 |
   |
|
Seeds For Thought
Making The Right Move For YouAD: "Kevin, the people of Newton seem to have taken a liking to your new restaurant. Are you satisfied that you made the right decision in leaving your secure department store job to start a small business? I think that your story would be an inspiration to many young entrepreneurs and I'm sure that they'd be interested in hearing your plans and secrets." K: "God bless, Father Bitsoli. I think he personally encouraged everyone from the parish to visit my shop. Father also found a new saint for me, Saint Lawrence, patron saint of cooks. He said, "Kevin, I'll help you get them into the door once and then it's up to you and Saint Lawrence to make this restaurant work." Thanks to the support of my friends and customers and family, I'm about to embark on the second phase of my business plan." AD: "So, what's next on the business life list for Kevin?" K: "Well, my first year's gross was $160,000 or over $60,000 over my projections. Mr. Domasi, a restaurant broker I work with, has a buyer for me who has offered $125,000 with a $50,000 downpayment and my taking back a note for $75,000. I've countered at $150,000 cash." 
AD: "So, on paper anyway, you have made over $100,000 in the last year and a half and, you're going to sell?"K: "Right now, I presume so, yes. I am netting about $800 a week but Mr. Domasi was right. To move ahead, I need my capital from this store if I want to expand, which I do." AD: "How will you expand?" K: "Well, actually, one of the other properties which I looked at before I opened this store was in a transitional neighborhood. I have a feeling that that neighborhood is beginning to come back; gentrification in action. Subject to the sale of this shop, I have spoken with that owner and made an offer. I presume that even if Mr. Domasi's buyer for my first shop raises his offer to $150,000 that a large part of that $150,000 will be in a note to me. As part of my offer to buy the other property, the store and two apartments, I have asked the owner of that property to assume whatever note I take back on the pizza shop." AD: "So, Kevin, if I can follow you, let's say that the buyer of this shop puts down $50,000 and you take a note for the other $100,000, that the owner of the building that you want to purchase will take this $100,000 as partial payment for his property." K: "That's right." AD: "What's your offer on the other property?" K: "$140,000." AD: "So, you would get a mortgage for $40,000 and use the pizza shop note for the balance." K: "Well, actually, I've already talked with First Cooperative about buying the other building and they will give me a mortgage of $120,000." AD: "If I follow you then, you would end up with the other building with a $120,000 mortgage and you would also have $80,000 in cash." K: "Yes, plus I would have about $28,000 in cash from the sale of this shop. Remember, the buyer is putting $50,000 down and the principal balance on my note is now $22,000, which would leave me about $28,000. Of course, most of this I'll need for the capital gains tax on my profit from the restaurant sale." AD: "You've learned a lot in eighteen months. And you don't seem to mind starting over." K: "Absolutely not. Most of the experience I've gained is in making the right contacts in the restaurant business with the help of my mentors, Mr. Kozopolus, Mr. Domasi and Uncle Giro. I know how to start a pizza business. And, I know how to build pizza business volume." AD: "I heard that you were passing out free books at your store. What's that about?" K: "I've handed out several hundred copies of the Catholic Action Principles™ to my customers. The Catholic Action Principles™ is a motivational book. I wanted my customers to know who I am and what I stand for and the Catholic Action Principles™ does that job. I bought the books as part of the Catholic Success missionary program. I bought the books for $5 each and I'm selling them as a fundraiser for the St. Stephen's Marching Band for $20. It's win/win/win. I have an opportunity to give back to Father Bitsoli. The kids in the band get some traveling money and the book recipients get a renewed perspective on our religion. AD: "What's with all the balloons?" K: "Well, I took Uncle Giro's advice about promotion, promotion, promotion. I have the logo on my boxes; I had a friend design it for the shop. You see a little Italian chef holding balloons in one hand and a pizza in the other. Balloons have become the trademark of this shop. I had balloons made with the restaurant name on one side and the address and phone number of the shop on the back. "I blew up the balloons with helium and, every off-hour, I've stood outside the shop and handed out the balloons. Everybody is anxious to take a balloon home to their kids. People will buy balloons for fifty cents or a dollar each. I give them away and they cost me about $.05 each with printing, the string and the helium. I've stood at the bus stop and handed out balloons. My helpers and I have handed out balloons in the mall parking lot. Customers take them home for their parties. I watch the paper and any big event in town, say a Boy Scout exhibition, I'll send over a couple of free pizzas and 20 or 30 balloons. "Look at your print advertising costs. The other shops might put an ad in the paper and pay $200, easy. And, what is the pay back from that ad? Maybe, nothing. For that same $200, I can hand out 1,000 balloons for $125 and give away 25 free pizzas, which cost me about $3.00 each. I look for opportunities to give away my pizza as promotions. Newton has a senior citizens club. I send over 5 free pizzas to them every Wednesday night. The Newton City Council meets and I send over pizza. I give away on average 25 pizzas a week and 1,000 balloons. And, I've gotten more free press from articles written about my shop than I would ever have gotten by simple newspaper ads." AD: "So, the balloons have made your business." K: "I thank Uncle Giro. Yes, they have. The balloons have been such a success that I had planned to run specials every night following Uncle Giro's suggestion but, as it is, I can't keep up with the business. I don't want to get stretched too thin, loosing quality and customer service." AD: "And, you're willing to walk away from all of this?" K: "To follow Mr. Domasi's advice, yes. What will probably happen is that I will sell this business, buy the other building, set up a new shop there and let my manager here run that business under a master lease." AD: "A master lease means what?" K: "I'm going to buy and rehab the other building and open up a pizza shop in the retail space. The rent for that store, vacant might be $1,000 a month. But, the store won't be vacant because I'll have a pizza shop ready to open. So, let's say that the value of the space with a ready to open pizza business is $2,000 a month. My manager under the master lease, leases both the space and the business for $2,000 a month net. He pays all expenses and pays me $2,000 a month for the master lease. Any and all profits go to him. So he has a business of his own under the master lease and the incentive to make the business grow. Also, I'll probably negotiate an option for him to buy the business at a later date." AD: "Where did you learn all of this?" K: "I ask questions and I listen. I find people who have already done what I want to do and I ask them questions. Most people want to talk about their success and help you. All you have to do is ask. I ask and I listen. That Pizza Shop Operators Division of the National Restaurant Association has been a great networking place. I leave every meeting filled with new ideas." 
AD: "So, you aren't worried about leaving your balloon idea with the sale of this shop?"K: "No, I'm not. Probably, the new buyer is going to scrap the balloons because he'd rather save the $200. If he keeps the balloon idea, fine; I wish him luck. I'll have plenty of other promotion ideas. For instance, very few pizza shops have a breakfast business and I'm exploring those avenues, as a "for instance." Gelato, Italian ice cream, is now a hot item and I'm looking into opening a few gelaterias." AD: "Kevin, you certainly exude confidence." K: "Well, I don't mean to sound cocky. I've just gotten very enthusiastic about business." AD: "You would say then that success breeds enthusiasm and, vice versa, that enthusiasm breeds success." K: "Yes, I would say that. And, I would say that I've found the right people to help me and I've listened to them. I would also say that I've worked my tail off six and a half days a week for the last year and a half. I haven't taken a vacation. And, I haven't been tempted to spend the $800 a week I net on clothes, cars and nightlife. I'm still young and ready to keep re-investing the money I make. "My phase two is to own another pizza business and to own some real estate. Within six months, I should be at phase two. Then, on to phase three." AD: "And, phase three is...?" K: "Well, it's "Little Giro's." I have met an excellent franchising agent and with Uncle Giro and with the backing of The First Cooperative Bank, we're in the very early stages of putting a chain together of "Little Giro's" restaurants, probably aimed at shopping malls. But, again, this is all very preliminary. Anyway, Uncle Giro and I are looking at joint ventures for the Italian food business. Also, made-to-order on-site pasta shops are really starting to boom now. But I don't want to bore you with the Italian food business." AD: "Kevin, eighteen months ago, you were selling hammers in a department store and now you're on your way." K: "Yes, now I'm on my way." AD: "Tell me, what would be your advice to other budding entrepreneurs?" K: "I would say the usual. Start your own business and work hard. Find out the people who have already made a success in the business you're in and ask for their advice and listen. Ask questions and listen. That's what I've done and what I'll continue to do. Make goals for yourself: short, medium and long term. And, promote, promote, promote. You owe the customer. The customer doesn't owe you. Make the people want to come to your shop. Make your money and re-invest in your business. Don't run off and lease a new sports car with the first $10,000 you make. Be patient." AD: "Your philosophy, then, Kevin, could be applied to almost any small business." K: "Yes, I guess so." AD: "It would seem, then, that it could apply to a convenience store or dry cleaner or clothes store, any small business?" K: "If you're asking me, the answer is, yes." AD: "I have one final question. What gave you the first kick in the pants to start your business?" K: "Well, someone gave me a copy of the Catholic Action Principles™ which is that motivational book that I mentioned. It didn't mean a lot to me until one day, I was in my dentist's office waiting for an appointment when I started reading a Forbes Magazine. "Anyway, there was this article about how Koreans were coming to this country and starting small businesses. Most of these Koreans come to this country with just the clothes on their backs and they don't know the culture and they can't speak a word of English. The article said that in four years, four years, the average Korean immigrant owns his own business and is making an average of $50,000 net a year. $50,000.00 a year." "This story helped me to understand the Action Principles and to get my butt in gear. I started carrying the Action Principles book with me and reading at least one of the principles every day. I kept reading it and the more I read the more sure I was that I could do something important with my life. Why not me? Who said that I had to stay in this department store for the next forty years? Only I did. The rest of my story you know." Learning from Kevin RomanoHe could work in the department store as an assistant department manager and in ten or twenty years he might be a department manager. This could be Kevin's career path. No matter how hard he worked or didn't work at the store, no matter how good his ideas could be for the company, it won't make much difference. No one is going to say, "Kevin, you're such a hard worker that we're going to pay you $150,000 a year instead of $30,000 to be the assistant hardware manager." Or, "Kevin, that was such a good idea you had for reorganizing the hardware department that the profits for your department should be up $100,000, so, here's $25,000 for your efforts." No way. Kevin's department store and many large companies are organized along a dual career tracking system similar to the enlisted man - officer system in the armed forces. If you are an enlisted man, you will never be a general. If you are an officer, even a lowly second lieutenant, you can give orders to any and all enlisted men regardless of the enlisted man's rank or seniority. That's the system, with the sole determinant for deciding whether you are an enlisted or officer's ranking being whether or not you graduated from college and Officer's Candidate School. Kevin didn't go to college, which means that the chances are slim that he will ever be the store's general manager or operating manager or merchandising manager or credit manager, etc. These are officer positions reserved for college graduates. Should Kevin go back to college? He could probably get a college degree in six years at night. If he really wanted an officer's career in the "big picture" retail business, he would probably want to continue another three years nights and earn a Master in Business Administration (MBA). In nine years, Kevin would still be in his early thirties, and, then, he might be considered for a low ranking officer's job, say, the front desk manager's job. There's nothing wrong with that. In another ten years after that, he might get a high-ranking officer's job at the store, operating manager. In another ten years after that, then being in his middle fifties, if everything goes right, Kevin might be the general store manager. Might be. Might be, because the corporate ladder is shaped like a triangle with a wide base and a very narrow top. There are many jobs at the bottom with fewer and fewer as you ride up. There are lots of lieutenants but very, very few generals. By starting his own business, Kevin made himself a general. The answer for Kevin is to get out. He doesn't need what he considers the arbitrary certification of a college degree to be a retailer in his own business. He doesn't have to worry about not offending one boss and playing up to another, if he starts his own business. He doesn't have to worry about people stealing his improvement ideas. He doesn't have to worry about working overtime for someone else's benefit. He can be free to make money, all the money his ability can muster. Kevin is a free man. Life is exciting. It is filled with possibilities. How far can his entrepreneurial drive take him? Go to Lesson TenIndex
|
 |
 |
© Copyright 1994-2006, American Success Institute. The Action Principles® is a registered trademark of the American Success Institute. We are a nonprofit research, publishing, and educational corporation headquartered in Natick, Massachusetts. |
 |
