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THE TURNAROUND

Chasing a Dream

Aired February 26, 2005 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
ALI VELSHI, HOST (voice-over): Next on the TURNAROUND:

They are chasing a dream.

MICHAEL BARELA, ALACRITY SALON CO-OWNER: We put a lot of sweat into this place.

VELSHI: they are living one. Now, three days...

JOHN PAUL DEJORIA, CEO PAUL MITCHELL SYSTEMS: Michael, I'm John Paul.

VELSHI: Two couples...

BARELA: This is what I've wanted to do since I was a little kid.

VELSHI: And one salon struggling to survive. He built Paul Mitchell into a billion-dollar beauty giant, but can John Paul and his team help Karen and Michael?

J. DEJORIA: What is your mission statement? Do you have a mission statement? Do you know what a mission statement is?

BARELA: Uh...

VELSHI: The TURNAROUND begins now.

(END VIDEOTAPE)

VELSHI: Hair care is a multi-billion- dollar industry, but not everybody makes the cut. In fact, the owners of this salon have struggled for seven years just to stay afloat. They know something's got to change. What they don't know is that we're going to surprise them with some high-powered help, and over the next three days, we'll put them on the road to a TURNAROUND.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): The scissors flash, and the cash rolls in. In the world of high-fashion hair, an hour with a big-ticket stylist can cost you a staggering $800, highlights not included. With 300,000 salons competing for customers in the United States, it's a cutthroat world, and one power-couple controls a chunk worth $600 million a year. J. DEJORIA: When you start with next to nothing, all you've got is a lot of thought, a lot of innovation, figuring new ways to do things without using a lot of money.

VELSHI: John Paul and Eloise DeJoria are familiar faces, internationally recognized for the commercials and magazine ads that sell their Paul Mitchell Systems hair products worldwide.

Twenty-five years ago, John Paul went from homeless gang member to empire builder when he transformed a $700 investment into the number one privately owned hair care firm in America.

It's Friday afternoon in Valencia, California. The Alacrity Salon has everything going for it, except customers. Owners Karen Knopp and Michael Barela are married and passionate about their business, but they make little profit here. In fact, their business is barely surving.

BARELA: We put, you know, a lot of sweat into this place. Seven years to keep the doors open.

KAREN KNOPP, ALACRITY SALON CO-OWNER: From doing the displays to figuring out what products, we've done it, so we're willing to do more.

VELSHI (on camera): Are you prepared to take the steps necessary to turn this thing around?

(voice-over): They're willing, but desperate for help from someone who's turned the struggles of the salon business into success.

J. DEJORIA: We, of course, saw the intro information on the salon, what they want to accomplish, and we think it's great. We think some of their questions were fabulous.

KNOPP: What kind of money is realistic to, not only pay people, but to expect in return.

BARELA: How do you figure out how to keep so many multiple personalities happy?

KNOPP: And how do you market?

BARELA: How do you get to that next level where you're -- where you're really blowing the doors off?

ELOISE DEJORIA, JOHN PAUL MITCHELL SYSTEMS: I think Michael and Karen have a great list of goals. I admire Michael and Karen's ambition.

VELSHI (on camera): Something's going to happen will happen. But, before anything happens, I need to know why do you want to do this?

BARELA: We are having some challenges with employees with the whole nature of the business. So, to find out those little secrets that someone might have for us, that's what I want, that's what I need.

VELSHI (voice-over): Michael and Karen have been told they are going to get some business help. But they have no clue that industry legends are about to walk through their front door.

E. DEJORIA: This is very charming and warm. I love it.

J. DEJORIA: Hey. We're looking for Michael and Karen.

BARELA: Hey there, how you doing?

J. DEJORIA: Is this Michael and Karen?

KNOPP: They just walk in the door and I remember looking, going, "oh my god!"

BARELA: I really didn't know how to react to it.

J. DEJORIA: Michael, I'm John Paul.

BARELA: How are you doing?

J. DEJORIA: Fine, buddy.

E. DEJORIA: Hello, I'm Eloise, John Paul's wife.

KNOPP: How excited were you when they walked in?

BARELA: Just a bit.

Once they saw Robert, I was like, going, "how did they do that?"

J. DEJORIA: This is Robert Cromeans.

BARELA: He was on one of my lists as one of my idols.

KNOPP: One of your lists? He's on the top of all of your lists.

BARELA: OK, so he is.

J. DEJORIA: Robert Cromeans, what a story. He started with absolutely nothing. Today, as you know, he is the most requested platform artist in the world.

VELSHI: Seeing this beauty industry in the flesh and realizing he'll play a critical role in this TURNAROUND, Michael and Karen know what an overwhelming opportunity they've just been handed.

KNOPP: Just to have those people come in is just amazing.

J. DEJORIA: Eloise is going to assist you with ideas in how to expand the take-home department. Nina, she's our world vice president of marketing, understands the industry inside and out and understands what it is like behind the chair. We're here to share with you what we know can make your salon extremely successful in every single situation. ROBERT CROMEANS, ARTISTIC DIRECTOR: We consider ourselves coaches and the difference between a coach and teacher, a teacher may sort of show you stuff, the coach is going to let you do all of the work and that's where the learning comes from.

The system is the key, and that's what we have to challenge. Your staff has never failed, you system has failed.

If they allow us the permission to take them on a journey, to give them an opportunity to try different things and change just little things in their system, I think they're going to see the result they're looking for.

J. DEJORIA: Michael and Karen are in a unique spot in their business life. They know they would like help and are going to accept help to try to do something and take their business to the next step. And if they follow through, very important follow-through, with the projects we'll give them, they can't help but see success.

VELSHI: It sounds like the break Karen and Michael could only dream of. Help from Paul Mitchell has arrived, but even they can't change the reality.

KNOPP: At one point in time it was great. We were the only building and then had exclusivity...

VELSHI (on camera): And now you got a salon around the corner.

KNOPP: No, we have seven in one block.

VELSHI: That's a problem.

KNOPP: That's a problem.

VELSHI (voice-over): Surround bid competion, with rent at $3,500 a month and haircuts starting at $45, something must happen and soon. For Karen and Michael it is now or maybe never.

KNOPP: We've come a long way and you feel like you're in a standstill and you have this -- these people inspiring you saying, "no, no, no you guys can make it even further," it lists you up a little bit more and says, you know what, I guess we can do it. We really, really can do it.

BARELA: I'm just overwhelmed.

Excited, because this is what I've wanted to do since I was a little kid, so to be able to achieve where I've come...

KNOPP: I know he's passionate. I know that this is -- this is -- means a lot to him and this shows, like, how much it really means. I mean, and how sensitive he really is and how he really, really has his heart and soul in the business.

BARELA: This could help us really make it. VELSHI: The dream is there. And so is all of that potential. Now it is time for the Paul Mitchell team to set Michael and Karen down to get busy.

Next, the TURNAROUND begins with a test for Michael and Karen. Then:

J. DEJORIA: Do have a mission statement? Do you know what a mission statement is?

BARELA: Uh...

VELSHI: Coming up on the TURNAROUND.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

VELSHI (voice-over): The fast-growing southern California suburb of Valencia on a Friday afternoon. It's typically primetime in the salon world, but the Alacrity Salon is nearly empty. The owners aren't around. A visitor approaches the front desk, as a hidden time laps camera rolls.

J. DEJORIA: We sent Nina, our marketing vice president, in there to look at the salon kind of undercover and she noticed going in there on a Friday there was only one person in the chair.

NINA KOVNER, V.P. OF MARKETING, JOHN PAUL MITCHELL SYSTEMS: It was actually quite fun. I'm a hairdresser, that's how I started, so the salon is a passion for me, and to be able to walk in the salon and having never been there before I had fresh eyes. The people were nice, but there really wasn't anyone there to greet me.

VELSHI: It is now Wednesday, five days after Nina's tour and the Paul Mitchell business team is officially on the case. Their job, get this TURNAROUND started. Michael Barela is a well regarded hairstylist in L.A., that's not enough for his business. The salon is struggling and his wife and partner, Karen Knopp, knows they need help.

(on camera): Specifically what would you change?

KNOPP: I do the financial part of it, a little bit, so I think overhead.

VELSHI (voice-over): Costs are killing Alacrity profits. It's never more than $3,000 a month, according to Karen and Michael, and often a lot less. The team is here to help. They're assembled inside the salon it's a small space, and to the marketing experts of Paul Mitchell, the problems are easy to spot.

CROMEANS: You never get a second chance to make a first impression. When I rolled up against the salon I wouldn't have naturally known it was a hair salon.

VELSHI: But that's not all. There's a sign at the front desk telling customers about tipping policy, but something more basic missing.

KOVNER: One of the most important things is a menu of services. When I asked for a menu, they didn't have one and I actually had to start asking "what services do you carry?"

VELSHI: To the untrained eye, the front of the salon may look inviting, but to the Paul Mitchell team, something is missing.

E. DEJORIA: Over here if -- you've got a great space that's not doing much for you.

BARELA: We're sitting here and...

E. DEJORIA: Yeah, and you've actually got four categories right there and you could use the styling category in this one large display.

J. DEJORIA: There are just new things that have come along since they've been trained by whoever they've been trained, on how to be successful business people. We plan to go in there and show them the new ways to take the talents and incorporate them into a new way to become extremely successful.

VELSHI: But, they have just three days to do it. Can the Paul Mitchell team put this business on the road to a turnaround? It's time to find out. No more spy missions. It is 3:00 p.m. They begin by watching.

Michael does this every day but never under the watchful eye of this beauty industry icon who happens to be his idol.

BARELA: I'm excited you guys are here, but I'm sweating to death.

VELSHI: Then it is Karen's turn. Eloise DeJoria sits down for some make up, and get to see Karen in action.

E. DEJORIA: It might be hopeless.

VELSHI: This test is over. John Paul is ready. He calls the team together for a meeting.

J. DEJORIA: Do you have, right now, any kind of a special direction you're going into? Do you have a focus you want for your salon that you and your staff know about? And do have you meetings where you talk to your staff about this?

BARELA: No.

J. DEJORIA: The vision should start with the salon owner and the entire staff incorporated into it.

What is your mission statement? Do have you a mission statement? Do you know what a mission statement is?

BARELA: Uh...

KNOPP: I knew we had one because I wrote it but I wrote it several years ago and couldn't rember it. How bad is that that I couldn't remember it?

CROMEANS: The thing I love about a mission statement it's kind of a guarantee of quality. It's one thing to build an outrageous business that can sustain it.

VELSHI: It's quickly becoming clear that as John Paul's No. 2 man, Robert will be taking on a key role in this TURNAROUND.

CROMEANS: They say the most successful companies of the world are people who communicate their message to their employees and not the customer, just making sure that we're all seeing that one focus point.

KNOPP: Tonight I'll study the mission statement.

J. DEJORIA: Is there any way to get your staff, all of them in here within the next half-hour to an hour and give them a little meeting that we could hold for them?

BARELA: At 2:00 we were supposed to have everyone near, but no one showed.

KNOPP: Everybody was afraid.

BARELA: They were very nervous.

KNOPP: Yeah, they were -- I think they were afraid of more negativity, people coming at them saying, "you are not doing things right. This is what you need to do. You guys are failures."

VELSHI: The staff is paid on commission. Getting them onboard will be key to this TURNAROUND.

KNOPP: Hopefully the stylist will be receptive. That's probably the hardest thing is to let them see that it's a good deal.

BARELA: There's a bit of greed there, because everybody wants a little bit for themselves. If they can help us show them those changes are positive and that it's going to enrich their life, I think that's half of the battle.

VELSHI: The team lays out tonight's assignments.

J. DEJORIA: Your assignment will be, one, to come up with a mission statement for yourselves and your staff they can look forward to to work together towards.

Second of all, start with the setup of the display, the marketing and the materials that go along with it. And then we're going to figure out a way to get a hold of a couple of the customers and bring them in for your stylist on Friday, because there happens to be some appointments open for these people.

BARELA: Are we willing? Yes. Also, and I feel energized again. I got goose bumps.

J. DEJORIA: I can see it. I mean, we had talked about wanting to meet these guys.

BARELA: I'm not kidding.

VELSHI: Can this be transformed?

J. DEJORIA: There's no doubt about. Especially if you have passionate people.

VELSHI: And so the challenge is set. There are just two days left for Michael and Karen to turn Alacrity from this into something better.

J. DEJORIA: I'm going to go get some sleep since we barely slept on even an airplane getting here. But we'll be ready for you tomorrow. We'll be there.

E. DEJORIA: Oh, no. I have total faith in you.

VELSHI: Next, John Paul is on a mission with surprise changes for the front of the salon.

KNOPP: It's kind of like starting a new day.

VELSHI: And later, a late-night scramble for customers.

BELARA: What I wanted to do is offer you a chance to bring one of your friends with you.

VELSHI: But will it work? Coming up, on the TURNAROUND.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

VELSHI (on camera): Yesterday we introduced salon owners Michael and Karen to some of biggest names in the hair care industry. They got a lot of advice, and plenty of homework, but today they've to roll up their sleeves and get down to business.

(voice-over): As day two of this TURNAROUND project begins, the Paul Mitchell mentors are making a special delivery to Alacrity.

BARELA: Robert's Hummer pulls up and then all of a sudden, they're like, "well, we're bringing in stuff, we need some help." And when we go out and the back end is filled with boxes, oh, it's amazing.

VELSHI: John Paul and his team are betting that product sales will be critical to the salon's future.

E. DEJORIA: These are she shelve talkers that the consumers can read. It make it so easy for them: Color care, smoothing, moisture, extra body.

VELSHI: A $10 bottle of shampoo could earn Michael and Karen $5 profit. A big opportunity they haven't really taken advantage of. But, they won't sell much product without an enthusiastic sales force: Their stylists. The mentors plan to win the staff over.

J. DEJORIA: We're going to involve their associates, here in the salon, on part of this. The end result is everyone involved in the salon, the whole team, is all going to feel better, have more fun, make more money.

VELSHI: It's time for the first big challenge of the day: Selling the "TURNAROUND." plan to the salon staff.

J. DEJORIA: Why are we here? Michael and Karen said, "Look we have a great salon, we have great people, but we want to find out ways to do things a little better, a little different, and we want everybody to come along, for all of us to be much more successful and even happier with what we do." We said, "We can do that."

John Paul Mitchell Systems was started with $700. All of our financial backers pulled, we had no money. So, I lived in the back seat of my car for the first two weeks. We sold it door to door.

CROMEANS: I'm a coach. I don't look like a typical Coach Bob. But I'm privileged to get into people's salon and people giving permission to look at certain things that may not be obvious.

KNOPP: Robert is some kind of character, isn't he? That Scottish guy, you know, with his unique wear. You look at him and you're like, oh, I don't know if he can relate to me because of how he's dressed, but when he talks you and you're like, no, no, no, he's one of us. He gets it.

CROMEANS: I know you could have been a little scared. I'm a little scary to people. But, truthfully, we honor you so much, because you represent a lot of what the industry goes through.

What we asked for Michael and Karen is to come up with a mission statement. If we put something on the front of the building that said something about our salon and our company, what would it be?

KNOPP: Our mission statement is "We at Alacrity, are here to provide superior service, with superior craftsmanship, in a pleasant, friendly and professional atmosphere. Service is our No. 1 goal and will always try and satisfy our clients for life."

J. DEJORIA: That's pretty good. You might want to blow it up and put right there on the wall (UNINTELLIGIBLE) that's good.

VELSHI: Philosophy aside, some concrete steps need to be taken, all in the next 24 hours. CROMEANS: We've got to get a little more dangerous for the out of sight part, so the posters are going to help, seeing the products...

VELSHI: The reception area is also under the microscope. Even the way Alyssa answered phone is getting a close look.

CROMEANS: You've got to get a little up gitty-up in your attitude to go, "Come on." What we want to do every time you pick up the phone is you want to tell them that this is incredible (UNINTELLIGIBLE) we want to get them excited about it. When you pick up the phone: Thank you for calling and then some miraculous thing, we've changed, or we went through an experience, whatever words you guys want to come up with. We're in a very sexy business. So, the more we can use, like what a restaurant does, you can go in there and have chicken, cheese, and bacon, but it is cordon bleu and suddenly it seems so much more appealing.

VELSHI: Each member of the salon staff has a lot to do in the next 24 hours. But, before taking off John Paul ups the ante.

J. DEJORIA: I came up with an idea today on how each one of you can get one extra customer in here tomorrow. One extra customer than you already have. I'm going to personally come in tomorrow morning at 10:00 in the morning.

VELSHI: For a struggling salon bagging more clients on such short notice is a daunting task.

BARELA: The pressure is there, yeah.

J. DEJORIA: Well, thank you very much and this is going to be really -- we're going to be -- we're going to do some great things together and you're just a great team. And my hat's off to the two of you to include everybody to make this all happen. Thank you very much

E. DEJORIA: Thanks guys.

VELSHI: The meeting is over. Inside the salon there are customers who need attention. The grand plans will have to wait for evening. Meanwhile, Karen has to leave for a freelance makeup job outside of the salon. She and Michael both do this all of the time to make ends meet and it's an ongoing business challenge. Everyone has a lot to think about between now and closing time.

BARELA: It's overwhelming.

VELSHI (on camera): Yeah.

BARELA: To absorb and actually be able to think about these. I couldn't sleep very well last night because I was just trying to take in some of the ideas that were...

VELSHI: You're not going to sleep again to night.

BARELA: No. VELSHI: You've got even more work ahead of you, you think -- you know last night was tough. You've got to come up with a strategy. This thing's going to look different by the time John Paul and Eloise gets here tomorrow morning.

BARELA: The challenge of doing that is scary, maybe nerve- racking because what happens if we don't follow through with it, that looks bad. And I don't want to look bad. My team doesn't want to look bad.

VELSHI (voice-over): Finally, the customers are gone but Karen's not back yet, so it's all on Michael to meet tonight's challenge if his staff is willing.

BARELA: We have to try to figure out how to make that front more appealing. I mean, they actually did with adding signs. Any other suggestions that we can come up with as team to make that work. Kind of hoping that you guys can come up with some ideas.

VELSHI (voice-over): Coming up, time is running out. And Michael is still on his own. Will the staff come through?

BARELA: Let's push the envelope a little.

UNIDENTIFIED FEMALE: Yes.

VELSHI: And when Karen does show up, will she like what she sees?

KNOPP: Oh my God.

VELSHI: Next on the TURNAROUND.

(BEGIN VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

VELSHI (voice-over): It's past quitting time at most salons, but here at Alacrity, indeed, the work is just getting started. The head of John Paul Mitchell Systems and his team have agreed to help turn this struggling business around in three days. After handing out assignment on night two, the mentors are gone, but they expect to see real change when they return in less than 14 hours.

BARELA: There are three things to work on tonight. One the telephone dialogue. If they are calling in for a haircut, why aren't they getting color at the same time. Now we're going to start asking. Also to get the front end done, so when people are coming in, they go, "Oh, wow. What is that going on in there?"

VELSHI: Finally, the toughest task assigned by John Paul. Get more customers for day three.

BARELA: J.P. challenged us to bring in one person per stylist. Right now we have six stylists.

VELSHI: Six new customers, that could mean another $200 in profit, about double what Alacrity now make in a day. It will be higher if they manage to sell some products, too. But as the salon staff starts scrambling, co-owner Karen is nowhere in sight.

BARELA: Karen, had to take off earlier during the day because she had a show to do.

VELSHI: And while they need the extra income, that leaves an overwhelmed Michael to craft the salon's new look without his partner.

BARELA: With Karen she tends to have everything organized. Me, I get totally messed up (UNINTELLIGIBLE). You tell me that you want me to decorate the salon -- oh please.

VELSHI: He also has to motivate his tired staff. The stylists get right to work on a sidewalk sign to lure in new customers.

BARELA: Sex appeal in that?

UNIDENTIFIED FEMALE: You know, we're in (UNINTELLIGIBLE)

BARELA: I know, let's push the envelope a little.

UNIDENTIFIED FEMALE: Yes.

BARELA: With the board (UNINTELLIGIBLE) are walking by, people may look down and go, oh, they do hair? And just bend their head in, just to take a look. And their going to see excitement, something is going on in there.

VELSHI: While the sign is underway, Michael turns to the receptionists to work on a new phone greeting.

BARELA: As people are calling to ask, like, how much are haircuts, instead of telling them our prices, ask them if they've ever been here before. And then tell them about how great it is being here.

VELSHI: When Michael steps out for a moment it becomes clear that the employees nervous glances of the afternoon have given way to a shared optimism.

JACKIE PRESTON, STYLIST ALACRITY SALON: It's really amazing to see all the hair gurus come in and kind work their magic to inspire us and get things going.

VELSHI (on camera): You guys think that this could, actually, take? This can hold, this enthusiasm can hold? Because in the end, you've got to get people in here. You've got to get more people in.

UNIDENTIFIED FEMALE: Wherever Michael is people will follow. He just got that type of personality that people want to be with him.

VELSHI: You guys feel that way? UNIDENTIFIED FEMALE: Absolutely.

EMPLOYEES TOGETHER: Yes.

PRESTON: That enthusiasm that we're going to have, that's what is going to bring people in here. Because they're going to want to radiate toward a positive energy.

VELSHI: They seem to be buying into it.

BARELA: Thanks, guys.

UNIDENTIFIED FEMALE: We believe.

VELSHI (voice-over): But the clock is ticking. The pressure is mounting, and Michael's patience is wearing thin.

BARELA: Let's stop on the board for a second and that one. Lets try to get this area back in together, because right now we've got all of these other actions going and it's driving me crazy.

VELSHI: Finally Karen returns.

KNOPP: Wow, we're stripping the place. Have you been busy today, in the past, I don't know, little while that I've been gone?

VELSHI: The sight of her husband and staff redecorating her salon makes Karen very nervous.

KNOPP: When I walked up to the door and I was peeking in, and I saw you doing this displays, I was a little afraid. Because I know you're not going to display, that's for sure.

VELSHI: She's eager to take back the reigns.

KNOPP: I think can even think of some stuff we can do...

BARELA: OK.

KNOPP: ... to fix this.

BARELA: OK.

Thank goodness Karen's here, because she's got quite a creative eye.

KNOPP: It's kind of like starting a new day, starting fresh.

I think we have done a great job on the front end, and we have turned it around.

VELSHI: As the crew adds finishing touches to the front, Michael gets going on the night's final and most critical chore, to somehow get six more paying customers through the door tomorrow. He's hoping a special offer will draw them in, and perhaps even hook them on the salon's new products. BARELA: Hello, it is Michael from Alacrity, how are you? I know you have an appointment tomorrow. What I want to do is to offer you a chance to bring one of you're friends with you. And what we're going to do is offer you and your friend a free gift, for just bringing your friend by.

VELSHI: With tomorrow's business outlook far from certain, Michael's not counting on a good night sleep.

BARELA: Tonight most the dreams are going to over at (UNINTELLIGIBLE) is it going to happen?

VELSHI: But what happens on day three will be a real surprise. Coming up, John Paul shows up for a final look, but the owners don't.

KNOPP: We're a little panicked.

VELSHI: And why is Michael in tears again?

KNOPP: You can trust me.

VELSHI: I don't want to.

VELSHI: Next on TURNAROUND.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

VELSHI (voice-over): A new day dawns at Alacrity. It is Friday, and the salon is slowly coming to life. Meanwhile, at his beach side home, the day begins for John Paul DeJoria, CEO of the number one privately owned hair care firm in America. A beauty empire that generates $600 million a year.

(on camera): This is day three. The first two days were very long ones for Michael and Karen. They left yesterday with some very clear assignments. They've got to make the front of the door look better. They've got to find way to make all of these new products into something that customers want to buy. And they've got work the phones in a way that gets more people into the store. We'll see what they have done with it today. But at the end of this thing, the only thing that matters are more people coming in the store.

(voice-over): Coming into the salon bright and early, Karen and Michael's staff. They had their doubts about this turn idea at first.

KNOPP: The first day was hard for the stylist, the second day even a little harder. Like, OK, now they're going to have to meet with these people. I don't want to meet with these people. Who are they, you know?

VELSHI: But this morning it seems this team realizes there is a lot at stake and they're rallying. They've helped transform the shelves into colorful displays. The staff adds finishing touches inside and out.

The only thing missing as John Paul and Eloise arrive are Michael and Karen. Without Michael and Karen, the Alacrity employees find themselves on their own with an industry legend. It is 10:30 a.m. and Alissa's performance is the first to be put to the test.

J. DEJORIA: We gave you an assignment last night as the receptionist to answer the phone a little bit differently. How did you do?

ALISSA WORKMAN, RECEPTIONIST, ALACRITY SALON: It took a while but I think I've got it.

J. DEJORIA: Can we test it? Let's pretend I'm calling you, OK. And you can even pick up the phone if you would like, OK. Ring, ring.

WORKMAN: Good morning, Alacrity. Can I help you?

J. DEJORIA: Yes, I'm interested in coming in to get a haircut. Do you do men's hair there?

WORKMAN: Yes we do.

J. DEJORIA: Wow, what to do you charge for a haircut.

WORKMAN: We charge anywhere from 70 to $35 dollars. If you want to get something done for the holidays, it's easy. We can book you an appointment any time.

J. DEJORIA: OK. All right. The one suggestion I might make is what Robert had said is, when you have someone on the phone, you have a chance for an advertisement. And as soon as somebody ask you asks you, how much is a service, you immediately gave me the answer. Now, I could have said, OK, thank you, good bye, and hung up and never given you another chance. Say, have you ever been here before. You may want to write that down.

WORKMAN: OK.

J. DEJORIA: You may want to write that down.

OK, (UNINTELLIGIBLE) answer this one. Lets watch answer this one. There you go. Go for it.

WORKMAN: Good morning, Alacrity. Can I help you? Yes, we do, have you ever been here before.

J. DEJORIA: She got it, but not quite as good as it can be.

VELSHI: The phone skills need work, but overall John Paula and Eloise are pleased with the changes at Alacrity.

J. DEJORIA: These people were energetic. They wanted to do something. They were open to hearing our ideas, how to do things a little differently and go through change. A few more minutes spent looking around. E. DEJORIA: I just feel the whole thing changing.

VELSHI: And the DeJoria's are ready to turn it over, but not to Michael and Karen just yet.

J. DEJORIA: Robert Cromeans, is going to come in this afternoon, and coach and work with them, and test them on some of the situation we gave them yesterday.

VELSHI: Michael, Karen and their staff will be working to hard to fill the seats and sell more product, but will they be able to turn this business around?

J. DEJORIA: They are on their way. They're on a great route to success.

VELSHI: The salon staff spends the next several hours with customers. And Robert arrives for his inspections.

CROMEANS: Hey guys, I'm here. Good morning. Look how cute you guys look.

VELSHI: But still no Michael and Karen.

(on camera): These guys are on time for class, but your primary students are late.

CROMEANS: Well, I assume it's because they had to work so hard. I'm sure they will be in.

VELSHI: What's your initial impression?

CROMEANS: Well, I think -- first of all, I want to see the owners first.

This is your first time here?

UNIDENTIFIED FEMALE: Yes.

CROMEANS: How's your experience been?

UNIDENTIFIED FEMALE: Great.

VELSHI (voice-over): Robert kills time checking in with new customers and quizzing an increasing jittery staff.

WORKMAN: I don't want to do it anymore.

CROMEANS: No pressure.

WORKMAN: Well, get away from me.

CROMEANS: We still don't know where Michael and Karen are, but I think they are on their way. So, they should be here momentarily they told us. VELSHI: When Michael and Karen do finally arrive, they blame it on the one challenge that continues to plague their business, freelance makeup and styling work and today's outside job ran late.

KNOPP: So, we are waiting there and waiting there and waiting there, and finally we got out and here we are. Robert's going to bust you.

(CROSSTALK)

Robert's going to be like, ah.

BARELA: Dressed up all in black for me.

CROMEANS: You know, I try to make an impression. I thought I was going to be your stunt double today when you weren't here. I was like, hi, I'm Michael.

VELSHI: Now that Michael and Karen are finally at the salon, the extent of the transformation of their business, their baby, is sinking in.

KNOPP: As we were walking up to the front of our salon, you saw commotion. It was kind of exciting actually.

VELSHI: But did all of that work and stress translate into more customers, and more importantly, more cash? Coming up, another tough test for the receptionist.

UNIDENTIFIED FEMALE: I (UNINTELLIGIBLE) falling into the desk, and answer the phone.

VELSHI: And will there be a real payoff to Karen and Michael's three-day struggle?

CROMEANS: Have you noticed anymore business today?

VELSHI: Next on the TURNAROUND.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

VELSHI (voice-over): Day three, late on Friday afternoon. The Alacrity Salon looks like a brand new place. The front of the store is decked out. There's product everywhere. It's colorful, inviting, and very different from how the Paul Mitchell Team described it just 72 hours ago.

KOVNER: They have great real estate for merchandising and product, yet the shelves was weren't so full.

VELSHI: The difference from one week ago is dramatic enough to attract attention from people just walking by. BARELA: It's kind of weird because as we're talking and discussing this, I can see people behind us, they're walking by and looking in.

KNOPP: They're people peeking in right now as we speak.

VELSHI: Before Karen and Michael even arrived, John Paul and Eloise DeJoria, had made their last visit to the salon, and given their approval.

D. DEJORIA: It seems like, boy, they sure did it.

VELSHI: The final word will come from Robert, who's on a quick tour of the area surrounding the salon, assessing the business opportunities. The Alacrity Team uses the time to for some last minute touches. But even as they work, they know they're about to be evaluated on a lot more than the way the salon looks.

BARELA: Robert, you're back again.

KNOPP: Hey!

CROMEANS: Hi, everybody. I was just walking around your neighborhood, there are so many people here you should be taking advantage of. What a great location you've got.

VELSHI: Finally Michael, Karen and their nervous employees get to hear Robert's assessment.

CROMEANS: I think you have done outrageous. If things were reversed and you came to my salon, and you said I want to move these things around, first off all, my wife would have been on you saying, you're not moving that. So, I give you, yahoo, just simply because you have the faith. It's, OK, we'll try anything. You know, lets see what it takes.

VELSHI: It will take more than encouraging words and cosmetics changes. Now come the true test, will Alacrity pull in extra customers?

CORMEANS: Have you noticed any more business today?

BARELA: Yes, we actually have 8 new clients in the book today.

VELSHI: And will the salon staff convince the clients to buy products along with their services.

BARELA: OK, this is going to add a little extra body.

VELSHI: They educate every client about a product that's just right for their hair type.

BARELA: Ooh, (UNINTELLIGIBLE).

VELSHI: They're determined to make sure no one goes home empty handed. KNOPP: A little thing or big thing, it doesn't matter what product it is, as long as it is good for that client.

UNIDENTIFIED MALE: That'll look good. I'm not going to walk around campus looking like a reject from the Mob Squad.

BARELA: If we can double our retail sales, we're doing much better. I don't care what product it is, it's still money in our bank and our little team's pocket.

VELSHI: The day's final numbers prove this team has met the challenge. On the Friday before the Paul Mitchell team's arrival, Alacrity had seven customers and $161 in product sales. This Friday, they've got 11 customers and $348 in product sales, more than doubling their profit on the products.

KNOPP: Ooh, we did a good job.

VELSHI: But there is one assignment Karen and Michael did fail to complete.

KOVNER: One of the most important things is a menu of services. When I asked for a menu, they didn't have one.

VELSHI: Turns out creating a customer menu was simply too much, as Michael explained late last night.

BARELA: There are so many services that can be added, and we have to figure out pricing and all of that, so the menu won't be done yet.

VELSHI: But Alissa will get one last chance to show off her new phone skill.

WORKMAN: Good afternoon, Alacrity, can I help you?

KNOPP: Noticing, she's answering the phone.

WORKMAN: Yes. We apply (UNINTELLIGIBLE) L'Oreal, Paul Mitchell. I could set up an appointment for you right now. Is this your first time? Is Wednesday OK? No problem. Bye.

KNOPP: Good job.

BARELA: Alissa, you did really well.

KNOPP: You did a good job. You referred back to some of the script too. It was really good.

VELSHI: So Alissa is getting it. And as the salon buzzes with activity, Robert has a final personal question for Karen and Michael.

CROMEANS: How are you guys doing as a couple? I don't want to know about your sex life, even though you've tried to tell me three times, Michael.

KNOPP: He does. No (UNINTELLIGIBLE).

CROMEANS: How are you guys getting on?

BARELA: Good.

CROMEANS: Karen.

KNOPP: Do you think he's telling the truth? Last night it was a little stressful.

BARELA: It was stressful, because when we went home last night we kind of...

KNOPP: We were starving.

BARELA: Starting, tired. And so, we kind of battled the bit about even doing the display.

KNOPP: And it was, like wait, it's not worth the battle but, we just have to realize that we're in it together and we were fine.

BARELA: And that's the other thing about recognizing those two things, work and marriage even though we do them together, they're still separate. And we've got to be able to walk away from work at points, just and be a married couple.

VELSHI: They are committed to each other, and to spending more time on their business. For the first time in a long time, Karen and Michael feel that both are heading in a strong direction. It's an overwhelming realization.

KNOPP: We took the risk. We bit the bullet. You dealt with the friction, and I think we conquered. It was -- it was a great...

BARELA: And I tell you, and being proud of you and also myself. Having -- feeling that pride of our little family group.

KNOPP: I'm proud of them.

BARELA: Yes. Keep talking.

KNOPP: You can cry.

BARELA: I don't want to. The way they sat through there, you know, even with some of their doubts, they were still willing to stand by us. So with that alone there's lot of pride. Any other questions?

VELSHI: As the sun sets outside Alacrity, Michael and Karen ask Robert as many last-minute questions as they can think.

(on camera): You can't keep him, you know that.

KNOPP: Yes, we can.

BARELA: No, we can (ph). He already told us.

(CROSSTALK)

BARELA: He's moving in.

VELSHI: I'm hoping that these guys have managed to give you something that you can carry on with once they are gone, once they're out of here. I kind of get the feeling that you might be able to make a go of this.

BARELA: It is overwhelming, because if you've never done it completely, then all of a sudden, you're like going where do I start? OK, I'm starting with the front desk. So, it's a little piece at a time. I think we got it.

KNOPP: Thank you.

CROMEANS: Congratulations. Thank you, Karen. Thank you, Michael.

BARELA: Are you gone, now? Is this goodbye?

CROMEANS: Yes. Yes. Yes.

VELSHI (voice-over): Robert says his final goodbye. It's time for Alacrity to go it alone.

BARELA: We just have to have the dedication, and the consistency to go forward. But you know, it is possible. It's back to the American dream.

VELSHI (on camera): Over the past three days, Karen and Michael have battled tight deadlines and unrelenting pressure and they have come out on top. With the help of industry titans, they've polished their marketing plan. They've developed a product strategy. And now they have to fly on their own. But with the inspiration and education they've gained, they got what it takes to make it.

I'm Ali Velshi

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