16: Starting Your Business On A Shoestring

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Seeds For Thought

Some very big companies started very small.
Ask for more business.
Ask for testimonials and referrals.
A piece of some pie is better than no pie at all.

Starting Your Business On A Shoestring

    You may want to gulp when you see the asking prices for some franchises. You may be asked to invest from a few hundred to several million. Yes, it may be possible to borrow most of the capital you'd need to buy a franchise or to buy an existing small business or even start a small business but, when you're just starting your research, these investment amounts can look mighty BIG.

   What's a budding entrepreneur to do?

   You don't cry in your beer.

   You don't feel underprivileged.

   You take action. If not now, when?

   You start small and grow as you "Learn and Earn."

   Tomorrow, you might want to own a large landscaping company. But, today, you can take that one broken-down lawnmower and knock on doors. You are still Armando's Green Thumb Company.

   Take action.

   Tomorrow, you might dream to be the owner of a large fashion design house. But, today, you can use that old sewing machine to hem the skirts of your neighbors and girlfriends. You are still Designs By Tiffany.

   Take action.

   Tomorrow, you might aspire to own a luxury foreign car dealership. But, today, you can detail that old wreck and put an ad in the Want Advertiser. You are still Henshaw Motors.

   Take action.

   You don't have to wait until tomorrow. You can start doing something positive and profitable today.

   If you are an Action Principles Champion, working every day to be your best and with your mind focused on helping others, you will succeed. The only difference between you now and the you that you want to become is only a little bit of time.

Armando's Green Thumb Company

   Come on, Armando. You can go to the local print shop and have them desktop publish a half-page sheet which lists your services. And, you can add a sales note to your flyer which notes your personal commitment to total customer satisfaction.

   You can probably pick out a generic logo for your business at no charge. Or in your circle of 250 people, you might have an artist or graphic designer who can make a customized logo for you. A logo is a symbol for your business. The logo is used on all your printed materials: business cards, flyers, newspaper ads, signs, truck doors, etc. With time, people will begin to recognize your business by your logo.

   You can print up 500 sheets and cut them in two and have 1,000 ads ready for you to hand out and put on cars and put in store windows and on bulletin boards in your selected neighborhood. Armando, you can probably do this for less than $100.

   For another $100 or so, working from home, you can order your own telephone line with an answering machine. You landscape all day and you return your calls at night.

   You can set up a simple website to include your services, prices and testimonials.

   If you hustle and do this, you should have no problem getting forty lawns to mow at $15 to $20 per lawn. Now, you're making a decent week's pay.

   Now, think free advertising. As you work, you keep a sign on the front lawn, announcing that this lawn is being professionally cut by Armando's Green Thumb.

   Of course, you are doing a good job.

   Don't be shy. Ask for more business.

   Remember, you will always be doing a good job and you will always be asking for more business or business referrals.

Action Principles Challenge

You know a lonely person. Someone who for any number of reasons (maybe perfectly valid reasons) is shunned or avoided by others, it will be a sacrifice for you to listen, call, visit or befriend. This is tough. However, this is what makes you an Action Principles Champion to give freely and expect no earthly reward, no recognition and perhaps not even a word of thanks. You can't be everything to the world but you can be the world to one person. You will know and this will make all the difference.

   You ask your present satisfied customers to further utilize your services. And, you ask your present satisfied customers to refer you to new customers.

   You are doing a lot more to promote your business than other local landscaping companies.

   Soon, your business begins to grow as the word of your quality service spreads. Now, the fun part starts. Now, to your new customers, you explain that you have to charge a little more, $25 per lawn, but for that money they can expect an excellent job. And, Armando, you deliver on your promise.

   In no time, you have 60 accounts and you've leased a new pickup truck with a landscaping trailer. You are buying two new commercial mowers. You are about to hire an ambitious, hard working kid you know from the block to mow the lawns for you while you drum up new business and create new services.

   Also, in the center of town, one of the key intersections looks awful. You offer at no charge to clean and landscape the intersection for the town. Of course, the town doesn't mind that you also erect a small permanent sign announcing your civic contribution.

This beautiful garden is brought to you compliments of
Armando's Green Thumb

   Armando, you're on your way.

Designs By Tiffany

   Come on, Tiffany. For less money than it would cost to buy a pack of cigarettes every day for two months, you could be in business. You need a sewing machine, thread, a phone, an answering machine and stylish business cards.

   Here is objective number one for you, Tiffany - there should never be a single person anywhere at anytime who does not know that you do sewing. Everyone you meet should hold up his or her hand before you can speak and he or she will say, "Thanks, Tiffany. I know. Yes, I have your card. You do sewing. Tiffany, if I ever need sewing or if I ever hear about anyone who needs sewing done, you'll have the business."

   And, don't stop now, Tiffany. Visit every tailor shop in your area and tell them that if they ever fall behind and need an extra hand, that they know whom to call. Go to every dry cleaner, clothing and dress shop in the neighborhood and convince these owners that offering a tailoring service will enhance their business.

   Tiffany, you'll have to hire so many people to get all this tailoring done and there are going to be so many people sewing in your apartment that it will be a miracle if someone doesn't call the building inspector.

   Tiffany, here is your typical day. You spend two hours a day soliciting new business, four hours per day supervising your workers and six hours a day working on your own new designs. Congratulations. It's hard work now but you're building a strong foundation for your financial future.

   Most business owners do not spend 10-20% of their time looking for new business opportunities. However, direct marketing is one of the most important responsibilities of an owner.

Henshaw Motors

   Come on, Sean. Everybody has always admired the way you can make an old car look like new. Now, you can turn those compliments into cash. You can buy a car for $1,200. Fix it up and sell it for $3,200. You can do this every week.

   You realize that financing is a problem for some of your buyers, so you decide to finance them yourself. You don't sell the car for $3,200, you sell the car for $3,400 with $400 down and a loan for $3,000 at 12% interest to be repaid over sixteen months. Now, a lot more people can afford your cars and you're selling for a premium price plus interest. This is how business can work.

   In no time at all, Sean is buying better and better cars to rehab and resell. Sean does so well that he hires a detail man just to work on his cars at Henshaw Motors. Sean concentrates his efforts on buying and selling.

   In six months, Sean is ready to lease a closed gas station site and turn it into Henshaw Motors. Sean is now buying and selling ten cars a week. Sean is on his way.

   In one defining moment, you can make a positive decision to do what Armando, Tiffany and Sean have done. Don't look for excuses but solutions - simple solutions.

You can start a business at home.

You can start a business on the Internet.

You can start a business with a mall kiosk.

You can start a business on the street.

You can start a business at swap meets.

You can start a business at flea markets.

You can start a business with garage sales.

You can start a business by sub-letting part of a store.

You can start a business part-time.

You can start a business right now!

The Lopez Goff Gallery, Continued

   Each week Ana met with Sheila. Ana was handling gallery inventory and operations. Sheila was staying on top of Mr. Lansing and the renovations.

   Ana had ordered eighty prints from various sources ranging in retail value from $200 to $12,000. She had delivery scheduled for two weeks prior to opening. This way, she would have time to have some prints framed and the rest shrink-wrapped. Ana also purchased an inexpensive, almost "state-of-the-art," computer system and printer and software for $1,400. The computer would help to track print return dates, handle inventory and manage the mailing list. It can also be used for desktop publishing and word processing assignments.

   Ana hired an energetic, full time framer/sales associate, a recent graduate of the Museum School. The rest of the staff consisted of a part-timer who was a student at the Museum School and an older woman, with a long list of social contacts, also for part time work.

   Sheila had suggested for employment a niece of hers who was interested in art but without an arts background. It was agreed that the niece would be hired on a trial basis. As a start, the niece worked on Saturdays and during opening show nights. Concerning the hiring of the niece, Ana recited back to Sheila what she had often heard from Sheila that "business is business." Actually, time proved the niece to be a valuable asset to the gallery. However, the niece issue had given Ana an opportunity to further establish working ground rules with Sheila. Ana was the managing and majority partner.

   Sheila had Mr. Lansing in hand, who in turn had the building manager in hand, who in turn had the contractors in hand. Each week, the basement looked more and more like a real art gallery.

   Besides managing a thousand details, Ana had two pressing decisions to make. The first decision was the selection of an artist or artists for the opening show and the second was finding a hook to bring traffic and attention to the gallery between shows.

   The first task was easier. The winners of the Museum School New Artists competition from the last several years were invited to submit three works for display and sale. The exhibition would be a joint enterprise of the Museum School and the Lopez Goff Gallery. The showing would be promoted as a Museum School Professional Retrospective, with profit and proceeds divided between the school and the gallery.

   Ana's rationale was that it was better to have a piece of some pie than no pie at all. If successful, the showing would raise several thousand for the Museum School. And, there would be enough additional income generated to cover the gallery's several thousand dollars in expenses associated with the show.

   On the plus side, this type of joint venture would be promoted by the museum on behalf of the Museum School, allowing Ana to use the museum membership mailing list for the show's promotion. Secondly, the museum would pay for a poster to advertise the show. Thirdly, Ana could use personnel from both the Museum School and the museum for volunteer work for the semi-for-profit venture. In addition, a tie-in with the museum would assure press coverage for the event. Finally, if successful, the show would pave the way for future joint ventures with the museum.

   The opening was in the bag.

   Now for the business. Ana was a realist. It was one thing to run a "free" show for the art and arty crowd who came to be seen, sip free champagne and eat free hors d'oeuvres. It was another thing to get these potential clients to come back to the gallery on a Tuesday morning and write out a check.

   With time, a client list would be developed. Who collects what type of art? What was each client looking for? When you have this information, you can find art and call back the client. Then you make an appointment, etc. But, a client list evolves with time. To start a successful gallery, Ana needed a hook. Something that other galleries didn't do for clients that she would do. She needed something unique that she could offer to clients. Other galleries on Sturgess Avenue sold fine art and fine prints by fine artists. Ana had to have something to make patrons make the extra effort to enter her building, walk down the corridor and walk down the stairs to the "basement."

   Selling art at discount might be done in East Bank or in the leather district but wholesaling wasn't why you located on Sturgess Avenue. She had to find a different approach.

   Ana asked questions and asked for advice. She asked everyone she met in the art world, why and how they bought where they did.

   The answers were varied. They liked the gallery owner. They liked the service. They liked the framing. The work they bought was unique. They always and only bought from XYZ Gallery, usually a prestige firm. They trusted Mr. X's judgements, usually a prestige name. They had no loyalty; they bought whatever caught their eye. They read an article. They met an artist. They only bought for investment. They only bought for enjoyment. At ABC Gallery, they bought as well as sold.

   It was apparent to Ana that there was no single good reason which she could tap for success.

   Ana made the following decisions. She would produce a monthly newsletter with an initial mailing list of 500. The cost for the letter with postage would be $0.75 per piece or $350 a month plus labor, her free time labor. Ana had produced newsletters for both the National Guard and museum. The newsletter would promote the "show of the month" and the new print inventory. To improve readability, some gallery and art world news and gossip would be included.

   Each issue would also include a free premium for anyone visiting the gallery. The premiums might be a discount on framing for the month, a free art calendar, a free poster, a free table easel, a free issue of an art magazine, a discount on museum admission, etc. She would offer something that would provide a hook to get clients to keep the newsletter and visit the gallery.

   Later, Ana's newsletter was to expand to a 1,500 circulation and become a profit maker. Sandy and three other Sturgess Avenue gallery owners paid Ana to have their events advertised together with Lopez Goff.

   The real hook to ensure patronage for the Lopez Goff gallery came as a result of Ana's continued and constant research into successful gallery operations. The source was Dave Hendricks, a student at the museum school, who was volunteering his time to catalog the opening show. Two other students, also volunteering from the museum, were ribbing David about his art collection. You see, David, a poor art student, collected autographed art posters. David had posters signed by Pablo Picasso, Juan Miro, Marc Chagall, Alexander Calder, Robert Motherwell, Georgia O'Keeffe, Rockwell, Indiana, Johns, Stella, Nevelson, Rauchenberg, Dal', Kandinsky and on and on. He had a collection of modern masters' signed posters.

   The laughing went on,

   "Ana, David wants to know if you're going to be selling any Picassos for $1,800. He wants more signed Picassos for his collection. Right, David?"

   David didn't seem to mind.

   "I really don't know what you guys are laughing at. Tell me, what's the difference between a signed Picasso print for $20,000 and a signed Picasso poster for $2,000? I'll tell you what, the price. Did Picasso make his prints? No, they were done by assistants. He made the plates and signed the finished product. The only difference is that the prints are limited edition and the posters are not numbered. For $18,000, I'll take the latter. Every poster I have is worth at least ten times what I paid for it. So laugh on, my friends."

   The students laughed. Ana didn't. Instead, Ana took David to lunch to discuss his collection.

   "David, your collection sounds very interesting to me. How do you collect?"

   David didn't see any mystery to his methods,

   "Well, Ana it's really pretty simple. Take your show. You have a poster. At the show, many of the patrons will ask the artists to autograph the poster. At your show, I'll add another autographed poster to my collection."

   "For free."

   David nodded assent, "That's right, for free, unless you're charging for the posters."

   "No, we're not. But, the show isn't Picasso, either."

   David shrugged, "But, one of your artists may be the next Picasso. If so, I've got a valuable poster somewhere down the line."

   Ana was interested in learning all she could, "Do you only collect from shows in this city?"

   David continued, "Oh, no. I read Art News, the Sunday New York Times, etc., and I look for the big name shows where the artists will appear."

   "And, the artists autograph posters."

   "Usually, yes."

   "How do you manage to get the poster?"

   David continued explaining his system,

   "Don't make this sound complicated, Ana. I call the gallery the week before the show, tell them I'm a student with a keen interest in Mr. X, and would they please have an extra poster signed and mailed to me."

   "And..."

   "And, sometimes, they say, 'Yes.' Sometimes they say they want money for the postage and handling. Sometimes, they tell me to get lost. On average, I win. On average for $50 or for free, I get a signed poster that, should I wish, I could sell for hundreds of dollars."

   "But, you don't sell them?"

   "That's right. I'm a collector."

   "But, you could sell them?"

   "Of course. Listen," David had a question for Ana. "Ana, what would happen if you had a sign in your window, "Signed Picassos, $2,000?"

   "They'd knock the doors down."

   David nodded, "Right, you'd better believe it. They'd knock the doors down. A signed poster isn't that much different than a signed limited edition print."

   Ana liked this young man's thinking, "David, I want you to work for me."

   "Selling my art?"

   "Well, we can talk about that. For now, you'll be in charge of our autographed poster business."

   David thought, "But, it will take me some time to build an inventory, one poster at a time."

   Ana said, "Leave that to me. I'll think about it."

   David, the struggling artist, wasn't about to argue, "Fine, boss."

   Ana ran the signed poster business by Sheila. They weighed the pros and cons. Were signed posters really art? Yes, the same argument that could be made for prints could be made for posters. Some artists had little more to do with their prints than signing them. Some artists participated in all aspects of print making. Some artists had little to do with the making of their art show posters. And, again, some artists participated in all aspects of poster making.

   Autographed posters were legit. And, autographed posters would sell.

   After several weeks of subconscious pondering, Ana got her idea. It could be expected that most artists would be cool to the idea of signing posters in bulk. How could they gain their cooperation? Live Aid. Farm Aid. Comedy Aid. How about artists? A sort of Art Aid.

   Here was Ana's strategy. Call the artist's agency or primary gallery and find out the cause of most interest to the particular artist. Was it AIDS, the Heart Fund, the American Success Institute, United Way, Boy's Town, the "old artists' home"? What? Everybody cares about something. Find that something. Then, make the offer. Negotiate.

   Say, for example, that the great American artist Frank Stella supports UNICEF. Offer to donate $5,000 in Stella's name to UNICEF in return for Stella's simply taking 15 minutes to sign 50 posters. The posters would each retail for $500 framed. There is nothing in the art world signed by Stella retailing at $500. Try $5,000.

   So, the 50 posters sell quickly for $500 or a gross of $25,000. Each poster costs the gallery a $100 donation plus $25 for the poster, plus $2 for shipping and handling, plus $40 for framing, or a total of $167. The total cost of 50 posters is $8,350 leaving a profit of $16,650. Plus, there would be considerable framing profit to be made by the gallery. Business is wonderful and everybody is happy.

The Opening

   The Lopez Goff gallery opened to a warm reception. The art public came, was seen, drank, ate, and some art was actually sold. The press coverage gave the gallery immediate credibility and the gallery took it's place among the prestige galleries on Sturgess Avenue.

   Business slowly built over each of the next six months. The newsletter brought traffic. Each new signed poster offering causes a near auction war. Some paintings sell. Some limited edition prints sell. Some sculptures sell. The doll sculpture show was a success. Some framing is done.

   Nice job, Ana!

Lesson 16 Resources

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