The Expert Podcast

In this last segment of the leadership self-employed business development series, we're going to talk about an example of looking for opportunities. This goes back into a story from my career background. I worked for a company that managed new car dealerships—automotive dealerships—and this company had franchises for a certain manufacturer. Let's call it Nissan. They had Nissan dealerships, and they were good at selling Nissans because that was the product they knew about. They had market coverage, they had management experience, they knew the product, and they had a couple Nissan dealerships around this certain geographic area.

The big city in this area—the biggest town in this area—did not have a Nissan dealership. In that town, there was no Nissan dealership. All the towns around it had a Nissan dealership, but not the big city in this market area. So as a manager of one of the locations, I was curious. Why was there not a Nissan dealership in this big city? It turns out that the Nissan franchise had been awarded to a person for this town—another person, another owner—but this person hadn't opened up a franchise. Matter of fact, this person didn't own any car dealerships. He owned some other businesses. He never owned a car dealership, but he had a piece of real estate that was in the perfect location for a Nissan dealer. He had the franchise awarded to him, he had the capital—he had money, plenty of money—but had not opened this Nissan dealership, and the franchise had been awarded several years prior.

So the question is: well, what is he doing with it? Why isn't he doing it? So you know, as a young guy, I'd look for an opportunity. Well, what kind of deal can I put together? Maybe he wants to open a franchise, but he hasn't found the right opportunity. I was a little bit young and naive about how business works, but I was curious about it, and I wanted to do something. This person was kind of high profile in their other businesses. His name was well known in the community and running other businesses besides car dealerships, and he had several locations for his other businesses.

One of them was relatively old—had been there 20 years, 15–20 years. So I took it upon myself to contact this guy to say, "Hey, don't you want to open a Nissan dealer? Or we can work a deal—we can do a deal." I don't even know what that meant. I had no money. I had no authority. I had no nothing. I just wanted to see what kind of deal I could do. So I went and called the guy up, made arrangements to go see him. I went to his office, which was in one of his other businesses—right inside the business. It was a little bit of a kind of grungy, lower-scale business—not a car dealership.

So I went to meet him there and I said, “Hey, look, I want to do some kind of deal. I know you have this franchise. Do you want to sell the franchise—the Nissan franchise—because I work for a company that might want to buy it? Do you want to open it? Maybe I can work a deal.” Also, at the time, I had a commercial real estate license. So maybe I could do some kind of brokerage on a property. I had no idea what I was doing with all this, but I was going to try to find out. And you know, he said, “Well, I don't want to sell the franchise. I'm not ready to open it yet.” He kind of pushed off all those things.

But at the end of the conversation, he said, “I am looking for somebody to take over and run this business that you're sitting in right now—this location, my main original location for this other business. You want to run this business? You seem like an ambitious guy, entrepreneurial—you want to run this business?” I don’t know—never ran that. “That's okay. You know how to run one business, you know how to run another. I'm sure you could figure this out. Lower end than running car dealerships.”

Fast forward to over the next few weeks—we talked about what the details were, how it would work, what the numbers would be. He said, “You know, you can do a buyout. You come up with a little bit of money—not a whole lot of money. I think it was ten thousand dollars or something—you could, as a down payment, buy out this business. And the rest of the price”—and it was a pretty high price, it was close to a million dollars to buy this business—“it’ll just come from earnings of the business. You’ll get a salary. The rest of the profit will go towards your buyout. And at the end of the buyout, if you run it well, you'll own this business.”

Okay. So I put together a couple people that I knew to run the business. We went in, and we started running it. Well, it turns out that the guy was a little bit of a scammer. He ended up having other legal problems with taxes and IRS, and he had some bank fraud. He ended up going to prison. And even this transaction to sell this business to me and the other guy that I went in with turned out to be kind of a scam. He just wanted to have somebody basically run it for cheap that he didn’t have to pay a lot of salary to, get $10,000 cash out of us up front so he could have some walking-around money, and not really have any liability.

But it doesn’t matter. It turned out to be a stepping stone. It was a good move. I ran a business on my own. I learned how to recognize the signs of who’s good and who’s not good to do business with. Here’s a couple stories about this person. There was a customer that had come into this business to buy a product while he was there—while I was there. I was already running the business, and the prior owner, this guy who was selling me the company, happened to be there. He stopped in to get his mail or whatever it was.

And the customer came in to buy something, and he says, “Hey, do you have this product?” And we had staff that talked to customers. And this owner jumped out in front—“Yeah, we have it, no problem, it's $82” or whatever it is. And I'm thinking, why would he be talking to customers like he's the owner or prior owner? And why does he even need to get involved with an $80 transaction? “Yeah, no problem,” he took the $80, put it in the cash register, and came back. I said, “Well, why did you need to do that?” He said, “Well, I just can't help myself. Somebody wants to buy something—I want to do a transaction.”

“Well, what if we don’t have it? You didn’t even look to see if we have it.” “It doesn't even matter if we have it. We'll just sell something, and we'll give them something.” “Well, don't you want to give them the right thing?” “No, no. It doesn't matter. We'll figure it out. We probably have something close to it. We’ll sell it to them. And if it doesn’t work, most times they don’t come back anyways.” Thinking, that's not a really good, honorable way to do business. And these are his exact words. He says, “There's a million people in this world. If you screw each one of them out of a dollar, you’ll be a millionaire.” And that was one of his business strategies. He said that to me directly. And I'm thinking, well, that's just—that’s a bad sign. Because I'm one of the million people too. Maybe you're screwing me out of a dollar. Maybe you're screwing me out of ten thousand dollars.

But it was an understanding of what the business logic is for some people—and how do you recognize that kind of person. Tell you another story: this person had a daughter. And this daughter was living with the mother. They had been divorced. You know, this guy and his wife had been divorced for several years. And this daughter was, I think, 13, 14 years old—maybe 15. Teenage daughter. And I had met her a few times. She had come by this business a few times to meet him or to just be in this company.

I get a call from the guy—this business guy that sold me the company—and he goes, “Hey, I know you do business with some of the radio stations for advertising.” Because we did advertising on the radio. And he said, “My daughter wants to go to a concert. And I know the radio stations have tickets for these concerts. She can’t get tickets for this concert—it’s sold out. Bon Jovi concert.” You can imagine what era this is—probably 90s. And he says, “Bon Jovi concert sold out. You know, my daughter wants tickets. Can you get tickets from one of your radio contacts?”

All right, I’ll look into it. See if I can. Call the radio station—the ad salesperson that sells me all my ads—and of course, they’re willing to do you a favor because they want me to buy more advertising time. “No problem.” So I found out that they can get tickets—yeah, good seats. Second, third-row seats for Bon Jovi concert. Got 'em. So this guy says, “Get the tickets. I’ll pay you back for it.” That’s where I knew something was going to happen. He was notorious for not having his wallet when he went out to dinner. Not having money. He was always broke. And he always ended up with someone paying something for him.

So he goes, “Give me the tickets, and I’ll pay you back for them.” I think, here we go. I'm going to lose out on whatever tickets are. But I figured, you know, it's 100 bucks or so, whatever it was. So I got the tickets. And I said, a couple days later, “I got the tickets. They're at the office. They're in an envelope. Got your name on them.” “How much are they?” And I told him, “I don't know—I think they're, let's say, forty dollars each.” This was back in the 90s. Forty dollars each. So that’s forty times two—eighty dollars. “Okay, eighty dollars. I’ll give you the money.” “Okay, whatever.”

He says, “Put it with my mail,” because he still had mail coming to this office, “and my daughter will come pick it up from you. And I’ll pay you the money.” Okay, here we go—here’s how he gets over. I figure it’s only 80, so sure enough, the daughter comes a day or two later to pick up the mail, pick up the tickets. I said, “Here’s the tickets.” She said, “I have some stuff for my father—if I could leave this here for him, then he’ll pick this up next time he’s here.” I got some stuff for him too. She left a couple envelopes for him.

So I put the envelopes on the counter and didn’t think much of it. And a few days later, somebody had seen this pile of papers—didn’t know what they were because they weren’t labeled. One of them was an envelope, had nothing written on the outside, and it was not sealed. It was just folded inside. So I didn’t know what it was either, so I opened it up and I pulled it out—and there’s a check in this envelope from the daughter and the mother to this guy, paying for the tickets.

He had charged his own daughter for the tickets. Which—okay, maybe you do, maybe you don’t. Not only did he charge her, but he marked them up. He charged her $150 for these two tickets that cost $80. Whether he paid me $80 or not—I don’t even remember if I ever got paid for them—but either way, he marked up—he scalped—the tickets for his own daughter.

So the moral of the story is: this business opportunity became a good stepping stone. A learning...