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Key Idea: Convince Your Family to Invest

Starting can be shocking. In the beginning you will need both financial and psychological support from your family.  The founder and his wife invented a safe way to put wine glasses through the dishwasher.

Key Question:

A: 

Through a lot of trial and error.  We will warn you; starting a business can be shocking, unnerving and even debilitating.  It is not for wimps.In the beginning, there will be more errors than trials!  Bob started his business thinking he would wholesale wine accessories to the retail liquor stores across America.

Q: What happened when he called on his first potential customer?

A: He dressed in his corporate suit, prepared a corporate flip chart, spoke in MBAese and then was told, "If our customers don't have their own bottle openers, they can buy screw top bottles." Bob was probably a total turn off to the buyers of a large chain of liquor stores that was making plenty of money with the current mix of inventory. His target customer didn't want to give his concept the time of day. He had to change his strategy to create demand at the consumer level if he couldn't get his products on retail shelves.

That was the first shock Bob had after he quit his big job with American Airlines in the tax department. As one of those guys who had an MBA in finance before hardly anybody even knew what MBA stood for, Bob was accustomed to success. He always did well in school and was promoted throughout his career at American Airlines. So to be thrown out on his first sales call as a small business owner was a big bruise to the ego.

Q: What else shocked Bob in the early days?

A: Rather than working 60 hours a week for American Airlines which got him a nice paycheck and great benefits, he was working 80 hours a week for no paycheck and no benefits. Also, he had to move his business out of the condominium building he and his wife lived in because a neighbor complained about the 40 foot delivery trucks backing into his driveway on a regular basis.

Q:  What shocked you about Bob's story?

A: My answer is that it took so long for him to make money and then just when he thought he was going to really hit it big, his costs ate him alive. He said, "In year one, we did $100,000 in sales and lost $140,000. It took till 1988 where I could take out a $30,000 salary and the company still could make about $20,000. By '89, we had a real business. We were making over $100,000 a year, taking out a salary. It was great.

By 1990, the recession hit and we lost $180,000 again in 1990. From '91 through '93, we kind of built back the base. '94, we started cross-marketing with the Wine Spectator and various other publications. In 1994, the business boomed, we grew 68 percent. However, the tax man took it all because we had to put more money into inventory, equipment and the payroll. So by the time I was done in 1994, I basically had the best year ever, made hundreds of thousands of dollars, I had to go to the bank and borrow money, you know, basically on my credit cards to pay my income taxes because I didn't have any money.  It was all in the business. It took till 1996, where the revenues from the business didn't have to all go back in and I could take money out for myself."

Joe Dannis of Dawn Sign Press told us he would never have started a business had he known how hard it was going to be. It took him nine years of working alone to perfect his first product and he said it was too hard and too lonely. It took years for Roy Crownover of Texas Nameplate to pay a few thousand dollars back to his first investor and Heliodoro Valadez of Best Buy Tortilla often fell asleep next to his tortilla machine because of his grueling work load in the early days.

Think about it

What kind of market testing did you do when you started your business?  What did you learn that surprised you?

Clip from: International Wine Accessories (IWA) and Bob Orenstein

Dallas, Texas: Meet wine enthusiast, Bob Orenstein; he started his business to serve people who, like himself, love fine wine. But, it was not easy. Learn how perseverance paid off. Slowly his company served hundreds of thousands of customers around the world. He  became the  authority on wine accessories and his customers began to depend on him to find items they could not find elsewhere.

From a spare bedroom of his condominium in 1983, it took him over ten years to break into the domain of the fast-growing businesses. He talks about business basics -- delivering quality products and extraordinary service.

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International Wine Accessories, Inc. (IWA)

Robert Orenstein, founder

10246 Miller Road
Dallas, TX 75238
2143496097

Visit our web site: http://www.iwawine.com/

Office: 2143496097

Business Classification:
Home products

Year Founded: 1988

Convince Your Family to Invest

HATTIE: All right. Your wife was very supportive. Let's talk about that, because when you cut loose from this job, that was an income that went away.

BOB: Right. We had to live off her income and my savings.

And what that meant is for a period of about one year before I left to about one and a half years after I left, I did no clothing shopping, we never went out to eat, we went on no vacations, we did absolutely nothing but work. My wife's free time was go to work, come home, work with me. And we did that seven days a week for several years.

HATTIE: So you started with your savings.

BOB: Basically started with my savings, borrowed money from my father and my brother, and in addition, I sold my coin collection.

HATTIE: The growth points--how long did it take you to get out of the condominium garage?

BOB: It took us, oh, about a year and a half, two years to get out of that, and the reason we got out is our neighbors called the city because we had 40-foot trailers rolling down over their front lawns and they were a little upset. So we were thrown out.

HATTIE: So you were having product delivered to your garage.

BOB: Absolutely. And they come in 40-foot trailers. You took what you could get. And, you know, we had no forklifts in those days. We just had a little dolly that we bought at Sam's for $29.95, and that's how we did it.

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