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Choosing Your Challenges
If you are transitioning from the service, you might be thinking, Most veterans don't get rich, so why will my situation be any different? Because you will have completed the Master Success Program; because you will realize the success skills that you possess as a warrior; because you will be putting those warrior skills to work. This is why you will be different. If you have lost a comrade in arms, gotten divorced, been sick, had a child go astray, you may hurt and find it hard to get yourself back on a successful path, but you can.
Reinforce your spirit. Every day, take your twenty minutes of quiet time to stop and think. Where have I been? Where am I now? Where do I want to go?  How sad to be a college senior, who after four years and with tens of thousands in debt, still cannot articulate a clear career objective. How sad to be married to an executive who has little time or interest in his own family. How sad to be able to buy a new Lexus and then immediately have buyer's remorse that you didn't buy the BMW. How sad to be surrounded by people who only care about you for what you can give them.
Stop the nonsense. You aren't a prisoner of war. Stop living in anticipation of tomorrow. To be happy, you must appreciate your life right now. The best things in life are free and available to you right now: hugs, smiles, sunshine, stars, beaches, pats on the back, thank-yous, flowers, love, loyalty, respect. Success is not hidden in some distant place. It is here. You are alive. Appreciate life now. Appreciate life for your brothers and sisters in arms who may not have made it back.
Do you want to enjoy the greatest books, DVDs, videos? Do you want super-fast Internet access? Go to the library. Appreciate life now. .jpg "Happy Skiiers")
Do you want to take great vacations for little money? Go off-season.Do you want to eat in great restaurants for cheap? Go for lunch. Do you want to wear the latest fashions? Go to outlets and to seasonal sales. Appreciate life now. Go to museums. Go to regional theater. Go to local youth concerts. Go to college basketball games. Appreciate life now. When you are a thinking person following the Military Action Principles™, you are close to leading a full rich rewarding life. If you follow the Military Action Principles™, becoming financially independent will not be that difficult for you even if you have had your share of hard knocks. Work hard. Smile. Care about your fellow man. Be ambitious. Want to be all that you can be. Fools are befuddled. Warriors know what they should be doing. Then, they do it. Romano's Homestyle Pizza, Continued
After two months of research, Kevin is ready to proceed with his plans. He has three mentors: Mr. Kozopolus, Mr. Domasi and Uncle Giro, all ready and willing to serve as advisers.Each has reviewed his equipment list and proposed floor plans. Each has agreed to assist Kevin in getting networked into the restaurant industry. They will work with Kevin to help him get the best deal on restaurant equipment and food provisions. Each will be able to guide Kevin according to that mentor's specific area of expertise. Mr. Kozopolus will advise Kevin on the day-to-day operations of a pizza shop. Uncle Giro will advise on advertising, promotions and specials. Mr. Domasi will help fill in the big picture that might include expanding Kevin's business through selling and reinvesting or expansion through adding additional stores. Kevin's next step is to secure a location for the shop. From his call to four real estate offices with brokers specializing in commercial property leasing, he learns that in Newton retail store rents can range from $8.00 to $15.00 per square foot plus utilities. From this range, Kevin's 1,000 square foot store would require annual rent payments between $8,000 and $15,000 per year or $666 to $1,250 per month. Kevin is shown three stores with the possibility of a fourth space being available in two months. The first store Kevin is shown is 1,300 square feet offered at $12 per square foot and is adjacent to a convenience store. The store has adequate parking and is separately metered for heat and air conditioning. The problem is that the landlord will not commit to a lease longer than three years. The convenience store's lease is up in three years and the convenience store has an option to expand into this “for lease” space at that time. The leasing broker mentions to Kevin that he might be able to buy the option from the convenience store. However, since Kevin is working within a limited budget of $25,000, this is obviously a long shot. The broker says that he will follow up with both the convenience store and the landlord. Kevin calls Mr. Domasi for his opinion. In discussing the store, Kevin and Mr. Domasi agree that although the store itself and the location are excellent, a three-year term is too short. Mr. Domasi is adamant that the lease must run 10 to 15 years with a 5-5-5 lease being ideal. A 5-5-5 lease means that the initial term of the lease is five years with two five-year options to renew. Mr. Domasi points out that a business is only as good as the lease that supports it. A lease term shorter than 10 years proportionately devalues the worth of the shop. In other words, with all other factors being equal, a shop with an 8-year lease is worth 20% less than that same business with a 10-year lease. Mr. Domasi always advises his clients looking to sell shops to first review and, if necessary, re-negotiate their leases to get those 10 or more years or options on the term. Kevin agrees that he wants to maximize the “for sale” option for the business. So, this store is out.  This store is a possibility. Further, the leasing broker mentions that this building is also for sale and that the owner might be willing to give Kevin both a lease and an option-to-buy the building. Mr. Kozopolus and Mr. Domasi come out neutral on this store with both stating positives and negatives. The third store Kevin sees is a 900-square-foot space in the local mall. However, this particular space is poorly sited in the mall. The store is located at the end of a wing that gets little foot traffic. It is not part of the food court. Only four tenants occupy the eight retail spaces in the wing. The other four spaces are covered with plywood. The rent is stated as a $15.00 per square foot base rent plus 4% of gross sales and a common area maintenance charge of $3.50 per square foot and a mall merchant's association joint advertising fee of $2.50 per square foot. The $15.00 per square foot quoted rent quickly becomes $21.00 per square foot plus the 4% of gross sales off the top that would push the rent to $25.00 per square foot or more. There would also be a stipulation in the lease that the business must remain open and only be open during mall hours, presently 10:00AM to 9:00PM. The lease would also state a long list of foods that Kevin could not serve, since other tenants already served those foods. Yet, the mall management would not give Kevin the same protection for his menu items. In other words, certain mall food tenants would be allowed to sell pizza and subs at a later date, if they so wished. In fact, the mall management would retain the option of also leasing to a nationally rated pizza chain should that opportunity arise. Neither Mr. Kozopolus nor Mr. Domasi like this store or the rent. However, Mr. Domasi does hold out the glimmer of hope that it might be possible to find a buyer quickly and get out. The fourth store is the end store in an older downtown store block. Most of the other stores in the block are long-term tenants: beauty salon, shoe repair, a tobacco shop, an Army/Navy store, a key shop and a coffee/lunch shop. The only newer tenant is a photocopy/film developing business. The store that Kevin looks at had been a travel agency, which was run for 35 years by the retiring proprietor. The store will be available in two months. The corner store measures 800 square feet with an 800 square foot basement and has windows on two sides. There is one parking space for the tenant but no other off-street customer parking. The landlord, an older gentleman, Mr. Simkis, is asking $12.00 a foot and states that a 5-5-5 lease would be fine. On the plus side, although the rent is a bit high, the taxes and insurance on the building are paid by Mr. Simkis, the landlord. The location is above average with strong daytime foot traffic and with neighborhood business at night. The corner location provides for signage on two sides of the building. There is that one off-street parking space that could be used for the delivery car.  On the negative side, there are already two established pizza/sandwich shops in the immediate area. These shops will cut into the automatic “lazy” customers' business or people who will go to the closest shop regardless of quality. The space also needs considerable upgrading. For contracting advice, Kevin turns to Jesse Hayes, a friend from work who manages the hardware department and who does remodeling on the side, and to Jim Rahman, a friend and Newton fireman, who also moonlights as a carpenter. Jesse and Jim agree to work together. They recommend a new plywood and linoleum tile floor and a dropped ceiling. Also, rather than trying to repair the walls, they would be covered with 3/8" sheetrock to provide a smooth painting surface and give the shop a new appearance. Together with the custom work to be done (counters, etc.), Jesse and Jim estimate figures of $3,000 for supplies and $5,000 for labor or $8,000 in total renovations. 
Of the choices available, all three of Kevin's mentors favor this fourth location. Also, they agree that the extra two months plus the start-up month will give Kevin ample time to have all his plans in place, including financing.With a signed lease from Mr. Simkis and his business plan with cash flow projections and containing his $25,000 budget figures, Kevin begins calling banks regarding small business loans. However, with Kevin's limited cash participation (he has $10,000 saved), no bank seems interested in writing a $15,000 loan. Each of the bankers with whom Kevin speaks projects that with just $25,000, he would be undercapitalizing the business. It is the bankers' opinion that Kevin's business plan should be redrafted to show not only available cash funds to carry the business for at least six months, but also Kevin's living expenses for the same period. Kevin's assertion that he would live at home and only eat store provisions, and that his car would be his sole expense, is not acceptable to the banks. The banks insist that the business plan reflect realistic living expenses. The bankers concur that Kevin will need $40,000 to start his shop and not $25,000. Of the $40,000, the bank will loan 50% or $20,000, if Kevin can show that he has $20,000 from other sources. The interest rate on the small business loan would be 9%. After talking with three banks, Kevin calls Mr. Domasi and Uncle Giro. First, Mr. Domasi, “Well, Kevin, let's see, you and I already talked this over and $25,000 was our number. What's the problem?” Kevin fills in Mr. Domasi on the bank's position, “The problem is that the bank's number is $40,000 to open and operate the shop and of this $40,000 figure, they will lend $20,000. I have to come up with the other $20,000. I have $10,000 and would need another $10,000.” “Or,” Mr. Domasi counters, “from our standpoint, you have $20,000 from the bank and your $10,000 which makes $30,000 or $5,000 more than you'll actually need.”  Mr. Domasi suggests, “Maybe, you can work a compromise with the bank by getting a line of credit for the other $10,000.” “How would that work?” Kevin questions. “Well, you get someone with good credit, say your parents or a relative, to sign a letter stating that they will lend you up to $10,000, if and when you need the money,” Mr. Domasi instructs. Kevin starts to understand, “But, I shouldn't need the money.” “Exactly,” Mr. Domasi agrees, “You shouldn't need the extra $10,000 but the bank will feel more comfortable if you have this extra financial cushion.” Kevin is grateful for the tip. “Thanks, Mr. Domasi. I'll try that approach.” Kevin now calls Uncle Giro and explains the financing challenge and also Mr. Domasi's idea about the line of credit. “Well,” Uncle Giro updates Kevin, “My manager, Carlo, and I have both gone over your budget and floor plan and you seem to be in the ballpark at $25,000. Are you asking me for the line of credit letter? Let me think for a minute. What if I give you the line of credit for a $1,000 fee?” Kevin seems surprised, “You mean that you'd give me a $10,000 line of credit for which I'd pay you $1,000?” “That's right,” Uncle Giro nods. “Let's say that the line of credit is for one year and that after the year, you pay me whatever you owe on whatever portion you've borrowed on the $10,000 plus interest plus $1,000.” “What would the interest be?” asks Kevin.  “You're a real businessman, Uncle Giro.” “And, I want to teach you to be a real businessman, Kevin,” Uncle Giro responds, “This way you'll learn to respect borrowing and friendship.” “Thank you, Uncle Giro. I'll talk with the bank and get back to you.” “Listen,” Uncle Giro isn't through. “I want you to run this whole financing package by Sam Vincent at my bank, The First Cooperative, and see what he says. I'll call him for you.”
Following a call from Uncle Giro, Kevin receives a warm welcome from Sam Vincent. Two days before his loan appointment, Kevin had dropped off his financing package with Mr. Vincent's secretary and also filled out the bank's application forms. As it turns out, Mr. Vincent is not a loan officer with The First Cooperative but the Senior Vice-President. Kevin sees the value of an introduction. “So, Kevin, Uncle Giro says that I should take good care of you. He told me two things that I like. He said you were a Marine and he says that you're the next Uncle Giro.” “Yes, Sir, I am a Marine, once a Marine, always a Marine. Yes, I do aspire to one day run a restaurant like Uncle Giro's.” “Alright Kevin, you're a serious guy, I'll get to the point. We've been handling Uncle Giro's banking for the last 25 years and we'd like to start the same relationship with you. However, I've had our chief business loan officer review your plans and applications and she thinks that you may be cutting yourself short asking for $20,000. You probably want to borrow $25,000 and with your $10,000, you should be in good shape.” “You mean that you want to lend me more than I'm asking for?” Kevin's heart is beating a little faster. “Let's say that when you borrow from First Cooperative, we become your financial partner. As your partner, we want to be sure that you have a solid chance for success. When you succeed, we also succeed.” Kevin likes the sound of this. “Thank you very much, Mr. Vincent.” 
Following the loan approval, Kevin will send a thank you letter to his “partner” The First Cooperative, care of Mr. Vincent. With the help of Uncle Giro's phone call, Kevin has received a very different reception from The First Cooperative than he had received from the other three banks he had visited as a man-off-the-street. Kevin calls Uncle Giro to thank him and to tell him that he won't need the letter of credit. “Well, Kevin, I was sure that Sam would take good care of you. So, you don't want my $10,000 line of credit for the thousand?” “Are you still offering it, Uncle Giro?” “Yes, I'm still offering it and, then, you can be sure that you'll be starting from a good base. My credit will be like an insurance policy for you.” “Thank you, Uncle Giro. I think I will take you up on your offer.” “Fine, I'll have my attorney draw up the letter.” Kevin calls Mr. Domasi to update him on the financing commitments. “Good, good. You've got $25,000 from the bank and your $10,000 and the $10,000 credit from Uncle Giro for a total of $45,000. Let's see. You should only need another $5,000 to open that second shop!” “Mr. Domasi, you'd be funny if I didn't know you were serious.” The Romano Homestyle Pizza Restaurant
After four months of research and work, the Romano Homestyle Pizza Restaurant opened. The total expense for equipment, fixtures, renovations and starting provisions came to $20,000. Mr. Domasi, Mr. Kozopolus and Uncle Giro all helped with the selection of equipment, some new and some used.With the rental payments, restaurant licenses, signs, stationery and initial advertising costing another $7,000, the restaurant was opened for $27,000 or $2,000 over budget. To operate the business, Kevin is left with $8,000 of his own money and the $10,000 credit with Uncle Giro. For his staff, Kevin turned to the department store where he had worked and selected people whom he knew had strong work habits. One ambitious young man was hired full-time to work with Kevin. Kevin also recruited several part-timers from the department store. His sister Susan and brother-in-law Mike are also working part-time. And, Mom and Dad are helping where they can. The story that you just read about Kevin Romano is fiction. It was written to illustrate basic entrepreneurial opportunities and problems. Your job as a student is to learn from Kevin's situation. What would you do the same way? What would you do differently? What are the general entrepreneurial principles that you can identify and apply to your business or career plans? The following anecdote is a real-life experience. Papa Peter's Pizza
A new Italian restaurant opened in my area and the response was overwhelming. The rookie staff was overwhelmed. The kitchen was overwhelmed. There were long lines at the take-out counter. There were waits to be seated. Once seated, you waited about ten minutes to be acknowledged. Then ten minutes for drinks. Finally, you waited another 20-30 minutes for the food. And, the lines to be seated grew longer. The waitresses lined up to place orders on new computers. There were mistakes. The wrong food arrived. Entrées arrived before appetizers. Certain menu items weren't available. How can you have an Italian restaurant with a liquor license and no Chianti? The food was cold. The food tasted terrible. Charges on the bill were incorrect. At our table and every surrounding table, there were complaints.This great opening opportunity was a disaster. The word-of-mouth was going to be bad. What could or should have been done?
Reinvestment - Putting money back into a business or project with the expectation of new rewards. Lease - Exchanging money for the temporary use of an item. Devalue - To lessen in worth. Negotiate - To talk and reach agreement with another person. Option - To buy the right to do something in business at a later date. Percentage lease - An agreement in which all or part of the rent is based upon a percentage of the amount of sales. Gross sales - The total value of all goods sold made before any deductions are taken. Common Area Maintenance (CAM) - Tenants in a shopping center who share the upkeep costs for places or things they share, such as parking lots, rest rooms, landscaping, signs, etc. Square Feet - The standard unit of measure in commercial real estate being one foot by one foot. Square Foot Rent - An annual figure calculated by the size of the space rented. Proprietor - The single owner of a business. Signage - Pertaining to all descriptions of signs. Security - Deposit Money that a tenant deposits with a landlord to ensure that the tenant fulfills the terms of the lease. Upgrading - To make improvements to a property. Start-Up Month - Time given by a landlord to a tenant to get a business upgraded and stocked before rent is collected. Cash Flow - The money that is left to spend after all deductions have been taken. Line of Credit Agreement - where a bank promises to lend a person or business a certain amount of money in the future without the need for further applications or approvals.
On a podcast, a hairdresser asked you about how to increase business and you said to give FREE haircuts. How realistic was that advice? You can't survive long if you give everything away. Let's say that a hairdresser, named Sharon, has ten clients a day but would like twenty or more. Now, Sharon works half the day and spends the other half of the day chatting with colleagues, reading the newspapers, and daydreaming. The unproductive time is gone forever. Sharon can pass the buck and ask the salon owner to do more advertising, or she can take personal responsibility for her own marketing by giving free haircuts. During her idle time, Sharon mingles with the public, and when she sees someone she knows, she compliments them on their looks and suggests that she can make them look even better. Most people like this attention. Sharon hands them her business card with FREE haircut written on the back. People like this. Maybe she gives out ten cards a day and five of those people call for appointments. Sharon does their hair at no charge. What has she lost? She has given a free haircut during her free time. What has she gained? She is friendly and professional, and two of the five FREE haircut customers become regular clients. Now, Sharon knows that each regular client will return about once a month and spend on average thirty dollars. In a year, her gross improves by $360 per new client. Now, is Sharon's use of her free time a waste or an investment? You advise people to join associations. Do you mean things like the Chamber of Commerce, and what are the benefits of joining? Most Chambers of Commerce offer excellent networking and educational opportunities. For self-employed small business owners, the opportunity may exist to purchase insurance and retirement plans at group rates. For individuals working alone or at-home, the social contacts and activities can be worth the annual membership. The Chamber is a strong lobbying force for business interests. The Chamber also may be involved with local charitable endeavors which will give you an opportunity to give back to your community. You may also wish to consider joining organizations like the Kiwanis, Lions, and Rotary for many of the same reasons you'd join the Chamber. And, you'll want to become an active member of your trade associations to mingle and learn at classes and conventions. I'm a former JAG lawyer about to transition to civilian practice. Recently, I was surprised to meet a local lawyer who gave me a business card that was dirty and had the telephone number crossed out and re-written in pen. This was a fairly successful lawyer. I know that you believe in good stationery and good design. Is there any reason not to show your best side? As a warrior, you take pride in your appearance and this should extend to your personal stationery. The business card says, “Here I am. Please remember me.” This attorney's card does not leave a positive reminder. Especially in this day and age when many fast printing companies, and even Staples, can complete most jobs in a few hours or overnight. Substandard stationery says, “I'm too busy for you and I don't even care enough to have a staff member take a few minutes to do this job for me.” Many more people will see your stationery than will ever see you. If your stationery projects a strong clean image, then others will begin to view you in this manner. Make life easy on yourself. When you see stationery that catches your eye, find out who did the design and printing. Copy success. You will also want to carry your stationery design over to your website.
Go to Mission 9
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