3 Lessons for Seasoned Entrepreneurs From CNBC's 'Crowd Rules'

Even experienced business owners can fall into counterproductive habits. The premier episode of CNBC's new small business reality show aims to solve them.

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By Stephanie Vozza

CNBC Prime
Kendra Scott and Pat Kiernan on 'Crowd Rules'

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Whether you're just starting out or have been in business for years, most entrepreneurs can improve their operations with the input of experts and peers. Crowd Rules is a new show on CNBC that offers helpful advice to small-business owners along with the chance to win a $50,000 prize. The format of the show combines the elevator-pitch format of Shark Tank with the audience-voting element of American Idol.

Each week, three small businesses compete for the prize. Kendra Scott, founder of Kendra Scott Jewelry, a multi-million dollar jewelry brand, and Pat Kiernan, New York news anchor, host the show and share their feedback and opinions. An industry expert also provides input, visiting the small businesses and reporting back on each company's shortcomings and potential for improvement. The winner is chosen by votes from the studio audience that is made up of small-business owners.

In the premiere episode three specialty food companies were up for the prize. While these entrepreneurs had each been in business for several years, longevity didn't mean the businesses were doing everything right.

Related: Crowdsourcing's New Platform: Prime-Time Reality TV

Here are three lessons entrepreneurs can learn from the Crowd Rules contestants' mistakes:

1. Have a strong focus.
Heartbreaking Dawns is a home-based spicy gourmet sauce company owned by husband and wife team, Johnny and Nicole McLaughlin in Wycoff, N.J . Founded in 2008, the couple started at local festivals, and today their products are sold in stores in 14 countries.

Industry expert Elizabeth Chambers, founder of the popular San Antonio restaurant Bird Bakery, was surprised to learn that the McLaughlins had spent $100,000 on new product development, using the money to create a line of 25 items, including sodas.

Chambers says businesses that offer too many products run the risk of confusing customers and watering down their brand. She suggests that the couple stop investing in product development and start investing in other aspects of the business, such as employees and marketing.

2. Know your numbers.
Pickle Licious is a Teaneck, N.J.-based pickle and olive specialty store run by Robyn Samra and her two daughters. Samra got her start more than 20 years ago at farmer's markets.

When Chambers visited Pickle Licious, she found the business quaint but disorganized. Samra uses "guestimates" for calculating sales. She is considering opening a second location, but doesn't have a firm number on how much money it will take.

Chamber says Samra needs to put a point of sale (POS) system in place and get firm grasp on policies, procedures, profits and employees before she considers a second store. Scott says knowing your numbers -- from profit margin to sales by item -- is the difference between running a business and having a hobby.

3. Align your company goals.
Mr. Green Tea is a Keyport, N.J. family run ice cream business specializing in unusual flavors. The business was started nearly 50 years ago by Santo Emanuele. Today, it is run by Santo Emanuele's son Richard and grandson Michael. Mr. Green Tea sells mostly to the restaurant market, but recently launched pint-sized containers into the retail market.

When Chambers visited Mr. Green Tea she found that the pint division is getting ignored and doesn't have enough funds to properly launch and market the product.

Scott says Mr. Green Tea doesn't have its goals aligned. Before you can move forward, you've got to figure out where is it you want to go, she says. Create a plan for where you want to be in three years, and make sure everyone in the company is in alignment to get there.

In the end, the crowd awarded the prize to Heartbreaking Dawns, whose owner Johnny McLaughlin displayed a lot of passion and drive. McLaughlin said he will use the money to move the business out of his dining room, hire a commissioned-based sales force and exhibit at a major trade show.

Related: Crowdfunding Goes Mainstream: Why Donald Trump and Google Are Supporting Grassroots Financing

Stephanie Vozza

Stephanie Vozza is a freelance writer who has written about business, real estate and lifestyle for more than 20 years.

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