Category Archives: Adulthood

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What I Learned from Margot’s Frozen Yogurt

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When I was in my late twenties, 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.

Under-Capitalized

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.

Conclusion

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.

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Wisdom in Entrepreneurship

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A friend recently told me about a young man who earned his MBA, worked for a year, lost his job, and got disillusioned about the corporate world. Instead of searching for a job he decided to start a new business.

Starting a new business is part of many Forward Stories. The thrill of entrepreneurship attracts many people, including me. However, the voice of experience has something to say to people like this young man. This voice of experience is my own. I have learned many things from the four businesses I have started.

This young man did not ask for my advice, but if he had here is what I would have told him:

1. Don’t Quit Your Day Job. Listen, the grocery store does not accept as payment your plans, hopes, and dreams. Neither does your landlord. They accept cold, hard cash or, in some cases, plastic. In that case, the credit card company accepts cold, hard cash. It is very possible in free societies to continue earning a living to pay the bills while starting your business on the side.

While I have not yet read it, I know enough about his thesis to recommend the new book by Jon Acuff entitled Quitter. The premise is that you do not have to accept the myth that the only way to achieve your dream and start your business is to go “all in” and roll the dice. There is a much wiser way to be a “quitter.”

If you have already quit your day job, find another one. Work at being great in everything you do. Start your business on the side and build it to greatness.

2. It Takes Money, but Don’t Borrow It. Starting any business takes some money. You may need to buy a computer, business cards, equipment, or any number of other “necessities.” The temptation is there to borrow the money either from a bank or on your credit cards. Don’t do it! Nothing is more discouraging than starting  a new business, earning revenue from your products or services, and then turning around and sending it all to your creditors.

So how do you do it without credit? Well, you could start with a pile of cash that you have saved up. That is the way the old-timers did it. You know, set aside money for a purpose and then use the money to achieve that purpose? That is called delayed gratification, and it is a very odd concept these days.

You could also choose to cash flow those items you need to start your business. How about using your old computer or finding one on eBay or at the local thrift shop? How about using that old computer and some free software to print your own business cards? How about renting your equipment for a specific job to generate profits from which you can buy your own used equipment?

This myth of necessary debt has sunk many a new business. If your business does fail, it is really discouraging to be obligated to continue paying credit card bills on a bunch of business stuff that you no longer have. When that happens each month’s credit card bill is a bitter reminder of your failure.

3. It Is Harder Than it Looks. To those who have never owned a business it appears easy. It is not. My goal is not to discourage you if you want to start a business. I am just saying that there is a reason to be conservative in your projections for revenue and be liberal in your projections for expenses. It is going to take longer than you think it is to achieve sustainable profitability.

Not only is it difficult to win new customers, it is also takes time and energy to take care of all of the required responsibilities in government reporting, bookkeeping and accounting, and taxes. If you hire employees, now you have the additional burden of making payroll, paying employment taxes, and handling employee problems. It is no walk in the park!

I have found that many people who leave the corporate world in frustration discover that owning their own business just shifts the burdens to them as the employer. Now they are wearing the boss hat. If they then decide that owning a business is not what they thought it was, they often return to the corporate world with a greater appreciation for being an employee and for how hard it is to be the employer. Often a paycheck never looked so good.

Conclusion

In future posts I will share some of the specifics of the businesses I have started and what I learned from them. A big part of wisdom is not only learning the hard way yourself, it is also learning from the experiences, mistakes, and successes of others.

Develop a Forward Story that includes your business, but do it with wisdom, patience, and realism. That is part of becoming an adult.

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The King and the Pawn

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Before the game is over there are a lot of differences between the king and the pawn, but as the old Italian proverb says:

And once the game is over, the king and the pawn go back in the same box.

That is some philosophical fodder to contemplate on this day that Prince William and Catherine Middleton marry in an amazing spectacle. Their wedding was very different from mine. William’s life is very different from mine. However, when it is all over, we both go into the box.

What I take from this fact is that both William and I can matter on this side of the box if we live in a way that makes a difference. How should we then live?

Exactly.

That is what having a Forward Story is all about.

Best wishes to the royal couple and to all of the pawns who will bind their lives together this weekend.

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Forward Story for Two

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The concept of a Forward Story is very personal. Each of us needs one to define and fulfill our greatest ambitions. We each take personal responsibility for our actions and for living in a purposeful way. Part of becoming an adult is learning to stand on our own and to be responsible for how we live.

However, what happens when we determine to spend our lives with another person? The biblical characterization of marriage is that two people become “one flesh.” When we unite together into a unity, how does that affect our Forward Stories?

Image: www.freeimages.co.uk

My wife and I just celebrated our 30th wedding anniversary. One of our secrets is that we are both strong individuals capable of making it on our own. As the late M. Scott Peck said in his book The Road Less Traveled, Timeless Edition: A New Psychology of Love, Traditional Values and Spiritual Growth, those who say they “cannot live without” another are really acting like parasites. A parasite needs a host and cannot live on its own. A healthier relationship is where both individuals can say, “I can live on my own, but I prefer to share my life with you.”

We live, then, with both our own personal Forward Stories and with a combined Forward Story as a couple and as a family. My wife and I recently realized that when we were first married we did a lot of work on our combined Forward Story. In fact, our lives so closely followed our combined Forward Story for the first five years that it seemed easy to us. Our story did not go beyond about five years from the date of our marriage, though. We have now realized that even though we are about to exit our forties, we need to craft a new combined Forward Story.

How does a Forward Story for Two differ from a personal Forward Story? The combined story must leave space for each of us to pursue our own paths. For example, if my personal story calls for me to work in my career through age 65, a combined Forward Story that calls for us to both retire at 60 and move to the Rockies would not be compatible. So, the combined story has to incorporate the ambitions of each individual.

Beyond that, the combined Forward Story is very similar to the individual stories. The process of developing this combined story is itself a very healthy process because it forces us to discuss all the areas of our lives that need to be taken care of. It also forces us to think about our mortality and the length of time we may have left. Even though the combined Forward Story will not turn out exactly as we write it, it will form a common vision that we will both work toward.

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Weight Loss & Your Forward Story

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Part of my personal Forward Story involves my health and my weight. Health is important going forward. If I suffer a breakdown in my physical body, I obviously cannot achieve the other goals I have in mind. It is for this reason that I do not smoke, but what about my weight?

Modern medicine is pretty clear on the issue of obesity. Being overweight or obese is hazardous to your health. Even if you see no current symptoms or effects, carrying too much weight will lead to cardiovascular disease, diabetes, and a host of other problems. Therefore, you and I must engage in future-oriented behavior today and every day in order to create a healthier future.

According to the charts, I am overweight. When I tell people that I am overweight many people tell me they don’t believe it. As a former athlete I have a a muscular build at 5’11”. I don’t look “fat” to them. However, the experts tell me I need to drop weight. So, how do I do that? Billions of dollars are spent in that pursuit. There may be no more fertile ground for scams than in the promises that a miracle drug or regimen will make it happen easily.

The simple answer to weight loss, and the one that people don’t really want to hear, is that you must restrict your calorie intake and regularly engage in physical exercise. That requires replacing present pleasure and ease for discipline and denial.

A couple of weeks ago my wife began the WW plan that counts points. I decided to join her on it in hopes of finally getting to the place on the chart where the doctors say I should be. So far I am seeing really good results. I track it on an iPhone app called iWatchr, which allows me to track my points, calculate the points from basic nutritional information, and track my weight. It is a very helpful little app.

The bottom line is that using this app and controlling how much I eat and exercise, I am engaging in daily behavior that is leading to the future I desire with regard to my health. Without these daily behaviors, the future will be just like the past.