The Profit: Athleisure Company “Montiel” Refuses to Take Risks and Innovate

Jennifer Weyant — July 26, 2018

— July 26, 2018

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In a rapidly growing athleisure market, Los Angeles based Montiel has quickly made a space for itself. Montiel boasts high-quality, made in the USA athletic apparel for women, such as leggings and sports bras. With a strong online marketing and e-commerce model, Montiel presented a financially strong company which lacked new and innovative ideas to “The Profit” host Marcus Lemonis.

Montiel’s founder, Maggie Montiel, expressed concern over her revenue dropping from $ 2.1 million in 2016 to $ 1.8 million in 2017. She attributes this to losing repeat customers and realizes that she can not make a change to her business alone. Maggie is paralyzed by the prospect of change which prevents her from being truly innovative and continuing to grow her line. Marcus and Maggie agree to a $ 700K investment with a 45% share in the company.

Marcus has a multi-tier approach to revolutionizing Montiel’s company model and brand while will require Maggie to be bold, take risks and be open to change:

• Spend money on custom colors and market research
• Reinvent packaging with a focus on specialty embellishments and the customer experience
• Marketing shift from a yoga feel to an active feel
• Explore contract manufacturing to build collections for other businesses to increase Montiel’s reach
• Create 3 distinct lines of revenue:
  • Continue to sell core products and add embellished products using Lua + Sol
  • Collaborate with Susana Monaco to design a whole new line for the wholesale market
  • Co-brand unique products for specific business

Marcus immediately recognizes that Maggie has no interest in taking risks to grow her business and is paralyzed by the prospect of change. Marcus zeroes in on a collaboration strategy that he feels will work with Maggie where he gives her the opportunity to try new things without fear of failure or without the consequence of failure. Unfortunately, Maggie doesn’t take Marcus’ strategy to heart and is continually saying “no” to any innovative ideas presented.

A tip from “The Profit:” When saying “no” in business, always follow it up with, “but what if we try this.”

To solicit feedback for Montiel’ product line, Marcus sets up a focus group. Maggie has a difficult time accepting feedback from the group and at times is argumentative as ideas are shared. This is a teachable moment for Marcus as he tries to coach Maggie on the best practices for responding to feedback. His advice is to push the overly-positive and overly-negative feedback off to the side and focus on the responses that are down the middle and try to pull out underlying trends. He also reinforced that it is not appropriate to argue with the focus group members.

Although Marcus tried to help Montiel begin innovating products and growing its business, the prospect of change and fear of failure was too great for Maggie to bear. Because she was unwilling to make any changes to her business, she expressed concern that Marcus wouldn’t be able to help her. Marcus and Maggie parted ways with Marcus feeling annoyed that she wasted his time by not accepting feedback, being unwilling to take risks, refusing to collaborate to expand the company’s reach and by refusing to innovate despite market and industry trends

Although the business relationship may have fizzled this episode, there are always great business insights that can be adopted across any industry. Here are a few key business takeaways from tonight’s episode of “The Profit:”

• Fear of failure can not paralyze you and inhibit growth. Success does not happen without failure
• The #1 reason people don’t succeed is that they don’t trust processes and they don’t adapt to change
• Online purchases require a great packaging presentation and attention to detail
• Collaboration with another business can increase your reach by sharing designs, ideas, and data
• When analyzing feedback from a focus group, try to determine the underlying trends and patterns

TRUST. THE. PROCESS. #TheProfit pic.twitter.com/Q8YgVmCHeM

— CNBC’s The Profit (@TheProfitCNBC) July 25, 2018

“The Profit” airs every Tuesday at 10 p.m. on CNBC.

What are your thoughts on the improvement plan that was introduced for this small business? How did you feel about Maggie’s resistance to change? Let us know in the comments section below!

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