tv The Profit CNBC December 18, 2019 12:00am-1:00am EST
nina: yes, that's true. finia: i'm gonna shoot for that. lemonis: i thought you were shooting for the moon? finia: i am shooting for the moon! lemonis: can we sell some more macarons first? finia: yes. lemonis: okay. ♪ lemonis: tonight, a very special episode mark: ah!rofit." lemonis: are you guys, like, taking all the fun out of toys? mark: no. we don't want to. lemonis: hello? a week ago, i got a phone call from santa... like, the santa claus? santa: the one and only. lemonis: ...asking me to help him with a business that is named after him. santa: it's run by some wonderful people, mark and heidi. lemonis: and because santa is asking for it, i'm not sure i really have a choice. santa: it is in santa claus, indiana. lemonis: wait a second. there's a town called santa claus? santa: [ laughs ] lemonis: i don't want to end up on the naughty list. that was weird. ♪ the toy industry has gone through a ton of changes in the last couple years, and candidly, it's hard to compete. but the idea of having a toy business that's connected to santa in a town called santa claus
is fascinating to me, and so before i go to the business, i want to stop off and see what it's all about. oh, hi there. woman: hi. lemonis: how are you? my first stop is the post office, where santa's helpers answer all the letters. woman #2: it will come here if it says north pole. lemonis: this is the best one. one thing i want to do before i leave is write a letter to santa and ask him to give me a good business. ♪ this town is fantastic. from a marketing perspective, i'd say you're starting with a leg up, and that's why i decided to show up with the christmas spirit. ♪ when i walk in, i'm expecting to walk into santa's wonderland with ornaments and christmas lights, but instead, it has dark ceilings and the place is totally uninviting. and even worse, there's cameras everywhere. who decorated this place, the grinch? mark: hey. lemonis: how are you? mark: nice to meet you. mark. lemonis: mark? mark: yep. lemonis: i'm marcus. mark: this is heidi. this is... heidi: hi. nice to meet you. lemonis: how are are you? nice to meet you. husband and wife?
heidi: yes. lemonis: well, i'm in santa claus. heidi: yep. mark: yeah. yeah. you are. it's a very tourist-attracting kind of area. lemonis: yeah. mark: holiday world, splashin' safari park... lemonis: okay. mark: ...they get about a million to a million and a half visitors a year. lemonis: wow. mark: so that's the big tourism for the town. they're actually the first theme park. lemonis: oh, they're the first theme park that every existed? mark: yeah. they were santa land about 70 years ago. heidi: we moved here two years ago. lemonis: oh, okay. where are you from? heidi: we were originally from pennsylvania. lemonis: oh. heidi: and we were going to do that back there, so i researched it. i'm like, "wow. that's a really cool town." so he changed his job. we moved out here, sold our house, and here we are... lemonis: wow. heidi: ...about two years later. lemonis: who does the toy-buying? heidi: it's a family affair. mark: yeah. yeah. heidi: our kids get involved, too. lemonis: oh, do they? how many kids do you have? heidi: we have two. lemonis: oh, wonderful. heidi: we have a 14-year-old and a 10-year-old. lemonis: very cool. heidi: yes. mark: when you meet hunter, you'll see. he's 14. he's a little more advanced, and my daughter is special needs. they call her delayed, and at some point -- and she catching up. lemonis: yep. mark: like, she's reading now, and she's doing great. lemonis: okay. can you take me through the products and the categories? mark: yeah. so we've got well over 4,000 different skus.
we've got games on this corner here... lemonis: okay. mark: ...a lot of the little knickknacky stuff up here towards the front. our squishies -- this is kind of our trendy area. lemonis: how do i know that other than looking at it? is there a sign? mark: there's no signs. yeah. that's the only thing. lemonis: okay. i'm not really sure where to shop or where to go. nothing has any labels on it, and when you're competing with the internet these days, it has to be just as easy as navigating through a website, and to say that the customer experience was not part of the thought process here would be an understatement. does the store seem dark to you? heidi: it does. yes. mark: oh, my gosh. yes. lemonis: the black ceiling... heidi: yes. mark: it's just... lemonis: yeah. mark: a lot of this stuff, we just kind of did ourselves. lemonis: what are these? mark: those are our cameras. we've got 16 cameras in here just to kind of deter somebody from... lemonis: is this, like, fort knox? the place doesn't really feel fun. "warning: all activities are recorded to aid in the prosecution of crime." then there's these cameras here telling you that again. that's, like... it's, "have fun, but don't have too much fun, okay?
because we're not about fun." i think it's important to elicit excitement and to encourage people to touch and play and fall in love with the toys. the best way to get somebody to buy something is to get them to fall in love with it. mark: what we've found was kids would be opening everything... lemonis: it's a toy store. mark: ...breaking them. lemonis: yeah. heidi: i think we just take it personally, you know? lemonis: yeah. heidi: because we built this. lemonis: because it's your stuff. heidi: so when kids come in there and, like, let loose, we're like, "oh." lemonis: right. unfortunately, in a toy store, you have to factor that there's going to be a certain amount of loss. so in a candy store, it's people sampling. in a toy store, it's people opening. what a business like this should do is you can actually create a line item on your p&l. of course, there's revenue. there's gross profit. there's rent. there's marketing expense. there's payroll, but maybe they factor in that $1,000 a month is going to go towards opening products up and letting people play with them instead of getting angry about it.
what do you do with stuff like this that doesn't sell? mark: we donate this kind of stuff for the schools, for the nonprofits. lemonis: so can you walk me through and show me the other dead merchandise in this store? mark: yeah. i sure can. we switched brands from that to this. lemonis: okay. mark: so once those are gone, we will not have anymore. lemonis: so that's dead merchandise? mark: yeah. these, i cannot sell. lemonis: okay. heidi: the remote-control cars don't really seem to go that well. lemonis: they don't sell well? heidi: mnh-mnh. mark: none of these, this whole rack, i've had these for two years. lemonis: it doesn't sell? mark: yep. lemonis: wow. do you do a lot of business online? mark: we don't. no, and now -- heidi: we have it. lemonis: do you do any business online? mark: we do a very small amount. we have a regular website. lemonis: what's that called? mark: santastoys.net. lemonis: dot-net? mark: yeah, and you can go to that. lemonis: why dot-net? mark: because the dot-com costs more. lemonis: how much is the dot-net a year? mark: i believe it's $29 a year. lemonis: and how much is the dot-com? mark: a hundred and something, it was. lemonis: and so you thought for the $70, it was better to go with dot-net? heidi: just because we weren't getting the orders from there. lemonis: maybe because nobody knows dot-net.
while i appreciate the frugalness, the customer experience is awful. they have santastoys.net instead of santastoys.com. he didn't even invest a little bit of money to have a shipping box that had his brand on it. instead, he's reusing old boxes, and there's a handmade sign that looks like it was made in an arts-and-crafts class. what's a busy day here? mark: $5,000 to $6,000. lemonis: and what's a low day here? mark: a low day here would be... heidi: zero. lemonis: did you ever do zero? heidi: we did. mark: we have. heidi: especially in the slow time, january through march. mark: january, february. so right now we're at the end of the summer season, where everything dies down a little bit. lemonis: uh-huh. yep. mark: so in the off-season like this one, nobody is open. there's nothing going on. it's quiet. lemonis: and have you ever thought about closing down seasonally and just having the website open? mark: some of the locals do that, local businesses, but for us... heidi: you don't know if they have a birthday or... mark: you have a birthday. yesterday, we had a little girl. she broke her leg, so we had probably five or six families come in and buy toys for her so she had something to do
when she was recovering in the bed. heidi: so we're here all the time. lemonis: so mark and heidi stay open year-round because they live here, and i get that, but ultimately, they have to generate revenue for their family and they have to do it efficiently. and so what's the solution? launch a website that actually gives people the chance to buy product 365 days a year, 24-7, and have it end in a dot-com, not a dot-net. lemonis: i'm kind of disappointed that it doesn't feel like christmas. see? like, i look at this, right? why did you feel the need to do that when you had this? mark: well, because it's a toy store. lemonis: i mean, people know santa's toys, it's a toy store. mark: yeah. lemonis: and it doesn't even feel like it's in the christmas theme. mark: no. it's not. lemonis: so as you stand out here, where's the christmas feel? mark: it's one of the things that we're working towards. lemonis: i mean, when you look at santa's lodge, it's got a giant santa out front. mark: yeah. lemonis: it's welcoming. you know that it's christmastime. your building looks clean. it just doesn't look inviting.
♪ what happens if the business doesn't work? mark: i mean, i go back to work, and she runs it because i made 20 times more than i'm making now. lemonis: what did you do before? mark: i was an atm repair guy. god, i was gone six to eight months out of the year. lemonis: yeah. mark: i was always gone. there's a lot of pictures of the family going to the zoo or the aquarium or the science museum. i'm not in them. lemonis: why did you get in the toy business? mark: for me, especially in this town, a classic town, you get that spirit of christmas. when you see that in the heart of a little child... ♪ i didn't grow up with a lot of money. ♪ i never met my real father. ♪ [ sniffs, sighs ] so i kind of grew up on my own.
lemonis: and so are you trying to create a refuge for kids to come somewhere and feel safe? mark: i just want them to feel the magic of christmas. ♪ lemonis: i think what you have to do is bottle up that passion that you have for it and figure out how to package it in a way where it could provide for you and your family 365 days a year. mark: yeah. lemonis: because every day is christmas. mark: it should be. lemonis: okay? let's head inside. ♪ ♪ guys. heidi: hey. mark: how you doing? lemonis: how are you? do you have the financials? mark: i do. yep. lemonis: okay, so $50,000 of inventory right now. mark: right now. lemonis: and what are the payables that you owe? mark: yes. we don't do credit. we buy it outright. lemonis: pay cash, and that's it?
mark: yes. lemonis: so you don't owe anybody any money on the vendor side? heidi: correct. lemonis: so here's '17, last year -- $344,000. so the business makes about $60,000 a year? mark: yes. lemonis: after everybody's paid? mark: yes. lemonis: is that including you guys getting a wage? mark: i mean, we only take enough to pay our bills. lemonis: but that's in these numbers? mark: mm-hmm. lemonis: considering that you bootstrapped it and in the last 12 months being open less than two years, you made $60,000, there's not a lot of businesses that can make that kind of return on capital in less than 24 months. does the place look as good as it could? no. but did you learn how to make a profit and do it with what you had? mark: mm-hmm. lemonis: yes. like, high-five on that one. mark: [ laughs ] thanks. lemonis: and i want to do a deal with you guys. mark: ooh, wow. lemonis: i want to put up 75,000 bucks. i want half of the money to go into the store to improve it, to fix it up a little bit,
and i want the other half of the money to go into building the website, which means that the store will be closed for a few days. heidi: [ gasps ] mark: she would freak out. heidi: i couldn't even shut it down for a half-hour. mark: she'd be like... she'd be a wreck. lemonis: yeah. mark: for me, it comes down to every little bit helps. we just want more for our kids than what we've had. lemonis: you've said to me, "we want more for our kids," and in a weird way, by not having an online store, you're doing your kids and other kids a disservice. mark: again, we have a website. we have an e-commerce. we have a whole payment system and -- lemonis: i understand, mark, but i don't like a dot-net. i don't think it's as good, and we're going to have something built because that's the nice thing about having an online store. you can always work. it's always open. but it also will work for itself when you're not there. mark: yeah. heidi: it's just not our -- that's not why we did it. it was to have the actual store. i think we should focus more on the store. yeah. lemonis: coming up... mark, put your heart into it. mark: can you imagine a place...
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mark: yeah. heidi: it's just not our -- that's not why we did it. it was to have the actual store. i think we should focus more on the store. mark: yeah. lemonis: so when we were in front of your store, what did you tell me outside that christmas is all about? mark: family. lemonis: uh-huh. how are you addressing that in working seven days a week and not taking any time for the family? mark: yep. i see what you're saying. lemonis: if you're selling christmas and joy and family, you better live it. mark: yeah. lemonis: so my offer is $75,000. half of the money goes into the store to improve the brand. mark: i see. lemonis: and where i want to partner with you guys is on santastoys.com. mark: how much of that do you want? lemonis: i want 50% of it. mark: that's fair. lemonis: i want you to keep owning 100% of the store. for your family, it's enough to make a good living. even though i'm not taking a financial interest in the store, the reason i want that money to go towards it is so that it can help build the brand for the website. what i expect from you guys is buying the product.
we'll ship them out in a really cool santa claus box. we'll make cool labels, but you guys have to do all that work. heidi: i'm in. lemonis: so do you understand the deal? mark: absolutely. lemonis: this is the biggest check i ever wrote to santa. [ laughter ] mark: santa is getting a new sleigh. lemonis: a new sleigh? he's got a new maserati. we have a deal? mark: absolutely. lemonis: i'm going to give the money to her. mark: i would. yes. lemonis: thank you. heidi: thank you. mark: marcus... lemonis: thank you. mark: thank you so much. lemonis: good luck. ♪ now that the deal is done, i'm super excited to get started working for santa, and i'm going to put some christmas in the air. these are good. i love these. heidi: good morning. mark: hey! lemonis: what's happening? hi. hunter: hello. emily: hi. lemonis: how are you? i'm marcus. emily: i'm good. i'm emily. lemonis: nice to meet you, emily. emily: nice to meet you. hunter: hunter. lemonis: hunter, nice to meet you.
do you love all these toys? emily: yeah. lemonis: what do you think about making it better? hunter: yes. lemonis: what do you think we should do to it? hunter: just decorate it better so that way it doesn't look kind of cheap, almost. lemonis: oh, it looks cheap? okay. at least we have an honest family member. and what do you think they sacrifice for you? hunter: a lot. dad worked a lot. he still does. mom still does. we never get to have family outings, not very often, anyway. ♪ lemonis: i'm marcus. laura: hi, laura. nice to meet you. lemonis: laura? laura: yes. lemonis: nice to meet you. jessica: jessica. lemonis: jessica. jessica: yep. lemonis: nice to meet you. do you guys work here full-time or part-time? both: part-time. lemonis: and so i know that we're just meeting for the first time, but mark and heidi and i ended up making a deal for me to help grow santa's toys, and in order to get ready for the holidays, something's got to change, and step one would be to take out the stuff that doesn't sell and put it in a truck and try to liquidate it. let's go outside for a second, okay? emily: let's go. hunter: outside we go.
lemonis: so... this truck is going to get filled today with everything in the store that we all know isn't good merchandise. so why don't you guys go start pulling things that you know are a problem, and then we'll load them up? mark: okay. lemonis: all right? mark: got it. let's go right by you. there you go. ♪ lemonis: how do you know what sells and doesn't sell? mark: just from being here. everything in this area sells. lemonis: all of it? mark: all of it. lemonis: get the data. don't just guess. mark: oh, i'm positive. lemonis: one of the things that i want to do is dig into what's really wrong with this business. mark: microscopes got to go. lemonis: and the best place to start at any business that's struggling is you start with the inventory. so who's the one that's buying all this stuff? mark: [ sighs ] me. lemonis: all this is -- these are all mistakes. mark: yep. lemonis: okay. you should get out of the toy-buying business if this is your aisle.
after seeing all this crap inventory, maybe it was too early for candy canes. heidi, what about all the stuff that you buy? heidi: all these dinosaurs are good. we just have to reorder more. lemonis: and you have to get a lot more. heidi: yes. good. good. that is good. lemonis: okay. heidi: this is good. lemonis: this is good. heidi: good. lemonis: all of that is good? heidi: all that's good. lemonis: what about all this? heidi: good. lemonis: look, it seems like the toys that are selling are the ones that heidi is buying, and the one that mark bought are ending up on the truck. so from here on out, mark is on the naughty list when it comes to buying toys. we're getting close to being done, and the place still doesn't look right. it looks like a metal building with a low, black roof with a couple different types of floors. and so how do you feel about closing the store for three weeks? heidi: [ gasps ] three weeks? you mean three days? lemonis: three weeks. heidi: three weeks? ♪ [ chuckles ] no. ♪
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closing the store and sofor three weeks? about heidi: [ gasps ] three weeks? mark: yeah. lemonis: the idea is to open the whole store up, from wall to wall. open up the ceiling and have it actually feel like christmas in here, like santa's workshop. it's going to take about three weeks. mark: honey, it'll be okay. if we sacrifice a little bit now, then the end result will be way better than continuing on the path that we're going, which isn't going as well as it should. heidi: yeah. lemonis: and the two of you have too much at stake, too much of your heart in it, for it just to chug along. ♪
heidi: okay. ♪ lemonis: with heidi onboard, christmas is back on, but let's be clear. we still have to figure out how to get rid of all this stuff. ♪ just out of curiosity, how much money is in there, heidi? heidi: $15,000? lemonis: $15,000? mark: yeah. lemonis: so for me, i'd rather buy it from you for $15,000 and donate it to kids and put the money back in the business... mark: i'm all for it. yeah. lemonis: ...and then we go to a show, and we take the $15,000 and we're smart about it. run it through the register. i'll sign the receipt. look, after we've gotten all the bad inventory out of the store, they need to buckle up because this is just the beginning of the changes. so the next three weeks aren't going to be a vacation. mark: oh, no. i didn't -- lemonis: we got to go find a couple toy shows. we got to go find a box manufacturer to get santa's toys boxes done. we got to go get a new marketing plan, get the website moving, get the website open, and you're going to write up a plan for the toy show. ♪
i wanted to bring mark to chicago to take him to a box manufacturer so that as we move the business forward and launch the website, when a customer gets a package, it's in a branded box. keith: we make 100,000 a day, maybe 200,000. this is the quantity you want to get to. like, this is a big-ass order. lemonis: this is -- yeah. how cool this is? and they do something even on the inside to elevate it. i mean, i want to understand what the barrier is to you doing something like this. mark: one would definitely be cost. lemonis: what's a box like this cost? keith: 500 units, a couple dollars. lemonis: okay, 5,000 units? keith: 5,000, it'd go down to $1. lemonis: you have to think about them not as a box company but as a foldable, moldable billboard company. keith: yeah. lemonis: it can travel the country. it could deliver your message. it can create an experience. but it's also to improve retention, so i need you to think about the box also as a retention tool. mark: okay. lemonis: anytime a business is trying to maximize their profitability,
one of the things that they need to understand is their cost of acquisition and the retention of that customer after the fact. so if a customer walks in on day 1 and it costs you $40 to get that customer, either from marketing, messaging, billboard, an ad that they saw, and they spend $40 at a 50% margin, you essentially are $20 behind the 8 ball on visit one. the second time they visit, they spend another $40, and now you're back to even, and over time, if you can get them to visit you two to three times a year, you're getting a lifetime value of that customer that will outpace your initial cost of acquisition. keith: a lot of people don't look at packaging as advertising, and a probably the most impact you can get for the dollar you spend is on your corrugated box. lemonis: back in indiana, construction is under way at santa's toys. the entire place is being gutted. the only thing that's left are the exterior walls and the roof. heidi is busy loading the rest of the merchandise into the warehouse she found.
she's probably still frustrated that the store is closed, but the payoff will be well worth it. ♪ good morning. mark: good morning. lemonis: how are you, buddy? mark: i'm good. lemonis: so i'm bringing you to pinnacle advertising. it's an agency that i've used for probably 20 years. so they're going to talk to us about how to turn a website into a 24-hour marketplace, and they're going to talk to us about how to market our location in santa claus, indiana, so that people want to stop there. why'd you make that face? mark: money! lemonis: i'm preparing you that you have to spend money to make money, okay? mark: okay. lemonis: at the end of the day, in order to grow this business, we're going to have to invest in this business. the reason that i wanted mark connected with pinnacle is because they handle massive companies. mike: this is our awards wall. mark: holy smokes.
lemonis: and i wanted him to know that i was giving him every available resource possible to grow his business. can we go to his current website just so you can see it? catie: yeah. it's -- i was going to ask a lot of questions about it because it looks like it was built by your e-commerce platform, but it doesn't sound like you're doing a lot of e-commerce right now. mark: no. we're not. we never really thought of the online site as a serious e-commerce. catie: in regards to bringing people into your store, i think there's a lot of very quick design work that can be done here. lemonis: the website is going to be the most important business, and i bought santastoys.com before i came here. jac: oh, i think that's great. i mean, it should be sensory overload. when i walk into santa's toys, i should smell hints of gingerbread in the air. you know what i mean? it's sights. it's sounds. it's feelings. steve: right. jac: and you are capturing that magic, and then we're going to transfer that magic online. steve: and then it's, like, somebody that's had a great experience is going to say, "santa's toys is amazing." jac: when they ask for the website, it's like, "oh, you should join our nice list,"
and, you know, you could capture some of their information and their data right then. mark: that's perfect. jac: right? mark: yeah. the nice list. that's so cool. mike: it's that type of innocent passion that is going to draw people in. it's just going to be fun. you want to be a part of it. it's totally infectious. lemonis: all right. well, let's start with... mark: let's -- yeah. lemonis: ...baby steps. mark: baby steps. i got you. lemonis: while we're at pinnacle, i'm going to have mark practice recording a radio spot. in order to be a retailer, particularly with something like a toy business, you have to be able to communicate excitement and fun. ultimately, if he can do it, customers will have a better appreciation for him and have an affinity towards him. mike: so in here, this is one of our edit suites, and this is a sound booth, so -- lemonis: you ever been in a sound booth? mark: never. lemonis: let's go inside. don't touch anything, though. so i want you to give us a 30-second elevator pitch. mark: oh, no. [ laughs ] you put me on the spot. lemonis: from the heart. make it happen. man: all right. we're recording. take one. mark: all right.
so santa's toys, to me, is a place where children can come in and see toys that you wouldn't normally see everywhere, and to -- lemonis: mark. mark. mark: yes. lemonis: i didn't -- this isn't an interview question. i want you to tell people why they should shop with you. mark: oh, gosh. all right. so santa's toys has over 2,000 different toys where you can ask questions from salespeople that really know about the toys. lemonis: i just turned the commercial off. i'm going to come in and help you. ♪ whether it's online or in the store, what are you selling? ♪ mark: the spirit of christmas, the magic. lemonis: i want you to read this sentence in a magical way. mark: "can you imagine a place"... lemonis: mark. mark: yes. lemonis: put your heart into it.
mark: [ sighs ] ♪ why did you really get in this business? "can you imagine a place where you're not alone?" mark: "can you imagine"... "can you imagine a place where you're not alone?" [ sighs ] ♪ lemonis: if your business is in trouble and you need my help log on to theprofitcasting.com. ♪ spread a little love today ♪ spread a little love my-y way ♪ ♪ spread a little something to remember ♪ philadelphia cream cheese. made with fresh milk and real cream makes your recipes
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chase. make more of what's yours®. mark: i get too emotional. i can't talk like that. lemonis: you can. you can do it. i'm positive. first day i was with you, i fell in love with your spirit and your heart about things. you care about your family. you care about your town. you care about your business. you care about your customers all because you wanted to take them to a place that was different than you used to be in, right? ♪ that's your motivation. come on. turn around. we got this. okay? ♪
take one last crack, but i want you to put the same thought into it, okay? [ door closes ] mark: can you imagine a place where you're not alone, where you can experience the fun, the imagination, and the joy of christmas? that place is santa's toys. lemonis: i got it. i'm very proud of you. you did fantastic. i think everybody agrees. mark: okay. lemonis: all right? let's go. mark: thanks, guys. lemonis: let's move it on. thanks, guys. while i don't feel like mark nailed it in the end, the progress that he made from the moment we walked into that sound booth to the moment we left was huge, and if i could see that sort of progress with him in a lot of different areas, well, that may actually be the code we need. all right. let's go. mark: all right. lemonis: back in santa claus, we are well under way. we're rewiring the whole place for new lighting,
putting in all-new floors. i'm having all-new fixtures and signage made. the goal is to open up the floor plan and put in new fixtures, allowing there to be double the amount of product there was before, but properly assorted and organized, and we're turning part of the wasted stockroom into a cool santa's workshop. ♪ good morning! mark: hey. heidi: hello. hi. lemonis: how are you? heidi: i'm good. how are you? lemonis: good to see you. welcome to dallas. how are you? hunter: pretty good. lemonis: what's happening? emily: good. lemonis: are you excited? emily: yes. i am. lemonis: all right. how are you, buddy? all right. so you ready to go inside? mark: yep. lemonis: let's head in. how you doing? mark: i'm good, buddy. lemonis: you doing okay? mark: yeah. lemonis: okay, fall toy preview. holy moses. look how big this is. mark: oh, this is awesome. heidi: wow! lemonis: it's cool, isn't it? do you have a written plan?
mark: i have it somewhat written. lemonis: no, but where's your plan that you were going to write down, like, "these are the age groups i need to accomplish. these are the categories"? where's that plan? mark: mostly in my head. lemonis: no more coming to shows without game plans. go ahead. mark: my game plan is a little different than yours. lemonis: well, your game plan hasn't worked. anytime you go to a wholesale show, you go in with a buying plan. an open-to-buy refers to a budgeted amount of money that you could spend that is allocated based on the business plan. the second thing you should do is understand what vendors are there and what categories am i trying to accomplish? what are the age groups that we're looking for? mark: zero to 3, 3 to 5, 5 to 7. lemonis: and how much do you have in each of those categories now? mark: we're basically starting over because there's such a small amount left. lemonis: okay. let's head to the first booth. emily: let's go. they're pens. man: you want to try a chicken? emily: [ laughs ] mark: i'm not a fan of this. it's very generic, in my opinion.
man: it teaches you how to draw, step-by-step. emily: i think it's cool. lemonis: what's the price point? man: $59.99. mark: what do you wholesale it for? man: $37.32. mark: not great margins. man: so you have something in your hand. whoa, it's a light. emily: it's a light. man: you can make it go through your head. i'm getting lightheaded. emily: wow. man: and then check this out -- you can take the light, and you can throw it into your phone. emily: how did you do that? is the phone, like, magic? hunter: how does the light thing work? how do you make it jump around? mark: so, to me, he makes it look awesome, but when a kid buys it, he's not going to be able to do what he's doing. this is kind of a waste of time. lemonis: you can -- mark: it's not something we would do at our store. lemonis: whoa, whoa, whoa, whoa. before you say it's a waste of time... mark: yep. lemonis: ...give him the objections that you have. mark: i got you. emily: what?! man: now close your hand. mark: so the thing for me, if they weren't here, i would have just kept walking only because i'm like, "well, how do i do that in store?" man: yeah. mark: because you're really good at it, and i don't know that i would be really good at it. man: everything comes with a video display,
so the video does the pitching for you in your store. mark: oh, that's pretty smart, actually. heidi: i like it. yeah. as a mom, i like it just because of the drawing for kiddos, something to do, creative. lemonis: okay. heidi: this is going to be $12.95, and then we have to buy it at $6.45. lemonis: so good margins? heidi: yes. mm-hmm. lemonis: how do you feel about the price point for your customer base? heidi: i think it's really good. yeah. lemonis: wow. heidi: yep. lemonis: mark, where is your pad of notes? mark: in my backpack. lemonis: hey, grab it real quick. mark: here it is. lemonis: okay. mark: yeah. uh-oh. oh, yes. she's a better note-taker. lemonis: she asked costs. she knew her margins. she liked the size of it from a value standpoint for $12.95. the one thing that i did learn at this toy show was heidi's ability to do the work, the detail work, the writing of the notes, the asking of the questions. i saw her executing at a much higher level than mark.
i don't think you should do much buying going forward. i watched heidi do it, and i was kind of blown away. mark: i agree. lemonis: i'm only comfortable being in business if you are the lead buyer. heidi: i -- it's just not me. i just -- i'd rather just go and help for somebody else. lemonis: you got to let these unbelievable brains and creativity out. we need it. mark: i want you to do that because you are better at it than i am. heidi: no. ♪ lemonis: what is it that you're worried about? heidi: i just don't want to fail. lemonis: you to fail, the business to fail, the family to fail? heidi: all of the above. lemonis: you feel that pressure on your shoulders? heidi: yeah. ♪ lemonis: coming up...
mark: i did get a label to go over the top of the dot-net. lemonis: but it's not done. mark: it's on my list. lemonis: bull[bleep] mark. you should have just done it, though. it's like you just didn't put the frosting on the cake. lemonis: what is it that you're worried about? it's been reported that there's a cyberattack on business every 39 seconds. ouch. i don't even want to think about it. comcast business has a solution. we go beyond fast with a cloud-based security system that automatically updates, so you always have the latest protection. phishing. malware.
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creais back at red lobster.ast with new creations to choose from; like rich, butter-poached maine lobster and crispy crab-stuffed shrimp rangoon. how will you pick just 4 of 10? it won't be easy. better hurry in. heidi: i just don't want to fail. lemonis: you feel that pressure on your shoulders? heidi: yeah. i don't know. ♪
lemonis: have i made you feel that way? heidi: no. lemonis: so then why? tell me. heidi: because i have them. emily: it's okay, mom. it's cool. lemonis: your mom is wicked smart, but she doesn't feel like she can unleash it because she's too -- she's worried. hunter: come here. emily: hello, there, hunter. hunter: come over here, you bugger. emily: [ laughs ] it's all good. kissies. mark: you can do this. emily: now we're happy. mark: you know you can. lemonis: you ready to go to work? mark: you've been doing it. emily: yeah! heidi: let's go to work. emily: let's go to work. hunter: see, you were joking and caroling. and you... lemonis: it's clear to me that heidi has the fundamentals to be more successful in this process and that mark's heart is so filled with love for his family that he recognizes that having his wife participate in the most meaningful way is only going to make their family business stronger. and it took me about a month, but i finally saw mark loosen up.
this guy won't stop hanging around. mark: [ laughs ] ♪ lemonis: okay. are you sure you're okay? 'cause you're having a little bit of fun. we made a ton of progress today. i thought heidi did really well in understanding that categories that needed to be bought based on what sold historically and then taking a few chances, but being really smart about it. let's go that way, and then we'll come back. ♪ we're putting the finishing touches on getting the store ready for the reset, and mark is putting finishing touches on boxes and bags, and the new and improved santa's toys website is almost done. also, i'm taking mark and heidi to buy christmas decorations. i'll take 15 of these, so three of each color. man: okay. lemonis: we're trying to make it magical for people when they come in. mark: it is going to be magical.
lemonis: we're going to decorate the store in a way that customers will never forget. mark: will this go outside? man: yeah. mark: [ gasps ] we could put one on each side of the doorway. lemonis: by the time we're done, i think we'll get put on the nice list by santa. what are you high-fiving for? high-five her. mark: i just wanted to be part of it. heidi: [ laughs ] lemonis: you high-five. ♪ i'm back at santa's toys because i've gotten all these e-mails and texts from mark about the fact that he was ready to open up the store, and i have come prepared with my santa hat to celebrate christmas, but i got to be honest. i have a hard time believing that christmas has come early -- especialthis early. what?! heidi: hello! give me a hug. lemonis: merry christmas. heidi: merry christmas. lemonis: merry something. heidi: yeah. mark: oh, there he is. lemonis: how you doing, buddy? mark: nice to see you. i'm doing good. lemonis: yeah. mark: it's awesome. what do you think? lemonis: it feels different. heidi: it does.
lemonis: it really opened it up. mark: oh, yeah. yeah. it feels so much bigger. ♪ lemonis: when i walked in, my first response was, "it does look totally different." it's brighter. it's more open. there's graphics on the wall. there's new fixtures. there's signage, but different and perfect are two different things. look at that. what does that look like to you on a grand opening? mark: not as good as it could be, for sure. yep. lemonis: the shelves weren't filled. this looks terrible. mark: because... lemonis: and i'm looking at this case by the register that's entirely empty! okay, so this is just empty? mark: yeah. lemonis: i'm not happy with the fact that you scheduled the grand opening for today when you're not ready. we need to take the next three hours and we get it right. mark: i don't know that three hours is going to do it. lemonis: why is that? mark: because we don't have a system at the storage unit. boxes are just piled on top of each other over there. lemonis: okay. i'm seeing holes everywhere,
and he's telling me that there's a bunch of product back at the warehouse and in the stockroom. in what universe did he think it was a good idea to have the grand opening today? mark: i completely missed how much time it was going to take to get all this stuff in there. lemonis: why'd you leave this behind? mark: just time. we got another santa over here. we've got nutcrackers, all kind of knickknacky stuff. lemonis: and you just decided to leave all this back here. mark: i just said, "when i have the time here next week or in the week after that, we're going to get -- i want to get all this stuff done." i just -- i should have waited. november the 24th and 25th, that would be a better day for a grand opening. lemonis: so why didn't you just stick to that day? ♪ mark: that was my choice, but that wasn't my other half's choice. lemonis: what does that mean? mark: heidi didn't want to wait until then. lemonis: how much pressure did your wife put on you to open the store? the truth. mark: considerable. lemonis: uh-huh. mark: ultimately, it's my fault for not thinking it over more.
lemonis: so we closed for a month. we did this giant renovation, but you won't know it because when you pull up, it looks just as bad if not worse than it did when i left. in the parking lot, i see overgrown grass, and i see the same banner hanging from the sign that i asked to be removed last time. why is that banner still hanging that we talked about? mark: i was going to take it down when i had a chance. i did get a label to go over the top of the dot-net to make it dot-com. lemonis: but it's not done! mark: well, i didn't -- lemonis: but it's not done! mark: it's on my list. lemonis: bull[bleep] mark. you should have just done it, though. it's like you just didn't put the frosting on the cake. ♪ for exclusives, extras, and business advice, visit theprofit.cnbc.com.
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go with the one that's here to help life go right. i need you to be perfect when it comes to the details of the business, but you weren't ready. mark: no. you're right. lemonis: so we got to scramble. ♪ ♪ [ indistinct conversations ] ♪ mark: if we aim that up and to the -- yeah. down just a little bit, we'll be looking pretty good. it makes a really big difference. it looks great. lemonis: we did it. we did a good job.
♪ mark: hey, everybody. [ cheers and applause ] mark: it's been a really fun, amazing road to get here. we really fell in love with the town, the people. we want to continue growing and getting better. anyway, thank you all. [ cheers and applause ] heidi: all right. mark: here we go. heidi: there we go. [ cheers and applause ] lemonis: who wants to go inside and see the toys? [ cheers and applause ] come on in. head in. finally, i can celebrate christmas. as everybody enters the new and improved santa's toys, they're going to get a totally different experience from what it used to be. the signs and cameras have been removed, and they've been replaced with christmas-themed murals. the low black ceiling has been torn out, and the ornaments and the open ceiling bring the place to life, and it is much easier to navigate with clearly signed sections that tell you where all the products are.
and i really love how the old storage space is now santa's workshop. ♪ this room came out nice. mark: yeah. lemonis: so when you see all these people here, what do you think to yourself? mark: it's nice to succeed. the support, it means a lot. i don't have to be on the road. i'm home. i see my kids and my wife every day. lemonis: christmas is really about people just being nice to each other... heidi: coming together. lemonis: ...and not, apparently, getting on the naughty list, which i'd like to contest why heidi is up there. mark: i don't know. she shouldn't be on the naughty list. lemonis: maybe it's because she opened the store too soon. heidi: yeah. it was hard being closed that long. lemonis: what did you learn about yourself? heidi: like, i have patience. lemonis: did you gain confidence in yourself? heidi: i think so. ♪
mark: hey, you guys! you know how gummy bears are usually really soft? these are super chewy. lemonis: with the new and improved customer experience and all the new products and all the new signage and the entirely different environment... woman: hello, santa. welcome! lemonis: ...and with the santastoys.com website up and running, well, they'll be able to get revenue 365 days a year, not just during christmas. i'm expecting this business to go from $300,000 a year in revenue to way over $1 million. heidi: $36.29. thank you. mark: this is botley the robot, hottest thing on the planet. lemonis: and the brightest bulb on the christmas string for me was having mark really understand what he was trying to accomplish. let me feel that muscle. woman: whoa! mark: whoa! holy moly! lemonis: the christmas spirit, santa's spirit, it runs in his blood. mark: i appreciate you helping... lemonis: you feel good? mark: ...helping me focus. lemonis: at the end of the day, i spent over 100 grand, which was way more money than i ever wanted to, but this town and this whole idea around santa and toys
and christmas was something that was really important to me. heidi: thank you for coming. lemonis: thank you for having me. lemonis: you did great. heidi: no. thank you. lemonis: i'm very proud of you guys. dear santa, you're welcome for fixing your toy store. now can you get me a good return on my investment? mark: thank you, sir. heidi: say goodbye! ♪ lejerry: about a week.st time youlemonis: let's go!e? tonight on "the profit"... my god, i'm already dizzy. ...a family fun center located on 7 acres in las vegas has become one of the city's most popular destinations. taylor: whoo! we're the birthday party capital of the world. lemonis: this feels like it. after nearly 27 years in this industry, owners jerry and matisun barton are ready to hand over the keys to their son, taylor. jerry: you're doing good, buddy. lemonis: but taylor struggles to fit in, sometimes appearing totally out of control. taylor: we sell fun here, so if you're not smiling, i'm gonna send you home. lemonis: your attitude, i want to throw it in the trash. previously, taylor was a nascar driver, but his career came to a screeching halt.