Hi there, everybody. Im j. J. Ramburg, welcome to your business. This brand probably looks familiar to you but youll never believe the ups and downs the entrepreneur behind these cookies went through after entering into a terrible partnership. Tates bake shop is known for these thin, buttery, crisp chocolate chip cookie. Her who sale factory on the east end of long island turns out more than 2 million cookie as week that are distributed throughout nationwide. I want amounts to 10 million a year. The cookie has to be crisp. But tates is second bakery business. Her First Company kathleens bake shop was an institution in tony South Hampton, new york for 18 years until she made a bad business decision to form a partnership with a former employee and his brother. That mistake cost sue herrera name, her brand, and her first thriving bakery business. They destroyed everything i ever had from cat liens bake shop. Everything. Baking since she was a child, kathleen started selling cookies at her familys roadside farm stand. I grew up here on South Hampton and started baking cookies when i was 11 years old. My dad told me i was old enough to buy my own clothes and bake my own cookies and sell them at the farm stand. We didnt come from money so anything you wanted you had to buy or save for. Kathleens bake shop was a success from the start with a slew of celebrity regular, great press and a wholesale business that was growing steadily in the new york met introduce poll tan area. She bought a building in South Hampton. Worked crazy hours baking and taking care of all the finances, marketing and Everything Else in her business. When i was 40, i was now in the business 20 years, i was getting tired and i would like some kind of, like, a little bit less commitment and less stress. She had generous off towers buy the business on the table but she always promised an accountant work forge her that she would give him the chance to buy the Company First should she ever decide to sell. He jumped at the opportunity. But insisted his brother join the deal. That sense of fairness set her up for a devastating fall. The business deal i made was crazy naive. I didnt have the best lawyer, obviously. And the deal was onethird, onethird, onethird. In my brain, were all equal. But together they were two thirds. As soon as the deal was done the brothers started to make major changes diminishing the quality of the ingredients, moving the wholesale bakery to virginia, and hurting kathleens reputation. Before i signed i had some kind of instinct. But we had gone so far. I gave my word. I felt it wasnt right to back out at the last minute. A long Time Employee who was with kathleen when she launched her business witnessed the dramatic changes firsthand. I know her standards. And they werent the quality that they had was not her standards. They continued to kill the quality of the brand, and it was heartbreaking. It was embarrassing because my name was on it and then ultimately after about six months then they came and fired me. A legal battle ensued and when the dust settled kathleen was saddled with 200,000 of debt from the brothers short time control of the business as well as legal fees from the fight. She also lost the kathleens brand name. The only thing she walked away with was her bakery store front in South Hampton. She had no choice but to start all over again. I had zero money left. In the bank. And i opened tates in two weeks because i had to. Along that time she was introduced to a business adviser for creative entrepreneurs. She told him the whole story and she was getting ready to sell her home for much needed capital to fund the new business. Looked at her and i said do you have a bake shop, do you have a building. Do you have a recipe. She said yes. I said youre not selling anything. Roll up your sleeves and well make it happen. How does an entrepreneur form a Successful Partnership and avoid a misstep like kathleen . Michael points out some simple things you can do, like keeping 51 of the company so you can have voting control and making sure you have veto power on important decisions written into your contract youre the founder, youre the visionary, they are coming to you. You dont need them they need you. Oftentimes private capital comes in. Theres this great vision, great idea, beautiful placement in the market and then all of a sudden they just want to make millions so they come in and totally destroy it and you lose your brand. With michaels guidance and the emotional chapter of kathleens bake shop behind them tates has catapulted to a bigger grand by focusing primarily on the cookie business. Its an all american story. Grow up on the farm, bake cookies, you get knocked down and now youre back. The whole ordeal was worth it says kathleen and in many wags its the best thing that could have happened. When you go through something very challenging that tests your limits, everything becomes easy. I dont have fear to take chance. Whats the worse that could happen . I already lost everything before. Can you imagine losing your business, even one with your name attached to it all because you chose the wrong Business Partner . How can you avoid this. We have a great panel to discuss this here today. Brian cohen is here on the set with us. Hes the chairman of new york angels a group that has invested more than 50 million in 70 Early Stage Technology companies and the ceo of a launch dot Public Relations platform and guy okay with a guy kawaski and author of 12 books. Good to see you guys. So, brian, you sitting on the set, were both watching this story and just shaking our heads when she said that onethird, onethird, onethird. Her adviser said it keep 51 . Its as easy as that, right . No, its not. It really depends on the kind of business it is. Im unusual because i married my partner and the best part of that is that she challenged me all the time and she was 50 and i was 50 . But we both went into it with that absolute trust. And that relationship that we had between us of challenging each other isnt normal in most business relationships as partners because they are always trying to figure each other out. I think the nature of the success of a Great Partnership is when you go into with it a rigor, a rigor you want to challenge each other. A rigor that says what can you add every day to the business. Guy, youre in business with your wife, brian, im in business with my brother. I trust him. He me. If youre going into business with someone who you know well but not that well what can do you from text yourself . Well, i think in many regards protection is somewhat of an illusion. Its all about doing the Due Diligence and doing the investigation and trusting your gut at the front end. Its much more difficult to undo a bad situation than to prevent the bad situation so its about checking references. In this case the thought that three people would be equally worth onethird is simplistic. Its very unlikely those other two people were worth two times more than she was. It was her idea, its her skill, her recipe, her name, its her everything. Hard to imagine it should have been onethird, onethird, onethird at the beginning under any circumstance. You know what i loved at the end where she said im not afraid any more. Right . Whats the worst that could happen . I lose everything ive already lost everything and that is a great attitude for an entrepreneur to have because chances you are going to lose everything. You could. You could. Im more of an optimist so i could into it with the realization im adding value to my company. Im calculating what is the person adding to what im doing. I dont think companies today particularly in the world i spend a lot of time can operate with one individual. Theres so many pieces thats required. She had bad advice. She never stopped to consider the consequences of doing what she was doing. So certainly find the best lawyer. The one that understands early partnerships and relationships that can happen and psychology of that. But i am a believer in a team. I dont think any more, inasmuch my wife and i built our company together and she challenges me i dont think companies can be built without Great Partnerships. You mentioned it, guy, about trusting your gut. How do you know when to trust your gut. Lots of times we have this last minute oh, im doing something wrong, im in too deep, i dont think i can change this. To be honest sometimes you shouldnt change it youre getting cold feet like just before youre getting married. How do you know when to give your gut credence and not to. This wont help kathleen but ive found what you should do is ask your wife, because my Historical Perspective thank you. Your wife has much better judgment than you. This is good advice for men. I dont cho what to tell women when they are the ceo because i dont recommend they ask their husbands. When people ask me about my business i tell them i have a strong feminine side. So maybe people should just callup brian and ask him. All right. Thanks, guys. Im glad this story has a happy ending because as you listen to the middle of it its like a knife in your heart. She pulled through and those cookies are great. Thanks so much. We just showed you the example of a partnership gone wrong. Well now lets look at the opposite. Free Fraternity Brothers who got together and struck the perfect balance. Their success can be traced to their friendship and commitment to the community following the zafgs of Hurricane Sandy the owners kept the facility open 24 hours a day to house the displaced and act as a base for Disaster Response teams. As we report ad few years back these College Buddies turned Business Partners have made the best of some tricky times and become a booming business. In the old days sports in new york city used to be of the classic variety. But times have changed. This is Brooklyn Boulders. 20,000 square feet of rock climbing in the heart of the borough. This is the only place in brooklyn. The facility is the work of Fraternity Brothers who turned Business Partners. Going into business with your Close Friends may sound risky but these guys figured out how to make it work. This is the promotion we ran. They found that a Clear Division of responsibilities has helped them tack tell challenges of manage the start up, and avoid any personal drama. Whenever the discussion gets a little fiery, were always just like friend first. Friends first. Jeremy and steven, avid climbers wrote a proposal for a climbing gym. They went their separate ways after graduation but continued to pursue their idea. We have the capabilities so we figured out why not. From the start their roles have been define. Jeremy works in finance in boston came up with projections and models and he and steven pitched the idea to their families. Hen they brought on a third friend. Do you want to be a part of this. We trust you. I said yes but i want equity. And so thats how i got into the mix. Operations guy, can sell anyone anything. Great at sales and marketing and pr. Im the creative type. I can, you know, design and build. Jeremy is the finance guy. With my vision, jeremys capabilities and lances execution the roles were so clearly define from the beginning. With funding and a Management Team in place steven took over the creative responsibilities. He searched around new york city for more than a year before securing a lease on a 100yearold warehouse in brooklyn that used to house Newspaper Delivery trucks. Now that Brooklyn Boulders is open for business lance manages the daytoday operation while jeremy and steven continue in their roles behind the scene. Im ready for every job. Seeing all the jobs from all the angles makes me the perfect person to assign those jobs and, you know, make this place run like a well island machine. I have a very intimate knowledge of the numbers. That helps you figure out pretty quickly if theres something going wrong or not. While they are focused on their specific responsibilities within the business they have an eye on the big picture. When it comes to what will happen over the next five years, the three of us really have input. Theres no major decision thats going to get done without the three of us being exactly on the same page. When we come back, seeking out investment capital. You may not be looking in the right places. And our Panel Discusses which mobile operating system is right for your business. Weve all had those moments. When you lost the thing you cant believe you lost. When what you just bought, just broke. Or when you have a little trouble a long way from home. As an American Express cardmember you can expect some help. But what you might not expect, is you can get all this with a prepaid card. Spends like cash. Feels like membership. Time now to answer some of your business questions. Brian and guy are with us once again. The first one is about seeking advice or investors. A small Start Company which is cash flow positive that has an innovative product, what path that company should go to in order to get the professional advice from venture capital, from management companies. Okay, guy youre in the heart of silicon valley. Youre surrounded by people this guy would like to speak to. How do you get in . The most important way to get in these days is to have a working prototype or working service or product that people are already using. In the past you used to raise money in order to build the prototype. Today with open source tools and cloud based servers and marketing using social media such as facebook and twitter the expectations are different. Venture capital expects you to show up with something thats working not just a Powerpoint Presentation and a dream. The key is to have a working prototype thats in use. This guy has something it sound like, its working. Even if hes not looking for money, brian, how does he get advice . Many times its easier to ask people forced a vice than money. Get the best lawyer in the business. The lawyers know the eco system. In new york city theres a handful of lawyers that do this every day. They see who is trustworthy, who has the money, what the system is that they have to go through, hire the best attorney you can find. Is that easy . They are there. They are overwhelmed because theres so many companies. So youre kind of selling them too. They have to believe in you almost as if they are investing in you because some best attorneys will give you and entrepreneur rate because they believe in you. Next up a question about mobile operating systems. What do you think the preferred solution will be in the future, ios, android or windows . Any sense . Thats a real visionary thing. Im a big apple fan. As much as apple has been challenged. Youre a focus group of one . I am. Im an ios guy. I think apple will pull a rabbit out of its hat. Google has a lot behind it with android. They have their challenges. They havent standardized. Im behind ios. Guy . You may find this hard to believe being the apple alumni i dont use any ios devices im pure android. But i think you have to be on both platforms, an troid and ios. Arguably you should do the one that you think your customers are using more but at the end of the day you have to do both. Okay. Probably not the answer he wanted to hear but one that is the reality. Finally this is an email from chris. He says i own an i. T. Service company with myself as the only employee. How do i know when its time to hire my first employee. We get this question a lot. When hes running out of time or not sleeping . Anybody who asks that question at the time they need it have not been planning enough. They should have thought about it before they started their company. I think if its in the Service Business how do they extend their service time because they are usually charging themselves out on an hourly basis. As soon as they see that happening and they need to extend their time they need to hire somebody to support them. Once you get there, hilt the ask the show link to submit a question for the panel. Again, that is openforum. Com yo openforum. Com yourbusiness. Or email us at yourbusiness msnbc. Com. Brian and guy had some really helpful advice about how to improve your business. Now lets get some great ideas from Small Business owners like you. We do a Monthly Company meeting where i sit with the employees, i show them the road map. We have a Company Discussion and now its got more challenging as weve gotten up to 70 people. But its a tradition that we kept since we were a handful of people. I think that really keeps staff engaged, excited. Everything we watch the Youtube Video gangnam style, the lesson i learned from this video, to succeed in the business, you should be very unique. Dont try to copy others ideas. Have your business based on your unique ideas and youre going to succeed. If you are unique, you can succeed like gangnam style. Chances are your customers or potential customers are going to look for you online so here are five ways to build your credibility on the internet, courtesy of small biz trends. Com. One, a great facebook business page. Its likely your customers are going to look for you on facebook. Youll also be able to use it to leverage the many social media benefits within the social media network. Two, interviews and press. Nothing helps your online credibility better than a third party endorsement, so seek out every Media Opportunity and be sure you have it posted online. Three, a maxedout linkedin profile. Its often one of the first things that comes up in an internet search. So make sure your profile is up to date with links and information. Four, a blog. Having a blog will help position you and your business as a leader in the field. And number five, videos. Studies continue to show that video use is on the use, so make sure you have a video presence online. When we talk about capital for our businesses, were generally talking about money, about funding. But our next guest says we should not forget about invisible capital. That there are Hidden Forces that can help to shape entrepreneurial opportunity. Chris robb is an adjunct professor at temple universitys fox school of business. We sat on a panel together and i was so interested in what you were talking about that i wanted to be sure to share it with them. So explain in a line or two, what is invisible capital . Essentially invisible capital is all the things that Impact Business viability when hard work, a great idea and a good attitude are simply not enough. Its Everything Else. So theres money, but as you say theres your knowledge, theres skills, theres experience, theres traits and then of course the network, the people that you know. All of these are important to growing your business. Absolutely. And so as we think about how to take advantage of these things and, look, i might say people that you know, sure, that works for you, youre at princeton, it works for me, im at msnbc, i might not know anyone, so how do we reframe our own invisible capital. You said one of the first things you think about is privilege. Well, there are things that we benefit from that we had nothing to do with and other things that we should take great credit for. I didnt choose to be born into a middle class family that valued education and entrepreneurship, i was just lucky. But that helps me so i shouldnt feel ashamed about it, i should leverage it. That just makes sense. It helps being a man in a maledominated industry or to speak english as a first language. All these things help. Theyre not enough, but they have to be used in a meaningful way. If we dont realize this, then we leave assets on the table. Thats interesting. So being a male, it obviously is happening. Youre a male in a male dominated industry, but youre saying taking a step back, recognizing that this is an asset actually changes the way you can use it . Right. Because otherwise they may be invisible to us, right . Sometimes it takes someone else to realize the things that we already have, but theyre hidden in plain sight. So, for instance, i dont think about my gender that much, but if you are a 19yearold woman who wants to raise money to open up an auto repair shop, people are going to be looking at you, irrespective of what skills, knowledge, experiences you have because they make certain assumptions about you. That doesnt make these people bad people, but we live in a society where theres very few 19yearold women starting auto repair shops. She has to recognize that that is the perception and she has to think ahead and say, well, how do i strategically leverage that i am not a man and think what other resources can i bring to bear to make this a reality. Okay. Then profile, how youre seen by others. Absolutely. When i show up here, i want to look nice. If i project a professional image, the way i speak, how i comport myself. All those things matter. What matters even more is how you perceive me. I may think im very professional and when i walk off the set, youre like whos this guy . You know, when i was in business school, there was a class that was called touchy feely, it had a real name too but everyone called it touchy feely. The whole idea behind the class was learning how people perceive you. When i put something out into the world i may think that youre reacting to me in a certain way. But when you actually get in a group of people that are told to be honest about their reaction, its interesting how youre perceived is not necessarily what you think. Absolutely. Thats a form of social capital which is a component of invisible capital which is not just who you know, but who knows you and what they think of you. And then finally, pride. Well, what are you most proud of beyond your tech cam competency in your business, providing goods or services . Separate from that, what do you do really well, really well . Actually write that down and look at the lists of privilege, pride, profile and see what connections there are. Thanks so much, chris, it was great to see you. My pleasure. Well, we do a lot of communicating online. Still nothing beats a facetoface meeting when it comes to networking. Our app of the week makes meeting up a little bit easier. The here on biz app alerts businesses when their linkedin contacts are physically nearby. After checking in with the free app at your next conference or trade show, youll get a list of other users who have checked in as well. Setting up a Meeting Place and time is easy using the builtin chat feature. To learn more about todays show just click on our website. Its openforum. Com yourbusiness. Youll find all of todays segments plus web exclusive content with more information to help your business grow and you can follow us on twitter. Its msnbcyourbiz. Also dont forget to become a fan of this show on facebook. We love getting your feedback. Next week, running a Small Business is hard enough, but running a Small Business with your family presents a whole other set of challenges. Im mouthy and all over the place i think we just im a little bit laid back, i guess. Yeah. If i werent, wed probably kill each other. Well introduce you to two Business Owners and their parents who tell us how they make the family dynamic work on the job. Till then, im j. J. Ramberg. And remember, we make your business our business. Weve all had those moments. When you lost the thing you cant believe you lost. When what you just bought, just broke. Or when you have a little trouble a long way from home. As an American Express cardmember