Will be behind her. My name is marcus lemonis, and i risk my own money to save struggling businesses. Were not going to wake up every morning wondering if we have a job. Were going to wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings going to 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 1996, susana monaco launched her namesake label, a collection of womens apparel marked by clean and contemporary designs. Susana the front is narrower than the back. Lemonis she had grown up working at her familys cutandsew factory and then engaged them to help her with manufacturing. Before long, she was in thousands of retailers across the country with revenue exceeding 10 million. Anna this is the bestselling for holiday. They love it. Lemonis but the Great Recession dealt the label a severe blow, and susana has been unable to reverse the damage. Susana stay in business or not stay in business thats the choice. Lemonis today, sales are off more than 50 from their peak. Susana this is devastating. Lemonis and the company is bleeding money. Im looking to grow my fashion business, and despite susanas troubles, im impressed by the success shes had in the past. If i can help get the brand back on track, im confident she can have an even brighter future. Anna hi. Lemonis hi. Anna how are you . Lemonis how are you . Im marcus. Anna anna. Lemonis nice to meet you, anna. Anna nice to meet you. Lemonis is this the showroom . Anna yes, please come in. Lemonis okay. Anna marcus, this is susana. Lemonis oh, hi, susana. Susana hi. Lemonis marcus. Susana hi, marcus. Nice to meet you. Lemonis how are you . Nice to meet you. Susana yeah. Lemonis dont be nervous. You guys manufacture your own stuff . Anna yes. Susana yes. Anna we manufacture in our new jersey factory. Sue is responsible for design, and im responsible for all operations and sales. Lemonis so you handle production and sales . Anna yes. Im very capable. Lemonis thats interesting. Susana the front stuff is too emotional for me. Anna sue is the Creative Engine of the company. Susana yeah. Anna so we dont want to expose her to all the you know, all the unpleasant stuff. Susana i dont like to be in the front of things. Lemonis okay. Susana i like to be in my world working. Lemonis youre the artist. Susana yes. I just. Anna shes very takes everything very close to heart. And, you know, in operations, every day there is a problem. There is i mean, every second there is a problem. Not every day every five minutes. Lemonis right away i noticed this very interesting dynamic between the two of them. Annas the employee, but shes dominating the conversation, and susana, whos the owner who has her name on the door, shes standing there like a bystander. Why dont we look at the product . Susana okay. Lemonis lets do that. Whats the demo . Susana i would say that its a cross section. Theres the young girl in there. Theres a middle girl. Theres a working girl. Theres a lot of girls in there. Lemonis is that code for saying its all over the place . Susana um, maybe. Lemonis look, you would expect a company like this to have a core lineup, a clear direction on exactly what they were selling, and there would be some consistency to it. Whos your customer for this . Anna well this is a young doll. Susana 20s, 30s. Anna 20s, not even 30s. Lemonis but when you look at her lineup here, its all over the place. Theres a dress made of this material and pants made of that material, and theres no story to the lineup, no collection. Ill tell you whats interesting about this rack. This is a very easy crossover to somebody who likes to live in athleisure wear. Susana yes. Anna yes. This is supplex, which is our base fabric. Lemonis okay. Thats how susana started the company. Lemonis it has a spandex feel to it. So it helps people with shape and curves. Susana shape is great. Lemonis but thats a very different fabric than this. cause this is not supplex. Whats the problem . Susana its a little dry. The economy crashed, our price point changed, so we had to work accordingly. Anna supplex fabric is unaffordable. Susana the supplex is almost 10 a yard. Thats the kicker. Lemonis so this fabric is how much a yard . Both about 4. Lemonis what are the overall margins . Susana the overall margin of the company is. You know, not great. Its in the 40s. Lemonis in a business like this, your margin should be no less than 50 . And whats even more surprising is they should be even higher, considering that theyre using lowquality materials. What it really tells me is that there has to be terrible inefficiencies in their process that ill have to look out for. Anna okay, so this is the patternmaking area. Everything is done on the computer, all patterns. Lemonis and youre literally making to order. Susana yes. Lemonis sell an order, cut, sew it, and ship it. Susana yes. Lemonis and so, when it goes to the cut and sew shop, they work off this pattern. Susana yes. My dads manufacturing plant. Lemonis oh, youre at your dads building. Susana yes. Lemonis so youre paying your dad rent. Susana yes. Lemonis so i should think about the factory as a shared building. Susana yes. Lemonis . Where your employees make your clothes. Susana yes. Lemonis . And his employees do thirdparty manufacturing for other people . Susana yes. Lemonis how often do you how much time do you spend there . Susana i dont spend any time there. Lemonis you dont go see what you dont inspect whats happening . Susana no. I used to, um, go, not. Lemonis whens the last time you were there . Susana the last time. Lemonis last week . Susana no. No. No. Anna no. Lemonis last month . Susana i would say, months. Lemonis do you go, anna . Anna i dont go. They dont like us. Lemonis your employees dont like you . Anna her brothers. Lemonis what do the brothers have to do with your dads building . Susana theyre running the factory. Anna theyre running the factory. Lemonis so you have no interaction with the people that actually make your clothes . Susana yes, no contact. Lemonis so this is a business relationship, contract labor, where youre paying for all the employees and all the work thats done. Thats your only source of manufacturing the products. But susana never actually goes to the factory that she pays the employees in . Because shes got some problem with her family . Im gonna spend a few minutes with susana so i can get to know her. Anna yes. Mmhmm. Lemonis why did you get into this business . Susana i was born in this business. Lemonis you were how . Susana my dad moved here from italy in the late 50s, early 60s. He started manufacturing clothing. I grew up in that factory. Worked there through high school. I did the designs. Lemonis and he manufactured. Susana he manufactured. Lemonis and then what do you do next . Susana i worked with a few really great companies. Mm, didnt really feel. I dont know, fulfilled enough, so i created the collection and it was going incredibly well. Lemonis whats the biggest year that youve had . Susana 13 million, then my father decides that i should split the stock of my company with my brothers equally. Lemonis why . Susana because he wants his family to be secure in life. This is oldschool way of doing things, cause all of my lemonis okay, hold on a second. Susana yeah. Yeah. Lemonis he walks up and says, i know you started this business by yourself, youre doing amazing, and i want you to take twothirds of the business and i want you to give it away. Susana yes. Lemonis to your brothers . Susana yes. Lemonis who are not in the business . Susana theyre actually working at the factory. Lemonis and so their payroll is coming from your production. Susana yes. Yes. Paying them a salary. Lemonis and did your brothers put any money in your company . Susana no. Its not fine, but. Lemonis so, i feel like youre being kind of, like, shaken down. Anna, whats your biggest worry . Anna the problem here is that we afraid that the brothers, theyre gonna screw us, you know . Because we dont trust them at all because they think that they deserve stock in the company, that this is their birth right. Lemonis they deserve in stock in the factory. Anna no, in susana monaco. Lemonis why would they deserve stock here . Anna well, good question. Lemonis now, are you with partners with susana in this business . Anna no. And the thing is that its really upsetting me, because i think it should be 50 50 because i carry a lot of stuff. Lemonis you get paid as well or no . Anna yes. Lemonis you do get paid. Anna yes. Lemonis similar to what susana makes . Anna no, im paid more. Her salary is 100,000. My salary is 175,000. I feel why should i cut my salary when im doing all the work, and i dont have partnership papers . And i said that to her straight out. I said, its one thing if i have 50 50. But now, i i mean, technically, im an employee. Lemonis so anna either gets twice as much as susana makes or she gets half the company . It feels like susana is being run into the ground all over the place. Her family wants a piece of the business. Her employees want a piece of the business. Its ridiculous. Whats your biggest concern about the business . Anna well, biggest concern is, of course, were not making money. I mean, honestly we didnt make any money since 2009, so. Lemonis no money. Anna yes. Theres no cash flow in the company. So what happens is we ship in the world, we ship in the world, there is no cash, so this is super stressful. Lemonis so, you know, when i met with anna individually, she told me she thought she should own 50 of the company. Susana yes. Shes making a lot of decisions here. Im not, you know, the pit bull. Shes the pit bull. I need a pit bull. Lemonis yeah, but your pit bull isnt supposed to bite you. Susana no. Lemonis theyre supposed to protect you. Susana yeah, but lemonis the purpose of a person like that is to protect you and. Susana yes, but she does in every other sense. Its not about bullying, its about. Lemonis but i feel like youre giving me a rationalization. Susana im not rationalizing, its the reason. Lemonis . Of why you let her behave that way, though. Even when were talking, she always talks over you. Shes not gonna take a cut in pay and she wants 50 of the business. Its like, okay, okay, hey, just slow the [bleep] down. Susana i just i dont know how i feel about that. Its a very, very mixedfeeling thing. Lemonis what i want to do is id like to have you bring your financials with you and i want to go to the factory. Holy cow. This place is huge. All these people work for you . This is gigantic. Susana yeah. Mario susana. Susana hi, pop. Mario please, go punch the timecard. Susana this is my father, mario. Lemonis mario, how are you, sir . Im marcus. You have a wonderful daughter. A lot of how many people work here . Mario maybe 85, 90. Lemonis wow. Can i have a tour . Mario okay. Lemonis all right, lets go. Lets take a tour. How many pieces a year come out of here . Susana with us, its about 75,000. Lemonis holy [bleep] susana yep. Lemonis what is all this . Susana this is just old inventory. Lemonis so does all this inventory sit on your books . Mario look how much stuff shes got around here. Susana yeah, but its its not a lot. Lemonis im sorry . Susana well. Lemonis i already knew from the showroom that their collection was all over the place. But this, there is product everywhere, rejected by customers. Were you drunk or something when you did this . This is what happens when you dont have a clear focus on your core product. Mario in each department, we have a foreman. In the cutting department, we have a foreman. Lemonis where are your boys at . They off today . Mario uh, no, theyre budging around. I dont know. Theyre very very busy. Lemonis id like to meet them. Can you take me to them . Mario uh, you know what . Susana i already know whats going on here. The brothers think i owe them their birth right. Lemonis so neither of them will talk to me. Susana no. Mario supposed to be equal partnership. Lemonis and so, the only way that they would agree to meet me is if susana gave away twothirds of the company . Mario well, originally, its what youre supposed to do. Lemonis whose business is it . Whos selling . Whos designing . The boys are designing . Mario well, its not the point. Susana they think that i owe them more than i owe them. They theres no respect here for me at all. Theres no respect. Wheres the respect . And what did i do . I created a business, made a lot of jobs, and now everybody hates me. Im never gonna be in business with them again. And im not gonna have them as my brothers, because this is bull[bleep] its [bleep] total bull[bleep] excuse me. Lemonis you got to get those boys down here. Go ask them one time. Mario i already asked them. Lemonis one time. One time. For me. Just you know, i wont go up there. You go ask them one more time. Theres a very simple reason that im asking mario to bring his sons down. If im gonna be in business here and im gonna have all the products made here, its not unreasonable that i want to meet them. Mario mario left. Dominic, he said, no. He dont want to come down. Lemonis mario left . Mario yeah. Lemonis okay. And dominic said no. Mario no. Lemonis wow. Look, its clear to me that the situation here is not ideal. The dynamics are really off. And if im gonna move forward with susana, im gonna have to put a lot more thought into it. But before any of that happens, i have to dig in and see if theres anything even here. Did you bring your financials with you . Susana yes. Lemonis why dont we sit down and go over them and well see . Okay. Start with the balance sheet. So 545,000 of inventory . Susana yes. Lemonis all right, so you could liquidate all that and generate some cash. Susana yes. Lemonis how much debt is in the business . Anna just the payables. Lemonis are there any bank loans . Anna we dont have any bank loans. Lemonis so the accounts payable are the real problem . Anna yes. Susana yes. Lemonis and thats 719,000. Anna yes. Lemonis so 545,000 of inventory, 700,000 of debt. So how much of this 700,000 is a problem . Anna i would say half a million. Lemonis is a problem. Anna yeah. Lemonis so if your payables are paid and all youre doing is selling the inventory, youre gonna have a lot of cash coming in. Anna yes. Lemonis lets look at the revenue. So last year, 6. 5 million in business. Gross profit of 2. 6 million, which is less than 50 and not good. 3,000,000 in expenses, and the business lost 361,000. If the margins were just what they should have been at 50 , it would have been 3,250,000 in gross profit, a difference of 650,000. Instead of losing 361,000, you would have made a couple hundred. cause 6 million in business, thats a lot. This is a margin game. Make a good product. Have a good supply chain. Have good margins. Control your expenses. Survive. I have enough Financial Information to at least understand it better. And maybe you and i can get together tomorrow. Thank you very much. Okay. Lets go forward. The financial statement, last year the company lost 361,000. Thats a lot. Some of that is attributable to the fact that you had low margins. What i like about the company is that the primary product, the supplex product, is timeless. It works for everybody. So id like to make an offer. 600,000 for 50 of the business. It pays all the bills, it brings the vendors current, we get back to producing, we get back to selling. With a lot of inventory where you can have enough working capital to do sampling and product testing and trunk shows. And were moving down the road, okay . Susana i am not sure how i feel. I need to know how annas going to be played into this, because shes a really, really important part of this component. Lemonis shes not gonna get 50 of the business, like she thinks shes entitled to. Thats never happening. Susana oh, my god, no. Its gonna be bad. I think this is gonna be a problem with her. Lemonis then she can quit. Susana oh. Anna unlike you, respect means more to me than money, than anything else. You know what im saying . I want to see you in my position. Susana im already in your position. Anna i dont think so. Lemonis you are not the owner of this business. Anna i didnt say i was the owner. Lemonis and your behavior is unacceptable. I put everything into my business. And i had all these points from my chase ink card. So i bought ingredients, utensils, even made custom donut cutters. Wow all with points. Thats how i created the ripple the doughnut in a doughnut in a doughnut. Suddenly its everywhere. I mean, it really took off. What will you create with your points . Learn more about the ink business preferred card. Fromi wanted to seeved, wthis great country. My last wish is for you to do it for me, as a family. Love, grandpa. Let us be lovers, well marry our fortunes together older grandaughter itll be alright. I know. Grandson how did you meet grandpa . Grandmother actually on a blind date. [ laughter ] i wish he was on the trip with us. Hes sitting right between the boys in the back of the car. [ laughter ] america all come to look for america all come to look for america lifes as big as you make it. The allnew 7seater volkswagen atlas with americas best bumpertobumper limited warranty. Susana i need to know how annas gonna be played into this. Lemonis shes not gonna get 50 of the business. Susana oh, my god, no. I think this is gonna be a problem. Lemonis then she can quit. Susana oh, my god. Lemonis because she gets paid almost double what you get paid. Susana yes, i know, but. I know. Lemonis we got to take these steps. We have to solve the first problem before we can solve the second. So, 600,000 for 50 of the busins. Susana i mean, this sounds like a. A great opportunity. Lemonis and you got the talent for it. And i have the distribution for it. You know that im 100 in charge, right . Susana yes. Lemonis do we have a deal . Susana yes. Okay. Lemonis hey, guys, were gonna have an employee meeting. Yesterday, i made a deal to invest 600,000 into this company. The moneys gonna pay the bills, and were gonna invest in product development. And then were gonna look at our business model. The goal is to shrink the line and get rid of the things that dont sell and get out of the business of losing money. Even though there are issues with susanas brothers, ive decided to stick with the factory, because i want as little disruption with the manufacturing process as possible. And while the brothers are still refusing to meet with me, theyre at least staying out of the way. Its the fathers factory, and he and susana seem to have a really good working relationship. So thats good enough for me. Its important for everybody to know that theres a Bright Future ahead and that were here to save jobs and make more money. [ cheers and applause ] all right, lets go to work. Thank you. So lets think about this for just a moment. If i wanted to see the entire susana monaco collection. Susana oh, theres thousands and thousands. Lemonis theres thousands . Susana thousands. Lemonis i already know that susanas collection lacks focus, but before i work on that, i want to look at how susana manages her inventory, how the retailers order product, and how the Company Actually fulfills those orders. If there are inefficiencies in any of those processes, that could explain why the margins are low. So where can i see one finished garment of every style. Susana most of them would be in the showroom right now. Anna yes. Whatevers finished is packed immediately and gets