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Seeds For Thought
Choosing Your ChallengesIf you have lost a family member, gotten divorced, been sick, been widowed, had a child go astray, you may hurt and find it hard to get yourself back on a successful path. This is a good time for prayer. Here is a link to an index of patron saints waiting to help. Do not covet the life of someone who seems to have it easy. Having an easy life does not translate to having a happy life. Often, the untested are weak and miserable. If you have had it tough, you may be able to channel this toughness to persevere and succeed. 
Each day, take your twenty minutes of quiet time for soulful reflection. Think and pray. Do your best to count your blessings.How sad to be a child who is never given chores to do and made to account. How sad to be a teen who has never had a part-time job where she can earn spending money and see reality. How sad to be a senior in college and still not have a clear direction for your life. How sad to be married to an executive who has little time or interest in his family or faith. How sad to be able to buy a new Lexus and then immediately have buyer's remorse that you didn't buy the BMW. How sad to be surrounded by people who only care about you for what you can give them. Right now, commit to self-improvement and service. Do your best to be your best. No one can ask for more. God is all knowing. He understands your trials and your triumphs. When you take the time to pray and reflect, you will be amazed at how clearer life becomes. You will recognize how often the best things in life are free to the accepting heart and mind: hugs, smiles, sunshine, stars, beaches, cool breezes, flowers, love, loyalty, friendship, respect and more.  Do you want to enjoy the greatest books, DVDs, videos? Do you want super fast Internet access? Go to the library. Appreciate life now. Do you want to take great vacations for little money? Go off-season. Do you want to eat in great restaurants without spending a lot? Go for lunch. Do you want to wear the latest fashions? Go to outlet sales. Appreciate life now. Go to museums. Go to regional theater. Go to local youth concerts. Go to CYO basketball games. Appreciate life now. Who or what is stopping you? Take what you have and go and build. When you are a thinking, spiritual person following the Catholic Action Principles™, you are a lot closer to leading a full, rich rewarding life than you may have ever imagined. If you follow the Catholic Action Principles™, becoming financially independent should be possible even if life sends you a few hard knocks. Really, what is the alternative? You can be a selfish, miserable, miserly, lazy loner but this gets you what? Work hard. Smile. Care about your fellow man. Be ambitious. Want to be all that you can be. This all means: be a good Catholic! Only you can say, "Let this be the moment when everything changes for the better." Pray for this blessing. Romano's Homestyle Pizza, ContinuedKevin's next step is to secure a location for the shop. From his call to four real estate offices with brokers specializing in commercial property leasing, he learns that in Newton retail store rents can range from $8.00 to $15.00 per square foot plus utilities. From this range, Kevin's 1,000 square foot store would require annual rent payments between $8,000 and $15,000 per year or $666 to $1,250 per month. Kevin is shown three stores with the possibility of a fourth space being available in two months. The first store Kevin is shown is 1,300 square feet offered at $12 per square foot and is adjacent to a convenience store. The store has adequate parking and is separately metered for heat and air conditioning. The problem is that the landlord will not commit to a lease longer than three years. The convenience store's lease is up in three years and the convenience store has an option to expand into this "for lease" space at that time. The leasing broker mentions to Kevin that he might be able to buy the option from the convenience store. However, since Kevin is working within a limited budget of $25,000, this is obviously a long shot. The broker says that he will follow up with both the convenience store and the landlord. Kevin calls Mr. Domasi for his opinion. In discussing the store, Kevin and Mr. Domasi agree that although the store itself and the location are excellent, a three-year term is too short. Mr. Domasi is adamant that the lease must run 10 to 15 years with a 5-5-5 lease being ideal. A 5-5-5 lease means that the initial term of the lease is five years with two five-year options to renew. Mr. Domasi knows that a business is only as good as the lease that supports that business. A lease term shorter than 10 years proportionately devalues the worth of the shop. In other words, with all other factors being equal, a shop with an 8-year lease is worth 20% less than that same business with a 10-year lease. The second store Kevin looks at is 1,600 square feet and is the sole commercial tenant in a wood frame house with two apartments above. The property, in character with the neighborhood, is in fair to poor condition. The store is substandard and the apartments seem likewise. The asking price is $10 per square foot. On the plus side, the landlord seems willing to accept any type of store tenant under any lease term conditions. On the negative side, the landlord seems to have had the same attitude in renting the apartments. The hallway to the upstairs units is filthy and there is graffiti on the walls. This store is a possibility. Further, the leasing broker mentions that this building is also for sale and that the owner might be willing to give Kevin both a lease and an option-to-buy the building. The third store Kevin sees is a 900 square foot space in the local mall. However, this particular space is poorly sited in the mall. The store is located at the end of a wing that gets little foot traffic. It is not part of the food court. Only four tenants occupy the eight retail spaces in the wing. The other four spaces are covered with plywood. The rent is stated as a $15.00 per square foot base rent plus 4% of gross sales and a common area maintenance charge of $3.50 per square foot and a mall merchant's association joint advertising fee of $2.50 per square foot. The $15.00 per square foot quoted rent quickly becomes $21.00 per square foot plus the 4% of gross sales off the top that would push the rent to $25.00 per square foot or more. There would also be a stipulation in the lease that the business must remain open and only be open during mall hours, presently 10:00AM to 9:00PM. The lease would also state a long list of foods that Kevin could not serve, since other tenants already served those foods. Yet, the mall management would not give Kevin the same protection for his menu items. In other words, other mall food tenants would be allowed to sell pizza and subs at a later date, if they so wished. In fact, the mall management would retain the option of also leasing to a nationally rated pizza chain should that opportunity arise for the mall. 
The fourth store is the end store in an older downtown store block. Most of the other stores in the block are long-term tenants: beauty salon, shoe repair, a tobacco shop, an Army/Navy store, a key shop and a coffee/lunch shop. The only newer tenant is a photocopy/film developing business. The store that Kevin looks at had been a travel agency, which was run for 35 years by the retiring proprietor. The store will be available in two months. The corner store measures 800 square feet with an 800 square foot basement and has windows on two sides. There is one parking space for the tenant but no other off-street customer parking. The landlord, an older gentleman, Mr. Simkis, is asking $12.00 a foot and states that a 5-5-5 lease would be fine. On the plus side, although the rent is a bit high, the taxes and insurance on the building are paid by Mr. Simkis, the landlord. The location is above average with strong daytime foot traffic and with neighborhood business at night. The corner location provides for signage on two sides of the building. There is that one off-street parking space that could be used for the delivery car. Also, Mr. Simkis agrees that since Kevin would be upgrading the store that he, as the landlord, would upgrade the heating, wiring and plumbing to meet Kevin's needs. Mr. Simkis will also give Kevin a free "start-up" month before he has to begin paying rent. And, with the signing of the lease, Kevin will only need to pay two months rent. He must pay the first month's rent of $800 and an $800 security deposit. The other landlords whom Kevin had spoken with, had wanted three months rent in advance: first month, last month and security. On the negative side, there are already two established pizza/sandwich shops in the immediate area. These shops will cut into the automatic "lazy" customers business or people who will go to the closest shop regardless of quality. Also, the space needs considerable upgrading. For contracting advice, Kevin turns to Jessie Hayes, a friend from work who manages the hardware department and who does remodeling on the side, and to Jamil Rahman, a friend and Newton fireman, who also moonlights as a carpenter. Jessie and Jamil agree to work together. They recommend a new plywood and linoleum tile floor and a dropped ceiling. Also, rather than trying to repair the walls, they would be covered with 3/8" sheetrock to provide a smooth painting surface and give the shop a new appearance. Together with the custom work to be done (counters, etc.), Jessie and Jamil estimate figures of $3,000 for supplies and $5,000 for labor or $8,000 in total renovations. With a signed lease from Mr. Simkis and his business plan with cash flow projections and containing his $25,000 budget figures, Kevin begins calling banks about small business loans. However, with Kevin's limited cash participation (he has $10,000 saved), no bank seemed interested in writing a $15,000 loan. Three loan underwriters came back with the same opinion; that with just $25,000, this pizza shop would be undercapitalized. The bankers concur that Kevin will need $40,000 to start his shop and not $25,000. Of the $40,000, the bank will loan 50% or $20,000, if Kevin can show that he has $20,000 from other sources. The interest rate on the small business loan would be 10%. After talking with three banks, Kevin calls Uncle Giro and explains the financing challenge. And, Uncle Giro, has a connection, "Kevin, I want you to run this whole financing package by Sam Vincent at my bank, The First Cooperative, and see what he says. I'll call him for you." Kevin receives a warm welcome from Sam Vincent following the call from Uncle Giro. Two days before his appointment, Kevin had dropped off his financing package with Mr. Vincent's secretary and also filled out the bank's loan application forms. As it turns out, Mr. Vincent is not a loan officer with The First Cooperative but the Senior Vice-President. Kevin sees the value of an introduction. "So, Kevin, Uncle Giro says that I should take good care of you. He says that you're the next Uncle Giro." "I appreciate that, Mr. Vincent." "Kevin, we've been handling Uncle Giro's banking for the last 25 years and we'd like to start the same relationship with you. However, I've had our chief business loan officer review your plans and applications and she thinks that you may be cutting yourself short asking for $20,000. You probably want to borrow $25,000 and with your $10,000, you should be in good shape." "You mean that you want to lend me more than I'm asking for?" Kevin heart is beating a little faster. "Let's say that when you borrow from First Cooperative, we become your financial partner. As your partner, we want to be sure that you have a solid chance for success. When you succeed, we also succeed." Kevin liked the sound of this. "Thank you very much, Mr. Vincent." "Kevin, I'm going to send you to Mrs. Davis, the head of our business loan department and she'll see that your loan request is expedited. If the loan is approved at our loan committee meeting on Thursday, you can start drawing on your funds next Monday. How would that be?" Following the loan approval, Kevin will send a thank you letter to his "partner," The First Cooperative, care of Mr. Vincent. With the help of Uncle Giro's phone call, Kevin has received a very different reception from The First Cooperative than he had received from the other three banks he had visited as a man-off-the-street. Kevin calls Uncle Giro to thank him. Yes, on his own, Kevin might have had difficulty securing a business loan. Yes, with Uncle Giro, connection and referral, financing became an immediate non-issue. Yes, the world of business does run smoothly on good connections and referrals. The Romano Homestyle Pizza RestaurantGo to Lesson Nine3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13Index
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