Start Small Finish Big. Fred DeLuca

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      We needed little more than $1,000 to open a shop, and strange as it may seem, money wasn’t an issue when we decided to find a second location. Sales had plummeted in February, but due to the help of our vendors, which I’ll explain in a moment, we were not out of money. We weren’t flush with cash by any means, but I held tight to the purse strings, a practice that helped us then and has helped us many times since.

      Since we didn’t have much money to start the business we never allowed ourselves to build up big expenses. We avoided buying anything that required a hefty payment on a weekly or monthly schedule. After paying the rent, the utilities, and a couple of employees, our only expense was the cost of supplies, primarily the paper goods, plus the meat and cheese, vegetables, and bread that we used to make our sandwiches. Of course we also sold soda and chips, and we paid for these products when they were delivered to our shop.

      My salary was skimpy and I didn’t collect it all at once. As management, I earned $1.35 an hour, 10 cents over the minimum wage. That worked out to $67.50 for my usual workweek of fifty hours. However, after I quit my job at the hardware store, I calculated that my personal expenses amounted to only $13 weekly. So when we opened the first shop I told Pete that the business should pay me a weekly allowance of $13. Then, when tuition was due at the University of Bridgeport, about $600 a semester at that time, the business would pay that, too.

      As part of the routine during our Monday night meetings we subtracted my allowance and any tuition payment from my accumulated earnings and most weeks the business owed me money. This may not sound very attractive to someone who’s thinking about starting a business, but in reality most new business owners can’t collect all of their salary at the time it’s earned. Our microbusiness remained open partly because I was willing to stick with it, to figure out how to make it work better, to work for a low salary, and at the same time delay collecting my salary. There was always the risk, of course, that the money would never be there, but that was part of the gamble in starting a business.

      The real reason we didn’t run out of money, however, had less to do with delaying my salary than with the special relationship we developed with our vendors. Every Friday morning I would look at the bills to be paid and, depending on the amount of money in our checkbook, I would decide how much we could afford to pay each vendor. In the early days, we could never pay as much as we owed, which is why bills started piling up. But I always wrote a check for each of the four main vendors. Then, instead of stamping envelopes and mailing the checks, which would seem to be the efficient thing to do, my mom and I visited the suppliers with payment in hand. It was an unusual procedure. Somehow, though, it felt better visiting the suppliers, and it was good that we did because otherwise we would not have been in the position to expand.

      It took about two hours for mom and me to visit the vendors, and we got a terrific return on our investment of time. Since they were all small businesses, there was a good chance the owners would be on site when we arrived and we’d have the opportunity to talk with them. We always started with a quick update about our business. Sales were slow this week, the big snowfall hurt us. But overall things are going great. And here, we brought you a check for $100. I don’t think the vendors were particularly interested in our story, but we told it anyway. Then we’d give them some unsolicited feedback about their product. With years of experience handling food, mom was particularly good at this. The bread formula was perfect this week, keep making it that way...Be sure we always get this brand of ham, it’s really high-quality...These paper products didn’t hold up. Can we try something else? Ten minutes and we were finished. However, we had one other critical point of business to handle. We didn’t leave until we placed the next week’s order, which was usually for more than the check we had just given the vendor.

      By the time we decided to open a second location, we owed our suppliers several months’ worth of bills, altogether amounting to more than $3,000. It was rare that we owed them less than two months’ worth of invoices on any given Friday. In spite of that, none of the suppliers ever pressured us for money. I can only assume this had something to do with our track record. We never failed to give them at least a small payment every week. We never missed a week, and we were always up front with them. If nothing else, we had earned credibility in the eyes of these suppliers, and consequently they were willing to do more for us. As it was, we financed the construction of our second shop, and even subsequent shops, with the credit supplied by our vendors. Blessed be the vendors!