Things could get very ugly for this company. Miranda if something happened to the business, i do worry about what would happen to us. Lemonis kansas city, missouri, is home to the lano company, a skincare and cosmetics business that was started by Miranda Coggins in 2005. Miranda high five, girls. Cristina whoohoo lemonis after the birth of her daughter, milena, she was inspired to create a lanolinbased lip product with medicalgrade benefits. Layne this is Layne Coggins with the lano company. Lemonis 10 years later, miranda and her husband, layne. Miranda love you. [ smooches ] layne love you. Lemonis . Now have a company that generates millions of dollars in revenue. Im excited to visit lano. And while its a profitable business, im 100 certain that it has a lot of potential for growth. The skincare and Beauty Industry generates billions, and its not just for women. Im marcus. Mccartney hey, marcus. Lemonis you are . Mccartney mccartney. Lemonis mccartney, nice to meet you. Cristina hi, marcus. Lemonis your name . Cristina cristina. Lemonis cristina, nice to meet you. Miranda hi lemonis hi, how are you . Im marcus. Miranda hi, im miranda. Lemonis hey, miranda, how are you . Is this your place . Miranda this is it. Lemonis how long have you been in the business . Miranda 10 years. We started in my house. I had chronically chapped lips my entire life. And so my daughter was born shes now 11 and while breastfeeding, started using lanolin for breastfeeding on my lips. Lemonis the nipple gets chapped. Okay. Miranda and im like, oh, ill put it on my lips, and they were healed for the first time in 30 years. Lemonis now, what is lanolin . Miranda lanolin comes from sheep. Its like an oil, like, a protective coating on their fur. Lemonis i think its especially cool when somebody starts a business that is meant to solve a problem. Sometimes necessity is the mother of invention. Miranda this is where we started. Thats the lano lip. This is my original formula, and its got medicalgrade lanolin, jojoba, sweet almond oil, and vitamin e because in my heart, my goal was to help people with chapped lips. Lemonis i love the name lano lip because it tells me what the story is. I like the fact that its medicalgrade. That tells me that theres some benefit, other than just looks. Miranda i understand. And this is all of our pure line. Lemonis whats inside of pure cosmetics . Miranda all of the lip gloss, all of the naturally based products. Lemonis whats this . Miranda this is our eye shadow that we came out with. Lemonis does this have lanolin in it . Miranda no. We have a whole nother brand called glam cosmetics. Everything we do has got kind of a twist. This has got a magnification mirror. Lemonis is there lanolin in here . Miranda no. Lemonis i dont love the look of it. So, is the glam cosmetics really a totally different audience . Is it teenagers . Miranda yes. Lemonis i think younger people today are more sophisticated. 1985 called, and they want their zebra stripes back. I mean, maybe when i was in high school and def leppard was out there, i guess it made sense. I feel like the fact that you came up with the lanolin as a solution is a great idea. This other stuff im kind of confused. Before i came to the lano company, i was under the impression that everything they made had lanolin in it. That was their hook. Thats what separated them from everybody else. But im not sure why they moved away from that concept. What does it cost . Miranda retail for 5. Lemonis and what does it wholesale for, if you were going direct . Miranda 2. 50. Lemonis what does it cost to make this . Miranda this particular packaging is 43 cents, not including the display; the display runs about 1. Lemonis so, this is 32 . Miranda right. Lemonis and then another 3 cents for the package, if you average it all in . Miranda right. Lemonis so its 46 cents, and youre selling it for 2. 50. Miranda right. Lemonis i mean. Miranda its not bad. Lemonis . Not bad. Its really good. Those are good margins. Miranda so, this is our shipping area. This is where we keep everything that may need to go out, like, any internet orders. And i can show you here. So, this is pure illumination. Lemonis thats what this is called. Who came up with the name what is this . Pure illumination . Miranda i did. So, we put the same formula that we started with my lip balm in our lip gloss, so its purely based. Other than the scent and the color, its 100 all natural. Lemonis unfortunately, you cant tell people that its 100 natural because youve added those things. Miranda this one has an l. E. D. Light here. See . So, its got a mirror on the side. So you can put your lip gloss on any time. Lemonis first, a line of cosmetics for teens. Now a lip gloss that doubles as a key finder . Way too bright. I came here believing lano was a brand, but i think that miranda just created some catchall to make everything she thinks is fun. Miranda this is where we store all of our boxes. Lemonis whats in here . Miranda this is our makeup brush. It comes with 12 brushes. And so its really great for travel. Lemonis literally, every time i turned a corner, i would see some other product that had no connection to her original story. I dont know how makeup brushes solve problems for people. Miranda layne. Marcus. Lemonis how are you doing . Im marcus. Layne nice to see you. Lemonis nice to meet you. Miranda layne does all of our numbers. Lemonis how much do you do in total sales . Layne well, last 12, of course, are 2. 8 million, but last year was 2. 336 million. Miranda im the artist, and hes the practical one. Lemonis does that work for you guys . Miranda no, it does. I think going into business together was really tough at the very beginning. Lemonis why . Layne she actually just got so aggressive on buying a bunch of inventory cause she was so excited about the product that she created. She just wanted to sell a ton of it. And me, i was wanting to try a little bit of it and then lets see if it sells. Shes kind of like that helium balloon. If you dont grab her, shes just gonna keep soaring away. [ laughs ] miranda its true. This is our production room here. Hey, ashley, can you show marcus how you fill lip glosses . Shes way better than i am now. Lemonis i think the thing that surprised me the most was their manufacturing process, if you want to call it that, where they basically line up trays of empty bottles, and, with a syringe, they essentially fill them one at a time. I did one. [ laughter ] its terrible. Ashley you did a good job. Lemonis thats, actually honestly, thats not easy. Ashley no, its not. Lemonis you do it with this . Ashley every single one. Lemonis in big vats. I mean, i guess its working if youre selling a couple thousand, but what if you got a 50,000piece order . Whats ashley gonna do sit here all day filling these bottles with a syringe . What im really trying to understand is who you are. Miranda right. Lemonis whats the main product thats creating the 2. 8 million on this table . Layne those eye shadows, the brush sets, and definitely the gloss. Its 25 , 25 , and 25 . And so this particular product makes up 25 of your revenue 700,000. What does this cost to make, allin . Layne depending on the colorant, anywhere from, say, 1. 76 to 2. 02. Lemonis what do you sell this directly to a salon for . Layne 10. Lemonis so 8 in margin. Layne yes, sir. Lemonis so, theres lano lip, which is what your original product was, and that makes up what percentage of the 2. 8 million . Layne 3 max. Miranda max. Lemonis what a bummer that is. Miranda i agree. Lemonis so, the premise of the whole company miranda . Was lost. Lemonis well, its not lost. Its gone. Im sure all these products are great, but you have to admit you are kind of all over the place. Miranda no, i think layne wants to go where the margins are. Layne we were really just kind of going where the money was. Lemonis you were chasing the money. The minute somebody else comes around thatll make that thing for 10 cents less, youre gone, and you really end up with a table full of stuff that doesnt really tell me who you are. This lack of direction and this lack of clarity, while it may be making them a little bit of money today, this is not a sustainable model. Do you have the financials . Layne mmhmm. Lemonis id like to go over them and really understand them more like, the balance sheet, p l. Both okay. Lemonis thank you. So, how is the equity split between the two of you . Miranda 51 womanowned, and then 49 layne. Lemonis well, at least youre 51 . At least you can kick him out at any time. Miranda i tell him that all the time. Layne ive been begging. Everybodys like, what are you doing . I go, im a guy selling cosmetics. Im living the dream. Miranda living the dream. Layne [ laughs ] lemonis very funny. So, is there only one entity, or there are multiple entities . Miranda only one. Layne theres one. Lemonis okay. Layne yeah. Lemonis so, 2. 3 million in total revenue in 2014. Layne 14. Yes. Lemonis after cost of goods, gross profit was 1. 5 million. So really good margins. Total operating expenses a year are 1. 1 million. Miranda thats with payroll, rent. Lemonis so, with 400,000 in earnings. I mean, you guys do well. Miranda obviously, financially, were not failing, but we want to do better. Lemonis without you being offended by it, your business is failing, just not financially. Im very concerned about the fact that its todays its like the flavor of the day. Youre selling lots of different beauty products, and youre making good money on it but with no sustainability. Theres two ways to run a business for today and you guys are doing a great job and for tomorrow. You guys have to figure out if you want to run it for today and tomorrow or just today. Miranda i dont want to fail. I want to be very successful. Its my blood, sweat, and tears for 10 years. You know, its our family. Its our marriage. You know, if something happened to the business, you know, god forbid, i do worry about what would happen to us because its become such an integral part of our marriage, too. Its everything for us. For real. Lemonis and you guys have a good dynamic together. Miranda well, can you help me . Lemonis the answer is yes, i can. But i have zero interest in makeup brushes, blushes. I have zero interest in that. I see a real opportunity to take this lanolin story and then have a core product and then create product extensions around it. My ultimate goal here is to create a hubandspoke model, with the hub being lanolin. Thats the foundation. Thats the story behind the business. And off of that hub are all these spokes. Those are products that are based on the story. They use the ingredient from the middle of the hub. And when you build that foundation and you build that brand and you build that product lineup, its got to have lasting power. We want to have a business thats built for time. Miranda id like to see it. Lemonis so, good talk. Layne yes, sir. Miranda thank you, thank you, thank you for everything. Lemonis nice meeting you. Thank you. [ indistinct conversations ] hey, there. Miranda hey. Layne hey, marcus. Lemonis how are you . Miranda good, how are you doing . Lemonis good to see you. Miranda good. Thank you. Good to see you, buddy. How are you . So, what did you guys think about after i left last night . Miranda youve got 10 years worth of work on the table, and you said, it looks like crap. You know, it bothers me, but lemonis did i say that it looked like crap . Miranda you said it looks like 80s, about glam, and you said, this is lemonis does glam sell . Miranda no, it doesnt. Lemonis you guys, with all candidness, have built a nice business. Most people would say, were doing great. Layne right. Lemonis and so i feel strongly that you know that you want to do something, but youre just not sure what it is. Layne you know, i mean, i know it, and all due respect. Lemonis what is it, then . What is it . Layne . Im not sure you know the exact direction we should go. Lemonis oh, i know what the direction is, but i didnt come here im not a consultant. I dont just lay out the plan for you. Layne i know that. Lemonis and so if you know what the direction is, whats the direction . Miranda i think that if anybodys gonna help us, it could be you. Lemonis i belie in what you guys are doing. To a degree, and youre definitely not a failing business, but you are a struggling business. I want to make an investment in a product that i think could be pretty amazing. So my offer is 500,000 for 30 . I think with that 500,000, the company should have sufficient working capital to be able to grow and allocate 100,000 of the 500,000 to new product development, new packaging, new branding. You said to me yesterday, can you help me . Miranda right. Lemonis and im telling you that i can. Im gonna give you guys a minute to talk without me, okay . Layne okay. Miranda okay. Its a lot of equity. Layne 30 is a lot. Youre right. Miranda are you worried . Layne mmhmm. Miranda nobody says we have to make a decision right now. I dont think we just give up 30 that easily. Lemonis for Business Advice and extra scenes from the show, log on to. Its gotten squarer. Over the years. Brighter. Bigger. Thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Lemonis so, my offer was 500,000 for a 30 stake in the lano company. Miranda we would like to counter you with 500,000 for 20 . Giving up 30 of your baby a little bit tougher than id like to swallow. Lemonis what do you think the business is worth . Layne somewhere in the realm of 5 million. Lemonis on a business that makes 400,000 . Layne based on what next year actually is forecasted to do and p. O. S that are in hand for then. Lemonis i struggle with the business being worth 5 million today. Miranda what would be your game plan . Lemonis are you interviewing me . cause if you are, then we shouldnt do business. cause i have enough of a track record that i shouldnt have to tell you what my game plan is cause, candidly, you dont have a game plan at all. When i think about investing 500,000, it could be years before i get something. What i would be willing to do is give you 500,000 for 20 , but i would want a guaranteed return on investment on an annual basis. And so its basically whats called a preferred investment, which means that i would get 10 on my money every year no matter what, which is 50,000 a year. And then we share in the profits above that. Layne right. Lemonis . 80 20 cause i dont want to take your baby, but i dont want you taking my 500,000 babies. If youre gonna get a return on your 80 . Layne mmhmm. Right. Lemonis . I would like to get a return on my 20 . Miranda i think that thats a pretty good deal. Dont look at me. Lemonis when we shake hands, the deal becomes effective the minute we shake hands. Youre tough. I have good credit. Miranda [ chuckles ] you okay . Layne i prefer the 20 with the 10 . Miranda i agree. Layne youre selling your baby. Now you got a stepdad . [ both chuckle ] lemonis we have a deal . Miranda we have a deal . We have a deal. Okay. Lemonis congratulations. Miranda thank you. Lemonis now, you know that for a period of time. Layne i know. Miranda we know. Layne you got us. Lemonis . I am 100 in charge. Miranda we know. Layne thanks again. Lemonis thank you. What a goodlooking group. [ laughter ] so, miranda and lane and i made a deal for me to invest 500,000. Ill own 20 of the business, and they accepted the fact that i was 100 in charge. And so were going to challenge every single thing we do from coming up with consistent branding to developing new products. And then we want to take lanolin, the thing that made us who we are, and find new ways to expand on that. Were gonna look at manufacturing, and were gonna potentially outsource it. What is your biggest fear . Ashley taking away my job security. Woman oh. Ashley for sure. [ all chuckle ] miranda you will always have a job, no matter what. Youve been with us for a long time, and, ashley, were only gonna get bigger and better, i promise. Lemonis lets get back to work, all right . Thanks, ladies. Miranda thanks, guys. [ siren wailing in distance ] man i know you. Lemonis hey. Today i brought miranda and layne to new york city to meet with birchbox, a very influential online retailer. While im hoping to build a longterm relationship, i also want feedback about the products and the brand. I believe in the lip gloss, and i think that this is a perfect item for birchbox. Its a Good Opportunity for us to show them our product, get them excited about it, and build a new relationship. Miranda okay. Im a little bit concerned. Im not very prepared. Lemonis sometimes you got to be good on the fly. I have no worry cause i trust you, and i know that youre gonna do a great job. Miranda okay. Yes. Lemonis okay. Great. Miranda hi. Im miranda. Katia im katia. Miranda hi, nice to meet you. Layne im layne. Lemonis every month, birchbox delivers beauty samples that are custom tailored to their subscribers. Getting our lip gloss into birchbox would put our product in front of hundreds of thousands of potential customers. Katia id love to hear a little bit about the product inspiration. Miranda my whole thing is i had chronically chapped lips. So, lanolin actually can help people with chapped lips. So i started looking for a lanolin lip balm, and there wasnt one. And that was 10 years ago, and the companys grown from operating out of my house to well do a little over 3 million this year. This is our lip gloss pure illumination. So, you push the button here. Yeah. And so, then you un theres a mirror right there. Katia the mirror is, like, amazing, and its so obvious. Layne honestly, we get more compliments on the mirror than we do the light. Katia i dont love the light. And, also, if i was at a bar and i put on my lip gloss and all of a sudden, my face was lit up, i think i would feel a little strange. What is the price point . Miranda 20 retail is what these retail for. Katia okay, so thats, like, actually a higher price. Id say this is lemonis 14 . Katia yeah, i was gonna say sub 15. But you could change the packaging and really change the perception on pricing and keep it at 20. Is the pure is, like, the natural aspect of it gonna be, like, part of this . Miranda its mostly pure, but except for the colorant and the scent. Katia its tough to say its pure. You can get natural color. I think that there is something to that. We see major trends in customers caring about ingredients. Lemonis birchbox has over 1 million subscribers, and katia filters their feedback. So shes an amazing resource. I wanted to get her feedback on as many products as possible. Interesting . Katia what is that . Miranda so, were doing a whole, like art deco theme. This is an eyeshadow palate. Katia no. Lemonis interesting . Katia uh, no. Thats weird. We really think in brand. It just feels all over the place. Lemonis i am floored by how much crap is in this space. Throw money in the garbage. Miranda i dont want to lemonis throw it in the garbage. Katia we relemonis how do you feel justabout the name lanolace. And a fullproduct set that explains the story and what the primary ingredient is . Katia i like it. Lemonis much like burts bees did with beeswax, right . Katia beeswax. Yeah, i think thats really cool. Lemonis are we onto something in that . Katia i think its supersmart. Lemonis so, if we made a commitment to sample 100,000, is that something youd be willing to try . Katia i think the right time to get, y