The Benefit of a “Shopkeeper’s Mentality”
Three years after founding the company, we had moved into a building built for us with the aid of the New York State Commerce Department. Although my office was new, my $22 desk wasn’t. It remained with one black telephone, the cheapest you could obtain. Things were tight, but if we needed to purchase something to improve production, we found the money, but if someone needed another chair in his office, it was extremely tough to get authorization.
A couple of years later, I noticed a new building being constructed about a mile down the road from MRC with a huge sign indicating it would be the home of the X Company. I learned that the company would be irradiating wire, a treatment of the plastic coating on a metal wire that improves its mechanical, thermal and chemical properties. It is the type of process that tires are given to toughen them for road use. The X company building was handsome and stood out from the usual factory buildings of the time.
A few months after I noticed the building, I received a telephone call from the founder/CEO of the company. He invited me to lunch and a tour of his operation. I accepted, and before lunch, I was given a tour of the new building. He explained the process they intended to use. I remember the hallways and offices with beautiful framed pictures. His own office amazed me. It was not the size or the beautiful framed pictures but the four telephones, one on his desk and three in far corners of the room. Each one was a different pastel color. The four pastel telephones impressed me more than anything else. I learned that one of his major investors was a financial arm of General Electric. I figured the founder had a sensational product and clearly excellent salesmanship,
That evening I was deeply troubled by the thought that I had a “shopkeeper’s mentality” and nothing more. The CEO I met that day was an entrepreneur with flair and an understanding of the executive life.
About 6 months later, this CEO called and asked if he could come to my office as he had some questions he would like to discuss. I wiped my black telephone and straightened the papers on my $22 desk. There were no framed pictures on the walls. My degrees and some scholastic honors hung on the wall behind my desk; that was all. The CEO arrived promptly and immediately got down to business; he asked me for a bridge loan to make payroll. For all the beautiful trappings and the excess, he had neglected doing a 12-month forward budget and was in a cash flow crunch, barely hanging on.
I was stunned by his request, but there was no way I could help him. MRC was hardly a cash cow, and I sure wasn’t a bank. His problem was elementary: Success and cash flow are separated by a significant time lag. More orders mean the need for more people, more inventory, more factory space and, of course, swollen accounts receivable. All translated into the need for cash.
Not long thereafter, I saw a sign in front of the X Company offering the building for lease or sale. I realized then there is nothing wrong with a shopkeeper’s mentality.
I still wonder where those pastel-colored telephones ended up.