Better Get Some Help

November 17, 2011

Email to Bonnie Fedchock, Executive Director of the National Association of Catering Executives (NACE):

11-17-2011

Hi Bonnie,

I am a volunteer with Inmates to Entrepreneurs, a unique non-profit organization that provides training and encouragement to prison inmates who are nearing the end of their period of incarceration, to start low-cost service businesses after their release.  As you can imagine, the traditional employment prospects for these individuals are not very good.  See http://www.inmatestoentrepreneurs.org/

I have recently agreed to serve as a mentor to an inmate who wants to start a small catering business upon her release, scheduled for early January 2012.

Among the publications in the NACE aStore I noticed a book titled:  Off-Premise Catering Management, by Bill Hansen and Chris Thomas.  Would you consider donating one copy for use my this inmate?  This would be a big help to an individual who now seeks to straighten out her life.

Best…


Hello, I’m Your New Mentor

November 17, 2011

November 17, 2011

Ms. H______ Y_______

[prison address]

Dear H______,

I have received a copy of your letter to Sageworks regarding your desire to start a catering business, and have agreed to serve as a mentor to you in this process.

First of all, congratulations on taking the first step towards becoming an entrepreneur, by attending the Jobstart session and completing the Inmates to Entrepreneurs Questionnaire.

Being your own boss can be very rewarding and provide much freedom, control and economic opportunity.  It is also a big challenge and very frustrating at times.  If you persist and persist some more, you can succeed!

Have you begun to develop a business plan?  If not, I suggest you begin immediately.  A business plan does not have to be overly complicated.  A good business plan includes information about these areas:

  • The value proposition to your customers (Lowest cost?  Fanciest service?  Most convenient?  Trendiest?)
  • Facilities (Where will you operate?  What equipment is needed?)
  • Personnel (Will you do everything yourself?  Hire others? If yes, what skills will they need?)
  • Operations (For a catering business, will you prepare the food onsite or offsite?  If offsite, how will you deliver, setup, cleanup, and control quality?)
  • Competition (If this information is readily available)
  • Pricing
  • Customer acquisition (This is the most important item!  To have a business you must be able to acquire customers.  This seems very obvious, but it is surprising how many entrepreneurs do not give this enough thought until after they have established their businesses.)
  • Financial (Including both the initial start-up costs and expected income and expenses in the initial weeks or months.)

Also I would like to ask what is the best way to communicate with you for now?  Are there any restrictions or guidelines as to how much information I can send to you (including books or other publications)?

Here is a little bit about myself:

I currently work with the owners of private companies when they are ready to sell their businesses or thinking about how to sell their businesses in the future.  I own my company, Arena Capital Advisors, which provides these services.  I have owned other businesses as well, including a staffing company and a recreation business.

A few years ago I helped the owner of a catering company sell his business.  At the time it was one of the largest caterers in North Carolina.  For that company, food costs were approximately 22% of sales revenue, and labor costs were 23% of sales revenue.  These figures may be helpful in your planning, although as a startup I would expect your food cost to be a slightly higher percentage as you would not be able to negotiate the same volume discounts on your purchasing.

Please let me know any questions you have, to help turn your dream into a reality.

Very truly yours,


I Have Only 61 Days Left

November 17, 2011

Here is the letter that started my on my Inmates to Entrepreneurs mentorship:

Nov. 9, 2011

To Sageworks,

Thank You for coming to Jobstart.  I look forward to seeing you soon.  I want to get this business on the ground.  You guys gave me hope that it can happen.  If there is anything I can do to get it started now or any information for me please send it to me.  I only have 61 days left.

Thank you.

H.Y.

Also enclosed was the I2E Questionnaire:

1. Why do you want to start a business?  [I want to be my own boss work for myself.]

2. Briefly describe the type of business you intend to start and why you have chosen this business?  [Catering business to maybe in 8-10 years.  I want my own restaurant.]

3. Describe in detail the product/service you will sell.  [Food anything from birthday parties to business meetings.]

4. Why will customers want to buy your product/service?  What is unique about your product/service compared to your competitors?  [Quality, always willing to satisfy the customer.]

5. How much will you charge for your product/service?  [I don’t know yet.  The price of the food, equipment, labor, and other charges that will acquire the price.]

6. Describe the group of people (market segment) to whom you will sell.  What do they have in common?  For instance, think about age, gender, education, location, etc.  [Any.]

7. How will you reach your customers to motivate them to buy?  [Word of mouth, start out little, advertisement.]

8. How do you plan on keeping your customers?  [Quality, performance.]

9. How will you get your product or service to your customers?  Will they come to you, or will you deliver to them?  [Come to them.]

10. List and describe your direct competition.  How will you compare with them regarding price, quality, and service?  [Price depends on how much I have to put into the product.  Quality best food ever.  Service on time.]

11. Describe your experience related to this business, if any.  [Serve Safe, I took on hand traninng for all areas in Food Service.  I have recommendations.]

12. What are your goals for this business? (Sales & Profit for year 1, 2, 3)  [To one day have franchises.]

13. What aspects of your personality will help ensure the success of the business?  [My attitude towards people]

14. How much cash will it require to start this business?  [ ? ]

15. Will you need to hire anyone to help you run this business?  [No]

16. What will you name your business?  [H____’s Catering.]

17. Are you currently incarcerated?  If so, what is your expected release date?  [Yes   1-2-12]

 


Inmates to Entrepreneurs

November 17, 2011

Earlier this week, I attended a “mentors meeting” of Inmates to Entrepreneurs, an innovative community outreach program to educate inmates on how they can start productive, low capital service businesses upon their release from prison.  I2E was developed by Sageworks, a Raleigh software company.

www.inmatestoentrepreneurs.org

By the end of the meeting, I had agreed to mentor an inmate who is approaching release in January, and wants to start a catering business.  My qualification?  About 4 years ago, I helped a client sell a catering business – then one of the largest in the state.

This seems like a worthwhile endeavor.  It must be hard for inmates to find traditional employment upon their release from incarceration, especially now.

Or maybe this will turn out to be a WOT (waste of time).

I’ll try to chronicle this activity here on the blog.


Job Creation’s 800 pound Gorilla

September 8, 2011

Tonight President Obama is going to propose a new jobs plan, and various politicians and media are already weighing in with many opinions about this.

But no one that I have seen is addressing the 800 pound gorilla sitting in the room, to wit:

For both small business owners and big business executves, the reward for eliminating jobs far, far exceeds any reward for creating jobs.

Here is one current example:  Just two days ago, Bank of America announced an executive shakeup that signals broad and deep layoffs, which industry analysts say could reach30,000 headcount reductions.  According to CNNMoney, “Investors cheered the changes.  Bank of America’s stock rallied 5.6% … Wednesday.”

This is not a recent phenomenon either.  A really galling example occured in January 2009, when pharmaceutical giants Pfizer ad Wyet announced a $68 billion merger.  The main financial justification was cited as the opportunity to reduce costs by eliminating 17,000 jobs.  About $20 billion in financing was provided by banks who had received the government’s TARP bailout money, helping mute criticism that they had not been lending enough after getting bailed out.

Huh?

I wish someone would come up with a real solution to our jobs dilemma.  As long as the rewards are greater for eliminating jobs, there is very little (very, very little) that any politician of any party can do that will work.


Graduation Musings

May 24, 2011

My daughter graduates from college this week, with a major in International Studies.  She has gotten a terrific education, developing a global perspective on many levels.  She studied abroad on 3 continents, and visited more countries that I have.  Speaks multiple languages and has a cultural sensitivity and awareness far beyond her years.

Now what?

I don’t ask that question about the near term.  She has a plan – to spend the next year teaching English overseas, then hopefully another year of work / travel / language / culture immersion, followed by graduate school.  But then what?

The skills she is developing will be useful – perhaps in law, or diplomacy, or academia, or commerce, or some sort of long-term Eat, Pray, Love experience.

It will be interesting and facinating to watch her future unfold, to see how the changing world opens new doors while also closing familiar ones.


Overhang or Hangover?

May 16, 2011

According to data released today by PitchBook, private equity firms were sitting on $477 billion in “dry powder” as of September 30, 20010.  In the trade, this is referred to as a capital “overhang.”  Most of this was raised in 2007-2009, as illustrated below:

PE Overhang 09/2010

This helps explain the many phone calls from private equity firms to Arena Capital Advisors looking for leads on companies they might acquire.

Or are they just hung over?  With easy and cheap credit, private equity firm bought nearly everything in sight in 2006 and 2007, paying seemingly any price.  There are a few, like the characters in the movie Hangover, who seem to be trying to reconstruct the events that left them in a mess, before doing any more damage.  Now that Hangover Part II is out, let’s keep an eye on private equity firms who need to deploy their dry powder to justify their existence and see if history repeats itself.

Your comments?