Q Is your relationship with employees important?
A Yes, very much so, and here is an example: There were several people milling around as I entered the lobby of Meadow Greens Retirement Community, which I own together with my partner, Kevin, and serve as managing partner. Just then a tall, distinguished-looking gentleman with graying hair approached me. He clasped my hand, shook it warmly and said, “Sid, do you remember me?” As we shook, while looking in his face, recognition slowly surfaced and then suddenly I knew. “John DeWit,” I said while shaking his hand anew. “John, tell me about your life.” We sat down as John began. “Sid, it’s been so many years since you hired me to work in your radio station. At the time I was a high school student. Currently I live in Florida with my wife and mostly grown children. I travel all over the world in conjunction with my job helping universities utilize technology in their curriculum.” I listened with admiration to this former youthful employee who clearly had become a success in life. “Sid,” John continued, “you have no idea how often I’ve talked about you while addressing college and university students in various countries around the world.” I looked at John thinking he could read the disbelieving expression on my face. “Sid, you were the first person to hire me. During that time in my life I was skeptical because I had come to believe that business people did not have a good reputation. To this day I’m not sure why I thought that. “My dad was a dairy farmer and may have had an unpleasant experience dealing with businesspeople. As a child I remember overhearing conversations about his negative experience with a certain business. I might have subliminally concluded that businessmen were not to be trusted. It was with that sense of prejudice that I came to work for you.”
“IN BUSINESS WE LEARN HOW TO MAKE MONEY. WE MUST LEARN HOW TO LIVE A LIFE OF MEANING.”
SID BARON
I had been listening quietly and thoughtfully as John, looking me straight in the face, continued. “Sid I knew you were a very busy man because you were running both the store and the radio station. However, on more than one occasion you took the time to sit down and talk with me. You asked questions about what I expected to accomplish in my life and took a personal interest in me. It impressed me and I’ve never forgotten that. You were not initially concerned about what I could do for you. Instead you were interested in me as a person and made me think about my future.” Other than thanking him for his kind words, I didn’t know what to say to John. I had no recollection of private conversations with him or any of the many high school students that worked for me part time. This incident clearly crystalized in my mind that, as employers, how we treat our employees, our young people, and others is vitally important. What we say to encourage or discourage can be a powerful influencing factor for the rest of their lives.
Q How did you handle terminating employees?
A Firing an employee is unpleasant both for the person being terminated and the “terminator.” In business, unfortunately, there are times when it is necessary to end a relationship with an employee. During my long business career I can remember only two occasions that I had to fire an employee on the spot. Once I walked past the desk of our receptionist who, at the time, was talking on the telephone to a customer. She had not seen me approach and seemed to be concentrating on some paperwork. When I overheard her uttering profane words I stopped in my track and waited for her to finish the conversation. When she noticed me standing there the conversation with the client stopped quickly. Without raising my voice I calmly said: “Rhonda, I’m sure you know that your language just now while talking to a client was entirely inappropriate. “I’m sorry”, she murmured. “Rhonda, I’m going to have to let you go immediately.” While gathering her belongings she said, “I understand,” and walked out of the front door while dabbing tears from her eyes.
I have also had to terminate employees for serious reasons including stealing, sexual harassment and more. In these cases, my approach was pretty direct. I would call him or her into my office and advise the employee that the purpose of the meeting would be “termination” of employment. Time spent counseling an employee was far more meaningful than using harsh words and attacking a person’s self-esteem. We always parted with a handshake while expressing my belief that the person would never repeat the offenses that led to his or her dismissal.
Q What do you believe are the essential ingredients for success in business?
A A strong desire to be your own boss. You must be predisposed with that desire rather than developing that desire because you happen to be working for a boss you either don’t like or don’t respect. To succeed you must have a passion to be successful no matter how long or hard you need to work. It also helps to choose a business in a field where you know that you will enjoy the work. Whatever business activity you choose, expect unforeseen changes. Something that’s in great demand today may not be tomorrow. That’s especially true in the field of technology. You must be flexible, nimble and quick to adapt. In my experience, selling expensive electronic organs at one time was a very profitable area of my retail business. Many people purchased one to be used as a family fun center. One morning I received a notice from the Thomas Organ Company that they had discontinued manufacturing electronic organs. They had accurately foreseen that inexpensive keyboards, computers, video games and other developments represented a huge change in the marketplace. The advantage of being small makes it much easier to change course than it is for huge companies. If you feel you could benefit from a boost in creativity and brainstorming you might visit the website innovationtools.com which focuses on business innovation.
Q Is starting my own business risky?
A Becoming your own boss does not guarantee success. Therefore you need to be willing to take risks with your own money and your security. You should not take those risks if you don’t have complete confidence in yourself and your ability to succeed. If you think that owning your own business is a nine-to-five job, you’ll never succeed. Early in my business career I became a firm believer in bootstrapping. It made me work harder without dealing with the pressure of having to pay back money borrowed from friends and/or family. Yes, attempting to start your own business is risky. You need an abundance of self-confidence without being “cocky” or arrogant. You also need to be brutally honest with yourself when you make a list of all the things that could go wrong. If you’re not comfortable with risking the possibility of failure, don’t start. You should never be reluctant to seek advice from experienced people whom you respect. If you fear that asking for advice from an experienced person will result in hearing things you may not want to hear, then don’t start.
Q Can you identify other characteristics to evaluate before proceeding with my plans to become my own boss?
A Look deeply into your very being and answer the following questions:
• Do you tire easily or possess boundless energy?
• Are you willing to risk your own money and your economic security?
• Do you have the skills required to inspire others?
• Are you determined, enthusiastic and strong-willed?
• Do you give up easily or do you have “never, never give up determination”?
• Do you consider yourself both capable and competitive in your undertakings?
• Are you likely to consider a failure as fatal or merely a stepping stone to success?
• Are you persistent? Can you live with the thought “if at first I don’t succeed, I’ll try, try again?”
Many people who want to be entrepreneurs don’t realize that they do not possess the requisite ingredients. They often mistakenly believe that they need reams of paper to prepare financial projections, feasibility and market studies. However, without prior experience it is virtually impossible to determine how all the studies and projections will translate to the real world. If your business plan is new and innovative your projections are likely to be of little value. Once you’ve turned your entrepreneurial passion into a successful beginning you may well need investors to grow your enterprise. That’s when you need a business plan, market studies, financial projections and a ream of paper.
Q Did your busy business life allow you to spend adequate time with your children?
A That was a pressure point in my life. I loved my wife and children more than anything and often felt guilty about not spending enough time with them. Sunday afternoons were the time to spend some enjoyable time with my four growing sons. Often we’d have bicycle races on our quiet country road. That was until the day came when they’d win every race. We would also go to a small densely wooded area in the back of our forty-acre farm and play hide and seek. Those were precious hours of bonding with my children. We were blessed that Margaret was an exceptional mother who took great pride in her children. They were always dressed neatly for school or church and she was able to deal with the challenges of childhood naughtiness and disobedience. On the rare occasions that serious disciplinary action was called for, she’d wait until I came home to discuss the issues and we’d agree on the appropriate punishment. As a result, our children knew that they would never be able to “play one parent against the other.”
Q Is being passionate about a specific activity sufficient reason to pursue it as a business opportunity?
A To become (or remain) successful by focusing only on money isn’t good. The focus has to be on the larger purpose of what you are doing and why you are doing it. Your chances for success will increase by looking at where you want to go and what you would like your legacy to be. Understand that there is no “instant gratification” when you are running your own business. You won’t get a paycheck every month like you do in a forty-hour-per-week job. For a period of time, you may need to work very hard with little, if any, monetary reward.
Remember, your life as an entrepreneur will not always be fun. You must have realistic expectations and measure your success not only in financial terms but also through satisfaction with life as a whole. Happiness does not come from a headlong charge toward wealth. It is about finding satisfaction in yourself and in what you have done.
Ask yourself these fundamental questions:
How do you really want to live your life?
What do you want to accomplish in your life?
It has been a few years since I read Stephen Covey’s popular book The Seven Habits of Highly Effective People. In one chapter, “Begin with the End in Mind,” he recommends formulating a “personal vision statement” to document one’s own vision for life. Since I already strongly subscribed to that concept, I did not do what he recommended, which was to write a personal mission statement. I recommend that you do that only after you seriously visualize the day when you die. What do you want your loved ones and friends to say or remember about you?
Q How did you deal with jealousy or other conflicts among employees?
A Jealousy in the workplace is not uncommon. Lack of recognition or selectively praising some staff or team members by a manager can easily result in jealousy. Praising all employees for a job well done instead of just a select few will reduce jealousy and conflict. Everyone likes to know that the boss thinks they are doing a good job and that they are appreciated. In the hotel business there are two primary departments:
1. The front desk and office operations.
2. The housekeeping and laundry operations.
Front desk and office personnel generally receive slightly more compensation. They are required to have good communication skills as well as being proficient on the computer—something not required for housekeeping and laundry personnel. This easily makes some employees feel inferior to others. I always made it a priority to point out that the two departments were equally important for the successful operation of the hotel. That success was attributable to the housekeeping staff keeping the rooms in excellent condition and gave the front desk staff the enthusiasm to keep rooms occupied with satisfied guests. All employees were equally important and the general manager was required to treat all employees with equal respect.
Q You wrote that during your business career you barely avoided bankruptcy. Can you give any specifics?
A When I received my license from the Federal Communications Commission to operate radio station KLYN-FM in November 1960, I had no experience in the business of operating a commercial broadcast station. As a result, I did not know that I couldn’t play recorded music without paying fees. That changed when a couple of well-dressed “inspectors” walked in late one Friday afternoon. They introduced themselves as enforcement officers for ASCAP (American Society of Composers, Authors and Publishers). I knew I was not knowingly guilty of having done anything illegal. The gentlemen explained that ASCAP was in charge of collecting royalty fees on any copyrighted material which included the recorded music we were broadcasting. I was informed that I had not paid the fees for nearly three years. They did not accept my explanation that I had been unaware of this requirement and insisted that I pay them immediately for all past due fees. That was a considerable amount and I told them that I was struggling to keep the radio station operating and simply did not have the money to pay. They closed their books and informed me that they would file a lawsuit. I was staring at the floor and remained silent for nearly a minute. Then I raised my head and looking them squarely in the eyes said: “Gentlemen, I understand the legal requirement to pay those fees on a monthly basis and starting this month I can promise you that I will never miss a payment. I can also tell you that as soon as I’m served with your lawsuit I will turn off the big switch on the station transmitter and KLY-FM will be off the air. When the time comes I will be happy to tell the judge that I had agreed to pay the monthly fees from this day forward and why I had no choice but to discontinue the operation of my much-listened-to broadcast station.” After a moment of silence, they asked to discuss the matter between themselves privately. I excused myself until one of the gentlemen came out of the office and asked me to join them again. One of the men said: “Mr. Baron, we have no doubt about your sincerity and no desire to inflict financial distress on you and the radio station. We believe that from now on you will pay the fees regularly and with that promise we will forgive all the past due fees and forget about a lawsuit.” I thanked the gentlemen. We shook hands and they departed.
There was another close call which could have resulted in the death of my business. This came during the time of Motivating Sound Inc., when we were manufacturing and distributing background music systems. One of our customers, who was an electronic engineer working for a Salem, Oregon, based company, also lived in Salem. His firm had designed one of the first solid-state portable transceivers. Their first production run was purchased by the State Forest Department. Unfortunately for the company, the units had a transistor overheating problem which rendered them unusable within a short period of time. The Salem design and manufacturing facility was owned by a larger company located in Minnesota. They suffered major losses and decided to discontinue their design and production of portable transistorized transceivers. Instead they decided, under the direction of their engineer, Mr. Marr, to develop and manufacture electronic merchandising systems. Mr. Marr was our background music dealer in the Salem area and I had come to know him well. He had told me about his employer proceeding with the electronic merchandising units and was approaching the assembly phase. Then one morning I received a phone call from Mr. Marr. “Sid, the Minnesota company has decided to pull the plug on the Salem operation and they want to dump all their partially-assembled units. I was thinking this would be a great opportunity for your company to acquire the inventory and expand your product line.” I told him that I was very interested in such an exceptional opportunity but was sure I could not afford it. He explained that the Minnesota company was eager to close the factory and two of the company’s executives would be coming in the following Monday. I agreed to meet with them to discuss the possibility of making a deal. After all, entrepreneurs are calculated risk takers. But as I piloted my single engine four seat Piper back toward Bellingham I encountered deteriorating weather. The aviation map on my knees was of little help in navigating since visibility was poor and I was not equipped to fly solely by aircraft instruments. As long as I remained northbound while flying above Interstate Highway 5, I knew I was heading in the right direction. To keep the freeway in sight I had to gradually decrease my altitude to 1000 feet, which is the lowest legal altitude allowed while flying over populated areas. The forward visibility was virtually down to zero and I was getting nervous. Suddenly a voice from the radio crackled: “Chehalis radio this is Cessna November 6890 Echo position report. Two miles north of Chehalis southbound over I-5 at 1000 feet.” At a combined closing speed of nearly 300 miles per hour I was on a direct collision course with an oncoming aircraft which I could not see. There was no time to think. Immediately I made a left turn knowing that the Chehalis airport was west of the Interstate. To my immense relief the airport runway was right in front and below me. I pulled the power, lowered the flaps and landed on the wet runway.
After taxiing to the airport office I made arrangements to rent a car for the more than three hour drive to Lynden. I was grateful to be alive after such a close call. Soon my thoughts returned to the big factory inventory purchase. I had the uneasy feeling that my excitement about the possibilities had obscured my fear of failure. I knew we were seriously undercapitalized and should have known that what I was trying to accomplish would require a great deal of money. I did have six months to pay for the inventory and had we not had collection problems with some of our key distributors, I might have succeeded. Now our total debt exceeded our total assets and we were heading for bankruptcy. Most of our debts were from the unpaid balance we owed the Minnesota firm for their Salem inventory. The attorney representing the Minnesota firm was very aggressive in his efforts to collect. When I received a registered letter informing me of a pending lawsuit I knew we would lose. I spent most of that day composing a response letter to the attorney. In it I was very honest advising the attorney that if the legal action proceeded, I would have to immediately declare bankruptcy. I respectfully requested that our company be allowed to return the merchandise, most of which we still had in our warehouse. Fortunately the attorney accepted. He most likely understood that if we filed for bankruptcy he would not get any money nor any merchandise returned. It was a close call I never wanted to experience again.
Q Did you ever begin planning your estate?
A During the first thirty years of my business career I didn’t have much of an estate to think about. By the age of about fifty that began to change when I experienced the satisfaction of starting businesses that became successful and began to bring financial rewards. I did not know to what extent the incurable disease multiple sclerosis would affect my life expectancy. It was undoubtedly a factor in my decision to take my estate planning seriously. My accountant advised me that taxes would take most of our estate at the time of our departure from this mortal life unless I did some creative planning. I studied a great deal about estate planning and learned that it would not entirely eliminate estate taxes. However, I could take steps to make sure that our family and our favorite charities would be the primary beneficiaries of my estate. After researching charitable foundations, I engaged the services of a Seattle law firm to establish the Baron Foundation. Our wills were then rewritten stipulating that our six children would each receive a certain amount as their inheritance. The entire remainder of the estate, if any, would be donated to the Baron Foundation to be gifted to the charities Margaret and I had identified. As the value of our estate continued to grow, we decided to designate two of our income producing properties to be owned by an entity named the Sid and Margaret Baron LLC. This was specifically established to allow parents to annually gift unit shares in the LLC to their children in the amount allowed under IRS rules and limits. As the Managing Member of the LLC, I remained completely responsible for every aspect in the operation of the properties. The profits generated by the LLC-owned properties were distributed annually according to the children’s and grandchildren’s percentage of ownership. Since additional unit shares were gifted to our children, the annual dividends paid also increased commensurate with their increasing ownership percentages. When in 2011 and 2012 I decided to sell the properties, the proceeds of the sales were distributed to our family members consistent with their respective percentages of ownership. Margaret and I have enjoyed being able to give parts of our estate to our children and grandchildren while we are still in the land of the living.
Q Do you still believe that America is the land of unlimited opportunity?
A It has been our family tradition for many years to get together with our entire family around Christmas time. As I write this it’s late in December 2012. All sixty-five members, including the great grandchildren, of the Sid and Margaret Baron family are together at the Holiday Inn hotel in Everett, WA. To begin my response to the question I want to tell you about my conversation this morning with one of my grandsons in-law. His name is Jeremy Crossin and he is married to my granddaughter Lindsay. They live in the Boston area where Jeremy is employed as an equipment technician for a pharmaceutical company. Early in life Jeremy knew that he wanted to “get ahead.” Through positive reenforcement by his dad he knew he could achieve what most would consider impossible. He wanted to “rise above the crowd” and also learned that his young wife Lindsay, my granddaughter, had similar drive and ambitions. Jeremy knew that one essential ingredient in becoming successful is to have the ability and discipline to save a little money every month. Doing this made it possible for them to buy their first home and very recently, after moving to the Boston area, adding a duplex. Their home, located in the eastern part of Washington State, is being rented with the monthly rental income substantially larger than their monthly mortgage payment. Now they will be living in the upstairs of their duplex and renting the other half. Jeremy and Lindsay, at a very young age, are already proving that America still is the land of unlimited opportunity.
Q Are there still opportunities to start a small business with little money?
A Driving through a largely residential area in the Fairhaven district of Bellingham I noticed a neon sign in the window of a residence which read “Computer Repair.” Computer repair and upgrading is a forty billion dollar business and growing. If you’re not already a computer expert you might have to take a home study course just like I did many years ago in television and radio electronic servicing. Then you need to get out among people and solicit their business. The face-to-face personal contact is very effective and handing your prospective client one of your business cards is much less expensive than placing newspaper ads.
“EARNED SUCCESS IS THE IDEA THAT YOU’RE CREATING VALUE WITH YOUR LIFE AND VALUE IN THE LIVES OF OTHERS.”
MARVIN OLASKY
There are a plethora of other opportunities for the would-be entrepreneurs such as starting a tutorial center on any subject in which the person is knowledgeable. Many businesses can be started on a shoestring such as building websites, computer repair, wedding photography, event planning and many others. In the days of my youth I could not have dreamed about computers, the Internet, E-mail, cell phones and so many other technological developments. We could no longer function in our businesses without those developments any more than we could function in our homes without electricity.
“LEADERS BECOME GREAT, NOT BECAUSE OF THEIR POWER BUT BECAUSE OF THEIR ABILITY TO MOTIVATE AND EMPOWER OTHERS.”
SID BARON
In the final analyses faith, family and friends form the foundation of our existence.
The value of our lives and its fulfillment are not measured by the accumulation of wealth but what we do for others throughout the journey.
I recommend you keep a gratitude journal. Sit down, daily, and write about the things for which you are grateful. Start with whatever springs to mind and work from there. Try not to write the same thing every day but instead explore your gratefulness.