The American Entrepreneur

The Award

The call was from Melissa Unger.

I knew the name because I remembered her from the Technology Council. She said something along the lines of, “Do you know anything about an award that you’re getting?” To which I replied, “No, what award?”

She then went on to tell me that the people at Ernst and Young, the mega-accounting firm that she had recently joined, had chosen me to be the recipient of their “Lifetime Achievement Award”; in recognition of my contributions to the general field of entrepreneurship.

My first thought was that someone must have been talking to my cancer docs. I reasoned that their conversations had gone something like this:

Oncologist “A”: I’m calling from the Hillman Cancer Center and if you have any special recognition awards you’d like to give to Ron Morris, I suggest you give them ASAP.”

Oncologist “B”: “Yes, I agree. And, let me add that mid-June 2011 would not be too early.”

Just kidding --- and while I’m still battling this God-awful cancer each and every day, I feel as if I’m still more than capable of doing all of the things that I need to do.

But hearing that I had been recognized … and by a panel of folks whom I greatly respect … was just terrific. It made me think about all of the entrepreneurs and small businesspeople I’ve ever known. And, it made me think about my whole (forty-year) run at entrepreneurism.

Since I’ll likely be handed this award right around the same time that this column is being released to the public by American Entrepreneur Radio, I thought I would do something that I greatly detest --- something that I avoid doing whenever humanly possible. That “something” is “look back” --- recounting my entrepreneurial career.

At least the early years. Here’s hoping you learn something.

My First Business

I guess it all began when I was maybe just ten years old. My son’s age now. Maybe I was even younger. But some how, some way, I learned about an egg route. I have no recollection of exactly where this opportunity came from, but each Saturday morning an old farmer would drop off some 144 dozen cartons of fresh eggs at my mother’s apartment. Recommended sale price of $0.62. My cost - $0.595 cents.

I would then sell those eggs door-to-door throughout Beechview, Brookline, and Dormont. I would keep my unsold eggs in the coolest place possible while re-loading my wagon.

I wanted no partners because they would only slow me down. And, I would have to split the profits with them. No way.

I just knew this intuitively.

I soon learned about “distribution”. And salesmanship. I also learned how to charm old ladies into giving me huge tips by the simple act of flattering their housecoats and/or jewelry.

And I guess I also learned a thing or two about route management, for as time went on, I learned the most efficient ways to get eggs to customers and to reload my wagon.

My egg route gave me my first understanding of the concept known as “margin”. Ahh, margin --- a term that my students hear the very first night of class and then in every class thereafter.

As already noted, I netted 2.5 cents on every carton of eggs sold. But in time, I was able to work out a deal with the farmer wherein my margin increased as I took ownership of more eggs. Now, I began to learn about inventory. And risk. I didn’t know these specific terms, but I did know that, and as I built up my route, that farmer treated me nicer and nicer. In time, I figured out that he needed me more than I needed him.

This is probably the point where I learned one of the most significant lessons of my entire entrepreneurial life: “He who controls the customer relationship controls the business.”

A very valuable lesson.

You see, I did experiment with a distribution strategy whereby a local eight year old would physically deliver to my “pre-paids” --- these being customers who gave me a month’s worth of cash up-front and ask me to, “just leave the cartons on the front porch.” (They like to sleep in --- I got that.)

You know how this turned out. Badly. I even lost a couple customers.

And so I realized, and even at that callow age, that I must never, ever “outsource” my customer touch points. That final contact with the customer must always be mine and mine alone.

And I guarded my customer list like it was a state secret. I even looked back over my shoulder many times to see if the farmer or one of his protégées might be following me around --- writing down addresses and names in some notebook! (So I guess you might say that I also learned the famous Andy Grove admonition about “paranoia.”)

All of this by the age of ten, while the other kids were watching cartoons.

Business Number Two

Fast forward four or five years and now I’m in high school. And while most of my buddies were working in car washes or as short order cooks (don’t worry, I had these jobs, too), I began two other start-ups.

The first was a snow shoveling business.

Every time it would snow --- which it seemed like it did a lot more in those days --- me and my buddy (I actually had a bunch of guys who would come out and shovel with me, but I usually had to knock on more than a handful of doors until I got one willing to come out in the real cold) would walk from our Dormont duplexes to the wealthy homes of Mount Lebanon where we would try to find what we then called the, “ten dollar driveways.” (A ten dollar driveway being double-wide and, hopefully, both short and not real steep.) We had no real scientific way of differentiating between a $10 or $15 driveway … it really came down to what I could negotiate.

We cleaned driveways strictly with shovels our first year. Then I got smart. About halfway through the winter, I started to put about 70% of my gross revenues aside for what would today be called a “capital fund.”

But I never called it that and in fact I didn’t even know what the word “capital” meant. The simple fact of the matter is that I was saving for a snow blower. And so into a special savings account I opened at my bank went both those revenues and any tips I may have earned. This meant less movies and pizza in the present, but now I could look forward to an easier snow season next year.

(I guess you could call this “long-term strategic planning.”)

The fact that I was saving to re-invest provided to me a very pleasant feeling; almost as if I had some “secret” --- a secret that everyone would see, come snow season --- and I was quite secure in knowing that I indeed had this machine coming on line.

I came to love business even more.

As soon as the snow season was over, I window-shopped a number of hardware stores, observing the various prices and features of their snow blowers. Even though no one had actually told me this, I knew I would probably get my best deal right then, at the end of the season.

After all, I too was a businessman.

I also learned another valuable lesson right then and there. Specifically, I learned that, and while buying a large capital asset such as a snow blower, you don’t want to negotiate with anyone but the owner. And not for the reasons you would think.

Take the world we live in today. Consider buying a large capital asset for your business. In this case, I would much prefer to negotiate with some middle manager or at least some other “corporate” type. Why? Because it’s not their money. And so they’re more than willing to give it away.

But when you’re a kid, the tables shift in your favor. This is because any entrepreneur or small business owner looks at a young person just starting out and remembers himself. And so these guys will give you a deal.

So, I bought my machine at an almost 50% discount from list. I took that baby home and counted the days until the first snowstorm.

And when that snowstorm came, I gleefully took my snow blower (and of course, I did not chase after any helpers, save my one friend with the requisite driver’s license --- this guy had real value --- he could actually get both me and my snow blower to Mount Lebanon) and went right back to my best customers.

The very first door I knocked on was a $15 driveway. Or at least it had been the previous winter.

I knocked on the door. Same old guy. (In fact, I think he was wearing the same clothes.)

“How much?” he barked. “Same as last year, sir, $15 --- for both the driveway and the sidewalk.”

“$15? I thought it was $10?”

“No, sir. $15. That’s what you paid me three different times last winter.”

He thought for a while, “Well, okay,” he said laconically. But just as he uttered those words, his eyes shifted almost laser-like. They were focused in on my new, wonderful machine, “What’s that?” his voice suddenly that of a lead baritone.

“That?” I said very cautiously, “Well that’s my snow blower. I bought it last spring, after the snow season.” (I kicked myself for giving him strategic information he did not need to know.)

“Snow blower? Why then, you should be able to finish my driveway in half the time. I’ll give you $7.50.”

Another lesson. Actually, two. First, keep the technology hidden until you cut the deal! I should have had the snow blower around the corner --- where he couldn’t possibly see it until after I had negotiated my price.

I also learned a lesson that has stuck with me the rest of my days, “At crucial points of a negotiation, he who speaks first, loses.”

So, and either by fright or the fact that I truly could think of nothing else to say, I just said nothing. In fact, I just stared at him.

And then after what seemed like ten minutes but was probably only a few seconds, he said to me, “Oh, all right … I guess I’d have to pay any other kid $15.00, snow blower or no snow blower. So, why not you?”

From then on in, I was very cautious about making my snow blower visible. (And more importantly, I adopted his “why not you?” rationale. From that day on, my standard response to someone complaining about my technology advantage was, “But sir, you’d have to pay that price to any kid. So why not let me get it done faster so you can get out of your driveway sooner?”)

The Last Business

My third and final entrepreneurial venture happened just a few years later. By this time, I was a junior in college. And that college was in “dry” Lawrence County.

You see, I went to a school (Westminster College) where, and when I started there in 1967, chapel was required five days a week with Vesper services on Sunday nights. I took twelve hours of mandatory religion. Shorts were not permitted in the library. Things like that.

And the women’s dorm? I swear, it had a minefield all around it. I think I once saw a foot and an arm just beyond the back door.

And not only was the college campus dry, the entire county was dry.

“See a need, fill it.” Can there be anything more basic to an entrepreneur?

Students drink. It’s that simple. To me, this was an opportunity.

So, I rented school buses. I also rented farmer’s barns (located in nearby “wet” counties, of course). And what would a college beer blast be without a cheap high school band? From there, it was a simple matter of marketing, and when you’re throwing a beer bust on a dry college campus, your marketing budget can easily be south of one percent of your gross revenue.

As the buses pulled up to my rented barn, I would have my hand out. Fifteen dollars for a couple, ten dollars for a single. All you could drink and (so long as it lasted) all you could eat.

(Note: There is a real art to taking four pounds of bologna and then slicing it so thin that, and when spread out laterally, each piece touching the next can fully cover a 10X4 foot picnic table.)

Students would pile off the bus, mugs in hand (yes, it was “BYOM”), elbowing one another in their rush to get me their cash.

Which is when I learned about cash.

Cash is beautiful. No one really ever knows how much you have. Thus, you have infinite negotiating leverage.

And, cash mesmerizes. I can’t tell you how many farmers I “sold” on my idea simply by displaying a wad of greenbacks.

This phase of my entrepreneurial training also taught me how to conduct guerilla marketing campaigns. Remember, the dean of students was very interested in knowing who was behind these “pop-up” parties.

Many readers of this newsletter already know that I run the entrepreneurial program at Duquesne University. As such, I am constantly talking to students about their student loans and just how much money they owe at graduation. The numbers they tell me are actually sickening.

Many, many students today are graduating college owing in excess of $100,000.00.

When I graduated from Westminster, and in part because of the aforementioned business but also because of other profit-making ventures, I had some $36,000.00 in cash in my bank account.

Not a bad way to start out. It gave me time and freedom to truly choose the life path of my liking.

Among other things.

There it is. The beginning. The first time I’ve ever told those stories.

Submitted because I thought that you might truly enjoy a glimpse into the entrepreneurial ventures I undertook before I started doing entrepreneurial ventures.

To you entrepreneurs reading this, I doubt you’re at all that surprised. But to those who are contemplating entrepreneurship, let me just say that you will be awarded many bonus points and you will increase your likelihood of succeeding if you have somewhere in your background “war stories” similar to these.

I say this because it seems that most successful entrepreneurs have these kinds of ventures somewhere in their past. It’s one of the reasons why I believe that entrepreneurship, and while it can be taught, is best taught to those who have certain “factory- installed” tendencies.

I don’t know if I’ll tell any of these stories when I accept my award tonight, but I know I’ll be thinking about them. That, plus the fact that it seems like it’s only been about twenty minutes since I was actually conducting them.

Ron

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