My friend Kenny Rogers sang one of the most famous pieces of advice in country music: “You gotta know when to hold ‘em; know when to fold ‘em.” Gambling aside, these words could easily fit an entrepreneur when it’s time to cut a deal.In the cat-box-filler industry, clay-rich lands feed our manufacturing furnaces. Cut off the raw-material supply, and our business would shut down almost overnight. Such an occasion forced me to make one of the costliest deals of my life.
Let’s make a deal
After Kitty Litter’s initial sales surge, I bought a mineral deposit in Illinois and set up our first large manufacturing operation. After mining the tract for everything it was worth, I decided — albeit too late in the game — to get an expert opinion on how long it could continue serving our needs. I hired a geologist who informed me that at our current production rate, the clay deposit would be played out within six months. I had to quickly acquire some new land, without looking like a desperate buyer willing to pay any price.
The fox makes a move
I approached a man named Abe, who owned 100 clay-rich acres next to mine. Abe was not a miner, but a scrap-metal dealer. I figured he might be willing to sell the land cheap, since it was worthless for much else than making Kitty Litter. Like a sly business fox, I offered him half of what I figured the land was worth.
“My sister in New Jersey owns the land with me,” Abe replied. “I’ll have to ask her.” Time passed and I heard nothing. I broached the subject casually every now and then, carefully disguising my dire need for his property, but his response was always the same: “I’ll have to ask my sister.” Months passed, and I upped the ante to the full value of the acreage. Still his response remained the same: “I’ll have to ask my sister.”
Finally, with about a week’s supply of clay left on my property, I marched into Abe’s scrap-yard office. “Abe, no more B.S.,” I warned. “Do you want to sell that property or don’t you?”
“Yes, but I’m having trouble with my sister,” he sighed. “She doesn’t want to sell it.” I offered him twice, and eventually three times the going price for his land. He then nodded and said, “OK, my sister will sell it.”
Every dog has his day
Abe’s sister didn’t exist. Abe was quite a fox himself, and he knew that by biding his time, he could determine how badly I needed his land. His gamble paid off handsomely; and though he burned a big hole in my wallet, I had to admire the guy.
As I left Abe’s headquarters shack that day, I saw one of the ugliest, meanest-looking junkyard dogs I’d ever encountered. Fortunately, he looked like he had just been fed. It occurred to me that although I fancied myself as the fox coming into this deal, I ended up like that junkyard dog; tenaciously hanging on and doing whatever it took — even at great pain — to save my business. Entrepreneurs certainly need to live by their wits; but when the chips are down, it’s your backbone that will keep you out of the doghouse.
This column is one in a series that will explore the thoughts, ideas and unadorned advice of an entrepreneur who made it, Edward Lowe. When he “brought the cat indoors” with a revolutionary cat-box filler, Kitty Litter, he created an industry that changed the lives of millions of cat lovers, not to mention cats. During his life, Ed Lowe used “plain talk” to speak about the bottom line from the bottom of his heart. We believe these writings, revised and updated after his death, offer value not only for your business but also your personal life.
