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Last Update: Thursday October 1, 2020

Key Idea: Anticipate Poor Cashflow

Running a business requires good planning, realistic expectations and preparing for the worst.

Key Question:

A: 

Murphy's Law reins supreme. If something can happen, it will. Even things we can't imagine happen.  We need bankers, vendors and even customers to be our friends and to buy in to our goals. These people can be our best hedge to prevent us from falling into bankruptcy.

Q:
What is an entrepreneur's biggest Achilles' Heel?

A:
Optimism. It is also an entrepreneur's greatest strength. You know that our greatest strength always becomes our greatest weakness.

Harry warns us that he entered into business with a background in corporate finance law and he had a partner who was the CFO in a $200 million company. With all of their knowledge, they failed to plan for poor cash flow. Hope that makes you feel better.

Think about it

What would you do if you needed a big pile of cash quickly?

Clip from: Sundance Catalog

Meet Harry Rosenthal (above) and Brent Beck

Provo Canyon and Salt Lake City, Utah: In this episode of the show, we go into a pristine part of the Rocky Mountains, a place Robert Redford loved and wanted to preserve. To sustain that dream and help pay for it all, he turned to Brent Beck and Harry Rosenthal to implement an idea he had for a catalog business. Brent knew the products. Harry knew direct mail. But, unlike most of us, these three had a fast start for this business -- they were leveraging the Robert Redford brand.

Business is not easy for any of us. When Redford applied for his initial loan from a bank, he was rejected just like the rest of us.  He turned to investors, bought the land  to preserve it from housing developers, and began thinking of how to turn it into a business. That was in the late '60's.

Even celebrities were once "less than famous" and had to crawl, scrap,  risk... take a flying leap, just like the rest of us.

Go to all the key ideas and video of this episode...

Sundance Catalog

Jessica Basin, Sr. Marketing Manager, Robert Redford, founder

3865 West 2400 South
Salt Lake City (and Provo), UT 84120
801-975-5238

Visit our web site: http://sundancecatalog.com

Office: 801-975-5238

Business Classification:
Catalog, direct mail

Year Founded: 1989

Anticipate Poor Cashflow

HARRY: Most businesses start out undercapitalized. I've done it – really – coming from a position where I should have known better. I was a corporate finance lawyer. My other partner, Lenny, was a CFO of a $200 million company (yet) we were grossly undercapitalized. And it's because optimism rules amongst entrepreneurs.... you know, the general rule – we used to call it Art's Rule after Art Minella who was one of the lead partners of the law firm ... it's going to take longer and it's going to cost more.

So be really rigorous in your business plan. Figure out how much capital you're really going to need, then add to it because it's going to take more just because it's going to take longer. And usually the early years of a company involve losses.

The third thing I would say is that you have to understand that while this may be the most wonderful experience of your life, you might be in for five years of the most abject misery before you get there. It's really tough to start a business. And I think anyone who's started a business would say the same thing. It was a heck of a lot easier starting Sundance with the capital we had behind us and with Robert Redford supporting us than it was when three guys named Lenny, Stan and Harry started Right Start.

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