A formula for success

FLORIDA WEEKLY PHOTO Scott Ellington and partner John Shaffer of The Whistle Stop Ice Cream Shoppe in Lakes Park. Statistics being what they are — undependable signposts that can be pointed conveniently in different directions — most small-business owners probably acknowledge this figure from the Small Business Administration, without being dissuaded by it: About half of all new businesses will not survive five years.

On the other hand, says the SBA, 44 percent of those that hire employees will make it to the four-year mark, at least.

One thing is fairly certain no matter what the statistics show (even the discouraging 13.9 percent unemployment rate reported last week in Lee County): Starting a business requires care, planning, imagination, capital, and a good, timely idea. Warehouses of copy have been written about it, and battalions of experts have waxed wise about it.

VALENTI Here, Florida Weekly seeks to avoid all that, along with the statistics. Instead, we offer the reflections of men and women who have tried and so far succeeded in business here in Lee County.

We describe them as “elders” not because of their ages, but because they have either carried on through the recession, kicked off their businesses in it, or (in one case) helped businesses move through the hard economic times.

What they say is not what you might expect.

Scott Ellington, for example, talks about sleep. A virtuoso clarinetist in his other life, Mr. Ellington has added the most inventive food concession ever to appear in a public facility here — the indoor Whistle Stop ice cream parlor and restaurant at Lakes Park, which compares favorably, say, to the concession at the skating pond in New York City’s Central Park.

“You better sleep a lot before you jump into a new business,” Mr. Ellington warns. “Whatever time you think it’s going to take, multiply that by five. We went into this with a full staff of employees (about 10), so we didn’t put ourselves on the shift schedule. But that’s changed. Sleep is something we used to do.”

ELLINGTON Mr. Ellington and his partner, John Shaffer, also manage the concession of rented cycles and paddle boats — but all that isn’t enough, apparently. So they imported almost 45,000 pounds of hardy Canadian pumpkins, delivered to Lakes Park in a super stretch semi-truck for the Halloween season. That created a huge additional workload for them, about which Mr. Ellington comments below.

Tom Cronin, owner of The Shell Factory, advises that entrepreneurs learn how to avoid squandering their emotional energy, if they want to succeed.

The result leaves Mr. Cronin sounding like a practical preacher — and if the proof is in the pudding, then his success at The Shell Factory is good reason to listen to his sermon: “I’ve eliminated the word ‘hate’ — that’s spelled H -A -T - E — from my vocabulary, because it takes too much effort to hate anyone or anything,” he says.

COURTESY PHOTO Scott Ellington and partner John Shaffer of The Whistle Stop Ice Cream Shoppe in Lakes Park. Bill Valenti, who picked the single most eventful and difficult decade in recent U.S. history to found Florida Gulf Bank in February 2001 — Mr. Valenti is president and CEO — calls this “the most challenging time in the last 40 years” for businesses.

But he also offers some sage observations based on his four decades in the banking business, which he stumbled into fortuitously after studying history.

DAY And Mark Welker, who has spent several decades as a CPA and small-business consultant, is now completing his Ph.D. dissertation with research into the way personality types can either destroy a business or enhance it. He notes that a business venture can be nearly synonymous with life itself — at least for owners who put their hearts and minds into it.

“What many people don’t understand about business is, if it doesn’t work it can be lethal,” he explains. “It can destroy your health, your life, your marriage, your kids.”

Some manage to avoid that.

Gail Day, who opened her family hairstyling shop just east of Buckingham Road on State Road 80 two years ago, has made her business work by following her very own simple advice, which comes in only four words: “Don’t go into debt.”

None of this, perhaps, resembles the vision of Lee County’s Economic Development Office, which offers a decided whiff of pre-recession boosterism in its rosy online view. As their writers put it about starting a business here, Lee County is “the icing on the cake,” with low corporate income taxes, no personal income tax and an educated workforce — along with 50 miles of fine beaches.

WELKER Here, they conclude, “the beach shakes hands with the boardroom.”

Well, maybe. But the elders, as we’ve called them, probably haven’t spent much time at the beach, lately, because they work too hard.

Here are some of their thoughts.

  

>> Bill Valenti, president and CEO of Florida Gulf Bank:

 

Disaster occurs in one of two ways.

Somebody turns a vocation into a business without realizing that even though you’re good at cooking or carpentry or something, you also have to think through the process in business the process in business terms. Just because you can fry eggs and bacon doesn’t mean that people will come to your cafe every morning.

Or — and this falls into “the worst approach” category: People will start a business with a good idea, but with no finances. So they borrow on their credit card, then open their business with $20 in the cash register, and they think the world will beat a path to their door.

The most successful business people sit down and say, “Let’s give a lot of thought to what it’s going to take to be in business for five years.”

The thing that always amazed me here at the bank is that I have people come in with a great idea and a little capital, but invariably they never provide me with a cash flow (plan).

That’s not some elaborate fancy instrument. Somebody just has to say, “I’m going to write January, February and March at the top of this paper, here. Then I’m going to write two categories: Money Coming In and Money Going Out.”

People who do this should be realistic about what will happen for a period of months or a year, or even two years.

But many overestimate the income and underestimate the outgo, and they fail.

Here’s one recommendation: I don’t read many how-to business books, but when I had the idea to start this business, somebody recommended the Jim Collins book, “Good To Great,” and I read it. This helped me overcome an objection I’ve always had about business, or a question, which is: “How do you distinguish yourself, how do you make your eggs and bacon different from the eggs and bacon of the guy down the street?”

You have to learn how to do that.

>> Scott Ellington, clarinetist for the Southwest Florida Symphony, the Palm Beach Symphony, and the Palm Beach Opera orchestra; adjunct professor of Music at Edison State College; and co-owner of The Whistle Stop ice cream parlor and restaurant in Lakes Park, along with the park concessions and the Halloween pumpkin patch:

The hardest thing about going into business now is trying to get a little financing from the banks, either national or local, to help to support your idea.

We weren’t able to. So when we went into the (rental) bikes, we were pretty nervous. It was quite a sum of money, which the previous owner financed. But we ran the numbers he was doing, and we had ideas about how to improve business and drive more customers in there, so we felt confident we could make this work and improve his bottom line.

We’d looked at all kinds of “bread routes” — funny things. One of the businesses we looked at was refilling air fresheners in bathrooms, for example.

We were concerned at first about working with the county. The county has a right to terminate us with a 30-day notice, but we had it written into the contract that if that happened, or a hurricane hit us, we had a grace period, so payments going to the previous owner would stop.

We put down a lot of money, our money, and we said, “This is what we’re risking. We could lose these tens of thousands of dollars and our time — but we think we have enough going to do this.”

As the economy was going down, our business was going up. Our rentals alone were up substantially.

But we had to go through a whole bidding process to get the contract for the ice cream parlor. There were sealed bids and steps — three different steps — and you had to show up at mandatory onsite meetings. We went from there and put together our expertise, along with a whole booklet that explained our concept for the ice cream parlor.

We brought in David Zimmermann, the owner of The Royal Scoop ice cream in Bonita Springs, sort of as a consultant, and we use his homemade, high-quality ice cream. And we also convinced the county it should be an indoor parlor, not an outside-at-the-window place, like you’d get at a ball game. And we spent extra. The tile floor alone was $4,000, but we felt it needed it, like an old-fashioned ice cream shop.

So now we have the bikes, the ice cream parlor and vending, and now the pumpkins.

That’s been a big learning experience, the pumpkins. We had record heat for two weeks after we got the pumpkins, and we had almost 45,000 pounds delivered in a super-stretch semi, straight from Canada (onto the ground at Lakes Park). We had to scramble and get them up on pallets. And we bought that sunshade stuff to put over them that cuts 75 percent of the sun, so now they’re selling.

The way we went into this, we took on the shock-and-awe type of strategy. Instead of buying a few at a time, we had one huge delivery.

Would we do it differently next time? Yes.

Did we achieve shock and awe? I think so.

But it’s all quite a juggling act, especially with my music. My family has to have a lot of patience with me. My kids love coming to the park, so that helps.

>> Gail Day, owner of Gail’s Family Hairstyling, a business she opened two years ago, at the beginning of the recession:

I think there’s probably a difference between the way men run a business and women run one. I make judgments more from the emotional side, and a man may be more black and white in his decisions.

So I run it differently than a male owner might, and that means, for example, I might not let somebody go as quickly as I should, sometimes.

But my main advice for anybody trying to start a business is: don’t go into debt.

For example, when I started in here renting this place, it had carpet on the floor and it was just a bare bones room.

A friend of mine put the wall up, I had electricians come in, so I did pay for that, and somebody else put in all my cabinets — I actually bartered for them, and I guess that guy will have free haircuts for the rest of his life. He comes in whenever he wants one, which is fine. And my old boss, John Yeoman, lent me his barber’s chairs.

But when it came to the carpet, I really wanted to have the $4,000 tile floor, but I didn’t have the money. So I went ahead and said, “All right, let’s just paint the concrete.” I ripped up the carpet myself, scraped the glue off the floor with a machine I rented, and painted the floor. And it turned out great. That was a total of about $200 and my time, instead of $4,000.

I don’t regret opening my doors when I did. My mother told me, “Don’t be afraid, Gail. What do you have to lose?”

Well, there’s a lot you can lose if you go in over your head. The rent itself was a big chunk, and it’s a scary step. You just open the door and jump out of the plane, and you hope that what you have is a parachute, and that it opens.

If somebody had said to me when I decided to open, “You know Gail, we’re in a recession,” I would have said, “REALLY?” I had no clue. I just wanted a place to work, and I didn’t want to work for anybody else.

If I survive this, I’ll be able to retire in 20 years, when I’m in my early 60s. Right now, I don’t see retirement in my future. There’s no way to save right now. It takes every dime, nickel and penny you can scrape up to pay everything. Once, when I was working with John in the old Twistee Treat (on Buckingham Road), guys came in every week or two for haircuts. That doesn’t happen now. Now, it’s every two months.

So what do you do? You make do.

  

>> Mark Welker, a longtime CPA, now spends most of his time coaching businesses to prosperity as president of Business Performance Insights: Performance on Purpose. He is also completing a Ph.D. in human resources development, which he describes as understanding ways personalities can be used or misused in business:

In troubled businesses, I started to understand that the problems were with the numbers, but the solutions were with the people. I studied organizational lifecycle theory, and began to apply it to business.

An owner’s values and the owner’s behavior really are what create the culture of that business. And if that culture is not amenable to making certain essential steps that move the business from infancy to adulthood, you’re going to have a problem.

Businesses follow a cycle that takes them first from birth through infancy to the go-go stage — that’s when an owner starts to have a lot of success, and attributes it all to himself, and then goes away to Dallas for the weekend and buys another company. Then he has to have a management plan to mature, and most of them never pull it off.

The next stages are adolescence, and then prime and then stable.

Most businesses are started by people with technical training who create a business that does what they do. It’s those skills and behaviors they can use for a good startup that’s successful.

When most people do a business plan, they don’t do a road map of what’s important to make it successful. That’s not what business plans usually do.

But I’m talking about a personal document, an owner assessment. If you do the things and watch the things on this page, it will happen.

The owner assessment has to do with profiling, to examine the behaviors and values of the owners and take an inventory of their management skills and capabilities.

I’ve learned that there are certain things owners will do, and certain things they won’t, depending on their personalities — on their behavior and values.

There’s an introverted task—oriented style, and an extroverted people-oriented style.

Let’s say I have an owner who is very people oriented.

(Research shows) that such a person is going to be more reluctant to make the cuts they might need to make to save the business. And they also will not set expectations for their employees at a high level, because most of what they can accomplish comes from how they can relate to people.

Then you have task-oriented owners who have similar problems, but in a different area.

Let’s assume I’m a very directed person. It’s my way or the highway. I know what needs to happen, it’s my business, and you either have to do it this way or it doesn’t work.

If I’m that kind of person, as the business gets to the other side of that continuum (in which that personality has achieved as much with that approach as it can), I have to grow a management team so the business becomes something besides me. And that requires a very collaborative nature.

If I can’t pull off the collaborative nature, my business will stay where most businesses are, which is not ever making that jump to something better.

This is the point when companies have to go beyond the owner as a sales team, when companies have to grow. If they can do that, they’ll succeed.

It’s an adaptation. It’s not changing your behavior or personality type. That’s what gives a business what it needs. Your behavior and your values, in essence, are your management style. But I’m here to tell you, it’s not thought about like that. 