Q&A with Kelli Hueler: - Napfa

Staying in the Game
By Richard Sincere
Doing Business on a Handshake
My wife Deb and I spent a late-
September Saturday in a far
north suburb of Illinois. This
area is known for its farmland and horses,
and as soon as you get off the interstate,
you immediately start to breathe easier.
Sadly, a massive outlet shopping center
has been built among the beautiful
pastures, but most of the area is still
picturesque, long on land and short on
buildings.
While I wish our purpose had been a
picnic or horseback riding, it actually was
to visit a nursery and select some trees for
our property. We have decided that it’s time
to do some landscaping, which we hope
in turn will encourage us to spend more
time in our yard (our landscaper says his
goal is to make it so nice that we’ll never
go to New Hampshire). I wish I could say
that my role at the nursery was to offer my
opinion about which species we liked best,
and then which of those trees looked the
nicest, but I realized that I had nothing to
contribute. Those decisions were left to my
wife and to Mike, landscape designer and
owner of the nursery, while I was relegated
to enjoying the crisp fall air and surveying
the nursery’s many acres.
Given my usual intellectual curiosity,
I began asking Mike about his business.
I was curious about why he started a
nursery and how he found the land. Within
minutes, he was telling me in great length
about how he had met the architect who
lives in the house adjacent to his nursery
and how he approached him about leasing
the land so he could start his own nursery.
The architect initially said no, but after
further consideration decided that he
could benefit by claiming the land for
agricultural use, which would reduce his
taxes significantly. The landowner’s only
caveat was that no lawyers be involved
and that it would be based on a piece of
paper and a handshake.
Mike first consulted an attorney who
crafted a document full of legalese to protect
Mike from what he believed was a deal
destined to fail. Mike knew he couldn’t
present this document to the architect, so
he decided to trust his gut. Mike wrote up
the terms on a piece of paper. Eight years
later, he is extremely proud of the fact that
he built a profitable business based on a
“gentlemen’s agreement” that is still in force.
Despite my belief in the goodness of
people, my cynicism led to my next line of
inquiry: What would happen when Mike
decided to sell the nursery? He smilingly
admitted that he had no one to hand it down
to, that he had more than enough money to
be satisfied, and that in six years he wanted
to retire and move to Italy. I thought that
was a nice position to be in but not really
relevant to most small-business owners—
people who, in my experience, are
dependent on funding their retirement with
the income from or sale of their business.
Yet, based on our conversation, I
felt that Mike was not a naïve person; he
was, in fact, an intelligent entrepreneur
who had figured out how to balance his
financial needs with his quality of life. I’m
sure he anticipates being paid some price
when he sells his business (despite owning
only the plantings on the land but not the
land itself), but that doesn’t diminish his
enjoyment of or passion for his business.
He figures that while he may not be
maximizing the profitability of a nursery
business (as business school teaches us to
do), he’ll get a fair price that will allow
him to at least feel good about what he
created.
It’s interesting to think about how
different entrepreneurs define their quality
of life and come to terms with what is
a fair deal. Since Mike and his wife are
financially comfortable and none of their
family or friends will be dependent on
making a living from the business once
he leaves, the decision is a little easier.
However most entrepreneurs (me included)
worry about our employees, family, and/
or heirs who are cheering for our success
and also are successors to our business. My
guess is that Mike’s nursery has a number
of employees who expect to continue
working for the next owner.
My most important takeaway from the
discussion was Mike’s attitude: comfort
about what he’s doing and appreciation
for his business. Mike was the epitome of
someone who was more concerned about
the quality of his product than his profit
margin.
Protecting Yourself as
an Entrepreneur
You would think that Mike’s lack of
concern about maximizing profits would
make running his business relatively stressfree.
After all, if he is willing to walk away
from his nursery in six years, why would
he be concerned about a customer taking
advantage of him? But he described a
recent situation with a customer who asked
him to develop a detailed landscaping plan
for her house. He went to great lengths to
diagram the irrigation system, stonework,
trees, flowers, and so on—really making her
home a showpiece. After his presentation,
the customer began hemming and hawing
and asked him to leave the plans for her to
review. He flatly told her no.
Part of being an entrepreneur is
protecting yourself from being taken
advantage of by your customers. We must
trust our customers and clients. But when
our antenna goes up and we feel someone
is trying to take advantage of us, we have
to draw a line in the sand and not allow it to
be crossed. As soon as Mike thought he was
going to be exploited, he pretty much told
his customer that she would have to pay
for his drawings and that he wouldn’t do
anything more until he was compensated.
He wants her and everyone else to respect
that his time is worth as much as or more
than the products he sells.
In contrast, when Deb and I were at
the nursery, Mike gave us all the designs
he had sketched and itemized. He and Deb
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Napfa Advisor October 2012