The Trump Effect!

Why Donald Trump is important for our prosperity.

The Trump Effect

There is a failure in the public education system of the USA which has blossomed into a widespread lack of knowledge of economics and civics, and how they are interrelated. This information is necessary to  understand how our economy operates, and is vital to elect effective representatives to legislate on our behalf. Decisions that harm our economy directly impact our prosperity as a nation.    

We have control only over  our actions and what we do or say. We are who and what we think we are, and knowledge is power. If we allow false information to corrupt and sway our thinking, we will be prone to act according to that false data. You may not be a failure in reality, yet if you THINK you are a failure, you will act as though you are a failure and you will have no inclination to improve your lot in life.   Your perception of reality is colored by your beliefs, so it is vital to have your facts straight. Young people are typically “plagued” by political apathy, yet can be swayed into voting by perceptions or feelings of inequality and injustice. Feelings are not the same as facts. Making decisions based on emotional reasons instead of logical ones is a recipe for disaster.  

The United States is the oldest Constitutional Republic in the history of the world. We elect representatives who act on our behalf in the running of our country.  In our constitution, we are granted our inalienable God-given rights of  life, liberty, and the pursuit of happiness.  It is the job of government only to protect those rights. The rest is up to us.  

According to data gathered and tabulated by the United States Elections Project http://www.electproject.org/home/voter-turnout/voter-turnout-data :

In 2016 there were an estimated 250,056,000 eligible citizens who could vote,  and 138,847,000 voted or about 55.5%.  This was the highest by population number voter turnout for a presidential election ever (it was 3rd by percentage). There were slightly higher by percentage turnouts in only two other  elections over the past half-century (2004 and 2008) but it is important to note that these were also reflecting a voting base millions of voters smaller. The highest BY PERCENTAGE in the past hundred years was the 1960 presidential election of John F. Kennedy when there were 109,672,000 eligible voters, and 68,836,000 voted, or about  62.8% .Other than during that election, percentage of voting by eligible voters has been under 60% since 1968. The highest by percentage EVER was the 1876 election which had an estimated 81.8% turnout, and the ONLY U.S. president to be elected unanimously was George Washington.

 A Washington outsider.

On Nov 08, 2016, the Dow Jones Industrial Average opened at 18,251.38, the S&P 500 was at 2,129.92 and the Nasdaq was at 5,154.99. After Donald J. Trump won the election against Hillary Clinton, the major indices began to rise dramatically and have continued to rise since, despite two minor corrections along the way. As of this past Friday November 8th  2018, the indices closed at : Dow 25,989.30, S&P 2,781.01, Nasdaq  7,406.90.

Donald Trump was a Washington outsider, and was elected by a majority of disenfranchised voters who were disgusted by the actions of career politicians.  The mantra and platform that catapulted him to the highest office in the land was Make America Great Again.  Trump promised to bring back jobs, reduce government waste, cut taxes, strengthen our military, and like the slogan, make America great again.  Trump is a billionaire businessman as well as a patriot. He knows what drives our economy and creates jobs. Most politicians by contrast tend to be lawyers with little or no understanding of business. As such, some of these career politicians went on to draft and enact job killing taxes and legislation which lead to the highest rate of unemployment and poverty since the Great Depression. It is interesting to note that Make America Great Again was also used as a motto by another Washington outsider and patriot, Ronald Reagan, the 40th President of the USA whose policies resulted in the prosperity of the 1980’s.

The 2018 Midterm Elections

Crying Hillary

After the crushing defeat of Clinton in 2016, and the appointment of two Supreme court justices, critics of Trump swore revenge and promised a Blue Wave was coming that would sweep the House and Senate making the way for impeachment.  Liberals see Trump as the enemy of America, which is about as far from the truth as one can get. Again, beliefs are NOT the same as facts. Many things that people believe have little basis in fact. There are people who believe in Global Warming despite the lack of evidence to support those beliefs.  There are people who believe in gender inequality wage gaps despite evidence to the contrary. There are people who believe in space aliens and UFOs, yet no one has even encountered little green men from Uranus.

Disgruntled voters often use midterm elections to punish the party in power. The president’s party has lost an average of 32 seats in the House and two in the Senate in almost every midterm since the American Civil War. It’s a time tested fact, and was a given that this would happen. Trump campaigned hard to save the senate and had truly inspiring rallies in battleground states. Due to ‘The Trump Effect’ his support led to the victory of 9 out of the 11 candidates he endorsed. In comparison, not one of the candidates endorsed by Obama for the DNC won. Not one.

I work at my polling place. I can tell you for a fact that I personally witnessed record turnout for a midterm election. It was almost as busy as the 2016 presidential election. We had long lines at 7am waiting at the door. We had the highest numbers of absentee and provisional voters I have ever seen. The DNC had a poll watcher on site almost the entire day, scrutinizing our list of voters and phoning every Democrat in the district. We had an incredible 58.8% voter turnout. The vast majority voted Republican.     

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“It was a big day yesterday. An incredible day. And last night, the Republican Party defied history to expand our Senate Majority while significantly beating expectations in the House for the midtown and midterm year. We did this in spite of a very dramatic fundraising disadvantage driven by Democrats’ wealthy donors and special interests, and very hostile media coverage, to put it mildly. The media coverage set a new record and a new standard”. – Donald J. Trump

In the House, seats that were lost tended to be held by ‘Never Trumpers’ and RINO Republicans. The derogatory term RINO is an acronym for Republican  In Name Only, and refers to politicians who vote contrary to the GOP platform.  The GOP and President Trump are much stronger without these lukewarm associates. Many of the DNC candidates like Alexandria Ocasio Cortez of NY who defeated her GOP opponent are brand new to politics and have no record to stand on. The 29 year-old former bartender turned State Representative is the youngest woman ever elected to Congress, and since winning has complained that she won’t be able to afford her rent in Washington D.C. Her new salary as a representative will be $174,000 a year. That’s four times what I earned when I was her age, and I had money to spare despite eighteen months of personal tragedies that racked-up $50,000 of debt. If she can’t even handle her own finances at 29, what qualifies her to handle fiscal policies for the entire state of New York?      

After the Midterm election results were announced, again the major stock indices rose. The only ‘Blue Wave’ which appeared on Election Day was the one which swished around the bowl when the toilet was flushed.  By contrast, a Red Wave appears to be looming for the next Presidential Election in 2020 which promises to be a landslide more epic than the 1984 re-election of Ronald Reagan. If you are one of the unhappy anti-Trump people, I assure you that the world is not ending, that whatever dystopian horror you think you are living in is NOT real, and that your information is wrong. Reexamine your information, actually listen to what the man says when he speaks, instead of questioning everything he says without hearing a word. Trump is good for America, and America is a great country to live in. Trust me on this. I want everyone to be happy and successful, and that’s why I sacrifice my Sunday leisure time each week to bring you these articles.   Socrates claimed that “the unexamined life is not worth living” because only in striving  to know and to understand ourselves do our lives have any meaning or value. Your life and your personal happiness belong to you and you alone. As Always, I wish you success and happiness.

The Path to Prosperity!

Keeping America Great!

The Path To Prosperity

An Editorial opinion–

“Freedom has cost too much blood and agony to be relinquished at the cheap price of rhetoric.” ― Thomas Sowell, Knowledge And Decisions

Full disclosure, I am a conservative Republican and Christian, and I fully support President Trump. 

We the People of the United States

Tuesday November 6th 2018 is Election Day in the USA this year. Registered voters will be voting across our great nation to elect representatives to legislate on our behalf. With the power of our votes, we have the ability to support or change the current socio-economic state of our country and pass on to future generations a country we believe they will want. Because our votes are crucial to this process, it is imperative that we fully understand the ramifications of our political views, and how they are shaped.  In the USA, our capitalist economy, our religious freedoms, and the laws of our land are all entangled forming a tightly interwoven way of life. Changing one aspect threatens the other two legs of the platform, and many uneducated persons are in danger of making ill-conceived decisions based upon poor information.

“The problem isn’t that Johnny can’t read. The problem isn’t even that Johnny can’t think. The problem is that Johnny doesn’t know what thinking is; he confuses it with feeling.” ― Thomas Sowell,  noted economist

in Order to form a more perfect Union

Ayn Rand was a Russian-American writer and philosopher who wrote two best-selling novels, The Fountainhead and Atlas Shrugged. She was an atheist with little use for religion. Although her fiction is interesting and some of her ideas have merit, she really didn’t understand people much because she lacked the critical spiritual component needed to fill the God-shaped hole ever-present in the hearts of man. Although she passed away in 1982 at the age of 77, many libertarians, and some  right-wing conservatives are still intrigued by certain aspects of her personal philosophy, which she termed ‘objectivism’. Objectivism is fully secular and absolutist; it is neither liberal nor conservative nor anywhere in between. In a perfect world,  objectivism might work, but we do not live in a perfect world. Nevertheless, she had some good ideas. She supported laissez-faire capitalism, believed facts were facts independent of a person’s feelings or wishes, felt that reason was a man’s basic means of survival, and held that we ourselves were responsible for perusing our own self-interests and happiness.

UNFORTUNATELY,  many people today lack the discernment needed to sail through the vast sea of information, and lack the skill to avoid being blown off course by the hot air and smoke of certain politicians and entertainers as they try to steer for those islands of reason. Truth is always true, and it can stand up to criticism. If it is YOUR ‘truth’ and you have no evidence to back it up then it is not truth, but rather your feelings based on an emotional response.  As long as you continue to make snap emotional decisions to immediate problems, you will continue to make the wrong choices and will suffer greatly in the long term. I can’t tell you who to vote for, or what to believe, I only ask that you examine your convictions to see why you believe what you believe, and be certain that your ideology is fact based. The road to Hell is paved with ‘good intentions’.

“Socialism is a wonderful idea. It is only as a reality that it has been disastrous. Among people of every race, color, and creed, all around the world, socialism has led to hunger in countries that used to have surplus food to export…. Nevertheless, for many of those who deal primarily in ideas, socialism remains an attractive idea — in fact, seductive. Its every failure is explained away as due to the inadequacies of particular leaders. ” 
― Thomas Sowell

Establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity

Our government is based upon three principals:

  • Inherent rights:  Rights that anyone living in America has.
  • Self Government: Government by the people.
  • Separation of Powers: Branches of government with different powers.

It is NOT the job of the government to run businesses, provide welfare subsidies, or redistribute wealth. Your ‘feelings’ are not the concern of the government.  Its only job is make sure that its citizens are safe, healthy and prosperous. Citizens have a legal right to live in this country,  Illegal immigrants do not. If they entered this country illegally, they do NOT belong here. A country without borders is not a country.  This is a great country and we have the freedom to live as we chose and pursue our own interests.  There is no reason to be poor in this country where every opportunity is available for you to pursue. BUT YOU HAVE TO DO IT, no one can make you do the right thing. According to a report by the Brookings Institute ( https://www.brookings.edu/research/work-and-marriage-the-way-to-end-poverty-and-welfare ) published in way back in 2003, if you don’t want to be permanently poor in this country, you only have to do three things:

  1. Finish High School
  2. Get a job
  3. Don’t have children out of wedlock.

The only thing preventing you from being successful is you yourself. Don’t blame anyone else for your bad choices.   If people don’t agree with you, it’s called disagreement, not hatred, sexism, or  bigotry. Mature adults don’t insult or attack people who disagree with them. 

This Tuesday I will be voting straight Republican. I’m doing this because I fully support the current President, and totally agree with him 100%. In the past two years since he won the 2016 election, my net worth has skyrocketed. To give a comparison, my investment gains since Trump became president less than two years ago  have nearly equaled the total gains earned over the entire 8-year Obama administration.   I dare you to tell me the economy is not booming.

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I am financially stable, I am debt free, I have cash on hand to do with as I please. This includes charitable giving and I am not bragging when I say I willingly donate thousands of dollars each year to worthy Christian charities, and other concerns.

If you are jealous of wealthy successful people, you are in serious need of a reality check. I grew up poor and worked hard for everything I have. I was not poor because someone else was rich. Wealthy people create jobs and opportunities for others, they don’t take them away. There is no ‘white privilege’, no ‘glass ceiling’. They are just figments of the imagination created by the real enemies who want to destroy this great nation.  Don’t allow yourself to be misled by their lies. You can rise to greatness   if and only if you wholeheartedly decide to.

This coming election, ( as well as all future elections ) is about safety and prosperity. President Trump has Made America Great Again, and we now have the lowest unemployment rate in the history of our country and things are getting better every day. On Tuesday November 6th 2018, you need to make the correct decision and vote Republican, it is the only way to keep our citizens safe, prosperous, and free. For the sake of our freedom and for future generations we need to keep the momentum going and Keep America Great.  As Always, I wish you success and happiness.

Selling The Place?

Buyer Beware!

SellingThePlace

Recently, I was on vacation in Columbus OH. I’ve been going there every October for more than a decade and I always stop at my favorite restaurants when I’m in town. I admit, I’m a creature of habit. When I find someplace I really like, you can expect to see me there on a recurring basis. There is comfort in the familiar. I also tend to eat the same favorite menu items. Being a vegetarian, my choices are usually limited to begin with.  I was a little shocked when I made my annual stop at this great Indian restaurant AMUL INDIA, only to discovered that my favorite dish, a vegetarian thali, was no longer on the menu. I had an awesome waiter who went above and beyond and was able to finagle the meal from the chief for me anyway, even though it was NOT ON THE MENU.  Evidently, the long established business had changed hands, and the new owner felt the sampler dish was not as profitable despite being popular. Fortunately my waiter had remained during the business transition and he remembered me from prior years. It pays to know people.      

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Nothing lasts forever, and if you live long enough you’ll have more tales of places that used to be in business than you have hair on your head.  Every year hundreds of thousands of business come and go, or change hands. Some are new start-ups built from scratch, some are franchised businesses, and some just change hands.  Buying an existing business is not without its risks, but a savvy investor can reduce or possibly eliminate those risks entirely IF they are diligent and gather enough information about WHY the business is for sale. 

Before you do anything, sign anything, or agree to anything make certain that you have a certified public accountant and a lawyer of your own. They, along with someone from your financial institution like a loan expert, or business rep.  will be key to forming a business acquisition team. These experts will be able to prevent you from making a costly mistake by examining the books, reading the fine print etc. 

What’s in the back?

As a customer, you are limited to the places intended for customers. It is rare for non-employees to glimpse much of anything locked behind the doors marked EMPLOYEES ONLY. As an interested potential buyer, it is essential to visually inspect ALL AREAS of the business you are considering buying. It’s my dream to open a coffee shop. There are several key pieces of equipment that every successful coffee shop MUST HAVE. You can’t make espresso if you don’t have an espresso machine.  There is a very big difference between residential and commercial kitchen equipment.  A cheap home kitchen espresso machine costs $50 and will make one shot of espresso in about 3-5 minutes.  A NUOVA SIMONELLI group two commercial espresso machine can make four shots of espresso in ONE minute, and retails for $8999.99

It is imperative to have a firm knowledge of what is the proper equipment needed for the business you want. The wrong machinery will put out of business faster than you can say “double flat white, extra sweet”.

Obtain a list of all business equipment, inventory, and assets.  Be sure to note condition, age, make, model, and shelf life.  Were those coffee beans roasted last week, or last year? Is that ancient espresso machine on its last legs?  Does the ice machine make ice?

You Owe Who What?

Make sure that the business you are considering buying has all its financials fully disclosed.  You’ll need to have your CPA go over their books. If they are not turning a profit after being in business for so time, there could be a serious problem and your accountant should be able to help you pinpoint it. Make absolutely certain that all outstanding debts and liabilities that the current business owner has and been settled BEFORE you buy the shop, or you might be facing a slew of past due bills for unpaid stock or other bills that will bankrupt you. A former acquaintance of mine whom I once considered to be  a friend had this happen to him. Actually he made EVERY mistake listed above and below. He ultimately lost his Shoe Repair Shop and ended up owing tens of thousands of dollars to at least three other individuals besides myself, and it ended our friendship.

Make certain you have money, LOTS OF MONEY.

Buying a business is not cheap. You’re going to need to have several months of working capital in the bank to cover operating expenses such as employee salaries. If some of the businesses’ assets or equipment need to be repaired or replaced, you’ll need to be able to cover the cost. Merchants who supply you with stock will probably expect you to be in operation for some time before they extend credit and will expect payment at the time of delivery especially during your first year of operation. Make certain that all licenses, permits, and if (you’re dealing with food services) health code inspections, and zoning codes are up to date and paid.  Lapsed permits, operating a business in a residential zone, or having heath code violations will force you to shut down.  Plus in dealing with the public, you may have to modify the building to comply with ADA standards.

But I just moved in…

I you are leasing the property for a business,  make sure that it’s a lease you can afford and have your lawyer read it BEFORE you sign it.  Triple Net Leases are quite common and will require you among other things, to pay for building maintenance, landscaping, property taxes, parking lot maintenance, etc IN ADDITION TO your monthly rent.  Snow removal in a large parking lot after a blizzard is expensive. As a result you could find that suddenly your rent was a lot higher than your initial agreement. Also make sure to sign a decent multi-year lease. You don’t want to be making a killing in the perfect location and end up having to move or pay double because the landlord realized he can get a lot more for his property then you are paying him and decides to price you out.

 Does she come with the place?

Will the staff stay on during the transition, or will you be suddenly be all by yourself running the shop with no help, and no clue. Understand that many of the staff may not be happy being under new ownership, with new rules. They may be used to doing things ‘the old’ way and you could encounter friction. Also remember that these employees and the former owner were the face of the business, and certain customers may be upset with the change in ownership and staff. You may find that you don’t have as many customers all of a sudden.

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Do they still sell those?    

Times change, tastes change. Remember my former friend and his shoe repair shop that I mentioned a few paragraphs back?  In addition to all the rookie new business mistakes, perhaps the most serious one that he made was buying an antiquated, niche business with a rapidly declining customer base. Shoe repair is a dying art. Scott was an employee of the first shoe repair chain at the mall. They were acquired by another chain, which franchised its stores. The guy who brought the franchise decided to cut bait and tried to recover his losses by selling it to Scott, who still worked there and enjoyed his job, so he jumped at the chance. He was very quickly in over his head, and for a while was able to use ponzi schemes to keep the wolves at bay. Ultimately he was evicted, his assets seized, and after a civil suit showed that he had nothing of value, he kept a very low profile and faded away leaving his backers with substantial loses. If you’re not a role model, you’re a cautionary tale.  

I’ll do it differently!

What has been will be again,  what has been done will be done again;  there is nothing new under the sun.  – Ecclesiastes 1:9 New International Version (NIV)

No one who ever started a business did so with the intention of bankruptcy and failure. Yet not a day goes by without some business shutting its doors. The best ways to avoid mistakes are to learn from the mistakes of others and do it differently. Knowledge is power and if you do your homework, and lay down the proper foundation for your business from the beginning you’ll be off to a good start.  A great location, with fantastic customer service, superior products, and competitive  (but still low) prices, along with a friendly and knowledgeable staff should be able to provide everything else you need to succeed!    As always, I wish you success and happiness!

FROM THE GROUND UP!

Building Your business from scratch.

From The Ground Up

All business ventures involve an element of risk. There are ways to minimize your risks but there is no way possible to totally eliminate the possibility of failure. Whether you start your business from scratch, franchise, or purchase an existing business, what you don’t know will hurt you badly. Since starting a brand new business is the most risky of the three ways to get a business of your own, this is the one which requires the most amount of background work.   

I spent more than a decade dreaming about opening a coffee shop of my very own before I started taking my first steps towards attempting to realize that goal.

Step one: Learn all there is to know, and take notes!

My earliest research into the grounds of the coffee business involved visiting a lot of cafes and observing their operation. Field work is essential to determine not only what everyone is doing, but also to know what they need in order to do it. Espresso machines are not cheap. You want to make sure you buy a commercial machine which will be able to handle the demands of the consumer. You want to make sure there is adequate seating, and that you have something that brings people back, it could be the food, or it could be a gimmick.  Get it right, because people will talk and their words will go far. You want to be remembered for being great, not for being so bad that people have to see it to believe it.

A tale of two cafes.

‘The Bohemian Coffee Shoppe’.  

Several years ago, I visited a very strange coffee shop near the end of North Queen Street in Lancaster PA. It wasn’t in operation very long.  The only signage was a flag that read COFFEE. The woman had a small espresso machine that made one cup at a time, it was not a commercial machine. I think it was a De’Longhi. Coffee was served ONE SIZE in a 12oz cup, black, no creamer of any kind. The only sweetener she had was  rapadura . Rapadura is unbleached, unrefined dehydrated cane sugar juice. It’s brown in color and has a molasses taste to it. And like the flag on the outside of the building proclaimed, coffee was the only item to be had in that establishment. I paid $2, then sat at a very large dining room table, the ONLY table. It was covered with newspapers and magazines.  I remember thinking to myself that this had to be a joke. I went there two, maybe three times in total and brought my friend Talley with me the last time I went. For years after the fact, we jokingly referred to  that nameless cafe as The Bohemian Coffee Shoppe.  It certainly was unorthodox.  

coffee flag

Snakes and Lattes.

I first heard about this unique coffee shop from a friend on Twitter. I then drove 500 miles north from the USA to Toronto Canada to check it out. I ended up spending 11 hours in that cafe. Their gimmick was that they charged a cover fee to enter, which allowed you access to use their vast collection of board games.   I played game after game sitting at various tables with complete strangers, and I had a tab run which was settled at the end of the night. It was also the first cafe where I ever saw computer tablets being used to record customer orders.  A couple of years later, I drove a hundred miles to The Board and Brew in College Park MD. The owner had also visited Snakes and Lattes and had cloned their business model. I too had had a similar thought upon  my initial visit to Snakes and Lattes, because you can’t copyright an idea. My lack of knowledge of gaming was what quickly made me abandon that plan. I’m a coffee man, not a game boy.   

Step 2: Learn the basics and practice.

The very first cafe that I ever tasted espresso and espresso based drinks like lattes was at The Monk’s Tunic . I became addicted to these drinks very quickly, so I purchased a very basic espresso machine and several espresso bartender guides and spent years studying the books and making my drinks at home. There’s a reason why the coffee at cafe’s taste better, they have much better equipment and their beans are  usually much fresher, having been roasted very recently and freshly ground for each drink. Better ingredients and better equipment equals better product, especially when made by the hand of a skilled barista. You can’t do latte art with a home unit. The machine just doesn’t have the right temperature and pressure to generate a proper crema on the espresso or the micro foam in the steamed milk.  There are only really a dozen basic drinks that form a basic menu and they are easily learn-able once you know the basics of how to operate the machine.

Step 3: Beef up your bank account.

Banks do not loan money to new business start-ups. The majority of all new business fail in under 5 years, and a fair amount shut down within months of opening.  This is often because they underestimated the expenses and ran out of money. If you plan to open a business you will need money. Lots and lots of money. You will need to self-finance, and possibly enlist the help of friends and relatives as potential backers. Cash flow is the life blood of business, and if you run out of money, you are out of business. You will not be able to prolong the inevitable for very long.

Step 4: Hire competent professionals and consultants.

The very first person you should seek out is a qualified CPA (certified public accountant) and a reputable business attorney. These two should be able to help you set up the paperwork and ground work to set up an LLC, open a business banking account, etc. LLC (limited Liability Corporation) status will protect you from losing everything you own including the shirt on you back should the business fail. You’ll also want to run a check on the name you intend to call your business to make sure no one else is using that same name, or you could face legal action. I once worked for a video game arcade that made the mistake of calling themselves Jolly Time Inc. They had the  same exact name as Jolly Time Inc, the Popcorn company. They were forced to re-brand the arcade to Pocket Change. Never use your personal banking account for your business. Open a business checking account. Open a P.O. Box for the business, never put your home address on anything for the business. A few months ago, I purchased  a jar of Salsa at a food festival. The proprietors at the stand were from Columbus Ohio, where I happen to be on vacation this week. There was an address on the jar which I assumed was their local storefront. I drove there and very quickly realized that this was their home address when I saw all the town houses in a residential neighborhood. This is why you open a P.O. Box.

I would also recommend contacting consultants in your field of business.  If you live in the USA, I would contact the S.C.O.R.E. Association. The Service Corps Of Retired Executives has been in operation since 1964 and is a 501 nonprofit organization that provides free business mentoring services to prospective and established small business owners in the United States. They will provide all sorts of advice and contacts.

If you are looking into the coffee shop industry as I am, I fully recommend contacting Crimson Cup. https://www.crimsoncup.com/ They are a franchise alternative and are consultants and suppliers for independent coffee shops. They have over twenty five years of expertise and experience, and have helped over 400 small coffee shops open. When I finally do open That Coffee Place, I will be proudly serving Crimson Cup coffee. They are awesome! The Better Business Bureau rates them A+ status.  If you are serious, really truly serious about opening a coffee chop, buy Greg Ubert’s book, Seven Steps To Success. It comes with a sample of their coffee and teas, and you get a phone consultation. It’s worth the $69.99. When you do sign up with them, their fee is about $30,000, but that includes a lot including shop design, staff training,  and coffee supplies for your store.  These people are the cream of the crop!

Next find a good business realtor. I have looked at over a dozen potential sights so far. Nothing has stuck yet, but some were very close. When you do locate a property, you’ll also need to hire an architect , a building engineer, and a construction crew if the landlord doesn’t have their own. This is all before you even open your doors. My first year of attempting to open a  cafe generated thousands of dollars of business expenses, and I still don’t have a shop. The point is, by going through the process, doing everything in order, dotting all my ‘i’s and crossing all my ‘t’s, I’ve protected myself from potentially disastrous mistakes while establishing a firm foundation for my future business venture. Hopefully, you will do the same. As always I wish you success and happiness!   

Do You Want Franchise With That?

What’s in a name?

DoYouWantFranchise

Each month hundreds of thousands of new businesses open nationwide in the US. A third of them will go out of business within two years, and only half will last five years. Owning a business is risky, and what you don’t know will hurt you. Many small business fail because the owner failed to take into account some vital piece of information which would have shown that their brilliant plan wasn’t so brilliant after all. It could be anything from foot traffic, to utility costs, to labor utilization. What you don’t know will hurt you, often in the most painful way, at the worst possible of times. Trust me, I know. I’ve been trying to start my own coffee shop now for going on five years, and I have faced setback after setback. Although I have lost thousands of dollars in the process, I have gained valuable insight and protected myself from some truly significant financial pitfalls which would have occurred had I not been as diligent in my research, and hired qualified consultants, and legal and financial advisers first. I’d rather invest a few thousand dollars than suffer a million dollar bankruptcy.  No business is ‘risk free’.  

There are really only three ways to have your own business.

  • Start it from scratch – very risky
  • Buy out an existing business –  risky
  • Buy into a franchise – not AS risky, but still has risk.

“The two most important requirements for major success are: first, being in the right place at the right time, and second, doing something about it.” – Ray Kroc

What is a franchise?

A franchise is a business which pays a licensing fee to a parent company in order to sell products under that company’s brand. Usually there are strict guidelines and corporate policies which must be adhered to, which failure to follow will cause the loss of the license, and a possible expensive lawsuit. By franchising, YOU are representing that brand, even though you own the business, the brand and all its intellectual properties belong to the licensing corporation.

There are pros and cons to this.

The pros include selling a known brand, and operating under a proven business model. Everyone knows what the coffee at Starbucks and Dunkin’ Donuts is supposed to taste like, and they are drawn to the familiar industry standard product they know and love. 

The cons are that those same industry standards and products are forced upon you. If you are barely scraping by, and the parent corporation implements a national sales campaign, more often than not you are required to participate. Likewise when chains like McDonald’s offer their McCafé®™ drinks at only $2.00 for any size, every McDonald’s franchise in that geographic area  has to offer that product at that price, even if they are losing money to do so.

When an industry leader announces a new product or sale, other chains scramble to offer a comparable offering. Prior to Starbucks offering cold brew coffee, that was something that you could only get at third wave coffee shops. Now cold brew coffee is everywhere, even at convenience stores.   When Starbucks began selling Pumpkin Spice Lattes earlier than normal this year starting on Labor Day Weekend, Dunkin’ Donuts and other chains quickly followed suit. This meant that the owners of every franchise suddenly had to purchase additional supplies needed for the drinks.

Franchises are not cheap. In most cases you have to pay to build the store to company specs, and buy all of their required equipment as well as pay an upfront fee.  Dunkin’ Donuts franchise fee is $40,000, minimum initial cash required is $250,000 with a net worth at least $500,000. Starbucks doesn’t do franchises, but they will sell you a license to sell their coffees at your cafe for just over $300,000. McDonald’s charges $45,000, requires you to have liquid assets of $750,000 and start-up costs  run  $1-2 Million. One of the cheapest franchises to start is SubWay, which begins at $15,000 with start-up costs ranging from $100,000 to $400,000.

Once you pay to start the franchise, you still have franchise fees on every product you sell for as long as you own the franchise, and IF you decide to sell the franchise, in some cases you will need to pay a franchise transfer fee.   

Can you make money owning a franchise?

Yes, and no. According to a report on food franchising by Franchise Business Review, 51.5 percent of food franchises earn profits of less than $50,000 a year; roughly 7 percent top $250,000, with the average profit for all restaurants coming in at $82,033. That doesn’t sound too bad, until you factor in the initial investment.

Business is business? What a Kroc!

Ray Kroc was a traveling salesman.  He had been a paper cup salesman for Lilly Cup.  After fifteen years, he switched companies and  started selling a 30lb, five-spindle milk shake mixer, The Multimixer for Prince Castle.  There wasn’t a great demand in the food service industry for this device, he was lucky if he could sell one to a restaurant. That was until he received an order in 1954 for eight of the machines placed by a single restaurant in San Bernardino CA. After confirming that the order was not a mistake,  he made a trip out west to see with his own eyes this business that needed eight Multimixers.   The place was a tiny burger joint owned by two brothers, Dick and Mac McDonald. Ray Kroc was so blown away by the way the brothers had re-invented drive-in burger joints that he mortgaged his house and pulled every string he could pull to get the brothers to agree to not only allow him to buy his own franchise, but sell future franchises to perspective buyers.

Ray Kroc was 52 years old when he opened his first McDonald’s franchise. For each future franchise he sold for the brothers, a franchise fee would be charged of 1.9% of sales, .4% would go to the brothers and 1.5% was for Ray. Needless to say Ray Kroc was struggling to keep his head above water before long, and tried to re-negotiate his deal. Dick and Mac refused. Ray had signed a contract and he was legally bound to it. Unfortunately for the two brothers, Ray was a salesman, and they were not. A salesman’s number one job is to convince someone to buy. Ray managed to find a work-around by creating a land acquisition company.  He bought and leased the land that McDonald’s franchisees would need to  build on and charged them rent. As a condition of their lease agreement they had to maintain quality control in their restaurants, or lose their franchise.

He began mass selling franchises, and the money from the land lease agreements made him wealthy. He then paid a hefty fee to the McDonald’s brothers of $2.7 million dollars to break the 1954 contract he had signed, and take ownership of all holdings and intellectual property, including the brand name. The McDonald brothers couldn’t even have their name on their own restaurant. He then opened his 100th store right across the road from the brother’s original store, and drove them out.

History is written by the winners.

The first time I read the Ray Kroc story, it was in his auto-biography GRINDING IT OUT The Making of McDonald’s. From Ray Kroc’s point of view, he was the victim, fighting his way out of a bad deal. I had found the book to be inspirational until I saw the 2016 film THE FOUNDER starring Michael Keaton. This version of the story made Ray Kroc look like the Serpent  in the McDonald brother’s Paradise. He was the epitome of every sleazy, used-car salesman stereotype you can imagine.  There are two sides to every story, your side, their side, and the truth. The point is once you sign a contract for a franchise or a lease agreement, be prepared to stick to the agreement, because unless you have more money and lawyers than the opposition, you will be in hot water quickly. It’s probably best to avoid the situation altogether. As always, I wish you success and happiness.  

Any Business Lately?

Why places close.

Any Business Lately

It happens to all of us. You travel to your favorite place of business and arrive to see the place shuttered. Another shop closed. How did this happen? Sometimes we can see it coming, but other times it comes as a complete shock, tragic and disheartening.  This year alone, two of my favorite products stopped being made. My favorite hot pepper jam, because the company apparently folded. The website says online items are all out of stock, the phone call I made went unanswered to voicemail, and the owner was absent at a local food festival. Just this week, I went online to order a few cases of this awesome specialty iced tea, not sold in stores. I always order six to twelve cases at a time, extra of  the diet blueberry flavor. I was devastated to learn that Two If By Tea  had been discontinued due to rising production costs.

As upsetting as it may be for us, often it is many times worse on the owner of the business because although we were loyal patrons, the business was their brainchild. What do you do when your dream dies?

The reasons why places shut down are as varied as the businesses themselves, but there are often several main reasons business close.

Declining customer base.

The first espresso bar to open in Lancaster PA was The Monk’s Tunic. It made the local newspaper. (That local newspaper has since folded also.) When you are the first business you often inspire imitators.  Competition for customers is often fierce when several shops of the same type open in close proximity. Customers are the life-blood of a business, and losing too many customers will kill a business. Although it is speculation on my part, I blame the press release, because within the first year of business, at least a half dozen similar cafes opened all within two blocks of each other.  That same newspaper article also mentioned a national bookstore chain that was opening at the mall, BORDERS BOOKS which would have a sit down espresso bar.

Why do I blame the newspaper? Think of the California Gold Rush of 1848 which brought over 300,000 prospectors to California when newspapers announced gold had been found at Sutter’s Mill.  Here was the local newspaper proclaiming the discovery of ‘Black Gold’ in the city.

I did manage to visit all of the cafes which opened during the ‘Great Espresso Rush’ to sample their drinks. I’m a coffee snob, so it takes more than just what’s in the cup to leave an impression on me. The ones that offered poetry readings and live music often brought me back rather than the coffee, all of which tasted pretty much the same. They must have all been using the same local roaster. The Monk’s Tunic put up a valiant fight, outlasting all of the newcomers except BORDERS, which in turn folded a decade later. Each of these shops were unique in their own ways, but I really miss both The Monk’s Tunic and BORDERS the most.

monk

Location, Location, Location.

Where you sell your goods is often as important as what you sell. Unless you sell a highly coveted item and have a rabid fan base clamoring for it, customers will not usually go out of their way to visit your establishment. A highly visible location with vibrant signage and easy access and exit are key. If your customers can’t see you easily, or get to your shop, they won’t stop and just pass on by. And don’t forget about parking, no one wants to fight for a space, or pay to park just to go to your store.

Accessibility.

Most new construction in the USA conforms to Americans with Disabilities Act standards. The ADA sets standards for construction of accessible public facilities.  However, if you buy an older property built prior to the establishment of the ADA to house your business, you may need to make modifications. This can include ADA bathrooms for customers, a designated check-out counter space set lower, designated seating and parking for disabled people, ramps, and even wider doors in some cases to accommodate wheelchairs or motorized carts.  Depending upon the modifications, this can be quite costly.

Staff.

When I was a young boy, I used to walk two extra blocks to a small grocery store to buy Pepsi for my aunt, because it was a nickel cheaper per bottle. The store was run by an old man. Two weeks in a row I went in and he was out of Pepsi, and I had to go back to the bigger grocery.  So I stopped going to his store for a few weeks. Sometime later, I went back to his shop, and there was one six-pack of Pepsi so I brought it. As I was walking out, I heard the old man grumble angrily to himself how ‘the boy doesn’t come in for weeks, then buys his last six-pack’. I NEVER went back to that store again.

You and your employees are the face of your business. A customer should always feel like you appreciate their business, not like you are doing them a favor by being open. Staff should be friendly, courteous, clean, identifiable, competent, and well versed in your product. Your employees may be well extremely versed, but NO ONE should know more about your business, or be more skilled at it than you. You should be easily reachable by both staff and customers to solve problems that your employees may encounter.  Yes, there are SOME high-maintenance customers who think the world revolves around them, but they are the exception, not the rule. I try very hard to be nice to ALL my customers, including the ‘difficult’ customers. IF you have a ‘difficult’ customer, it may be necessary for you or a trusted high-level employee to personally  deal with them. By isolating this E.G.R. (Extra Grace Required) customer, you are protecting your staff from them, and vice-versa.

Word of Mouth.

Do your customers rave about you and your shop? Do they leave positive reviews on social media? Do they even know you exist at all?

Thirty years ago, most people looked up businesses in the Yellow Pages phone book. They saw advertising on TV, in magazines, newspapers, and on bill boards. Reviews were often by word of mouth. Today however, social media is the main go-to.  It is very important to have an online presence. Although I am still in the process of trying to establish That Coffee Place, I do have a Twitter and a Facebook page already established. Both have been dormant for years waiting for my brick-and-mortar location to open someday.  When it does, I’ll probably expand my online presence to Yelp! and Trip Adviser, as well as Google. When that does happen, positive reviews will be very important. One bad experience at your place of business can be all it takes for a disgruntled customer to leave a negative review online which can harm potential sales.

Incompetence and mismanagement.

The saddest reason a business can fail is because the owner failed to do their homework. There is much more to opening a shop than signing a lease and hanging an OPEN sign. As the owner of your shop, you need to know everything there is to know about your business and the location BEFORE you even open the door. I know of a struggling pizza place that is barely keeping its lights on because they opened in the same ‘Turn-Key’ location as FIVE other pizza places before them, all of which folded. In the same little strip mall, there is an empty restaurant which was a ‘Turn-Key’ restaurant that in the last seven years had 3 different Spanish restaurants, 2 African restaurants, and a Jamaican restaurant.  Just because it’s a ‘Turn-Key’ location selling all the necessary equipment and furniture included with the lease does NOT mean it’s a great place for a restaurant.  There often are very good reason these shops closed.

The neighborhood changed.

When you’re surrounded by a large population of very poor people on public assistance, these people do not dine at restaurants often, if ever. When a neighborhood goes into decline, litter, graffiti and crime increase. This alarming trend often discourages patrons from more affluent areas, who tend to avoid such slums and favor more inviting places.

Parking.

Not having a well-lit attached parking lot with adequate spaces will discourage patrons.

Tastes changed.

What you’re selling may no longer be desired.

Staffing issues.

You can’t pay people enough to stay, or find good help.

Money Issues.

You ran out of working capital and are robbing Peter to pay Paul. No Ponzi scheme on Earth will keep your Money Pit open long term.

Health Issues and Retirement.

No avoiding it, we will not be young and healthy forever. Everyone one of us will grow older, feebler, and eventually die.  When this happens, we are often forced to downsize, and this will also include either shutting down, passing on, or outright selling our businesses.

The Pancake Farm in Ephrata PA will be shutting its doors in eight weeks on December 1st, 2018. The owners are retiring. The business has been these since 1960, and owned by them since 1982

The owner of The West Reading Diner sold the business to his son, who re-branded it as The American Diner.

american

After decades of business, my guitar teacher Ken Rohrbach shut down Ken’s Music Studio on 10th St several years ago,  and retired. We all have our strengths and weaknesses. I may be a coffee expert, but I’m no guitar player. I could probably earn a fortune standing on a corner asking passers-by for tips for me NOT to play my guitar. Just goes to show, pobody’s nerfect. As always, I wish success and happiness!

GOING CLUBBING?

Membership has its rewards.

goingclub

Last weekend, Wegman’s held a grand opening for its newest store in Lancaster PA. This would be the second largest supermarket in the county. (The largest is Shady Maple.) It was a rainy day, but I kid you not when I say it was standing room only. Everyone and their mother living in a twenty mile radius was there. People were lined-up ten deep in three different queues to sign-up for the store loyalty reward program. You could not move one foot in any direction in the store without encountering someone with a shopping cart, and state police were directing traffic into and out of the fully occupied parking lot as drivers circled the lot, jockeying for position. It was a total madhouse. I left after 15 minutes without buying a single item.

wegmans

Now there may only be ONE Wegman’s Supermarket in Lancaster county, but there are more than a hundred supermarkets owned by at least a half-dozen chains. Wegman’s has things that you cannot get anywhere else. It is the ONLY place I have ever seen that carried Oaxaca cheese! Oaxaca is a white, semihard cheese from Mexico, similar to unaged Monterey jack, but with a mozzarella-like string cheese texture.

oaxaca

Loyalty has its rewards.

It seems that every chain store in the world encourages people to join their loyalty rewards program. Signing-up is free, you save money on specials, and you get a wallet card and or a small fob for your keys that you have to scan at the checkout.  I have so many of these that I ordered a small loyalty-card holder for my key ring to protect and organize these flimsy, plastic-coated card-stock tags. 

loycard

Aside from the initial hassle of filling out the application, it’s a smart way to save money for the customer, often on products you already use.  On  National Coffee Day, I got a free cold brew coffee from Sheetz, after I downloaded their app to my smartphone and ordered online. A minor inconvenience for a free $2.99 drink.

sheetz

The downside is that you’re supplying personal info and shopping habits with that company. I know people who refuse to provide their contact info and insist on asking the checker at the register for ‘the store card’. Some chains used keep a card at each register for people who ‘forgot’ their card, which they would scan so you can still get the discount on the specials, but this is slowly being phased out.  As more and more people have smart phones, loyalty programs are switching over from cards and fobs to apps you download right to your phone.  Stores really want you to sign up for these reward programs.  It provides their company with vital market research as they track your purchase history. Knowing what brands and items you buy allows them to stock greater quantities.  Knowing where you live can help them determine the potential viability of opening new stores in your neighborhood. I used to shop at Wegman’s sporadically because prior to last week, the nearest store was over 35 miles away. The same goes for Trader Joe’s, I’d love to have a local store.          

Membership has its rewards too.

“I don’t want to belong to any club that would accept me as one of its members.” – Groucho Marx

There are several store chains such as Costco, BJ’s and Sam’s Club which require an annual membership fee for people wishing to shop there. This may sound crazy to some people.  Who would want to pay $60 a year for the ‘privilege’ of shopping at a wholesale ‘club’? Firstly, let’s go back to my harrowing tale of the Wegman’s grand opening.  You NEVER encounter crowds like that at a wholesale club. EVER. Every person with a cart paid their membership to shop there.  If you’re curious and want to look around just to determine if a wholesale club membership is for you, you can go to the customer service desk and they will allow it (and probably offer you literature and an application form). I used to belong to BJ’s years ago when I was in charge of supplying drinks and snacks for the employee break room, until the honor system broke down and the till dried up. I don’t understand people stealing snacks and sodas when we get paid as much as we do.

Wholesale clubs eliminate the cost of shipping and distribution of items from the warehouse to the retail store, because the warehouse IS the store. Also because these items are special packed in larger quantities, the per-item cost is much lower for the consumer. So if you have a large family, buying in bulk at a wholesale club will save you a significant amount of money, and allow you to recoup the initial investment you made when you brought your membership. 

But what’s a single person going to do with a hundred-roll case of Charmin?

Fortunately there IS an online alternative to the warehouse wholesale club. There are two members-only online shopping clubs that I know of. Like the warehouse clubs, you pay an annual fee. BUT you get free shipping IF you buy a certain amount. You are also buying only their unique brand, so don’t expect to order Pepsi or Doritos. Now there are store brands that meet or exceed the quality offered by national chains. The organic specialty health food chain Trader Joe’s sells almost exclusively their own unique brand with very few exceptions. I LOVE Trader Joe’s. They really have the best groceries, but they are pricey. Again, many  of these items are organic, free of artificial preservatives and chemicals, and are much healthier so they are better for you. (Isn’t your health worth the cost?) Costco sells KIRKLAND brand exclusively, GNC sells its own brand, I could go on.

So back to the two members-only, online shopping clubs which offer only their own brand. Both launched in past two years.  Their mission is to provide the customer with a high quality product at the lowest cost possible.   

They offer factory direct non-branded products with simple black and white no-frills labels with just the company , product name, ingredients, and nutritional info. You won’t see a photo of a tomato on the tomato sauce. It will say TOMATO PASTE. From the few examples I’ve seen online, the labeling is ONLY in English, which I consider to be a plus because it always irks me when foreign language is forced upon me in my native country by social justice warriors in the name of diversity and inclusiveness. I would never think of living in any country where I didn’t have a firm grasp of the local language. It may be true that the USA has no official national language, but since the country was founded it has been the consensus that it is English.  

The ONLY two possible drawbacks I see are that the new companies might fold, as new business have a high failure rate, and that you can’t sample the goods before you buy them, so you really have to rely upon customer feedback. Most of the reviews I’ve read have been favorable, and I do plan on trying out both companies in the very near future. I always believe in supporting small businesses and  the independent operators. Without customer support, these companies cannot last. Their prices do seem fair, and a smart consumer should be able to seamlessly work these goods into their personal budget plans to both recoup the cost of membership and save money in the process.       

The two companies  are: BRANDLESS and PUBLIC GOODS.

BRANDLESS https://brandless.com/

Only $36/year after your free trial.

BRANDLESS Their mission is to provide better everything, and sell it at a fixed price of just $3. Since every item is $3, be sure to check the size. You’re not going to get a pound of organic coffee anywhere, even at BRADLESS, but ounce per ounce it will be a better deal than Starbucks.

PUBLIC GOODS https://www.publicgoods.com/

Public Goods. They too are attempting to provide healthier alternatives to commercially available products at cost, making as little on the item as possible. It’s a counter-intuitive business strategy that relies upon the sales of the memberships to cover costs. I think it’s an interesting social experiment, but only time will tell if it’s economically viable for a company to operate long term under that business model. I am intrigued enough that I’m willing to gamble on a LIFETIME membership deal, offered through KICKSTARTER  until November 8th 2018.   

Only $59/year after your free trial.

If you want to gamble on the LIFETIME Membership deal like I did yesterday here’s the link for that ‘possible’ money saving offer: 

https://www.kickstarter.com/projects/494595922/public-goods-healthy-wholesome-food-affordable-to

Hopefully, these suggestions will provide money-saving opportunities that you can take advantage of. Always remember that every dollar you can save, and every cost-cutting measure you can find will get you closer to attaining wealth and achieving your dreams. Good luck! As always, I wish you success and happiness!