You have a fantastic idea while working for a company. You think it will be a winner….how do you create a new business? Do you quit and start the new company or stay with your current job?
We were faced with this question on several occasions. It all started back in the 1980s. Betsy was working in the new business development department of a hospital in Colorado Springs and I was leading an Internal Medicine practice. The medical practice had an office in a well-established neighborhood, but the physicians could see retirement on the horizon in 10 years.
They wanted to sell the practice at some point but were not sure how to set up the business in a way that they could make the sale. (We will discuss this more when we address exit strategies.) We all made the decision that the best way to create an asset that could be sold would be to grow. Therefore, over the next couple years we identified a growing area of town, purchased the ground and built a new medical office suite. The initial practice was 3 physicians and the new satellite office had room for three additional physicians.
We decided to move one of our established physicians to the new office as an anchor and recruit three new physician employees – 2 at the new location and 1 to take the overflow at the original office. The plan worked well and soon we were up and running…but the big question was how to fill the private practice for three new physicians.
At that time Colorado Springs, CO was experiencing rapid growth. I surmised that new residents to town or even those relocating to a new part of town would need to establish new healthcare and other professional relationships. So, I looked around and discovered that no one (except Welcome Wagon) was reaching out to new residents and informing them of professional services in their area.
Ah-ha – a new business idea was formed! We could create a publishing company. Get advertising from all the doctors, lawyers, and accountants in the area – as well as other professional services. And get this information into the hands of residents. Betsy and I came up with the name The Pikes Peak Professional Directory and off we went.
As with most of our businesses, Betsy set up sales and I oversaw logistics and finance. What do you do after the idea? We knew a few of the first steps…1) we needed a vision for the publication, 2) we needed a mock-up of the directory, 3) we needed to create a sales package…all with no money. If we could sell a few adds, then we would take the next steps to fulfill the vision of a new business.
We found a typesetter in town and worked together on evenings and over a couple weekends to create a 6-page sample of the directory. Betsy created a pricing strategy and called a few physicians and other businesses. She would meet with the businesses during her lunch hour and before/after work. We were both amazed to learn that other businesses were willing to buy an advertisement in a publication that would be available to new residents.
Over the next few weeks, Betsy continued to make sales calls in the evenings and over the weekends. I would keep up with the accounting in the evenings and we would both work on the design with the typesetter over the weekends. As the project grew, we became confident that it would make money as an annual publication. However, it was also clear that one publication could only make part of the revenue upon which we needed to live.
We continued to work full-time at our day jobs and worked another 20 hours per week each in the evenings and weekends. Once we finished talking to most of the businesses in the area, we closed sales, found a printer and printed the Pikes Peak Professional Directory. The sense of accomplishment was amazing and I think we cleared a couple thousand dollars profit.
We were hooked on being entrepreneurs and wanted more. While we both truly enjoyed our careers in healthcare, we liked overseeing our own destinies more.
We spent the better part of the next weekend 
answering the question that we still ask each other today… “What did we learn?” We ask each other this question to debrief a business, a meeting, or even after going to a dinner party. It may be the best question of all time for the two of us.
At any rate, we learned that 1) we could run a small publishing business, 2) the business community would pay for advertising, 3) we could work together as a team, and 4) a professional directory was limited in scope to classical profession – excluding general businesses. So now the question was of scale…“how might we turn a small profit into a large profit?”
The answer to this question needs to explore revenues and expenses…sounds simple. To make more money you either need to have more revenue or less expenses (or both). While the question is simple, the answer is much more complex. Taking the professional directory as the example, how would we increase revenues?
First, we might expand the directory to cover the entire town and not just northern Colorado Springs. That is a good answer to increase revenue and the publication would reach the same general geographic area for distribution…leading to only marginal increases in expense. This is the low-hanging-fruit and needed to be incorporated into the next edition. A quick spreadsheet confirmed that we would triple the profits but, unfortunately, that would not be enough to sustain a full-time business.
Second, we could publish more often. But we had told advertisers that this was for a year. In talking with a couple key advertisers, they would not be willing to pay again for a new edition without a significant discount – making the profitability an issue.
Third, we looked at the idea of different professional directories in different cities like Pueblo, Denver and Ft. Collins. This was good, but the publication was limited in scope to classic professions and was targeted to new residents. To open sales in multiple cities we would also need more salespeople.
What to do…based upon the things we learned. We thought advertising direct sales could work. We wanted to expand the potential advertiser base to all businesses. And, we wanted to reach more consumers. Yes, the answer today would be the internet and SEO! However, the internet was not yet invented….so perhaps a new Yellow-Pages was the answer.
However, the Yellow-Pages was already a crowded space and several “knock-off” directories were advertising. But what was the biggest problem with the yellow-pages? Many of our patients at the medical practice complained of the small print on our medical forms…then a person called and said that while she liked the idea of our Professional Directory, what she really liked was that we used a larger print size and she was using it like the yellow-pages!
Eureka! We had our idea…a large-print yellow-pages targeting services for people 55 and over. And the Senior Pages was born. Revenue would increase because we would target a broader range of business. In addition, this publication would market to a separate target market from the professional directory that went to new residents of all ages. We now had a publishing company with two offerings – The Pikes Peak Professional Directory and the Colorado Springs Senior Pages.
We went back to the typesetter and created a sales sheet. The typesetter said that we could reduce our cost by creating our own lay-out. We had no clue how to do that, but we figured we could learn.
This was at the beginning of the computer revolution and we had heard about a new Apple Macintosh that had “desk-top” publishing capabilities. We had a computer at work, but no one had personal computers. We went to the bank and borrowed $10,000 to buy a new Macintosh with an amazing 10MB of hard-drive (your phone today is 10,000-times more powerful)! While expensive, the new tool helped with accounting and saved us money on set-up for printing.
All through these months we were working 40+ hours per week at our jobs and 30+ hours per week at the Senior Pages. The company was making a little money and we had lots of conversations about quitting our day-jobs and focusing full-time on the new business. On the one hand if we quit our jobs, we could focus full-time on making the business successful. On the other hand, with 2 small children we had no room for error if the business slowed.
We decided to keep our day jobs a bit longer and just spend all our evenings and weekends on the business. As the Colorado Springs Senior Pages finished, we hit a lull in revenue. It took every spare dollar we had to publish the first issue. Had we stopped working there would be no reserves and we would have closed the business and gone back to work.
Because we still had our jobs, we were able to publish the issue and rely on our salaries to meet personal bills. We learned that continuing to work gave us the flexibility to allow the business to grow without putting pressure on the fledgling business to pay us a salary.
Some entrepreneurs say that you need to pay yourself first. This has always seemed both arrogant and unrealistic. As entrepreneurs, our first responsibility is to ensure the survival of our business. To me, this means that we pay ourselves after the essential needs of the business are covered. By keeping our day-jobs we are able to nurture the business during its formative years and ensure it has a strong foundation.
The business grew and we added Senior Pages publications in Denver, Pueblo and Ft. Collins. As we grew, first we added a commission sales team as sales was the life-blood of the business. Then, as revenues became stable we took a leap of faith and Betsy resigned from her job to work full-time in sales. Shortly after I joined the company to oversee logistics and finance.
We grew the business for three years and then sold the company. While in today’s numbers the dollars are modest. At the time we were really excited to take a $10,000 invest and sell the company for $250,000. The key for us was creating a business from an idea and seeing it through development and operations…we were hooked and on the look-out for the next idea!
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