Marcus Lemonis: There's hope for every struggling company

According to Marcus Lemonis, every struggling company can be saved.

As the star of the CNBC program "The Profit," Lemonis invests in troubled businesses and works with his new co-owners to fix every aspect of the companies.

That could mean changing every product and service. And it also may require that the owner set aside a little pride.

"The business is bigger than you, and while you're an important part of it, you are not the business," says Lemonis. "That includes telling the owners all the mistakes they've made. It's a blow to their egos, but it has to be done to save the company," Lemonis says.

Businesses on the show have included food manufacturers, restaurants, a beauty salon and a used car company. Some have been close to collapse.

"Taking something and fixing it is enjoyable, but more important, it's equally enjoyable to fix the people," Lemonis says.

One of Lemonis' favorite turnarounds on "The Profit" was his first — New York-based Car Cash, which bought used cars and sold them to wholesale car dealers. The company was owned by two brothers who inherited it from their father but, because of their personalities, didn't work well together. They were also working with wholesalers who were paying too little for the cars. Lemonis restructured the company to give the brothers separate roles so they had fewer conflicts, and he eliminated the wholesalers. Car Cash now has more than 70 locations across the country.

He spoke recently about turning companies around. Here are excerpts, edited for brevity:

Q: What are the biggest mistakes small-business owners make?

A: The first is not understanding the importance of people. They don't understand that people make the difference.

No. 2, they typically don't know their financial numbers. They don't understand the entire business and the decisions they make circulate around numbers. They don't know the difference between a debit and a credit, a profit or a loss.

No. 3, and most important, they have trouble putting their pride aside. It's something all of us have trouble with. When it comes to having somebody look at you, or your business, it's difficult to put your pride aside and be objective about it.

One more: the willingness to be vulnerable, honest and transparent.

Q: What kind of company can be saved?

A: Any type of company can be fixed. Some people say, if the product is irrelevant, like eight-track cartridges, the business can't be saved. It can be, if I can get them to understand how to get the same content of music and distribute it a different way. We've had plenty of businesses where we've had to change the product and process entirely and transformed the people. I went into a women's clothing company last spring called Courage b. We analyzed and simplified all of the products they had, put them in categories, looked at sales records. We eliminated products we knew weren't selling. We brought in products we knew were selling.

Q: How does someone make sure they don't end up in a place where they need someone like you?

A: The first mistake is saying you don't need someone like me. Even I need someone like me. Why would anybody ever think they don't need help? Why would anybody ever think they've already figured it all out? I've hired people to work in my organizations because I believe they bring something that I just don't have, some skill, perspective, insight, knowledge.