The Card Stop
In the late 1970s, I purchased a card and gift shop called The Card Stop. It was in a busy commuter train station in the suburb of Palatine outside of Chicago, Illinois.
The research I performed to purchase this business provided me with some skills I needed to be a long-term successful serial entrepreneur. I learned how to succeed by watching and asking questions of others. I spoke with other card store owners in the same town, I asked the train station attendants about consistency in the number of daily travelers, and on a variety of days and times, I sat in my car counting heads. That was how I calculated the risk of whether I could make this store a success.
I purchased the assets and name of the business but the corporation. I renegotiated the lease with the building owners and contracted with vendors and suppliers for new inventory and shelves to display my wares. Within the first few months of my ownership, bill collectors arrived asking for payment due to them from the previous owners. I explained that the former business was no longer operating in this location and they would have to search for the prior owner. This was one major lesson I learned in accepting liability.
My sales increased more than five times in the first year. By year two, sales expanded rapidly and I made plans to expand into other areas around Chicago. In the early 1980s, a company that owned more than 200 nationwide Hallmark Stores became available for purchase. I planned to buy two or three locations. To help fund this plan, I listed the Card Stop for sale. I immediately had three offers from which to choose.
My attorney and accountant advised me to sell the business by accepting a down payment and carrying a note for the remaining balance. Knowing I was accepting liability, I selected an offer from a couple who owned a prior business. If they stopped making payments, I would repossess the store.
After several months, the new owners neglected the store, stopped paying me and the lawsuits began. During these trying seven years of legal battles, the new owners resold the business without my knowledge. The lawsuits were filed in Cook County courts during the same time judges were being investigated for fraud under the FBI’s “Operation Greylord.” There was a serious shortage of available trial dates during that period.
I learned the attorney I used to handle the original purchase did not file the Uniform Commercial Code lien correctly. Currently, per the United States UCC, since I was holding the note on the sale of my business, I had a right to place a lien against the business and its assets to guarantee payment; similar to how banks file liens on real estate for mortgages.
Because of this mishap, an important lesson I learned was vetting licensed professionals. Not every lawyer is experienced in all forms of business. This challenge taught me how to question any legal representative I hired for my business dealings. Since there was no internet or electronic method to perform background checks I created a list of questions to use in every interview.
One question I always ask any new attorney is, “Who do I sue if you make a mistake?”