Dave DeRose - The Principles of Business: Understanding What Makes a Business Successful and Valuable to Society

The Principles of Business

Understanding What Makes a Business
Successful and Valuable to Society

Dave DeRose

THE PRINCIPLES OF BUSINESS

UNDERSTANDING WHAT MAKES A BUSINESS
SUCCESSFUL AND VALUABLE TO SOCIETY

Copyright 2020 Dave DeRose.

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

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ISBN: 978-1-5320-8692-2 (sc)

ISBN: 978-1-5320-8693-9 (hc)

ISBN: 978-1-5320-8694-6 (e)

Library of Congress Control Number: 2020901694

iUniverse rev. date: 01/27/2020

Contents

My thirty years of being involved in business endeavors have made one thing very apparent to me: everyone wants the freedom to be in business, and few really understand the dedication and effort it takes to be successful. While I was in the plumbing and HVAC business, my theory applies to any business. These are thoughts and experiences I have had over the last thirty years. Some are from personal experiences, and others are from observations, but for me all are pure gold in value.

You may start a business and not find your heart or mind for several years, but I hope these chapters will help you find them, as that will be financially and personally rewarding to you on the journey.

I graduated high school in 1973, and my father had always told me to go to college and get a nice white-collar office job. After looking around in my junior year, I told him I wanted to be a plumber and work with my hands and not be confined to an office. So I went to work for a union plumbing shop as the shop boy and general helper, and as soon as the opportunity to apply for an apprenticeship in plumbing and pipe fitting came up, I applied.

My father taught in the apprentice program, and while you would think that would put me high on the entrance list, it did not. About two years after being put on that list, I started an apprenticeship at a coal-fired plant 170 miles from my hometown. My father, a plumber, was not happy about my being a pipe fitter, but I tried to learn all I could. I became a journeyman pipe fitter, passed a journeyman Colorado plumbers exam on the first try, and became an instructor in the apprenticeship program, like my father, teaching trade math, science, and hydronic heating and cooling.

I worked at this for several years, and then, after becoming a father myself, my wife wanted a divorce. I could not leave my son, so although I could have left and made great money and traveled the country, I stayed in this small town and went to work for a small contractor for a short time. Then I worked for another small shop, which consisted of the owner, a sheet metal worker, and myself. After working for this company for three years and watching how the owner ran the business, I was asked to take a 30 percent cut in pay around the time Chrysler was taking a dollar-per-hour cut and Lee Iacocca was saving that company. I did not know what to do and considered moving to a big city, but then the opportunity to start my own business presented itself.

I had a master plumbers license, I carried the local mechanical contractors license for this small company, and all I needed were an insurance policy and a pickup truck. A friend had moved to the town in which I grew up and wanted to sell me all his HVAC/refrigeration customers in our small town, so I made the deal on October 1, 1988. I started a new business and hit the ground running.

While I was a union steward on the power plant and also a foreman and had installed a job for Johnson Controls (which is what I really loved to do), I now was a one-man plumbing, heating, and refrigeration contractor. I did it all, and although those days were at times difficult, they were rewarding. Our town was in a big recession, and many days I winterized houses that were bank owned so they would not freeze and be damaged. I fixed everything you could imagine. Two years later, in 1990, I installed my first real contract job. I took all my friends to lunch at the local Village Inn to celebrate my first big contract. (One piece of advice: wait until you are done with that job to see if you made any money before you buy lunch.) I installed boilers and toilets, plumbed hair salons, fixed walk-in freezers, and grew into a company that employed twelve or more and produced around $1.8 million to $2 million per year in a town of about ten thousand people.

It has been a great ride, but there have been issues I hope to help you avoid as you try to grow or refine the business you already have. Here are some things we will talk about that I learned the hard way.

I recommend you find a really good accountant who understands taxes and how they relate to you and your business and can advise you on how to operate. My accountant helped me create a college fund that fully paid for my sons college and left him with $20,000 in the bank. We also bought him a drum set, a new guitar, and a new pickup truck, all while paying for his college. He got a free education, and he has used it to create a graphic design company and is doing well.

I recommend you have some mentors who keep you honest and also help you think through things. Sometimes they can be a supplier, like Bill Olsen was to me, or a former employer, like Bud Moriarty, or even a customer who operates a chain of restaurants. I used to tell him my labor costs were in line but my food costs were out of control. All of these people taught me many things that made my business successful.

Make sure your spouse and family are never hurt by your business. You will work long hours in the beginning, but you still need to be a great spouse and parent. Never let your business take your home. In other words, in times of trouble, do not finance your home to bail out your business. Make sure you can keep a roof over your head.

A good banker who understands business and is not there just to make a loan fee or interest, who thinks of your best interests and gives good advice, will be key to your success. You may need to borrow money, but make sure this is for a profitable reason and not just a personal desire.

In the following chapters, I will cover more of these subjects in depth, but right now I want to give you a brief look at where I came from and what I have experienced.

Never let the success of your business make you a different person. Do not let it change your desire to be generous or a mentor. Do not let it make you a selfish, miserable individual. Basically keep centered in your life. If someone had told me that I would be anything other than a really good plumber and pipe fitter when I entered the trade, I would have called them crazy. My trade consisted of anything that had pipe to it. I did not have a goal of being in business for myself, although I think all people wonder and dream about what that might be like. I never would have thought I would have the opportunity to be on the founding board of a Boys and Girls Club or on the board of directors of a bank. Owning commercial real estate was not something I set out to do, but I own quite a lot at this time. One of my mentors, the author of a book called Rich Dad Poor Dad , taught me about that.