats chris. Lemonis is it . Thats you and your kids . Meredith they always wanted to be with him. Chris as a dad not being able to necessarily bring home money for the family, too, i just felt like, i, um. I drove it into the ground, and it didnt its no longer capable of surviving, and it just made me feel like it was a representation of me. Lemonis hi, there. Akiko hi. Lemonis im marcus. Akiko akiko. Lemonis akiko . Thats a cool name. Akiko thank you. Lemonis what do you do here . Akiko operations. Lemonis operations. And do you do the accounting, as well . Akiko just light accounting. Chris i got to the growth of the company because of her help, and shes been basically well, you have been. And shes also, like, afforded me to be able to have the travel time that i need to do with meetings and such. Lemonis how long have you worked together . Akiko 13 years. Lemonis 13 . Youre really helping run the business. Akiko thank you. Chris i know. Lemonis okay, why dont we sit down, go over the financials. 2015, total sales 900,000. 2016 460,000. 2017 431,000. And last year, the company lost 186,000. What do you think the biggest problem is with the business . So, the total expenses in 2017 are 344,000. Your rent is 42,000 a year. 4,000 a year in cellphone. 4,000 a year in landline. 15,000 in marketing or consulting. Marketing pr 10,000. Product development 30 grand. Chris yeah, that was a lot of all that between the designer. Lemonis you mean all the ping pong table stuff . Chris yeah. Lemonis what do you have in debt . What are your payables . Chris um. This is 17. Where did the 18. Yeah. Thats the balance sheet. Meredith this one, too . Lemonis so, total payables 410. So you dont owe anybody any money because you havent ordered any inventory. Chris right. Lemonis the business is essentially debtfree . Chris yeah. Lemonis right . But it doesnt have any cash. Chris yeah. Lemonis bags did 2 million, and people didnt become less babyfriendly. So, im willing to take a shot. Im willing to put up 200,000, but im gonna want to own 60 of the business. I want to increase the volume, which lowers the price. And then i want to reinvest the difference into improving the quality. I dont like the material on the bags. I think theyre cheap. I think the zippers can be improved. I think we should make it so that when my diapers are done and my babys grown up, i can still use the bag. I have a business here in l. A. That has all of my other products, and i would have you guys sit inside of my infrastructure so theres not, like, separate phone bills, separate web bills. Chris yeah. With the investment, so, how do we what are the benchmarks and how are they reached with us . Like, obviously, i want to grow the sales as much meredith hows this allocated . Chris cause lemonis which question . Chris i know. Baby, um, lets ask meredith the allocated . 200,000, you said. Lemonis where it just goes into the business for working capital to invest in inventory. Meredith okay. Lemonis . And to invest in how that inventory is gonna be marketed and fulfilled. So i want you to make at a minimum 60,000 a year. A huge increase for you. Chris yeah, yeah. Meredith 60,000 after taxes thats not a lot of money, you know, for a family. It sounds like there could be room for negotiating for a higher salary. Lemonis i think the thing for me is, if we werent doing a deal, what would be happening to the business . Chris it would be it would i think eventually, itd close. Lemonis if your business is in trouble and you need my help, log on to theprofitcasting. Com. So youre a small bor a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Msounds like there could be room thats not a lot of money. For negotiating for a higher salary. Lemonis i think the thing for me is, if we werent doing a deal, what would be happening to the business . Chris it would be it would i think eventually, itd close. Lemonis a different way to look at it is, hes gonna make money before i make money. Meredith okay. Lemonis cause i make im gonna get paid nothing. If the business just makes 100,000 a year, how much will i make . Meredith 60,000. Lemonis how much will he make . Meredith 40,000. Lemonis on top of. . Meredith 60,000. Lemonis and how much does that total . Meredith 100,000. Lemonis so hell make more than i do. Meredith i see. Lemonis and i have all the risk. So, what do you want to do . Chris its a reset. Its like starting from scratch cause everything is there meredith and sometimes, things are required to do that, and if youve created something that generated that much money at one time, guess what. It can do it again. Chris this is the only way that i think this can be done. I agree with you. Lemonis lets go to work. Do we have a deal . Chris i would love to. Meredith yay its such a pleasure chris marcus, thank you so much. Wow. Thank you. Lemonis slow the ideas down. Meredith okay. Lemonis we have a really beautiful office. Sleep tonight. Next time, youll be moved in. Well just keep the ball moving forward. Chris yes. Meredith thats great. Lemonis okay . You ready to go . Meredith yay akiko thank you. Lemonis see you guys soon. Meredith akiko. Chris oh, my god, its, like wait. We need, like, a family hug. [ laughter ] lemonis hi, guys. How you doing, brother . Chris good, good. Lemonis everything good . Packed up . Chris were getting there. Lemonis this is moveout day. What i want to do is grab the bags and then lets go over there. Chris okay. Perfect. Lemonis today, were closing diaper dudes office, and were moving to my office just a few blocks away. This is it, buddy. Chris i know. Lemonis is this hard for you to leave here . Chris yeah. I mean, this is, like this is everything i know, you know . Its really everything that weve done past over a decade. [ sighs ] we got to take that sign down. Say goodbye to diaper dude. Lemonis ready . Chris yeah. All right. Lemonis i have a showroom thats located downtown where a number of the Small Businesses that im invested in work out of a shared space. Akiko oh, wow. Meredith this is amazing lemonis theres design space. Theres creative space. Theres web services. Theres a number of things there that give all these business the chance to utilize them without having to have them on their own payroll. So, you have some creativity with how much space you need. Akiko okay. Lemonis whats the best part of this space . Its free. Chris its amazing. Unbelievable. Meredith wow. Lemonis your design table could probably go in the window or over there. Chris cool. Great. Awesome. Lemonis and you can use the whole space. Chris gotcha. Lemonis but for displaying merchandise, you just have to keep it cause theres other companies here. Chris hey, just introducing myself. Juli juli. Chris juli, im chris. Brad brad. Chris brad . Nice to meet you. Brad we do a little bit of everything, but mainly handle all the operations for all the brands that we bring in. Chris right on. Awesome. I started diaper dude is the name of the company. Theyre diaper bags designed for dads, messengerstyle. Juli cool. Brad ive actually seen your canvas. Chris oh, yeah. Brad . The full bag at buy buy baby. Juli hes actually a new dad. Chris oh, right on really . Juli so hes your spokesman right here [ laughter ] renae chris, how are you . Chris hi. Renae renae. Nice to meet you. Chris nice to meet you. Chris this is meredith. Renae hi, meredith. Lemonis chris started a Company Called diaper dudes a long time ago 15 years now.