What I Learned from Margot’s Frozen Yogurt

When I was in my late 20s, I acted upon a desire to start my own business. The allure of being one’s own boss is very strong, and creating a business is one of the most exciting things a person can do. It was certainly exciting for my wife and me to start a frozen yogurt shop in Santa Fe, New Mexico.

The Author in Santa Fe – circa 1989

Rather than relate every detail of the start-up and operation, let me tell you about the challenges we faced and what I learned from them.


We began Margot’s with virtually no capital of our own.  This meant that we had to borrow money to get started. At the time my desire to start the business was so strong that I was willing to borrow money to buy equipment and lease space. The idea was to invest a lot of our own sweat equity into the place and to buy the bare minimum of equipment required to get up and running. Then, we would upgrade from the profits of the business as time unfolded.

This was a problem on two fronts.

1. The strategy of buying just enough equipment to get started soon became a problem. The two soft-serve yogurt machines we could afford with our borrowed money were new machines, but they were air-cooled machines. We had selected a great location for the shop, so getting traffic into the place was no problem. In fact, the first day we were opened a line formed and stayed all day. This meant that the front door stayed open most of the day allowing the warm summer air to come into the shop.

As the ambient air warmed up, the air-cooled machines had to run more to keep the yogurt frozen. The more the machines ran, the more heat they threw off. We created a heat spiral. At one point it got so hot behind the counter that all of our chocolate toppings melted together in their respective containers. The machines could not keep up with the rising heat, and the product started coming out too soft. This heat problem remained until the day we sold the business.

What was the cause of the problem? We didn’t have enough money to buy the more expensive closed-loop (glycol) cooled machines or even water-cooled machines. If we had been able to afford those machines, we would have avoided this serious heat problem.

2. Given that we could not afford the proper machines, you might think that the solution to the problem would have been to have borrowed more money at the outset to buy the better machines.  That, however, would have just exacerbated problem number two. When you borrow money from a bank or any other creditor, that creditor has to be repaid with interest. This means that every month without fail, we had to write a  check to the bank for $800 to repay our business loan. That business loan, by the way, was personally guaranteed by my wife and me. Our home and vehicles were collateral for the loan. If we did not repay the loan as per its terms, really bad things would have happened to us.

So if we had borrowed more money up front, the monthly payment would have just been larger. When your new business is struggling to get off the ground, paying $800 per month to service debt doesn’t help matters.

What Would Have Worked?

My older wiser self would tell the young 20-something to save money toward the opening of the business. That requires patience. Patience is a four-letter word to people like my younger self. I had the idea, I had the location, and my mind was made up. I did not care that I had no money and no experience in the industry at all.  It was time to shoot now and ask questions later.

If I would have piled up cash first before starting my business, I would have begun Margot’s Frozen Yogurt without debt, with the proper equipment, and with much better prospects for long-term survival and expansion. Eventually we sold to a couple that was properly capitalized. The first thing they did was to replace the air-cooled machines with glycol-cooled machines. Because they had no debt, the operation of the business was a lot less stressful.


I realize that entrepreneurs as a class are risk-takers. I am one. However, I strongly recommend that anyone planning to start a business begin with their own personal finances first so that they can start setting aside capital to begin the new venture on solid footing. If you can live below your current means, you can stack up cash so that you can use your own money and avoid the business debt trap.

If you are an aspiring entrepreneur, don’t let this article discourage you. I believe in entrepreneurism. In fact, I love business. I just want you to be aware of some of the pitfalls of starting your own business so you don’t have to repeat my mistakes. Despite our challenges, Margot’s Frozen Yogurt was a tremendous blessing to us. It taught me many lessons that I took with me into the classroom as I finished my BBA. It continues to help me in all of my current business ventures. The people I met and worked with at Margot’s were tremendous. We got to employ a lot of excellent people in the Santa Fe community, including a lot of wonderful young people at Santa Fe Preparatory School. These were impressive people that blessed us. We got to know our customers well, and we loved serving locals as well as tourists and celebrities (like Brian Dennehy and Karen Grassle). All in all, we would not trade the experience.

If your Forward Story includes starting a business, I strongly recommend that you educate yourself as much as possible about not only your desired industry, but also about the wisest ways to finance, launch, and run your business. It is a lot easier to learn from those who have made mistakes than it is to repeat those mistakes on your own.

Please note: I reserve the right to delete comments that are offensive or off-topic.

3 thoughts on “What I Learned from Margot’s Frozen Yogurt

  1. Hey Mark!

    Great advice for anyone thinking about starting their first business. For most small business people, personal finance and business finance are essentially the same thing. Going deeply into debt works only a small percentage of the time. Everything, and I mean everything, must go right. In reality, risks are everywhere and for a highly leveraged individual Murphy’s law should scare them to death. Building wealth first and minimizing debt doesn’t appeal to many business-minded people. Dave Ramsey may be at the extreme when he says not to go into debt at all when starting a new business but that approach is definitly safer.

  2. Lonnie, sorry for my delay in approving your comment and in replying. 99% of the comments on blogs like this are spam, so I tend to ignore them.

    I do believe that by following Dave Ramsey’s advice and starting debt-free there are some businesses that a person simply could not start. If I wanted to start a factory producing pharmaceuticals there would be no way for me to do that without debt. As you said, incurring that kind of debt to create a new business significantly increases a person’s risk.

    So many people have been ruined financially by going into debt to start a business that my experience and knowledge tells me it is not worth it. The fact that we did incur debt in creating Margot’s Frozen Yogurt increased our risk and put a lot of pressure on that brand new venture. Fortunately for us we were able to sell it and come out relatively unscathed.

    I remember some great times there having you and your family, as well as other friends, join us down at the shop for yogurt and treats. Great memories.

    Thanks for commenting. Don’t be a stranger. I will do a better job of reviewing and approving comments.

  3. My wife and I ate at Margot’s Frozen Yogurt when we lived in Santa Fe in the early 90’s. It’s was a joy to later meet Mark & Margot in Austin, and now recently reconnect with them.

    Having started a business myself as well, I agree that the capital question is a central, and difficult, one. The only thing I would add is that there is a focusing aspect to having to write that monthly check to the bank, that can be beneficial in starting a business. If there is no external accountability, there can be a tendency to goof off a little or experiment rather than getting cash flow up and positive as quickly as possible.

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