Tracy these people are here because they care. Lemonis . The entire tumbleweed business will collapse. Do you know what fercockt means . 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. In 2012, Steve Weissmann took over tumbleweed tiny house company. Steve how are sales going . Lemonis . Now americas top manufacturer of mobile tiny homes. Tracy this is our roanoke model. Lemonis he had little experience building homes. Still, he managed to grow the company from five people working out of a garage to 70 people working out of a 20,000squarefoot facility. Tracy we have hundreds and hundreds of floor plans. Lemonis and today, sales exceed 6 million per year. However, as the company has grown, so have the operating costs. Tracy if i do not get my windows ordered, it is gonna really kill us. Lemonis desperate to keep the lights on and expand, steve turned to unconventional loans and credit cards. Now, with over 1 million of debt, tumbleweed is on the verge of bankruptcy. Steve the company is in jeopardy. Lemonis with my ownership in camping world, ive been in the rv space for over a decade, and i feel that investing in tumbleweed would allow me to make a huge splash in the tinyhome market. Pat yes, sir. How may i assist you today . Lemonis hi, there. Pat welcome to tumbleweed. Lemonis how are you . Im marcus. Pat oh, marcus. So wonderful to meet you. Lemonis nice to meet you. Steve hey. Lemonis im marcus. Steve im steve. Lemonis steve, nice to meet you. Steve nice to meet you. Its so surreal, actually, meeting you facetoface. Lemonis were here. Lets do it. So, this is your business. Steve this is it. Lemonis what prompted you to get into this . Steve im a minimalist by trade. Lemonis do you live in a tiny home . Steve no. I live in a regular house now. Ive got a family and kids. I actually live in sonoma and in colorado. Lemonis what happened to, i want to be a minimalist . Steve i still am a minimalist. Lemonis yeah. What did you do before this . Steve i was a restaurateur. I really dont have much experience in manufacturing. I can manufacture a burger. Lemonis okay. Can you show me a few models . Steve so, we have cypress, the farallon alta, the elm 26 equator, and the roanoke. Lemonis i mean, its like a log cabin. Steve yeah. Lemonis but its movable. Steve yes. They can pick their floor finish, they can pick their roof and window colors. People really want to get into these and customize them. Lemonis so, what is your typical price for an average unit sold here . Steve right now, 80,000. Lemonis and whats the Maximum Capacity that the factory can actually produce . Steve were currently producing anywhere from eight to ten a month. And we have about three to four to five month backlog at any given time. Lemonis three to five months . Steve yes. In the beginning, when we started off, we were building about two to three a month, and we started selling more, and so our backlog grew and grew and grew and grew. Lemonis uhhuh. Steve well, were gonna go out in the shop and take a look. Lemonis well, show me the shop. Steve yeah, all right. Lemonis whats fun about tiny homes is that, although theyre mobile, they typically stay more stationary, and the craftsmanship really matters. When i look at this particular product and i look at the materials that they use and the work thats going into them, the work is unparalleled. I have never seen anything with this high of quality. Start to finish, how long will it take . Steve it should take 16 days. This ones probably gonna take us 21, maybe 22. Lemonis well, how do you not know . Steve were gonna know when its done. Lemonis no, no, no, no. How are you pricing the unit before you know how long its gonna take . Steve we have a lot of estimates on our pricing. People really want to customize these a lot, so we get curveballs all the time for things that weve never done before. Lemonis like . Steve like folding porches. We had no idea what that was gonna entail. Lemonis what did it cost you to make . Dont say you dont know. Steve our costs of labor and materials on one of these units is around 60 . Lemonis so, your margins are 40 . Steve well, okay, so, besides the cost of goods, theres probably about 10 additional costs in design, servicing, labor, sales. Lemonis so, your margins are 30 . Steve 30 . Lemonis do you think those are good . Steve i dont know if theyre good or bad. Lemonis the more i dig, the less i think he knows. I think any Business Owners lack of research will ultimately lead to bad decisionmaking. You cant run a business that way. Whats up, guys . Brian hello. Lemonis how are you . Brian good. Lemonis im marcus. Brian im brian. Lemonis nice to meet you, brian. Mason mason. Lemonis mason, nice to meet you. Where did you learn how to do this . Brian military. Lemonis you were in the military . Brian yeah. Lemonis thank you for your service. Brian thanks for your support. Lemonis im gonna put everybody on the spot right now. If all the models that you guys made were Standard Units, how much quicker would the production process be . Mason significantly. Brian yeah. Lemonis double the output . Mason i would say so. Lemonis how are you doing, sir . Austin im austin baker. Lemonis hey, austin. Austin production manager out here. Lemonis how are you, sir . Austin great. Lemonis nice to meet you. So, are you in charge of the floor . Austin yes, sir. Lemonis you want to give me a little tour, just you and i . Austin please. So, im gonna show you the two types of trailers we build on. We are fabricating our frames right here. Were building them. Lemonis youre not even buying them . Austin were building them. Everything we can do, we do inhouse. We are so jammed, and its unnecessary. The word custom is sexy, and it sells. Lemonis it also does one other s. Austin ruins us. Lemonis slows things down. The real problem in this production process is that the customization slows things down. In tumbleweeds current manufacturing process, there are two distinct lines, meaning that only two homes can be built at one time. And while theyre being built, theyre done in four distinct stages. In stage 1, the trailer comes in and the floor goes in. In stage 2, the walls and the roof go in. In stage 3, the interior starts to get put in. And in stage 4, thats where they do the finishing touches. If theres one thing that needs to change in the unit, it slows down the entire line. When youve taken those ideas to steve, what does he say to you . Austin my ideas were shut down. He doesnt understand what we do out here, yet. Hes a restaurant guy. Lemonis has he ever worked in the shop . Austin no, and thats okay. Thats not his job. Thats what he pays me to do. Lemonis im surprised that steve isnt immersing himself on the floor with the guys, stepbystep, learning. How do i improve it by a day . Not just to make more money, but to help your people be more successful. Ii dont know why thats missing for him. Austin marcus, i wanted to introduce you to lee. Lee hi, marcus. Lemonis hi, lee. How are you . Lee very nice to meet you. Lemonis nice to meet you. What do you do here, lee . Lee c. O. O. Lemonis okay. Steve lee is brandnew. Hes been with us a week and a half. Lemonis and so, how does the reporting structure work here . Austin so, we have employee. Lemonis yep, one. Austin . We have leads. Lemonis two. Austin . We have the foremen. Lemonis three. Austin . We have the production manager. Lemonis four. Austin . Then, i have stephen schlosser, whos the gm. Lemonis five. Austin . Then, thats his boss. Lemonis six. Austin . Whos his boss. Lemonis seven. Austin yeah. Lemonis so, seven layers between you and the people that make the magic happen. Steve correct. Lemonis does that seem like a lot to you . Steve yes, it does. Lemonis how about to you . Lee no, it doesnt. The only redundancy that we might have is austin, because you have general manager, foreman the foremans over the two leads. Lemonis i was with you up until shop foreman. The further we get away from the work that, i get nervous. Steve lees like flight control. Do we have the parts we need . Which house is coming into the line next . Are the plans complete . Lemonis which is, normally, in a small business, what the owner would be doing. Steve so, i dont personally think that ive got the time to do all that. Lemonis so, what are you spending your time doing . Steve i do a lot of the website, backend work, as well. Its not a small job. Lemonis okay. It was kind of interesting meeting lee, because the things that he is doing, i would expect steve to do. Steve is too separated from what happens on the front lines. How are you . Tracy im tracy. Lemonis tracy, nice to meet you. I just spent a little bit of time with austin. Tracy my husbands name is austin, yes. Lemonis oh, its your husband. Tracy uhhuh. Lemonis okay. Tracy weve been married almost 13 years . Something like that. Lemonis i like him, by the way. Tracy hes very passionate about what he does. Lemonis yeah. Tracy and his people out there. Lemonis so, could could you take me through the sales process . Like, if i want to order a certain type of floor. Tracy so, youre basically asking for a customization on this . Lemonis yes, can that be done . Tracy if the Production Team says we can do it, im not walking away from the sale. Lemonis why . Tracy so, we get 20 of the cash upfront. Lemonis uhhuh. Tracy if i dont have a lot of cash customers for the month, those guys are struggling for materials. Lemonis so, better said you say yes to anything, especially if theyre a cash buyer. Tracy yes. Lemonis okay. Its become clear to me that every single unit that is bought from this company has some nuance to it that is slowing down the process. Tracy this house, right here, is a custom one. Lemonis i dont understand how youre getting upstairs. Austin youll never see this in any other house. This was this lady. Lemonis how do you get up there . Austin shes gonna get her little stepstool right here. Lemonis so, is there a disconnect between sales, design, and whats happening in the shop . Austin i cant blame sales, because they have to make money. Lemonis i want to ask you a question. Does steve know what hes doing . Austin no. Lemonis does he know how to manage people . Austin no. Lemonis does he know how to design things . Austin no. Lemonis whos really running this company . Tracy hes running the outside, and im running the inside. Lemonis doesnt something have to change . Tracy yeah. Austin if something doesnt change, it wont happen. Lemonis okay. Whats wrong . Austin so. Whats wrong . Lemonis talk to us. Tracy just that we love this place so much, and we love those people. We do it for these people. These people are here because they care. Theyre not because of the paycheck, i can promise you that. Lemonis the idea of being in the tinyhome business excites me. And after talking to tracy and austin and seeing the folks on the factory floor, i mean, theres a good recipe there. It just needs some major tweaking. Steve hi, marcus. I want to introduce you to my wife, bernadette. Lemonis bernadette, how are you . Bernadette nice to meet you, marcus. Lemonis nice to meet you. Bernadette thank you for being here. Lemonis i thought it may be a good idea for the three of us to go outside and talk, just, away from everybody. Bernadette yeah. Lemonis is that okay . Lets head out. You have kids . Bernadette two. Theyre in there. Lemonis oh, they are . Bernadette yeah, stocked up with snacks and games. Lemonis how old are they . Bernadette 5 and 7. Lemonis whats the year been like for you . Bernadette weve worked really hard, and id hate to see what weve worked for, um, disappear. Lemonis he smiles a lot. Bernadette he does. Lemonis is that a real smile, or is that just for show . Bernadette its a real smile. Steve i smile when im stressed, i smile when im nervous, and i smile when im happy. Lemonis well, thats good. Steve its my default position. [ laughs ] lemonis how hard has this been on him . Bernadette incredibly difficult. A lot of questioning himself. Steve i have taken a huge risk just to get here today, and ive pushed myself to the limit. Lemonis do the people that work here know how bad it is . Steve the top managers do. The rest dont. Lemonis you know that it makes me crazy that you have all these layers of people, right . Steve i know. Lemonis and so, if the business closes, what happens . Bernadette we start over. We start over from scratch, yeah. Lemonis what does that mean . You have to file bankruptcy . Bernadette mmhmm. About, like, a week away from that. It puts a lot of pressure. You can hear it in his voice, and then i know it, and then i cant sleep, and thats all you can think about and its spinning in your head and your stomachs clenched and. Its been very difficult. Lemonis wow. Steve when business doesnt go well, its hard to be a good father and a good husband. And thats the biggest disappointment. To me, the most important thing of my life is my kids, you know, being there for them. I havent been. Bernadette its okay. Lemonis okay. Do you have some financials we can look at . Steve yeah. Lemonis maybe head inside . Bernadette mmhmm. Lemonis i feel like ive gotten a good sense of the great people that work here. The fantastic product, while inefficiently made, still a really quality product. So, i commend you for that. Steve thank you very much. Lemonis lets go through the p l. Steve okay. Lemonis so, your total revenue for the last 12 months is 6. 9 million. Your gross profit is 2. 5 million. Your total expenses. Steve 2. 6 million. Lemonis and so, then, your net profit would be. Steve minus 100,000. Lemonis okay. Have you ever made money here . Steve yes. Lemonis whatd you make in 12 . Steve about 100,000. Lemonis whatd you make in 13 . Steve about 100,000. Lemonis whatd you make in 14 . Steve 400,000. Lemonis whatd you make in 15 . Steve in 15, we lost money. When we expanded, about 1. 1 million. Lemonis okay, so, 100,000, 100,000, and 400,000 is how much . Steve 600,000. Lemonis youre at a 600,000 positive. You lose 1. 1 million in 15. Steve mmhmm. Lemonis takes your 600,000 positive to a 500,000 negative. Steve well, there were no retained earnings, so these earnings were all taken out. Lemonis what do you mean they were taken out . Where did they go . Steve to me. Lemonis so, you took all the money out of the business . And so, at the start of 15, there was no money here. Steve yeah. Lemonis so, if i take everything your total liability of 2,885,000 against assets of 1,239,000, and that means that youre negative equity. This business is upsidedown insolvent to the tune of 1. 6 million. Steve correct. Lemonis the debt is so significant, really, it just sits with me in a very bad way. So, when i look around this factory, how did all of this get funded . Steve so, originally, the customers were paying upfront. Lemonis so, essentially, customers financed this whole business. Steve and also, in addition, i put some money in. It was 1,500. Lemonis 1,500 bucks. Steve correct. Lemonis okay. From an outsiders perspective looking in, you put very little money in the business. Whatever money the business made, you took out. The hole in this business, now, is 1. 6 million. Steve correct. Lemonis thats not even to provide any more working capital. Thats to get the payables current and all of the debt paid off. Steve correct. Lemonis and where youre sitting today is, in a business that, quite frankly, is out of business. And i have a real problem with the fact that you took 600,000 out of the business, in a business thats growing. Why did you take it all out . Steve i didnt see this coming. I didnt know it was gonna happen. Lemonis is this really a smokeandmirrors business . Steve no. We have a real product. Lemonis okay. Are you running a house of cards . Steve im running on the edge. Lemonis do you know fercockt means . Steve yes. Lemonis what does it mean . Steve it means all screwed up. Lemonis debt doesnt scare you, does it . Lemonis im curious as to why you say that. Lemonis because youre reckless about it. And because you didnt save any acorns for the future. The fact that youre not scared of debt in one breath, but youve taken on debt. This doesnt even, like, faze you. That freaks me out. Austin i mean, we were both yelling at each other, cussing. Its only a matter of time hes gonna fire me. Im nervous. I dont know what to expect, and thats why, i guess, im scared. Lemonis lets go talk to him. Just serve classy snacks and bew a gracious host,iday party. No matter who shows up. Do you like nuts . [narmain street is back small bufor season two. On this is one of our newer retail shops. [narrator] Amanda Brinkman and her experts at deluxe have landed in bristol borough, pennsylvania. And they brought along entrepreneur Robert Herjavec and a whole cast of experts to help the towns Small Businesses thrive. Any kind of change thats worth its scary. [narrator] every episode, well be working with a new small business. You really build us up. [narrator] and together, we can start a revolution. Now streaming on hulu and smallbusinessrevolution. Org. Directv has been rated number one in Customer Satisfaction over cable for 17 years running. But some people still like cable. Just like some people like wet grocery bags. Getting a bad haircut. Overcrowded trains. Turnstiles that dont turn. And spilling coffee on themselves. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable, switch to directv. And for a limited time get a 100 reward card. Call 1800directv that freaks me out. That youre not scared of debt this doesnt even, like, faze you. Am i totally, like, bat [bleep] crazy, here . Steve no, i completely understand what youre saying. Lemonis so, you have a business thats 1. 6 million underwater, but the product is great, the people that work here are spectacular. So, im willing to lend this business 3 million to clean up the payables, the lenders everything so that the employees can continue to work and so that the company can breathe. Steve yes. Lemonis in exchange for that, i want to be paid back, and i want 75 of the equity. Based on steves pattern of how he deals with money, i have to structure this deal very differently than i normally would. And so, the money that im gonna put in is gonna go into the company in the form of debt and equity. So, not only am i gonna be the lender, im gonna have 75 of the equity. And while that may seem aggressive, i have to protect myself. Because when you look at the pattern here, i dont think i have a choice. Steve its certainly not the offer i was expecting. Lemonis whatd you think the offer was gonna be . A few Million Dollars and i sprinkle fairy dust in here . Steve 51 . Lemonis i want to help you be a better c. E. O. cause right now, youre a nice man and a terrible c. E. O. C. E. O. Is not a title. Its a philosophy. This would be a business that i would in