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Marcus Lemonis: The Biggest Mistake Small Business Owners Make
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December 21, 2018
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1:40Now PlayingMarcus Lemonis is adamant that he always puts his best foot forward when it comes to dealmaking. Unfortunately, that's something the small business owners he works with on CNBC's "The Profit" don't always realize until it's too late.
"My first offer is always my best offer," says Lemonis.
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Lemonis, a self-made millionaire who is the CEO of billion-dollar company Camping World, is talking about the first offer he makes to his potential business partners. On "The Profit," Lemonis tries to help struggling small business owners turn around their fortunes, which often includes the millionaire putting up his own money (along with an episode's worth of business advice) for a stake of those businesses.
Lemonis occasionally reminds the entrepreneurs he meets on the show that they would be wise to take his first investment offer, because he's unlikely to be as generous the second time around.
"For people that are on the show, that have watched the show for years, they continue to make a mistake," Lemonis tells CNBC Make It. "When I give my first offer, it really truly is my best offer. And, when the next offer comes around, well, it has the appearance of looking like it's a better offer and it usually has other strings attached to it."
For instance, Lemonis says, his second offer might include a a higher percentage stake in the business for Lemoniz, which also means a larger amount of control in the business for Lemonis. Or a subsequent offer could affect that valuation of the company.
In one episode of "The Profit" that aired in June 2018, the brothers behind the Southern California apparel company Tankfarm rejected Lemonis' first offer, which was for a $2 million investment that would have given the Camping World CEO a 50.1 percent equity stake in the company.
After some discussion, the Anderson brothers decided they should have accepted Lemonis' initial offer, but Lemonis refused to put it back in play. "Uh uh, that deal's off the table," Lemonis told them.
Instead, they reached a deal that saw Lemonis put in just $1 million and receive a 33.3 percent equity stake — a smaller cut for Lemonis, but one that placed a smaller valuation on the company. The deal they agreed on also gave Lemonis full control of business decisions as he looked to help the owners turn their business around.
"Once people hear what my second offer is, [they might] want to call back that first offer," Lemonis says. "And, I'm sorry, but that train left the station about three minutes ago and I won't go back."
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Marcus Lemonis: This is the biggest mistake small business owners make on ‘The Profit’ | CNBC Make It.
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