Could it be the end of the road for Looks Good on Paper?

[Looksgood]

Two years ago I embarked on a venture that conventional wisdom says is next to impossible, to start a retail/service business with no capital. I had skills, equipment, persistence, and a willingness to work long hours (which are, of course, capital of a sort) but virtually no money. Other than a $5,000 loan from a friend, the business has been self-financing from day one. Sadly, this has not proven to be a sustainable business model. There are several reasons for this.

Everything is more expensive when you do not have money; you cannot take advantage of good deals when they are there; you have to buy only what you actually need. You buy in smaller quantities, which is more expensive. You pay rush charges because you could not stock up in advance, and need something in a hurry to fill an order. And sometimes supplies are simply not available when you need them. You pay overdraft charges because you are always close to the edge, and sometimes slip over.

Another important area that gets neglected when you have no spare money is advertising. There is no question that advertising pays, but you have to put out quite a lot before you see much return for it. So if you don’t have a lot to put out, you tend to skimp on the advertising.

Equipment needs replacing, especially as another easy way of saving money in the short term is to skimp on servicing. My main printer that generates a large portion of my income reached the end of its useful life and I had to spend $2,500 to replace it. Had I not replaced it, I may as well have closed the doors right then.

And then, let’s face it, I am not much of a businessman. Paperwork and organization, and especially legal and financial matters are things that I find it impossible to keep track of. I have observed that money-handling skills in particular are regarded as a kind of virtue (as distinct from a mere convenience) in our culture, and the lack of them is seem as being somehow immoral. In any case this lack makes it hard to be successful in business.

Some of these failings would not be a problem if this were not a one-person business. If I do not do it, it does not get done. Consequently the things I enjoy doing get done, and the things I do not enjoy doing get pushed aside. It is not that I enjoy chaos; I would much prefer to work in an orderly and well-organized way. It is not even that I am incapable of organization; I have set up systems and written user manuals and programmed computers, all of which depend on good organizational skills. My problem is that by force of circumstance I had to start making money right away, and could not spare any time or attention for setting up systems or organizing paperwork, and once it has built up to a certain point the whole idea of organizing it all becomes overwhelming, for me at least.

And finally, my private life demanded considerable time and attention for several months recently, at the expense of business.

So all of these factors have brought me to the point where I see little option but to close the doors. After shaking all the trees I can think of (and coming up with more than half of the money) I am still about $5,000 short of what I need to come up with to avoid getting evicted. The landlord’s lawyer is completely uncompromising and says that I must come up with all the money or a cosigner for he balance. I will try to reason directly with the landlord, but he says he will be guided by the lawyer’s opinion.

The irony is that the very fact that I have survived for two years against all these odds is a shining testament to the viability of the business. If I had in fact started with the kind of money you would normally budget for a business like this, I would be very happy with my position right now. I am almost breaking even after two years, and I have a lot of satisfied customers; much of my work is repeat business. Every day people come in and express delight at finding our what I do. I have also continually expanded the range of services I offer. I still believe that with a relatively modest amount of investment it can be very successful. I do have the prospect of funds from the sale of shares in a former business, but not until April, and that is too late, and not certain enough for the landlord’s lawyer.

Please do not think I am whining; I do not feel I have singled out for harsh treatment. I think that it is unfortunate that the one paramount ingredient of success in our culture, money, is so unevenly distributed; that we value cheapness over quality; that we reward aggression rather than compassion and understanding. In another value system perhaps a person with all of my failings could still be successful using the skills I do have. But much as I would like to change it, things are the way they are and I have to deal with reality.

So unless some angel appears or I get a huge amount of work in the next couple of days I will be forced to bid farewell to both my business and my home, and then try to figure out what comes next. I would very much like to continue to do what I do, and I have a very large number of satisfied clients, but I have been putting so much energy into trying to salvage the situation that I have given little thought to the future. In any case I will safeguard all my files and archives, and make them available to customers who need copies of work I have done for them.

If you feel like responding, right now it is not helpful to be told how I could have avoided the situation if only I had done something in the past, or how to overcome the personal demons that hamper my success; these are worthy subjects for a more reflective time, but right now the boat is sinking fast. Rafts and flotation devices would be great. People with more money than they need looking for something good to do with it would be just wonderful. (It doesn’t have to be the full amount; if I cannot raise enough to stay afloat, I will not take up any offers of loans.) Sympathy and good wishes help.

Thanks for reading all the way to the bottom!

Patrick Brinton
Looks Good on Paper
1190 Gravenstein Hwy S
Sebastopol, CA 95472

707-479-6124

[Braggi]

Patrick,

That is a fascinating post. Yes, many of us who have run businesses can look at your brief history and suggest to ourselves what could have saved the day. You already know most of those thoughts.

You should also know that many substantial businesses flowered after confronting a serious crisis. I'll recall for you a story I heard about a small restaurant chain in southern California called the Rusty Pelican. I always loved the original restaurant in Newport Beach, when I could afford to go. The owner was a guy who did everything he could and had trouble delegating. He had an amazing menu and many hundreds of satisfied customers. But his lack of accounting skills was running him into bankruptcy, in his business and personally. A friend convinced him to hire a consultant, who suggested it was time to make a business plan (Wow!) that included opening several more restaurants. The owner was shocked at the idea, but went ahead and sold some franchise licenses to people who were falling all over themselves to hand the guy money, started buying and shipping his products in bulk (thereby saving a lot of money), and within two years was way, way in the black and buying himself a new sports car and a mansion.

I hope the chain is still in business because they had some of the best seafood dinners I've ever enjoyed.

You need a bookkeeper now. Not later.

You need some money. Not a great deal of it, but you should figure out how much you need to pay your debts AND HIRE a bookkeeper.

Then you need to make another post. I'll bet the 5,600 members of Waccobb could put together a package, as a small group of investors, that could be shown by the bookkeeper how they will get their investment back.

BTW, the original seed money for the Rusty Pelican, if I recall correctly, was gathered up by the customers of the original restaurant.

Asking your satisfied customers first makes a lot of sense. Perhaps you could ask people to buy their work in advance.

I suggest you find ways to raise funds that do not cripple you in the future by adding non working partners. In other words, take out loans, don't sell shares in your business unless those shareholders are going to work with you on a daily basis.

Good luck and keep us posted.

I may know a bookkeeper who can help if you don't. Or you can ask here.

-Jeff

[nayana2]

Hi,
Yes, I've been into your business and good for you for sharing your story with the rest of us...I wish you the best. Check out this web-site, www.prosper.com. I think if you make a clear presentation, you'll be able to find the money and support that you need to keep going.

God bless you and pray for miracles!
Namste,
Carolyn Nayana

PS: Let me know what happens...I'm a graphic design student at SRJC and I'm going to need what you do!

[boomerfashion]

Hello,

Just a slight concern if anyone is thinking about prosper.com. I went to their site out of curiosity and found that they want your SS#, Driver's License # and Bank Account #. Does anyone else find this odd?

Hi,
Yes, I've been into your business and good for you for sharing your story with the rest of us...I wish you the best. Check out this web-site, www.prosper.com. I think if you make a clear presentation, you'll be able to find the money and support that you need to keep going.

God bless you and pray for miracles!
Namste,
Carolyn Nayana

PS: Let me know what happens...I'm a graphic design student at SRJC and I'm going to need what you do!

[shellebelle]

Not if you plan to get a loan as it suggests.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I hope no one else runs there business to this point and since people may be reading this who are getting there here is some free basic advice - there are of course lots of tweaks to these and exceptions but I get paid to handle those.

Have a good network of people who know more than you to ask advice from. Bookkeepers, lawyers, friends, mentors even your competition.

Keep good books on paper - They don't have to be perfect. They do need to show that your account with xyz company who supplies your primary product for your end product is paid in full and you are on good terms. They do need to show that you rent, utilities and employees are all paid on time and in full. Even a well maintained check register and copies of your statements from the suppliers will suffice in a pinch.

Do know your business. Be able to tell anyone the basics, I use x number of z every day, month, etc. Know how much you have on hand, how much you can store, and should you run across that perfect opportunity where could the excess go, at what cost and would it still be profitable. Even service businesses need to know this since you sell your services and there is only so much of you; only so many hours per day you can do what you do etc.

Know your competition. Who are they, how are they seen in the community, what are their prices and how do you differ in services and how does that affect pricing.

Knowing this information makes you immediately a business person who respects their business and if you respect your business so will others including potential investors and lenders.

Should you get to the point where attorney's are knocking on your door please have invested in something like a prepaid legal business plan or some great wealthy friends willing to front you the retainer so you can get legal advice. Better yet ask before hand and evaluate your risks before you take them.

Many businesses can be started on nothing more than enough invoicing to pay rent and utilities and many great successes have come from this.

Don't fear but do start educated.

Don't feel bad if your first few businesses fail; they are all learning tools. I'm sure you fell off your bike a few times before you could ride it. Same goes with business, pick yourself up, learn a few things and try again. As you gain skills you will avoid pitfalls and grow both personally and financially.

[pbrinton]

Well, the dust has settled, and I am still here, by the skin of my teeth. I was very touched by the response to my first post; many people contacted me privately, and were very encouraging. I read stories of success after an initial crisis, and some just wanted to express sympathy and wish me the best. Thanks to two of my regular customers and an old friend I managed to put together enough to weather the immediate crisis, and I am very relieved and grateful.

This still leaves me with a big problem, though. The conditions that created the crisis have not changed. I still need to pay the rent (and all the other expenses) going forward. Too little money is coming in to sustain the business out of cash flow. This can be rectified in either of two ways; increase business or raise capital. I aim to try to do both.

Raising capital pretty much requires a business plan. Now I have always had a very negative opinion about the value of business plans. They always seemed to me to be exercises in fiction, especially in their financial aspects. How can one possibly predict how many people are going to be willing to pay for a certain service? It is true that I have not had any education in business practices, and am perhaps missing an important benefit to be had from a business plan, so I am rather reluctantly making up my mind to embark on one. The first website I came across on the subject warned me to expect weeks of hard work, and said that I would probably have to make four or five drafts. This does not fill me with joy. I actually enjoy writing, and find that it comes fairly easily to me, but I am best at essay length. A short sprint I can manage, but this looks more like a marathon. So if anyone has a better way of doing it, I would love to hear about it.

Increasing business starts right here. You need something that I do. Custom greeting cards, business cards, postcards, graphic design, CD and DVD duplication, shrinkwrapping, vinyl banners, large format printing on paper, canvas or vinyl, large format scanning, photo restoration and reproduction, printing from digital files, art reproduction, murals, slide and negative scanning and all related services. Call me on 479-6124 to discuss your needs. Or come by and ask. Pass on the word to your friends. I need to hear that doorbell jingle. I work fast and give personal service. And if you live in west county, it saves a trip into Santa Rosa.

Patrick Brinton
Loooks Good on Paper
1190 Gravenstein Hwy South
Sebastopol
707 479-6124

Just south of the Holiday Inn on the other side of the street.