Inspire

Stuck in a rut? How one firm's risky bet paid off

Sometimes making no decision is worse than making a bad decision.

That's the lesson the owners of Mr. Green Tea learned when they worked with Marcus Lemonis, serial entrepreneur and host of the CNBC series "The Profit."

The ice cream brand had spent decades supplying Asian restaurants with traditional green tea-flavored ice cream but was preparing to make a risky bet on selling its products directly to consumers.

Richard Emanuele
CNBC
Richard Emanuele

The company, which was born in Brooklyn, New York, nearly 50 years ago before moving to Keyport, New Jersey, was grossing between $1.1 million and $1.8 million a year, and its profit margin was almost 20 percent.

"I was very happy to continue going that way," said Richard Emanuele, who took over the business a decade ago from his father, in an interview last year. But when his son joined the family business, he was more aggressive about growth.

"Michael always wanted more growth. [He] had a lot of ideas," Richard Emanuele said, referring to his son.

The younger Emanuele wanted to launch a gelato line and remodel an old building into a brand-new production facility so that Mr. Green Tea could move away from utilizing co-packing services. He also wanted to begin marketing individually packaged mochi ice cream.

"I think, to be successful in any business — you have to be a disruptor," he said. "And you have to sometimes go against the grain. You have to disrupt the status quo."

But for many small businesses, that's hard to do.

Lemonis contacted Mr. Green Tea about potentially making an investment in the company. But Richard Emanuele was hesitant to accept it.

"We sat down a couple times … and my son, Michael, and my wife, Lori, were like, this is the best thing that could ever happen to us. We have to do it," he said. "So I put my fears aside and accepted the deal with Marcus."

The investment served as a launch pad to grow the business. They built a new production facility, expanded their retail offerings, met with major grocery chains.

Emanuele expects Mr. Green Tea to become a $10 million company with a 35 percent margin by the end of this year.

Small businesses face two sets of challenges when they start to expand. One comes from within them, having the capacity and faith to move forward with their vision, and the other can be based on external forces such as the economy and competitive landscape.

"Don't let yourself get in the way of growth — meaning, don't be so cautious; take some chances." -Richard Emanuele, owner, Mr. Green Tea

Right now, few small businesses feel confident enough to make the leap, according to the National Federation of Independent Business.

In the organization's most recent small-business economic trends survey, only 9 percent of small-business owners said now is a good time to expand, a number that is historically low.

"The biggest problem is finding [expansion] opportunities because the economy is sluggish and [small-business owners] just aren't confident that the economy will improve enough for them to bet their own money on possible expansion opportunities," said Holly Wade, NFIB's director of research, in an interview last year.

She attributed this sentiment to the high levels of uncertainty in the U.S. economy.

Despite the lack of confidence, small businesses must remember that they "are the R&D department of the U.S. economy" and that they have a unique ability to take advantage of market opportunities, Wade said.

She suggested businesses find a financial advisor to help navigate and provide resources to a family business as a good first step to take in seeking out those opportunities.

"[Small-business owners] hold many hats and run most aspects of their business. They can't afford to delegate all the different components to departments that large companies are able to take advantage of," she said.

'Liz #1 (Early Colored Liz)' by Andy Warhol, photographed by Emmanuel Dunand | AFP | Getty Images.

It's also important for family businesses to develop relationships with banks in order to create a cushion and generate capital, said Wade.

"Knowing the loan officer at that bank and having a relationship with that person," can push small businesses halfway to their goal, she said.

For other family businesses looking to make a similar leap, Richard Emanuele said owners shouldn't be a hurdle to their own ambition.

"Don't let yourself get in the way of growth — meaning, don't be so cautious; take some chances. Have faith in people and trust more," he said.

"My new motto for Mr. Green Tea ... is trust your decision, and when you make that decision, act on it," he added. "Because if you don't act on it, you'll never get anywhere. You'll stay exactly where you are."

— CNBC's Reem Nasr contributed to this report.

Correction: This article has been updated to reflect the spellings of Lori's name and Keyport and the company's expansion since Lemonis' investment in the company.