How The Profit’s Marcus Lemonis Evaluates Potential Investments

marcus lemonis

Editor’s Note: Click here to see a list of companies that meet the Marcus Lemonis criteria that you can invest in today.

Marcus Lemonis, serial entrepreneur and host of CNBC’s hit show “The Profit” recently sat down with AOL Finance to dish on how he evaluates small businesses, investment opportunities, and common pitfalls people face when heading down the entrepreneurial path. We highlight some of the key excerpts from the enlightening interview below.

Q: Do you have any standout small business success stories that you’re particularly proud of?

Marcus Lemonis: “I focus on something a little different [when it comes to judging success] — I like to see the maturation or the progress of the people in the business. How have they changed their perspective? How are they running the business differently? How have they matured and changed their mindset about the importance of the other people in the business, the importance of having a process or really improving their product?

I have one really cool business that I think has really changed a lot, and that’s SJC Drums out of Boston. It’s two young guys that own a drum company that make drums for bands like Green Day and Imagine Dragons…but they’ve now progressed for making drum sets for people that are just starting out, and not just being so boutique — And how they’ve had to change their mindset, and how they’ve had to manufacture differently…even though they’re Patriots fans, I still like them! They’ve done very well.”

Clearly Marcus places a lot of importance on innovation and the willingness to adapt to a changing market environment when evaluating potential business investments. Things move awfully fast in a startup environment, so it’s important that leadership have the ability to confront obstacles in a systematic, process oriented manner and make the appropriate course correction in a timely fashion. Those that can maintain this disciplined approach while also focusing on innovation are the ones that will ultimately thrive in this economy.

Do you have any business books or courses that you recommend?

Marcus Lemonis: “If you’re going to read books about getting into business, I would strongly advocate that you start with a math book…I really want people to understand the basics of math. And once they really get a handle on that, then get some basic books on accounting — debits, credits, how to balance a checkbook, what a balance sheet looks like, what debt looks like — and then you can progress.

[But] get into the trenches and work…there’s no better education than the education of real life. working for somebody else and understanding how a business should run or how a business should not run is the best thing.

In a previous interview on CNBC in late 2016, Marcus said Adam Grant’s book “Give and Take”, had a profound impact on his career. The book he explains, “really talks about the different types of people that exist in the marketplace and in the universe. There are people who give of themselves and they make sacrifices and they don’t wait for things to happen to them. And there are other people, and you know who you are, who are just takers, who just want to get a free ride or want to get a free introduction or want to get the best deal — and they forget that there’s a balance there.”

Q: What’s the best industry to invest in right now?

Marcus Lemonis: “Invest in things that aren’t going to go away — the auto business, the hair business…things that Amazon can’t kill — you can’t get a haircut on Amazon. People always ask me, ‘If I lost everything, what would I go do? I would go sell cars. It’s what I used to do and I would do it again — Everybody needs to get around!”

Rather than focusing on new technologies, industries and businesses, Marcus tends to focus on the tried and true business investments that are not going away. The key ingredient here is focus on the businesses that are in established industries that are innovating from within. These businesses are the ones most worth investing in.

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