How Does an Entrepreneur Actually Start Out? (Born that way?)………………by Robert M. Katzman
© January 13, 2012 (Revised June 1, 2014)
I never received an allowance as a child. I always had to earn it myself. So, I was motivated to learn how to do that.
At age five, I dragged a red wagon behind me, walking about half a mile to a vacant lot across from a high school where I discovered there were seemingly endless empty pop bottles thrown there by the students, which I could collect and deliver to my nearby drugstore for instant cash, at two to five cents per bottle. Many of the bottles were broken and it was risky to go after the good ones, but I felt the reward was worth the risk. Evidently, no other kid did. I had the bottle harvesting market to myself, in 1955. Learned, at five years old, that there is money to be made almost everywhere if you are astute and can evaluate the risk, reasonably.
I also taught myself carpentry at age five, being the grandson of an immigrant carpenter, and built a tree house in my backyard. Later, an actual small boat which I briefly sailed in Lake Michigan. I had a large collection of tools and after hammering my fingers a number of times, became well-versed in using them.
Two years ago, at age fifty-nine, when I reopened my collectible periodical business with no funding whatsoever, I built all 700 running feet of shelving by myself. It took me seven weeks, always working alone. You never know what skill you learned long ago that will save the day some future time when you have no other options open to you.
At age twelve, in the winter of 1962, I went from door to door asking homeowners to pay me to shovel their snow-covered walks. It took me three houses to establish the going rate, which I didn’t know when I started out, and that older women were far more likely willing to pay for my services than older men. I learned that gender really matters when I wanted to sell something. After shoveling my way all around the block, I decided it was much more work than the money was worth, decided to find something else and never shoveled for pay again.
At age thirteen to fourteen, I was dating a cute girl from down the block whose father, I discovered, worked for Whitman Publishing Company in Wisconsin. They produced the well-known “Red†and “Blue†Books, which were widely respected by coin collectors to establish the retail and wholesale price of coins. They also made the blue folding coin-collecting boards that actually held the particular coins found in chronological order, with the missing dates printed below each spot to tell the collector what to look for.
I bought all three items wholesale from my girlfriend’s dad, Carl, a Russian immigrant, who was very amused that I thought I could actually run a business while still in seventh grade. I felt I could sell the books to my classmates when coin collecting was becoming a mania in America because of the newly minted Kennedy half-dollar, after he was assassinated the year before. Then, gradually, I became a coin dealer myself, to supply my customers with a reason to buy my coin folders and books. I subscribed to two adult coin newspapers and educated myself about the history of coinage, and what was worth how much, and why. Also I learned about grading.
As I began supplying more and more students with coins and supplies, my own collection began growing. When the boys lost interest in collecting, I bought their collections at wholesale prices, sometimes less than that because it was a buyer’s market in grammar school.
My own collection, logically, skyrocketed in quantity and value. When I graduated grammar school, I stopped collecting, boxed up my collection and hid it away, to sell for some real emergency in the future. By educating myself completely about what I was doing, I knew the actual value of what I had and what it was likely to be worth in the future. I learned the value of targeting my education. My girlfriend’s father stopped laughing when the money I earned from my sales was spread over his kitchen table. My success changed his perception of me. That’s usually been the case. I always had to prove myself to disbelieving people before they would help me.
At the same time, in 1963 at thirteen, I also found a cooperative druggist who (illegally) agreed to sell me Playboys for fifty cents each. I cut pictures out of each issue and sold them one by one for various prices, depending on both the kid and the picture. Almost fifty years later, I am the last store in America with a complete collection of 695 issues of Playboy and I sell back issues to collectors almost every day. However, I no longer cut the pictures out. The adults don’t like that and you have to adjust to your market’s desires, as it gradually mutates. Today, in my collectible periodical store, I have twenty thousand Playboys in stock.
I might add, in reflecting upon this long ago transaction with the friendly druggist, that it was he who was breaking the (small) law in selling me the Playboy. Not me making the purchase. Playboys weren’t drugs.
I left home at fourteen and started a newsstand with a good friend from my grammar school, Richard Munden, after my freshman year in high school. I built the newsstand myself, because I had no money to buy one. I used scavenged wood from construction sites. I had an old bicycle and was mobile so I could find out where those sites were. The only thing I had to buy were the metal hinges for $2.00.
Twenty years later, in 1985 when my decades-old newsstand business closed in Chicago’s Hyde Park, I sold my teenaged coin collection for enough money to create a mail order poster company to sell international posters, giving birth to what I am still doing today.
In the politically turbulent Sixties, specifically 1967, along with that same old friend from grammar school, I bought thousands of protest buttons to sell to my more financially independent classmates at the University of Chicago Laboratory High School, with the school’s blessings because they admired my “entrepreneurial spirit”. They gave me two weeks to sell my buttons. My friend in Bowen, however, a Chicago public high school on the old South Side was discovered selling the controversial buttons to his classmate and was suspended from school. I am still selling buttons, forty-five years later.
The difference in our situation? I learned earlier that people in authority liked to be asked for permission to do something. It is a way of their manifesting their power over someone to say yes, from someone who really needs that “yesâ€. It also depends on how you ask them for what you want to do. I showed my respect to their position and gained their approval. What I learned about dealing with people in authority while in high school served me very well in navigating Chicago’s incredibly corrupt political machine which controlled my newsstand license.
I learned who to pay off, how much and how to find a local political power to protect me and control how much my payoffs would be. I learned at sixteen that corruption in local government was absolutely everywhere, and my knowing how to navigate that fact gave me at least some control over my vulnerable business and how to survive within the Chicago power structure.
The lesson? It doesn’t matter how pure you are in every way. Look what happened to Jesus Christ. You have to learn the real life situation before you decide to buy or open a new business and if the risk is worth the reward. You don’t want to ever be blindsided because you didn’t take the time to find out the invisible political local realities behind the seemingly secure surface. Criminal corruption is a cold hard fact and should never be discounted in making your plans.
The owner of the shopping center where my newsstand was located asked me and my father if we would be interested in opening a bakery in a small 740 sq. ft. space that apparently was unappealing to every other prospective renter. We immediately agreed despite the fact that no one in my family, particularly us, had any experience with food, restaurants or anything related to that. We both felt that was a minor obstacle and weren’t intimidated by our ignorance. It was 1969 and I was 19.
Over a two-month period, we immersed ourselves in initially bakeries, but then swiftly saw there was no way we could make enough profit to sustain a retail business. But opening a kosher deli would work, in terms of margins. I eventually apprenticed myself to Sinai 48, a kosher meatpacking company in Chicago’s former stockyards area, at 39th and Pershing. I learned to use a meat slicer, how to take it apart, clean it and reassemble it. They were going to supply us if our plan took flight, so they made a significant effort to help me learn the ropes. They also taught me how to make circular and attractive party trays with different kinds of meat.
The self-education effort continued with my father learning about other suppliers of different kinds of traditional Jewish food, paper and utensil sources and anything else we could think of. I signed the lease, laid tile, painted the walls and wrote the advertising while my father negotiated with suppliers of refrigerated display and storage cases. I paid cash for everything we needed ($8,501) with my newsstands profits, opened in mid-June 1969 with no debt and considerable publicity because of the oddity of my owning newsstand AND a kosher deli, a very exotic combination. I named the deli “Deli-Dali” and it was immediately popular, not in little part because we were located across the street from a major high school.
We soon encountered two very large men, very serious men, who informed us that we were all going to join the Retail Clerks Union immediately, weren’t we? After a heartbeat we instantly agreed that was a wise decision and we’d be delighted to join. Satisfied, they told us the paperwork would soon arrive and they left. Neither thanked us or left us a card. We never did learn their names.
A few days later, another group of large men walked into the deli at lunch time when it was filled with people, shooed everyone out and informed us they were from the Chicago Department of Health and Sanitation. The guy obvious who appeared to us to be in charge of the situation then locked our door from the inside, placed a “Closed by order of The Chicago Health Dept.†sign on our window, then turned to face us and without moving a step, looking at anything or even asking to see our Chicago Food Dispensing License, smiled broadly at my dad and me and said, quietly,
“Two hundred dollars.â€
Understanding the situation for what it was, we immediately produced ten twenties which disappeared into the pocket of his very nice coat. He smiled again, told us he’d be back about the same time next year, turned and removed the sign from our door, unlocked it and all of them left. The swarm of curious kids who had been shooed outside immediately marched back in and the day went on. No one else from the city bothered us. We were clearly wise and cooperative deli operators very concerned about properly running a safe and healthy operation, plus we were respectful of City Officials, too and that was important. Why bother us?
After six months I decided that the food business wasn’t for me, and gave half the business to my father and sold the other half to my uncle to be paid out over time. The overall return on my investment for the six months I worked there was 300%. The place made money for years and was the first time my father was successful in business. Sometimes the returns on a risky situation are not all measured in money. I took my cash from the sale and bought another newsstand, which eventually became five retail stores across Chicago.
A couple more unusual results from my deciding to open a deli in Hyde Park, Chicago: Only a small number of our customers were Jewish. The vast majority of them were Christian and/or black. Even though I was no longer involved in working for the deli, if my Dad’s Lazy Susan person failed to show up for work possibly because of Mr. Budweiser, he knew he could call me at the last minute and I’d run across the parking lot to swiftly and expertly assemble the components for his impatient customer. He needed the back-up and my time spent at Sinai 48 learning how to make party trays wasn’t wasted or forgotten. He charged his customers a the normal labor fee, but I never took any money from him. Just love.
Lastly, organized crime is an invisible world living all around us. What is offered there can be very seductive. Unlike the movies, you never, ever want to believe you can be friends with criminals or ask for help from them when there are no other legal options. They help you, and then they own you. Remember that. There is no way out of that situation. There is nothing called friendship in organized crime. It doesn’t exist.
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