Career Stage 6: Start-Up Founder

Business owners often get so caught up in the process of selling their business that they forget to think about what comes next. My advice? Leave the deal details up to the experts. Focus more of your attention on creating your new, post-deal life based on your creativity and passions.

When I sold my 40% share in the Vomela Specialty Company in the 1990s, I was only 39 years old. So, one of my goals during negotiations was to get enough money to start another business.

Here’s a quick overview of how my own experience as a start-up founder affected the advice I give to people who are starting their own businesses.

From Consulting Back to Converting

Initially, I opened the LaManna Alliance consulting agency for the print and converting industry. (See Career Stage 5: Becoming a Consultant.)

But that venture was sidetracked a few years later when I felt the itch to get back in the game of building a business.

Through my consulting work with a client from Europe, I learned that the slitting and rewinding steps that 3M used to make tapes, films, and foil products was typically outsourced in Europe. I could see that the need for outsourcing partners was also growing in the US.

The opportunity made me wonder: Could I grow my own Vomela? The entrepreneur in me said yes. But would the bank say yes? Would my father Carlo LaManna help me?

Carlo refused to bankroll my venture unless I hired my four brothers and gave them each an equal ownership stake. I was willing to accept Carlo’s conditions to get the business off the ground. But when my brothers chose not to get involved, Carlo’s willingness to back my new venture disappeared too.

So, using my personal finances to start the deal, I opened Advanced Converting Technologies (ACT) in 1996 and back-burnered the LaManna Alliance LLC.

I wanted to build ACT to be like Vomela had been when my father had owned it. I envisioned that ACT would innovate and grow with healthy profit margins. It would provide good pay and benefits for employees, along with monthly potlucks and a family atmosphere. I didn’t realize just how difficult it would be to achieve this vision.

Without Carlo as part of the deal, I had to lease rather than buy the property for ACT. I leased a new facility for $12,000 a month. Then, I dumped $40,000 into the building for production and office improvements. Some former Vomela co-workers joined my new venture.

Five years later, we were generating more than $7.5 million in sales. My ability to create relationships and strike new deals was as good as ever.

But running the business wore me down. My 18-hour work days were back, and the pressure to meet payroll for 20 employees was always on my mind. Yes, I had secured my future financially with the Vomela deal, but between alimony and the money I’d tied up in investments, I had little liquid cash.

Then came the lease debacle. I made a rookie mistake by not consulting with a commercial real estate contract lawyer before the move. So, I overlooked the fact that after the first year, the lease amount would increase to include taxes and building improvements. When my rent skyrocketed from $12,000 to $33,000 per month, it further ratcheted up pressure on company earnings.

I also struggled with human resources. To run day-to-day operations, my consultant advised me to hire someone outside the family who had experience in the industry. Instead, I listened to my father who suggested that I bring in my younger brother Paul.

Not only did my consultant advise against the hire, so did my office manager. She told me that if we hired Paul she would quit. When I ignored her and hired my brother she did just that.

By mid-2000, it was clear that Paul was not committed to the ACT team and vision. He resigned during the company’s Christmas holiday potluck. Not only was I pissed off at Paul, but I also was angry with my father for strongly endorsing Paul.

Looking back, the person I was pissed off at most was me. In heeding my father’s advice and bending over backwards for my brother, I had hurt the company.

Relieving the Stress

A long-time friend saw how burned out I was so he suggested I take a vacation to a destination I had always dreamed of visiting.

So in November 2000, with a start-up company still experiencing growing pains, I made the decision that would change my life. I would go to Italy – for a month.

In my memoir “They Named You Right,” I explain everything that made that trip unforgettable. But one morning in Italy, it became clear that I was missing something in my life. I thought that I had it all – great kids, great company, financial independence, and freedom. But what I didn’t have was peace.

That’s when I decided to sell my business and move on to a different phase in my life.
When I returned home, the building owner let me out of my lease and gave me 60 days to move the business. GML bought a share of ACT to get access to 3M via the converting and packaging businesses. Hiltner Industries bought the paper and paperboard business unit of ACT.

I re-opened the LaManna Alliance with a new outlook. My goal was to help business owners navigate their own uncertain business growth and exit strategies. I looked for people like Carlo – business owners who came from the working class and strived for something bigger and better.

Helping entrepreneurs from Main Street businesses make smart deals with the big dogs from Wall Street is very rewarding. I help entrepreneurs the same way that my legal team and advisors had helped me land on my feet after selling my share in Vomela and ownership of ACT.

Lessons Learned the Hard Way

Starting a new business after exiting another business has its own set of perils. For example, if you successfully built a business once, you might be over-confident in your ability to do it again.

Every business is different and the economic environment in which businesses grow is constantly changing. But here are some tips that are timeless:

Start with a big idea and a business plan. Having a long-term vision for your business will make it easier to get financing and hire employees. Because I didn’t have to apply for investor financing, I neglected to write a business plan. That resulted in a lot of stressful, on-the-fly decision-making.

Start with enough cash and clear priorities. Don’t underestimate how much cash you need to get a business going. Once you have a business plan, ask a trusted advisor to help you realistically calculate how much cash you will need to start it and keep it going. Resolve not to spend too much money on facilities until your business is generating a steady stream of cash.

Go outside your family for advice. Family members may not share your passion for the business. And their advice might not be objective. Instead, rely on your family and friends to help you achieve work-life balance. Focusing entirely on work can not only damage your health, but also the long-term relationships you need to die happy.

Don’t try to do it all yourself. Identify your strengths and weaknesses and surround yourselves with people who can provide the skills and expertise you lack. While I was very good at sales and networking, I wasn’t good at human resources or day-to-day production work.

Not everyone is cut out to be a business owner. It takes competence, confidence, guts, and the determination to stick it out through some very tough times.

Sometimes you have to quit on dreams. When I was young, I was disappointed to learn I didn’t have what it takes to be a professional athlete. It wasn’t easy to quit on that dream. But when a dream no longer lines up with your vision for future success, you need to find a new course.

My memoir ends with a section called “Rock’s Diamonds” in which I summarize all of the lessons I learned the hard way and emphasize to family business owners. To order a copy of the book, visit theynamedyouright.com.

To learn more about how The LaManna Consulting Group can help get you ready to buy, grow, or sell a business, call me at 561-542-2323.