Before The Beginning – My First Business Venture

This is a prequel to my In The Beginning post. The year was 1987 and I was about to enter my first business venture. My friends and I thought up some crazy scheme to set up a Valentine’s dance at a big hotel ballroom. A few months earlier, we had attended some Christmas dances set up by other people in small local halls. We had visions of doing a much bigger production. I was the project manager.

I booked the entire ballroom of the downtown Ramada Hotel for $1,000 for the night (I’m sure it’s a lot more expensive now), rented ton of DJ equipment and hired security. My brother worked at a print shop at the time and I got him to print up some tickets in his spare time using left over card stock. Tickets were $6 advance and $8 at the door. We didn’t do any advertising for the dance except for word of mouth. I gave some free tickets to the popular kids in school and have them sell tickets for me.

I remember the night of the dance as a complete blur. I didn’t know how many tickets were sold or if any tickets were sold at all. I didn’t even know if anyone would show up. We spent most of the day setting up the sound and lighting. The hotel staff was great and really provided a lot of support. When the hotel was setting up the bar, I had to tell them no alcohol because everyone was under age. Looking back at it now, I’m really surprise the hotel even rented the ballroom to us. We were fresh out of our teens and really didn’t have anyway of paying for it if the dance flopped and nobody showed up. But they say people do crazy things in their teen years so I guess I will add this one to the list.

The ballroom had a coatroom next to it but no hotel personals were staffing it. I asked my brother to work the coat check. He asked, “Why?” I told him, “The hotel doesn’t have anyone and people want to hang up their coats. Just charge them 50 cents or something!” So my brother and his friend Henry went to work the coat room.

At first, my brother just took the coats and hung them up. He didn’t even give the guests a claim ticket. All he said was, “I’ll remember who you are. How many people are going to hang up their coats anyway?” After about 10 coats, he and Henry got some pieces of paper and started creating some claim numbers to keep track. Then he raised the coat check price to $1.00. Then he disallowed people from hanging two coats on the same hanger. Then he went to the security guy at the ballroom entrance and said, “Don’t let anyone into the ballroom until they hang up their coats!” Then he raised prices to $2.00.

When the dance was over I got all the money together and did a count to see if we came out of ahead or behind. We were able to sell only 100 advance tickets at $6.00 each. However, 300 people showed up at the door and paid $8.00. I guess the $2.00 difference in price was not enough incentive to buy early. After subtracting the $3,000 in sales from the cost of the ballroom, sound equipment, music-licensing fee, and security, we came away with a net profit of $50.00. If I had to pay for the ticket printing, we would have lost money. We celebrated by spending the profits on Dim Sum the next day. We were quite happy that we came out ahead until we found out my brother made over $300 hanging up coats.

I learn some valuable lessons from that Valentine’s experience. The most important being; It’s not what your sales are, it’s what your costs are. Sure, it sounded great to tell people we made $3,000. However, it’s not as impression once they find out it cost $2,950 to make it. In the mean time, my brother’s $300 was pure profit because his cost was zero.

This lesson in cost control would eventually lead me to the internet 11 years later. This blog cost nothing to run. Likewise, the cost of running TTZ is next to nothing when you compare it to a normal business that does the same level of volume. A normal business takes years to break even and earn a profit (if it ever does). However, the barriers of entry for an internet business can be so low, you can profitable from the get go.

A few days after the Valentine’s dance my brother said, “Hey John, if you ever decide to do another dance, I’ll work the coat room.” I haven’t done a dance since.