Katie attributes her success to her hard work, the fact that her key staff stayed with her (they run the store and serve as sounding boards), and considerable help in many areas from SCORE.
Katie’s adventure is the result of a team effort from Katie, Deb Kneale, Chuck Halaska, Larry Storms, Tom Moore, and myself, Jack Scott. At different times we imparted knowledge, adapted tools, held hands, and became cheerleaders. You may remember that the Spring-Summer of 2011 was not a great time to get. a business loan, especially for a single parent who had never run a business. Katie is the type of client we like to help; smart, persistent, willing to learn new things that are way out of her comfort zone, willing to take risks, and a person her employees appreciate. Show of Hands is a model of what SCORE’s success should be. Katie and Show of Hands won one of the $1,000 Sam’s Club grants last month.
Ironically on the way out of the interview for this article, we discovered an apparent bust in her 2013 cash-flow projections. As I left, businesswoman Katie was taking over from artist Katie to discover and rationalize the reasons for the bust.
In February 2011 Katie contacted Chuck Halaska at SCORE to get some advice about purchasing Show of Hands Gallery in Cherry Creek. Asked how she heard of SCORE, she responded, “I heard about SCORE from Deb Kneale (seller). She knew of SCORE thru the mentoring she does with the CRAFT organization. Deb was your biggest cheerleader as I had never heard of SCORE. My mom had also heard of SCORE and when I told her about the chance to buy the store she recommended I contact you as well.”
Show of Hands (www.showofhandsdenver.com) is a galley of hand-made American crafts. Katie, an artist, had worked as an employee there for seven years and she asserts that this description does not give the store just recognition; she says “it’s much like the Willie Wonka of Chocolate Factory fame. Once people come in they always come back. Common reactions are OMG – it’s my new favorite place and some say it’s their happy place. Our challenge is getting people to come into the store”. She comments,” I sell wants . . . I do not sell needs, a tough challenge in recent history.”
In 2011 Deb wanted to sell the business and Katie wanted to buy it. Initially, Chuck and Larry Storms asked for her financials to see if such a purchase was even possible and recommend a course of action. At the time the business’s banking relationship was with Key Bank where her initial request for an SBA loan was rejected in an exchange of phone calls. At about that time in the spring of 2011, Jack Scott became involved. In the face of what seemed like misinformation or misunderstanding from Key Bank Jack took Katie (prospective buyer) and Deb (seller) downtown to see Bob Martin, then a Lender Relations Specialist in the Denver SBA office. Bob confirmed that the information as understood from Key Bank was incorrect; her prospects of obtaining a loan for the purchase of this retail store were probably good and referred us to Mark Abell, Senior Vice President, and SBA Specialist at Vectra Bank who heard Katie’s presentation and examined her business case requesting a loan of $160,000. Mark supported the plan and forwarded it to his underwriters in Salt Lake who denied the loan. Now what?
Persistent Katie asked Mark to go back to his loan committee to see how much they would loan which turned out to be (after negotiations) $120,000. Along the way, Katie and/or Deb attended each of our monthly workshops and used Tom Moore’s financial template extensively in the preparation of a revised business case. Katie was on her way to complementing her considerable artistic skills with business acumen. Later in 2011, Tom adapted his financial model to integrate it with the output of Show of Hand’s “Artisan” Retail Quick Books package so Katie can see at a glance how much she can invest in inventory at the end of each month. Katie says of Tom, “that man is priceless”. (Indeed, Katie would have had to pay several thousand dollars to a consultant for the kind of help she got from Tom. His tools are central to the operation of the business today.
Katie acquired the business in November 2011 and as of now has owned 100% for a little more than a year. Although the business is 30 years old, it seems to her like a start-up. Asked why she bought it she responded; 1) it was her dream to own it and Deb wanted to sell, 2) she wanted a job that afforded her time to be home with her six-year-old son – who was 4½ when we started on this adventure and 3) being a slightly proud but obstinate daughter, demonstrate to her doubting father that she could do it.
In 2012, her first year of ownership, the business produced $700,000, up six percent from 2011 in revenue, and generated $78,000 of net profit (3X the budgeted amount) after some pretty hefty interest and principal payments. The business is carrying a $109,000 SBA loan with Vectra Bank and two notes of $118,000 and $79,000 with the seller.