We often fail to realize our true potential and the true value of our business. Time and again, the foundation for success is right under our feet or on our computer screen. All we have to do is look. The following story illustrates the magnitude of evaluating your business and realizing your true potential.
In the late 1930s, in rural Oklahoma, there lived a man named Orville Hatch. For many years he scratched out an honest yet meager existence farming a dusty section of unforgiving acreage. At the age of 75 and with little to show financially for his lifelong struggle, Hatch found himself thrust into the realm of the mega-rich when oil was discovered on his property. He reportedly received $15 million—a fortune even by today’s standards.
However, within one month of receiving the money, Hatch fell terminally ill with advanced pneumonia. As he lay dying in the hospital, he was approached by a local newspaper reporter who wanted to interview him for a human-interest piece.
Hatch agreed, and as the interview progressed the reporter asked the inevitable: "How does it feel to struggle your entire life—and then when you finally hit it big—discover you have just a short time to live?
Hatch was well prepared with an insightful answer—one that seemed to contradict his folksy, backwoods personality. He looked the reporter in the eye and said: "First, let me say that I am grateful to God for all that I have and for the blessings bestowed, regardless of the timing. However, the real lesson to be learned is that I was always a millionaire but didn’t realize it. The oil was right under my feet for 75 years. All I had to do was look."
Truth In Numbers
When I first heard the story of "Oil Patch Hatch," the nickname he was given in the article, I passed it off as just another unfortunate case of a person who let opportunity pass him by. Later, as I began closely analyzing salons as part of my consulting business, I began to see similarities between Hatch’s situation, my own situation and that of hundreds of salon owners throughout the world—that the foundation for success often is in place, we just don’t always see it.
I recently was hired to analyze the business of a 15-unit tanning salon that opened in December 2003. I had worked with the salon owner on the preconstruction business plan and provided guidance on pricing, as well as sales and marketing strategies. As is often the case, the salon owner gleaned elements from the business plan that she agreed with, then proceeded to copy what other salons in town
were doing.
The salon featured nine premium class or base units, four super class or mid-range units and two ultra class or high-end units. After one year in business the salon built a database of 3,048 new customers and generated gross tanning sales of $192,000. Lotion sales were $52,000. The total earnings were $244,000. After deducting fixed overhead, operating costs and other expenses, the salon had a pre-tax gross profit of approximately $45,000. These were very solid numbers for a first-year business, and the salon owner was pleased with the initial returns.
