YOUNG ENTREPRENEURS GET A HEAD START IN BUSINESS WITH EDUCATION Cynthia A. Crane, Xavier University ABSTRACT This paper describes the case histories of four students who pursued entrepreneurship education at Xavier University and now successfully operate their own small businesses in Ohio. The paper delves into these student's businesses: the initial beginnings of the business, personality, management, finance, marketing, customers, competition, future plans, and the role that education played for them. The article stresses that interested students can be taught how to be better entrepreneurs. Constructed from numerous hours of individualized interviews, the paper is full of insights into entrepreneurship, especially in its connection with young people who start early in a business and are experiencing steady growth. INTRODUCTION Xavier University, a liberal arts school in Cincinnati, Ohio believes the entrepreneurial spirit is vital to America. The Xavier Entrepreneurial Center was firmly established in December 1987, and an entrepreneurial studies concentration was offered within the university's general business major. According to Dr. Andrew Eustis, Director of the center, the program is important and essential for those individuals hoping to own their own company. Says Eustis, "The strength of our free enterprise economy depends heavily on entrepreneurs, individuals who take initiative and assume risks in creating new businesses or in growing existing ones." Xavier's program in entrepreneurial studies is designed to help prepare students for careers in three areas: existing family businesses, corporate entrepreneurial opportunities, and new startups. The following four students currently attend or have graduated from the Xavier entrepreneurial program. All of them are self-employed in some capacity and attribute much of their business know-how to the entrepreneurial program. PAUL UHLIR, 23 years old, graduated with a business management degree, and is the owner of Michelangelo Painters in Cleveland, Ohio. In the summer of 1985, he was a garbage man in Cleveland, Ohio working 50+ hours per week and making only $4.00 per hour. Tired of working for someone else, Paul began talking to customers along his garbage pick-up route about painting their houses or garages. This sales tactic proved successful; he made more money painting two houses than from collecting garbage six days per week. He remembers, "I would get out of my maggot filled work clothes and get into paint clothes and paint until dark." However, problems began to arise. He still needed more money - "I wanted to expand the painting but I didn't have enough capital to start up my business." So, Paul asked his friend, Bob Hill, to join him in the venture. The first summer they split the equipment and worked separately. Bob was in charge of the financial operations, and Paul oversaw hiring, training, and insurance. Paul hired high school age employees and expanded his business to include roofing. By the end of the Summer 1986, personnel was up to eight people - two people on roofs and six people painting. The business took in $20,000 worth of painting profits which was to be

used to pay off Paul's school debts. Instead, he invested in trucks, lawnmowers, roofing equipment, and a trailer. In the summer of 1986 they did three times as many houses as in 1985. Says Uhlir, "We started our roofers at the beginning of the summer in '86-vs.-starting them in August like in '85." The company's first summer gross was $6,000 with a net of $1100. "After we took out wages, it was a big loss for the first year." The second year roofers grossed more than painters - $26,00 -vs.- $22,000 respectively. In 1986, they added lawncare services and driveway resealing to the company. To save on costs, the workers used their own lawnmowers and tools. There's been over 100% increase on completed jobs each year. By creating new spinoffs, Michelangelo continues to grow year by year. Relatively speaking, they have no more risks. Paul says, "We're making it big now and getting more customers for house painting." He and Bob keep their own books which cuts down on outside costs. In order to keep business flowing, Paul keeps in weekly contact with customers and keeps track of contracts. COMPETITION: Two competitors have offered to buy out Michelangelo several times. "We've thought about it because we both dislike painting," says Uhlir. One competitor would tear down Paul's flyers posted around neighborhoods where Paul's crew was painting a particular house, and then replace them with theirs. Competition can be fierce. Uhlir reflects, "There are a lot of painters in Cleveland and there's going to be room for more. There's a population here of 1.5 million with lots of homes worth money. Our niche in the market is a two year guarantee on our work." Paul claims that daily communication with the customers, even just saying "hello" in the morning is crucial. Paul says his customers "treat you like a king" if you are courteous and friendly. CUSTOMERS: Paul knows his customers are very satisfied. "In three years of business, we're approaching our 150th home this upcoming summer (1988). We've had only two jobs that have required partial repaintings and that was only on the garages." FUTURE: Paul plans to rotate crews so each employee will know every aspect of the business. Ideally, Uhlir wants to oversee the business and have the painting as just one tiny entity of Paul Uhlir Inc. Paul sees a possible career for himself in Michelangelo in maintaining and controlling all these home services. In the future, he plans to add plumbers and concrete workers. EDUCATION: "I learned about business from reading and from having a lot of experience." One important piece of advice that has struck with Paul from his entrepreneur class is "Don't mess with the IRS." ANN RISACHER, 26, graduated from Xavier with a management degree and was part of the entrepreneurial program's initial stages. After graduating, she returned to her hometown of Mansfield, Ohio where she bought a children's clothing shop from a neighborhood friend; and existing business that had been unprofitable. Her mother, Judy, had the finances to back her. Renamed ANTONY'S ANIMAL CRACKERS, with the motto "Your children are #1 with us, too," Ann sells clothing sizes moderate to high end, preemie to 14, in boys and girls. The store also sells instant gift items such as bibs and rattles. Ann emphasized that they won't carry the same lines as department stores or discount houses and 95% of their business is repeat.

Ann makes it a point to know each customer by name. Her store maintains a high level of customer service - a level she worked hard to develop from the time she purchased the store. "The first two years we had a limited reputation - you couldn't get out of the store without spending $50.00 for a shower gift," said Ann. She explained that the store was very elite and rather high-priced for her town forcing shoppers away to Cleveland and Columbus. "However," Ann said, "we re-organized and gave the store the energy and attention that it needed and is necessary in order to run a small retail business and we made the customers feel comfortable." Based on her customer mailing list, traffic increased 20% each of the first two years of operation; 1988 showed the most dramatic increase in business volume and customer growth. "We can see the light at the end of the tunnel now." CUSTOMERS: Ann travels twice a year to New York where she completes 95% of her buying. "Going to New York is a two-person job. We spend a large amount of money in just five days. We deal with each line individually - eight to ten lines per day, sometimes fifteen." Ann shops for her customers specific needs which shows her commitment to service. "If I know a customer is looking for something special, I'll try to find it in New York. For instance, locating an outfit for a thin six year old who wants to look like a six year old but wears a size 4." Ann says she LIKES her customers - "There is sincerity here in my store. They don't take advantage of me and I don't take advantage of them." Ann claims her business runs about 55% in-town and 45% from small, surrounding cities. Ann says she is trying to increase both areas, but especially the out-of-town percentage. Her most frequent buyer is the well-to-do grandmother, with the career mothers close behind. Ann stresses, "We build from repeat business and customers demand 100% quality. I have sent merchandise back when it didn't look like a sample. Clothes that are going to be washed a few times and then fall apart won't work for kids." COMPETITION: Ann's competition is the nearby mall and discount houses such as T.J. Maxx and Swallens. The mall stores provide a discount, but the service techniques at larger stores are generally poor or non-existent. "At any rate," says Ann, we have an upscale client that doesn't want 1200 regular customers in a store where they shop." Ann's official, no-nonsense manner seems to be one of the keys to her success as an entrepreneur. "My long-term goal in life was to own my own business. After college I thought I could either become a buyer in a retail operation, save money, and then go to the banks OR I could get out of college and buy this business and be my own boss. I decided on the latter. I don't like politics - I'm `no bull.'" EDUCATION: Ann obtained advice and encouragement from Dr. Eustis that better enabled her to own and operate a business. She says, "In the entrepreneur class I learned that practical common sense and using your instincts was very important." Overall, "the more I'm into business, the more I value my business education." GRACE GOTTENBUSCH is a manager involved in a family bakery business, SERVATII's headed by her father/owner, Bill Gottenbusch. In Cincinnati, Servatii's has a solid reputation and is noted for its fine specialty breads and pastries. Says Grace, "We bake as late as possible so that everything will be fresh the next day. We don't want our name mixed up with factory production." Grace's grandfather began the business in Muenster, Germany. Originally, Servatiis Cafe, the Cincinnati-based shop was founded 26 years ago. In total, there are six SERVATIIS' stores three of which were opened in the past few years.

Although no one in the family is pressured to take part in the business, Grace, who recently graduated from Xavier University with majors in entrepreneurship, accounting, and marketing, is already heavily involved in the operation. She laughs, "I wanted to be a doctor, but my chemistry grades weren't too good." Grace worked 30+ hours per week as administrative assistant to her father while a full-time student. In the summers she worked about 50 hours per week and more. Grace says, "I'm the `catch-all." I'm capable of filling in as manager or sales rep in any of our locations. Mostly, I make labels and troubleshoot, especially in customer-related incidents." Since graduating in May, Grace has been taking on more of the organizational responsibilities within the business. CUSTOMERS: Customers usually fall into three categories: specialty items buyers, daily basis buyers, and out-of-towners. A large portion of business revenue is generated from impulsive buying habits. The stores are set up to display products on shelves and behind counters easily visible by the customers. The bakery smell is their best advertisement - luring in customers who frequent the stores or walk by. COMPETITORS: Servatiis considers the numerous Cincinnati German bakeries their true competitors, but their history gives them the competitive edge. FUTURE: Servatiis is getting more into wholesale. Says Grace, "We are working with Krogers now putting our items in their delis and bakery counters. We also do specialty breads for them." Currently Servatiis employs 125, and they are trying to upgrade their training program. The family is always trying to come up with new items. "We're updating tortes right now and how do we test new items? We eat them!" laughs Grace. EDUCATION: In addition to all her responsibilities in Servatiis, Grace worked for a sub shop in a required internship for her entrepreneur major, was a top student, and participated in the newly formed Entrepreneur's Club. Her face is a common sight as she continues to help build the program and bring in interested students. JEFF KLUG, another family business employee, and a former Xavier entrepreneurial student has always worked for Klug School Bus Service. Jeff's father started a body shop business 35 years ago and went into school buses in the 1970's. Says Jeff, "Dad figured with seven kids in the family, any income was helpful." The growth rate was unbelievable from a one-bus to a 150-bus company and then into highway service. In 1968, Jeff's brother, "Butch," went into the business while attending college. "Eventually, my father said to my brother - here's the business - run it. Since then, my brother has been standardizing all of the equipment, and universalizing it." He is now CEO and Jeff's sister, Mary Joe (age 31) is the Vice President. The company is officially called Klug School Bus Service and Charter Bus Service, although there are four different corporate names. Says Klug, "My brother started the charter business within the past five years." Four of Klug's sisters are not int he school bus business. They wanted to find their own road. Jeff relates, "In our school bus company you earn your stripes. There's no free lunches. There's not enough room for slack. Our father made it clear that we would work hard - 50 to 70 plus hours per week." Jeff says it can be tough working with your family: often you hurt each others feelings. You have to tell the difference between work and family. Jeff explained the benefits of working in the family business versus working for a larger public company. "In the family business, I have my own say when I can do things. I have

some slack. I love the responsibility, but I'm not power hungry. I enjoy people looking for help. Granted...it gets hectic at times. But you have to keep your head straight and keep it up." Jeff is on an hourly pay scale. "I don't make $30,000 a year. I'm an entrepreneur - I make enough to live nicely, but you don't take away from the pot - from what's feeding you." Jeff expresses a sense of pride in what his father built. "Our name means a lot going down the street. You don't like to see your bus pulled over or wrecked. It's embarrassing. So, you work that much harder to keep your vehicles in top-notch condition." Jeff explains, "I started working for the company like my brother, beginning in grade school pushing a broom, cleaning up around the shop - learning the business from the bottom up. I now do all of the purchasing for the company. I drive routes during the school year as well. As buses get older, I sell them. I do all of the bus and highway coach scheduling, answering radios, making sure buses get out on the week-ends. Someone has to be out at 3 a.m. to make sure the buses are leaving." Jeff says his father quit school in ninth grade and idealizes the American Dream - work hard, be fair, and live happily ever after. The company "just happened," and with lots of hard work it got bigger. Jeff says,"Dad knew he was skilled enough with the people he had and he had the facilities to run a company. Jeff stressed their loyal workers - "our mechanic has been with us for twenty- five years - not a better one in the business. He's been very frugal with the company's money when buying parts. He spent the money as if it was his own - his last few dimes." Klug hires employees outside of the family; in total, he employs approximately thirty full-time workers,a nd 150 to 200 part-time school bus drivers. The company has ten mechanics, one body man,a nd others who work on parts, driving, and stock checks. The school bus business can be "tricky." Klug is contracted by the Cincinnati Board of Education on a yearly contract. Each year they must go back to sign and bid on contracts. With the highway coaches, they are presently under contract with corporations in Cincinnati to conduct tours. They use MC 8's and transit city buses which are like Greyhound buses. They also own a small tour agency. JEFF TOURS, in which charters are set up to go to ballgames or restaurants. Their charter work includes travel throughout the country by highway coach. This is the most profitable part of the business; however, the coaches are expensive to repair. They would like to get more involved in special trips. "For instance," says Klug, "we'd like to charter college trips such as spring breaks to Florida." They also set up package deals. For instance, the Cincinnati Bengals might charter several buses to take themselves and others to an out-of-state game. The prices charged to customers depends upon the amount of time, number of miles, and the area of destination. Says Klug, "We ask that people honor our alcohol and clean-up deposits so that if there is any problem, we can charge them fairly. We have a system where my brother and I go through the buses and make a decision whether they need to be cleaned or taken care of or if they're o.,. and only need normal maintenance. We don't take someone's hundred dollars just because it's there." COMPETITION: Jeff cites six companies as competitors many of whom are vying for The Cincinnati Board of Education's business. Says Klug, "We have to make something we have attractive to them. For instance, we have a good record - 1% breakdown ratio which is excellent. We have the best maintenance program - we pride ourselves on that. Also, we have our own on-site body shop."

Another "plus" is that Klug Bus Service implemented their own training program for bus drivers. Says Klug, "it's the same as the State of Ohio and then some. We show movies, hold a four-day class, we have driver training until they can handle a vehicle properly. We hold monthly safety meetings which are mandatory. We speak to them about problems that may crop up, or any new laws or rules that they need to know. "The drivers usually have other jobs and want extra income; often drivers are women who want extra money while their children are young. Says Klug, "We've got to have dependable, good people behind the wheels with their eyes and ears open, and the ability to check things out." FUTURE: With the highway coaches, Klug foresees opening branches in every city in the U.S. Klug would like to franchise out and personally would like getting into limousine service. EDUCATION: "In the business classroom," says Jeff, "you don't SEE much - not until you're really involved in business...the taxes...the people you deal with...the type of thinking." He stressed that working in business for yourself is different from working in a business for yourself is different from working in a business for someone else; you have to understand the needs of other people first before your own if you want to be successful. Jeff believes the entrepreneurial program is great for people who want to get into entrepreneurship and don't know much. "I wasn't totally dumbfounded as some others since I've been involved in it. I learned from the program that people are in small business because they want to be and because they try hard. If it was easy - and it's not - everyone would be doing it. BUT just because you fail once doesn't mean you can't try again. You learn from your mistakes." In conclusion, as can be seen through these students's experiences, entrepreneurship is frustrating, fascinating, and requires endless hours of hard work. All entrepreneurial career paths require individuals who can identify and evaluate the unique marketing, financial, and operational factors relevant to the success or failure of specific business enterprises; entrepreneurs must therefore possess skills as business generalists rather than specialists in a single business function. The Xavier Entrepreneurial Center is doing its part to develop that most valuable economic resource: entrepreneurship.