Bold strokes

Restless entrepreneurs

Tom Hunt, Anita’s Cocina
Wickenburg, Ariz.

Tom Hunt spent years working odd jobs in construction and landscaping and at local golf courses as a laborer in and around Wickenburg, Ariz. His wife, Sherry, would wait tables at night after tucking in their five young kids. When Tom discovered that they both harbored irrepressible entrepreneurial urges, he started his own electrical contracting business in 1980. About ten years later Anita’s Cocina, the Mexican-style family restaurant where Sherry had worked for five years, went up for sale. She wanted to buy it, but the ramshackle place desperately needed renovations.

“It was a big risk, money-wise,” says Tom, now 46. They’d bought the restaurant with a $10,000 two-year loan from a friend, which required a co-signature from Sherry’s grandfather. Then the Hunts borrowed another $10,000 to stock the kitchen with food. Their money was so tight, Tom recalls, that “my wife didn’t have $100 to open the cash register drawer. I’d lend her $100 from the electrical business and she paid me back that day.”

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So began a powerful business partnership that would involve four other family members. At night Tom pitched in with demolition, electrical and carpentry work to double the seating capacity at Anita’s. By day, he built their own home while continuing to provide electrical contracting for other houses under construction. Meanwhile, Sherry, now 41, worked days at the restaurant. Rarely were they both home together with the kids.

As things turned out, the Hunts paid off one loan in 11 months and the other within a few weeks. And that success emboldened them to take bigger risks. At their peak, Tom and Sherry and a small army of relatives they enlisted ran four different businesses simultaneously: two restaurants, a retail shop and Tom’s contracting business. Tom, a nephew, a cousin, and Tom’s son Scott, now 25, do hands-on electrical work in the contracting firm. Anita’s Cocina employs their 19-year-old son, Eric, plus Sherry’s mother, Clemie, who is the cook, and Sherry’s sister Tina, who waits tables. Raspberry Patch, a country gift store, was Sherry’s baby until the family sold it last year. In the interim, the Hunts bought two other run-down local restaurants—the Cowboy Café and March Hare—refurbishing both and later selling them.

Each home where the Hunts have lived has been bigger and better than the previous one. “We started with a 1,400-square-foot house,” Tom says. “Now we have a 2,400-square-foot home with a swimming pool. I couldn’t pay interest and rent. We moved six times in two years—once on Sherry’s birthday. She wasn’t too happy about that.” But all that judicious moving, he says, will help them own a home free and clear within three years instead of 30.

After running at this pace for more than a decade, the Hunts finally seem ready to slow down. They say they plan to keep operating the electrical business and Anita’s Cocina at least until the youngest kids are grown, to see if they want to take it over.

They’ve lived in the same house now for six years—a record. Now Tom says he’s itching to build once more, on 14 acres he and Sherry just bought.

Heavy metal

Jane Perlman, Louis Perlman & Sons
Pittsfield, Mass.

When Jane Perlman took over the Louis Perlman & Sons scrap metal recycling company after her uncle died in 1988, she approached the business much like a social worker and a former rock singer with a high local profile—which she was (See “Getting Off the Daughter Track,” FB, March 1990). Her experience in the for-profit sector so far seems to suggest that virtue is its own reward.

Because the local plastic-bottle redemption center was going out of business in 1991, Perlman took her husband’s suggestion to provide a local place where consumers can collect the five-cent return. “It was a fiasco,” Perlman says with a laugh. “We had these 80-year-old men coming in with 40 cents’ worth of returns. They were tying up my operation so that people with hundreds of tons of metal couldn’t get through.” Then she had to spend two weeks separating the Pepsi, Coke and 7-Up bottles. Some people who claimed to bring in 100 Sprite cans had stashed 30 or 50 non-redeemable Lipton cans inside. And once the cans and bottles were finally separated, someone broke into her trailer and stole them all. Perlman figures she lost $686 worth of bottles and cans, not to mention the cost of hiring two part-timers to sort them out.

But that experience didn’t douse Perlman’s altruistic fires. After local farmers informed her that people were dumping old appliances in their fields and behind nearby malls, she invited residents to drop off their used stoves and washing machines to her, forgoing the customary charge (15 cents a pound, or $5 to $25 per appliance). “I just wanted to help the community, though I could make a killing if the price of metals ever goes back up,” Perlman says. “I didn’t intend to make money on it.” So far, she hasn’t.

Another favorite Perlman innovation involves offering tours of her facility for second-graders, which she’s been doing for a decade. “I like having little blue-collar girls and boys see a woman boss operating cranes and fork lifts,” she says. “Some of them say they can’t wait to tell their dads, who are mostly construction workers and gas-station attendants, about this. It helps prevent them from pigeon-holing themselves and broadens the possibilities of what they can do. It also helps kids see recycling in concrete terms—like what happens to bathtubs and steel doors.”

Perlman recently launched a materials exchange program. For instance, her yard lets a toy company and the local newspaper unload their used pallets, which her firm uses to ship copper. “I don’t know where I got that one, but I started swapping things,” she says. “You know, one man’s junk is another’s treasure.” This gesture didn’t add much to Perlman’s bottom line either, but it did elicit an invitation to join the board of the nearby Center for Ecological Technology, which expanded her idea into a county-wide, computer-based used materials exchange. Although no cash changes hands, Perlman has reduced her own garbage output from four pick-ups a month to one.

With five full-time employees and dwindling annual sales ($500,000 last year) due to the declining price of metals, Perlman hardly can afford the distraction and cost of these do-good projects. But she insists that recycling is simply the philosophy by which she runs her business. “What goes around, comes around—with recycling as with the rest of life,” she says.

Drumming up psalm business

Bill Shorney, Hope Publishing
Carol Stream, Ill.

Hope Publishing was launched in 1892 on the religious principles of its Methodist founder, and for a long time the company successfully stuck to its knitting: publishing church hymnals and sheet music for choirs and handbells. After three generations it needed just 20 employees to generate $3.5 million in revenues annually. Then ten years ago the third generation took a stab at secular school music and hit a sour note.

“We thought, since we were set up as well as we were with dealer relationships, it would be a natural,” recalls Bill Shorney, Hope’s third-generation president. Hope proceeded to buy a choral music publisher that had ample existing inventory and retained its key employee to maintain some continuity and help Hope penetrate the secular music market. But it didn’t work, because Hope Publishing hadn’t done its homework.

Had Bill, now 65, and his brother, George, 69, delved deeper into market trends, they would have found that school chorus groups were into singing hip, popular music—not the old masters in Hope’s new division’s inventory. “The music we brought probably would have sold 20 years ago,” Bill laments. Hope paid off the head of that operation, folded it after a few years and took a charge to inventory.

Chastened by its foray into secular music, Hope is steering clear of the new pop contemporary Christian music finding its way into the church. “We learned to stick to our regular niche,” Bill says. “And we’re doing very well at that, still.” All the family owners (Bill, George and their sons Scott, John and Steve) sing in their respective church choirs, though they belong to different mainstream Protestant denominations. The company publishes music by living lyricists, who either compose original melodies or rely on traditional tunes that are used by churches in both traditional and contemporary worship services. Bill says the company’s three editors pay careful attention to the lyrics, to ensure they’re wholesome and Biblically correct.

“It might be salable,” he says, “but if it doesn’t have our principles behind it, we’re not interested in publishing it. Maybe that was part of what went wrong with the school thing. This is definitely a spiritual thing for us.”

Hot on the trail

Fran Roberts, Long View RV Rentals
Hatfield, Mass.

Fran Roberts was a 19-year-old college freshman in 1959 when he borrowed $600 from a bank to start a recreational vehicle dealership as a way of paying for his college tuition. Actually, he points out, there was no such thing as an RV in those days, and Roberts wasn’t an avid camper himself. But his few ventures into the wild had convinced him that campers needed to get their sleeping bags off the rocky ground.

“I saw a few folding camp trailers on the road and wrote letters to all the manufacturers of semi trailers in the U.S.,” he recalls. “I didn’t know who else to write to.” His only response came from the maker of Apaches, which required a purchase of only three of its camp trailers to launch a franchise. Roberts bought three fold-down Apache camp trailers at $200 apiece and re-sold them for about $350 each.

His parents, who operated a souvenir shop at a three-state lookout point on the Mohawk Trail in northern Massachusetts, thought he was crazy, Roberts recalls, but “I kinda felt it would work.” One reason it worked was that he had no overhead: His parents allowed him to sell his trailers on the lawn in front of their shop. He sold eight trailers in his first year, 25 in the second. By the third year, when he was a college senior, he sold 100 camping trailers and netted $10,000, the equivalent of $59,000 today.

Roberts and his wife took over the souvenir shop in 1964 and ran it for 18 years while they built their dealership. Although Roberts, now 61, has since inherited the property, he had no interest in selling souvenirs and leases the store to someone else to run. “I had to have a little more action than that,” he says.

His appetite whetted by his success, Roberts moved to his own site in Hatfield, Mass., in 1983, borrowing $100,000 for five acres that opened just before the stock market crash of October 1987. But the gamble eventually paid off: That land today is worth $750,000.

In 1993 Roberts purchased a second location in Windsor Locks, Conn., now run by his son, Frank. The two sites gross $30 million a year from a combined inventory of 300 units, which sell for anywhere between $9,000 and $450,000 a pop. “Just dumb luck,” he muses. “I’m as much surprised today as anyone.” His latest gamble: Roberts recently purchased a bowling alley adjacent to the Connecticut dealership, which he plans to gut and use as an inside display area so customers can shop for RVs all year round.

Giving up control

Josh Wormser,The Wormser Company
Northbrook, Ill.

After nearly 30 years of making and marketing private-label and licensed children’s sleepwear products to mass market and specialty stores, in 1999 Ed Wormser and his son Josh spent $2 million to acquire Salant Children’s Wear. Then the Wormsers recently turned around and sold 80% of their privately held company’s stock to an investment management firm for $7.5 million.

Bold decisions? As executive VP Josh, 30, describes it, both actions were logical and inevitable.

“We decided one of the easiest ways to grow and get into new products was through acquisition,” says Josh.

The Salant purchase enabled Wormser to add the Dr. Denton’s sleeper line to its approximately 25 licenses with major entertainment companies like Warner Brothers, Marvel, Sony Pictures, Universal Pictures and Disney. It also gave Wormser an entrée into the infant and toddler markets after specializing in boys’ and girls’ sizes. And Salant’s and Wormser’s factories were both in Tennessee, just 30 minutes apart.

Salant was “a business we understood,” says Josh. So when Salant’s parent decided to sell its division, Josh was quick to approach his father, Ed—the company president—with the idea. “He didn’t need much convincing because we paid very little,” Josh says. “Salant was going to liquidate if we didn’t buy that division. If we had had to pay a multiple of earnings, or if we had had to buy Salant’s other licensed sleepwear business, such as Joe Boxer, it would have taken a lot of convincing because we would have had to run that part of the business out of New York.”

Despite some initial culture clashes, the acquisition worked out well, adding about 30% to Wormser’s volume with almost no extra overhead. It worked out so well, in fact, that Wormser became an attractive acquisition target itself. Ed and Josh decided not to resist their fate.

“Maybe selling was outrageous,” Josh acknowledges, “but it was an absolute no-brainer. My father has been in this business for 30 years. The environment is a lot different now than it was 30 years ago. Profit margins aren’t as high, and the way he learned to do business isn’t necessarily the way business is done today. My father is great at sales and design, but he’s not an operations guy. At his stage in the game, rather than reinvent himself, he decided he’d rather take his chips off the table. Today you have to tighten the screws to make money. He didn’t want to do it.”

For that matter, Josh admits, “I couldn’t do it, either.” Today, by contrast, “We’re owned by a fund that’s hundreds of millions of dollars. They can come up with money to buy a new business in ten minutes. These guys have banking, industry and factor relationships. And new people who leave other positions feel more comfy working here if they know there’s more money behind it.

“I think my future here is much better than it was before. There’s nothing like working for your family when you love your family. My father and I have a relationship that not many in business have—we’re best friends. But now I’m working with people who are motivated and who have resources to make it happen.”

Keeping death in the family

Michael Meierhoffer,Meierhoffer Family Funeral Service
St. Joseph, Mo.

Deciding whether or not to keep the 107-year-old funeral business in the family was the boldest action Michael Meierhoffer, 56, recalls initiating. His two sons—Scott, now 32, and Todd, 28—both had business degrees and were weighing their future options.

“I mentioned to them there was no predestination involved,” says Meierhoffer. “We were able to do anything we wanted to do.” But when his sons decided to stick with the business, the nature of the business changed dramatically. Meierhoffer and his sons decided to grow more aggressively. In just two years, the company has acquired five existing funeral homes, including three locations across the state line in Iowa. This involved taking on substantial debt for the first time.

Owning and operating mortuaries several hours away from home base was a radical departure, too. “It’s easier for those close by, where we can use our already existing infrastructure—people, equipment, facilities,” Meierhoffer says. The Iowa mortuaries, by contrast, operate on their own. “But opportunities present themselves in different ways,” Meierhoffer figures.

The gamble seems to be paying off. The acquisitions helped the company’s revenues to grow about 60%, to roughly $3.75 million. The acquired mortuaries seem better off, too. “Most of these people are starving for guidance, vision and training,” Meierhoffer says. “Once they see our management style, they become more open.” For instance, the Iowa funeral homes previously had an absentee owner, so the manager was frustrated over his limited opportunities to grow professionally and financially. “This opportunity came for both of us at the same time,” Meierhoffer says. “He was young and ready to leave. By giving him some ownership, it’s worked out perfect.”

Jayne A. Pearl, based in Amherst, Mass., is a regular contributor to Family Business. She is the author of Kids and Money: Giving Them the Savvy to Succeed Financially (www.kidsandmoney.com) and co-author of Keep or Sell Your Business: How to Make the Decision Every Private Company Faces.

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