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The Power of Positive Pricing

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Why You Can’t Afford to Give Employees ‘a Free Lunch’

Marcus Lemonis has a simple solution for startup founders looking to maximize sales: Prioritize the employees who are willing to “ride the elevator” with you.

The entrepreneur, investor, and star of CNBC’s hit series The Profit, explains to Marwa Abdelbary, the co-founder of Tiny Tots Therapy, that she can’t afford to let her salaried employees get away with “a free lunch.” Abdelbary appears as the featured entrepreneur on Ask Marcus Lemonis, a weekly video series. As part of the series, a business owner gets the opportunity to ask Lemonis a pressing question about his or her biggest business challenge.

Tiny Tots Therapy, based in New Jersey, is seeing nearly $4 million in annual sales. With 72 employees and two physical office locations, it provides occupational, physical, and speech therapy, through outpatient services and by contracting its therapists to schools.

As the business grows, Abdelbary concedes that she can’t afford to compensate her employees — with pensions, for instance — as well as many competing public firms can.

“How can we, outside of compensating them [employees] money-wise, provide them incentives, to be able to retain the exceptional staff and the services that they provide year after year?” she asks Lemonis.

Lemonis explains to Abdelbary that she needs to focus on a specific set of therapists: Those who are getting paid hourly. Those workers are much more likely to be productive, he says, whereas salaried therapists are effectively unapplied labor.

“I would strongly, strongly incentivize — by three, four, or even five points of pay — somebody who is basically willing to take risk with you,” he says.

To learn where Abdelbary can get the cash to entice her best workers, watch the episode above.

By Zoë Henry

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