Gregorsky Business Chronicles
safe neighborhoods, healthy peer doings, and a
In 1971, their dad is downsized out of General Mills: "With three kids to support, he [is] out on the street," but makes a midlife switch to leadership roles in smaller companies. "Mom worked part-time but was home with the kids a lot of her life."
Sue gets through the Vietnam Era without taking up any of the isms: "I was the pollution-control advocate in the sixth grade, but that was about the height of it." Toilet-papering someone's yard wasn’t supposed to be civil disobedience, but "all the while a policemen was sitting there watching," and "seeing the inside of a police car...cured me for life!"
Right after high school, a magical door opens up. On the
Menomonie campus, Sue enters a
Who was behind all of this? "The big department stores were focusing on
getting women into the buying field," so they funded this university
curriculum. And why was it a magical
door? "From the time I was 13, I wanted to have my own store. I was
really into fashion. I always wanted to wear the latest thing." At the age
of 16, with a general direction locked in, she had commenced what would be
eight years working at JCPenny: Summer job during high school and college, and
full-time upon graduation. Sue ends up working in Lacrosse,
At the age of 24, an act of principled rebellion occurs: She refuses to follow the company's "Golden Rule," which mandates replacing any item purchased at JCPenny, even if the item is years old. She believes the company "should be standing up for themselves" rather then tolerating abuse by cheapskate customers. "It was something that really bugged me -- and, yes, I did lose my job over it."
As of 1981, then, "I had already decided that, if I ever got my own store, I would cater to a specific kind of clientele, and weed out [the type] I didn't want to deal with." Sort of the Nordstrom's model as opposed to the Penny's? "Exactly. It's Nordstrom's in the specialty-store field."
Sue moves to Lenox Candles and a marketing slot. Then comes six-and-a-half years at Kimberly-Clark. She marries Larry Hawkinson in 1984 and earns an MBA going to night school, financed by "KC." She sees management practices and personalities that span the gamut of human nature. Overall, the final few years make far more sense than the first couple. During this whole time -- 1982 to 1989 -- the national economy is solid and the stock market triples.
Sue Hawkinson is 32. No kids, much confidence, and a husband who thinks and
acts entrepreneurially. She decides, with an office colleague named "Donna," to
open up a women's clothing store. "The area was ripe for it. Major
corporations are here. Women were finally making enough money to buy good
clothing. And it was a real niche -- but there was nothing here." Sue and
Donna have been driving to
Six years Sue’s senior, Donna "has a Masters in finance [and is] kind of a pit bull... Her strategy was get them in there, get the bucks, get it over with... I'm a soft-sell person [and prefer] relationship marketing." These divergences are actually a plus: Between them, Sue and Donna have nearly all of the necessary skills. They stoke each other’s sense of can-do. The business is named J. Hawkinson Clothiers. Selected because Donna's middle initial is J, and Sue's last name is Hawkinson.
The store receives good press, makes the desired splash: "Because it was just so absurd that two women from Kimberly-Clark would risk this much, and build a building...it's like, say what?" Besides stocking inventory, where is the risk? "We built a store. We figured we needed $170,000 initially, plus we had a 10-year lease on [this] building that we had built for us. The whole package came to about half-a-million dollars."
At 32, Sue has achieved the dream of early adolescence. Seven years later, she will recall the smell of new carpet and all-wood fixturings. "We spent so much time there and it felt like home -- I loved it."
Do you remember that movie Field of Dreams? It came out the same year, 1989. "Build it and they will come." Lots of people are coming to Sue and Donna’s store. But its construction locked in a load of debt.
From the Magic to the Math and the Aftermath
With a rent of $3,000 per month, "we weren't selling enough stuff. We needed to be doing about 1 1/2 to two times more volume to support the location, the number of employees, everything. We projected a $600,000 business." After the first year, the revenues are half of that. Personality strains are apparent, although you get some of that during any start-up.
critical is the business cycle, which is cresting as 1990 begins. Just around
the corner is the federal S&L bailout, leading to mass dumping of
properties that will depress real-estate values in most places for the next
half-decade; and the Iraq-Kuwait crisis, which will double oil and gas prices
Throw in the fact that Sue's husband Larry had left two advertising-firm partners to go solo, and now appreciate what happens on March 6, 1990: Sue is diagnosed with a four-centimeter brain tumor. The operation takes place a week later, followed by two months of recuperation. During those two absent months, Donna is "very good about it." She has to take care of everything, "including buying trips and buying decisions."
By May of 1990, Sue is back in the store, with one eye taped shut. "I did what I could do without making customers uncomfortable -- I just went out there and killed them with kindness... [T]his was as bad as I was going to look, and I could deal with that. Attitude is everything." Perhaps, but it's tough to use so much of it compensating for wicked financials.
Another year passes. Long work days, plus worries about health: Ever since ‘90, Sue has been deaf in the left ear and her "eye doesn't work properly... I can't chew on that side, 'cause I can't feel the food."
By July 1991, tempers are raw, the partners can no longer speak to each other, and the lawyers have come in. "The business was worth nothing. We were at a negative net worth... Unlike my husband and his partners [Donna and I] didn't have a buy-sell agreement. We had each put in $30,000 of cash, so we used that as the number [and] essentially I got the business by default."
That part needs more explaining. Using $30K as "the number" meant each partner saying to the other: You give me my $30,000 back, and you can take over my half. Where does Sue get the $30,000 to buy out her estranged business partner? Having been fully vested when leaving, "I took all my retirement money from Kimberly-Clark. We all [husband plus parents] thought this was an important enough reason to liquidate my retirement -- to try to save the store." Being only 35 left time for recovery.
"But, from a taxation standpoint I just got nailed. Between attorney fees, accounting fees, IRA, the taxes on the IRA, we're talking about a $50,000 proposition" -- to dissolve the partnership. Sue pays Donna $10K up-front, and the other 20K over the following two years.
Hawkinson also escapes from her 10-year lease and the
custom building -- ironically, by no longer being able to meet the financial
requirements for what the bank called a limited partner. She shrinks the staff
down to a single employee -- Debbie
Merkel, who will eventually stay 12 years -- and becomes "very good at
financials." In 1992, thanks to the national slump, Hawkinson gets a deal
on space in the Avenue Mall, downtown
Okay, Pause for the Cause
What transpired with J. Hawkinson Clothiers, in not quite three years, isn’t what anyone opening a store banks on. If you’ve never been close to such a cauldron, but have only dreamed of "following your bliss," you might be sitting in front of that PC screen thinking what "should" have been obvious to Sue and Donna. It wasn’t. And if you go into something without a very good coach and more than a little luck, you’ll also be notched down by "obvious" events that come out of nowhere.
The moral -- if you need one this early in the narrative -- is that "business plans" and "financial projections" are often a security blanket as we sail over the cliff grinning. Later on comes the real payoff, best conveyed by a single word: RESILIENCE.
During 1995-97, working for congressional committees and west-coast think tanks, I interviewed 49 women business-owners, and Sue’s story is one that would not let go. Realize this, friends: She had about six months of "dream," followed by 15 years of tough negotiating, health scares and financial grind. All the while, she has to keep on top of a business that by definition is fickle on the style side.
Signs of recovery are there during our first taping in August of 1996: "Last year, 1995, was the worst sales year I ever had -- but also the most profitable one. I still don't pay myself what I made at Kimberly-Clark...but the business is stable, it's comfortable. We are working our way out of this negative net worth -- picking away at it." And "we" refers to Hawkinson and Merkel, her long-time colleague.
If you like to read business books, you’ve been looking for the Vision statement in this saga. Hawkinson articulated it during our first taping: "My strategy is personalized service with quality clothing. People come to me because they don't have the time. They want good product, they want somebody to take care of them. We do all the alterations, we deliver -- whatever it takes. Just all the services department stores don't do."
fast-forward by nearly a decade. Early in 2005, I’m reading the above text back
to her and she won’t change a word. It’s the same building, and the same
business name. But other things have changed, matured, ripened. On a six-degree
morning in downtown