Today we are speaking to Tom Kane, a voice over specialist, radio news anchor and author of several books. Tom has also created a variety of listening comprehension materials for learners of English and he frequently helps people improve their accent and pronunciation. In addition, Tom consults you on how to choose the right college or university.
Tom, you have been successful entrepreneur for quite a while. What was the first business idea you put into practice?
Thank you for your question. The first business idea I put into practice was
opening a restaurant. I believe the year was 1988. I was pretty young, only
26 years old. I had been transferred to Pittsburgh, Pennsylvania with
another company as a regional sales manager a few years prior to starting the business. I had a
very good job as a sales manager. I had a decent salary, a company car, and
a complete expense account. Although the sales manager position was a
quality, challenging job, I had a desire to be self-employed.
I considered purchasing an existing restaurant. However, after looking
at a few restaurants that were for sale, I decided it would be best to start
the business from scratch. I reviewed various locations to put the business
and finally decided on a location, a street between two major universities
in the Pittsburgh area - The University of Pittsburgh and Carnegie Mellon
The restaurant was called Kane's Courtyard. It was a New York style
delicatessen. We served soups, salads, and cold sandwiches. The restaurant
business is a very risky business. Meaning, there is a very high failure
rate. We purchased the best breads, meats, and cheeses that were available.
Although I had a good location, and served a quality product at a fair
price, there was still a high probability that we could fail.
The restaurant did fairly well from the start. We were only open for
breakfast and lunch. The hours of operation, per our lease, was 7 a.m.
through 5:30 p.m. The restaurant was small. It seated only 36 people.
However, during the warmer months, we had white tables and chairs that we
put outside in a courtyard, directly off the sidewalk. When the outside
seating was available, we had a total seating capacity of 70. We also offered
a delivery service to the local businesses.
About two years after opening, I decided to create another business to
compliment the deli. It was called Kane's Catering. We catered lunches and
parties to the businesses in the area. As we became more well known in the
area, we began to get many calls for lunches to be delivered on the other
side of town. I had then decided to open a second deli location called, Kane's
5th Avenue Deli.
Kane's 5th Avenue Deli was a smaller location than Kane's Courtyard. It had
limited seating, but its purpose was to serve the folks on the other side of
town. By now I had 26 employees working for me. 24 of those were college
students and 2 people were senior citizens. Unfortunately, the Kane's 5th
Avenue Deli didn't work out too well. The business lasted only 2 years
before I had to close it down. Although we served the customers in that
part of town, the business wasn't enough to sustain a full restaurant
operation. The overhead, meaning the rent, utilities, staff and operational
costs were more than the revenue that was being generated. I decided to
focus my efforts on the first restaurant, Kane's Courtyard and Kane's
The business at Kane's Courtyard was great. I had some very loyal customers and met many wonderful people. I don't know if you have ever heard of the children's television program called, Mister Rogers Neighborhood? The founder and star of that program, Fred Rogers and his office staff were regular catering customers of mine. Mister Rogers Neighborhood and Fred Rogers are legendary in the United States.
After a while, I began to get a little burned-out dealing with pressures of running the business. Seven years of hiring and firing college students, dealing with leases, dealing with the landlord, and overhead increases, I thought it would be best to sell the business while it was still generating a decent amount of revenue. I ended up selling the business to another guy who had it for 6 additional years. Because of the reputation the restaurant had, I allowed the new owner to keep the name, Kane's Courtyard. For almost 7 years, I owned and operated Kane's Courtyard and Kane's Catering. Although the restaurant did require a lot of hard work and discipline, it was a fun business to own. Given that fact that most new restaurants close within the first year of business, I consider myself very lucky that I was able to keep my restaurant open for as long as I did.
A question most people have when they hear about an entrepreneur
starting a new business is this: Where did you get the starting
capital from? I take it you had saved some money from you job which
you then invested into your restaurant business?
Obtaining capital is always a very good question. My first choice was to go
through a bank for a small business loan. However, because a restaurant is
considered a "risky" loan, the banks weren't very interested in lending me money.
Although I had good credit and was an existing customer, I did find one
banker who was willing to at least listen to my plan.
It was funny, the banker was a good guy and kept joking while we were
talking. He would say
things like, "The only reason I am considering lending you any money for
this small restaurant is there is no where good to eat right now."
Ultimately, the banker said, if I came up with one half of the money needed,
he would finance the balance, or the other half. So that is what I did. I
had some money that I put up front. I also borrowed some money from
relatives. Once I had 50% of the money I needed, I went to the bank and
opened an account and deposited the money. I then showed the banker a
detailed plan of what I thought would be my operating expenses. I then
showed him how I would be repaying the loan to the bank. After I made the
deposit, and showed him all the information I needed, I signed all the
paperwork and I received the loan within a few days.
Being self-confident and having a strong will to succeed is crucial for success, but to be honest though, it's probably very low on the list when it comes to "actually" securing a loan. There are many points to consider when applying for a bank loan. When I received my loan it was in the 1990ies. I remember my banker always telling me, "We'd like to be a small partner. We don't want to be in the restaurant business." Whether you are applying for a personal loan or a business loan, the banks main concern is your ability to repay the loan.
"Business" loans are very tough to secure at any time. When I received my loan it was a "personal" loan, put in my personal name, NOT a business loan. Once I received the money, I could do with it what I wanted, but it was not a specific business loan. That is very common, even today. To secure a specific business loan, a person should be established in a profitable business for years. Even then banks will want you to sign a "personal guarantee." That means, if the business fails you are "personally guaranteeing" that you will pay back the loan. Banks need to see detailed plans, financial statements, income statements, tax returns, credit worthiness, and a host of other things just to apply and consider a loan.
I don't mean to sound negative. The truth is, personal loans and business loans can be very difficult to obtain. Think of it this way: if you receive a car loan, and default on the loan, the bank will repossess your car, sell it, and hopefully get a large percentage of their money back. That's called a "secured loan." Auto loans, boat loans, houses - either a first mortgage or a home equity loan, are all "secured loans." They have something substantial they can actually take from you and sell. Personal loans and business loans are much more difficult to collect if the person defaults. Another comment my banker used to say to me, "Tom, you almost have to show us you don't need the money for the bank to lend it to you." I know that sounds odd but it is the truth.
Think about where we are today in these very difficult economic times. Banks gave loans to people with houses that couldn't repay the mortgages. The banks foreclosed on the mortgages and in many cases, the banks can't even sell the houses. Bad loans have caused a great deal of economic turmoil both in the United States and abroad. Even when you purchase a home, mortgage companies and banks always ask for how much you are putting down. The more money you can put down, the greater the chances of getting the mortgage.
In my case, the banker told me he wanted to see 50% of the money deposited in the bank before he would even consider lending me the money. He couldn't give me a business loan, because the restaurant didn't even exist. I still had to provide all my personal tax and income statements. I had to give him a copy of my lease and sales projections for the restaurant. The bank was only one block away from the restaurant. Joe, the banker, would stop in every day, as we were under construction and when the restaurant opened. He would joke with me, "I want to buy lunch from you every day because it will help you repay the bank." And he really did buy lunch from me almost every day. I was lucky, my banker was a good guy. We actually became friends over the years.
So what did you do after you sold Kane's Courtyard?
A very good question. About a week after I sold Kane's Courtyard I flew to Florida with my wife and daughter for a wonderful vacation. While on vacation, I really tried to think about what I would do next. It was March 1994. When I arrived home, I knew that I didn't want to make any hasty decisions so I took about six months off from work.
A couple of my food suppliers had asked me to come to work for them in a sales capacity. They knew that I was familiar with the products. One company was rather persistent, and I ended up going to work for them as a sales representative. That job only lasted about 8 months because I realized I wanted to be self employed again.
Before I left the sales job, I had signed another lease in an "old" corporate airport. I wanted to open a restaurant in the old terminal building overlooking the runway. I thought it would make a great atmosphere. Also, I love planes and flying and it was a good mix. To get things up and running, before the restaurant, I opened a catering business in the basement of the airport called, Top Flight Catering. I would supply the corporate jets with in-flight food for their executives.
I stayed there for just over a year because I had come to learn that the airport manager was "on the take" - meaning he was extorting money from people. He wanted me to pay him on the side in order to open the restaurant overlooking the runway. I wanted nothing to do with that kind of "shady" business dealings so I got out of there rather fast.
I loved the location and the concept, and wished it had worked out, but that's business. It's also a side of being self-employed that people don't understand. Meaning... the headaches that are involved. For example, when I owned Kane's Courtyard, sometimes folks would slip and fall, and threaten to sue me. My restaurant was broken into many times as well.
As I mentioned, I just wish the restaurant had worked out. I really enjoy airplanes, so the corporate airport was a fun place to work. I did end up learning how to fly and received my pilot's license. I had an opportunity to be flying in the cockpit of corporate jets and actually flew the Goodyear Blimp.
I had grown tired of contracts, leases, and dealing with employees. I created a business called Financial Recovery Systems after I closed Top Flight Catering. Financial Recovery Systems was a debt management business. I helped businesses and individuals get out of debt and restructure their finances. Some people are great at what they do, but they're not very good at managing their money.
Individuals with substantial credit card debt, folks who were behind on their mortgage, or who couldn't understand where all the money was being spent were my clients. Many small business owners are good at their trade, but they had difficulties with their accounts receivables and accounts payables. I would also help them. So for almost 6 years, I would help individuals and small business owners get out of debt and try to get them back on their feet.
At the same time I was running my debt management business, I began writing on a part-time basis.
How did you get your debt management company off the ground? I mean how did you approach your first clients?
It's a great question. Many years ago, almost 30, I worked for a collection agency. I would phone individuals and organizations who were behind on certain bills or invoices and set up a payment plan to get the past due balance paid. I was pretty effective at doing it, but I was offered a much better position at another company so I moved on.
I never thought about the business again until some people I knew, some of them friends, told me they were having difficulties collecting the unpaid invoices, or balances that were owed to their company. In many cases there were large amounts of money that were owed. I found myself just giving them "friendly advice" on how to collect some of these invoices - to try different strategies if you will.
A few weeks went by and I began to receive a couple of phone calls from the people to whom I gave the suggestions. They told me some of my ideas had worked and they were able to collect a big portion of the amount that was owed to them. Two people asked if I wanted to come and work for them in their accounting department, in accounts receivable. I turned them down, but I did say, why don't they give me a handful of accounts to try and collect them. If I am successful, I will take of percentage of the money collected, and if I am not successful, they would owe me nothing. They liked the idea and that's how the business began.
Primarily, I was dealing with the "commercial" aspect of businesses who owed other businesses. Many times, the business who were past due with their invoices were solid companies. Some were in better positions then others, of course, but most were still operating and active. The problem, in most cases, was the owner of the business who owed the money, was not good at bookkeeping and handling the administrative side of the company. In order to get my client paid, I would actually assist the owner of the business in organizing the administrative side of his business. I would help him with the account receivables, accounts payables, billing, etc. These folks were very appreciative because I would help them get out of debt, and I would get my client the money that was owed to them.
After a few years of doing this, I found I was receiving a lot of referral calls to help others get out of debt. As I mentioned before, some folks are great at their trade, but they are not the best at managing money. The business eventually evolved into doing strictly "debt management" work. Individuals and companies would call me to see if I could help them get out of debt and restructure their finances.
To give you an idea - on many occasions, I would go into a small business and they would give me 6 - 10 "grocery bags" FULL of past due bills. They would be overwhelmed and really did not know where to begin. I also had a friend in the mortgage business that would assist me in helping some folks secure a "home equity loan" to pay off their past due bills - a bill consolidation loan.
Individuals for example, would call on me due to excessive credit card debt and other personal bills they would owe. Most of the time, folks would get into debt because of "lifestyle" choices, not because they lost their job. So, in that case, I would help them get back on track.
I had the debt management business for many years. While I was doing the debt management work, I also began to write a column in my local newspaper.
What was the column about and what is the title of the newspaper?
For many years I wrote a regular column called, Tom's Town Talk. It was published in our local paper called The Times Express Star. The editors of the paper had an idea for someone to write a unique column. They interviewed a variety of people and asked me to write the column.
My column, Tom's Town Talk was about the unique people and unique businesses that lived in and surrounded our community. For example, one of my columns was about a man, a contractor, who was a home builder. What made this man so unique? He was 80 years old. Another column was about a lady who had a rather large garden. Not an ordinary garden, but she had an all "herb" garden. I wrote a column about what the "police dog" did on his day off. And another column about a young high school girl that could throw a softball so fast, the batters had trouble seeing it.
Over the years, I interviewed many interesting people. My column would run about once a month. More if I had the time. It was a fun column to write and led to other writing endeavors, including magazine articles and eventually books.
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Author: Tom Kane and Torsten Daerr