Practical Suggestions, Based on Actual Experience, for Starting a Business of Your Own and Making Money in Your Spare Time
Chapter -1
How to Start your own business
WHEN Gustavus Swift, a youngster in knee breeches, dressed and sold his first calf to the fisher folk of Cape Cod, he laid the foundation of the largest meat packing business in the world. The desire to make money—to have a business of his own—was a driving force in the make-up of young Swift. In Barnstable he was known as a chap with a lot of “get up and go” to him. So it was not surprising that when he felt the desire to make money, he didn’t waste his time wishing, but took his courage in his two hands and started in the dressed beef business in his dad’s back yard.
No doubt there were other young men in Barnstable who wanted to make money too. But while they were wondering how they could make it, Gus Swift cut the Gordian knot. It meant work for him. It was not a pleasant way to make money. There was the possibility of his not being able to sell his calf after he had dressed it. He had to walk miles in order to market his veal, for Cape Cod in those days was a “spread out” sort of place. But Swift didn’t care.
He wanted the money. The work, the walking and the adventure were fun. And because he regarded making money as fun instead of work, he later was able to come to Chicago and start the great Swift packing business. How different from the average young men of today! They are usually more interested in having a good time than they are establishing themselves in a business of their own. Being in business is so confining! So they concentrate on enjoying themselves, serene in their philosophy that tomorrow is another day. If these people, and they are not all young people either, worked half as hard at making money as they do at having a good time, they would be rich. Then there are people who are willing to work and do work hard at making money, but they are not successful because they lack a target. They are like the chap who hunts big game with a shotgun. They do a lot of shooting, but they bag very little game. Next to being willing to pay the price of success in hard work, the most important thing is to have a definite, clear-cut objective. Since it is necessary to crawl before you walk, it is suggested that you make that objective $1,000. Now you may say, why stop at $1,000? Why not make it $100,000? While there is merit in the idea of setting up your sights high, there is such a thing as shooting at the moon. Set an objective that you know you can attain. Having attained your first objective, you can then consider what your next objective will be. Remember that after you start in business you are going to run afoul of many discouragements. While it looks easy now, it may not two months from now. If you have as an objective a mark that you can almost reach out and touch, it will help you to carry through this period of discouragement.
The Story of Money
Since this is a book about making money, and money will be mentioned frequently, it might be in order to get it clearly fixed in our minds what money is. Money itself is no good. You cannot eat it. You cannot wear it. You cannot use it for much of anything except to exchange for things which you need. That is why it is called a “medium of exchange.” Money can be anything. In the early days of the West whiskey was used for money. A farm was advertised as being worth so many barrels of whiskey. Beads were used by the Indians as a medium of exchange. The island of Manhattan was bought from the Indians for a few beads. The first use of coins as money antedates Christ. To save people the trouble of having to weigh each coin to determine its value, the government stamped them with its mark. They could then be passed in exchange without using scales, although even today the banks in Great Britain weigh all gold coins presented to them to determine the wear. One of the first countries to use credit money as a medium of exchange was England. People took their silver to the Exchequer and received in exchange a tally stick. Notches were cut in this stick according to the number of “pounds” of silver loaned to the government. These tally sticks were about three-quarters of an inch square and about ten inches long. After being notched, the stick was split in half, and one-half was hung in the Exchequer, and the other half given to the person loaning the silver. At first these tally sticks were used as receipts only, but after a time people exchanged them for things they needed. Then the Exchequer issued tally sticks notched for even number of pounds of silver—one pound, five pounds, twenty pounds and so forth. These were much more convenient than carrying around the actual silver. Eventually the tally stick was superseded by paper receipts, the forerunner of our present paper money. The big advantage of the tally stick was that no two sticks were notched in the same way, so that when the owner of a tally stick called at the Exchequer to collect, the notching on his tally stick certified to his ownership of the silver. It remained for John Law, the eminent Scotch banker, to carry money to its next stage of development— pieces of paper secured by various kinds of assets, and too often by nothing at all. It is important to know how our present system of money grew, so you will understand its true place in our scheme of business. When you determine to make $1,000 you are not thinking of ten one-hundred-dollar bills so much as you are thinking in terms of what you can buy with those bills. And the same is true of those from whom you get money. You both talk about money as though money was all important, but actually you are exchanging services. So your success in making your first $1,000 will depend upon your ability to make or do something, of definite value to society, which people want more than they want the money it will cost them. In the years gone by, there was money in making and selling carriages. Based on figures alone it might seem like a good thing to start in the carriage business. But even the most casual investigation will show the folly of doing so. The public today needs low-priced aeroplanes, automobiles operated with fuel oil, and similar things. So other things being equal, if two men started in business today, one making carriages and the other making Diesel automobiles, it is probable that while the man making carriages might make a bare living out of his business, he would never make any “big” money. He might be every bit as smart, even a better business man, but society is not willing to exchange money for better horse-drawn carriages. But it will for automobiles which will run one hundred miles to the gallon of crude oil!
The First Step in Making Money
It is easier to make money in some localities than in others. There is, for example, the Ogden hardware merchant who became rich selling shovels during the California gold rush. He was quick to see that with people pouring into the West digging everywhere for gold, they would need a lot of shovels. So he wrote back east and bought all the shovels he could get. It was no trick to sell them. All he had to do was to advertise that he had shovels to sell, and the prospectors took them away from him at fancy prices. That kind of merchandising does not require any skill. Neither does it require any knowledge of business principles. But the gold rush is over. The West has been settled. To be successful in business today you need more than a stock of merchandise. You have to know how to sell goods at a profit. Nine out of every ten men who start in business today fail because they cannot measure up to those requirements—especially the last part of the formula. So the first step in starting a business of your own is to know something about it. You need not know all about it. But you must know something about it. Fortunately much of the knowledge you need may be found in books and trade periodicals. The manufacturers of the equipment which you will need to get started are usually able to furnish you with essential information. The federal and state governments have publications of value to you. This is all experience which you can buy very inexpensively, yet it is experience that has cost others much time and money. So read everything published about the business you intend to start, to get the combined experience of others, and begin your plans where they left off. You will find many people who will laugh at the idea of learning how to make money in books. They will tell you that business success depends upon inherent trading ability and action. They will cite men who never read a book in their lives and still made lots of money in business. Do not be influenced by these views. No man ever started in business for himself, who did not short-cut the time it took him to become established, by reading about what others had done. When you read a book about business it is just as though you were invited into the home of the author and sat down with him and talked over your problems. Only those who think they know all there is to be known—and more besides—consider such an exchange of ideas foolish. Why spend hundreds of dollars to find out that a business idea or plan will not work, when another who has tried the plan tells you in a book or a magazine article exactly why it is not a good idea? At the end of this volume you will find references to books, pamphlets and magazines which may be consulted for further information on some business problem. Consult those references. They may save you much grief and loss. But understand this: Reading alone won’t enable you to succeed in business. The best idea ever conceived for making money is utterly worthless until somebody puts it to work. You, no doubt, know many brilliant men, fellows with more ideas for making money than a dog has fleas, yet who never get enough money together to buy a second-hand automobile. What is wrong with them? They are probably like the inventor who never stops inventing long enough to make and sell his invention. One good idea, at work making money, is worth a thousand ideas just buzzing around in the head of the smartest man in America.
How to Begin Making Money
The way to begin making money, is to begin. That may sound foolish. But the hundreds of thousands of people in this country who would like to make a lot of money are not making it because they are waiting for this, that, or the other thing to happen. Some are waiting for business to get better. Others are waiting for the right moment. For the most part, however, they are waiting for no reason in the world except that it is easier to put off until tomorrow those things which should be done today. Business is a game of “put and take”—you can’t “take out” until you “put in.” People often put off starting in business for themselves because they cannot see clearly ahead. So they go to friends for advice. It is characteristic of people, when advising friends, to be super-conservative. Benjamin Franklin, you will remember, asked his friends what they thought of his chance to succeed in publishing a newspaper in Philadelphia. Without exception they advised against it on the grounds that there were already too many newspapers. They did not take into consideration Franklin’s ability nor his capacity to succeed. Had they stopped to analyze the situation they would have advised him to go ahead by all means. The fact that there were so many newspapers made the opportunity for a better newspaper that much greater! As a rule most of the advice to those contemplating a business venture is “don’t.” If you ask the advice of enough people you are almost sure to end up by doing nothing. The only person really qualified to advise you as to what you can do is yourself. You know yourself better than any one else does. You, and you alone, know how determined you are to make a success of the undertaking. And in the last analysis, about 90 per cent of being successful in business is that indefinable thing which for lack of a better name we call “guts.” If you have the “guts” to work eighteen hours a day if need be; if you have the “guts” to go without pocket money in order to carry your business over the rough spots; if you have the “guts” to stick when others say you are just wasting your time, it is a pretty good bet that you will succeed, because that is the stuff from which success is made. So do not be overconcerned with the real and imaginary difficulties that loom up so large at the outset. It is not necessary that you see the harbor at the other end of your course before setting sail. If you sail straight, and keep moving, you will get to your destination. But you won’t get there, or anywhere, unless you start. Once you have started, most of the difficulties will give way before your enthusiasm and determination to succeed. You may end up in an entirely different business from the one you started. You may have to change your plans a number of times. But what does that matter? The all-important thing is that you have started. In the following pages you will read about hundreds of people who, like yourself, had the urge to make a thousand dollars. Some earned it making things, and others selling things. Some made it quickly and others slowly. But you will find one thing true of every story in this book. Each person began making money when he or she started. Had these people not come to a decision, and started in a business of their own, they would never have made any money. Their success began with their decision to start— and so will yours.
Raising Money to Start a Business
Many a man with a good idea hesitates to start in business because he lacks capital. Capital is important, and it cannot be denied that a lack of it is one of the principal reasons for business failures. However, lack of capital need not hold back a determined man. The old saying, “Where there’s a will, there’s a way” still applies. Sometimes a money-making idea is so good that men who have capital will “grub stake” you in starting your business. Many famous businesses were started in just this way. Hires root beer is a case in point. Charles E. Hires discovered the formula for his root beer in a farmhouse back in 1877. One morning George W. Childs, publisher of the Philadelphia Public Ledger, sat down beside Mr. Hires in a street car. “Mr. Hires,” he said, “why don’t you advertise that root beer of yours?” “How can I advertise?” said Mr. Hires. “I haven’t any money.” “Advertise to get money. Come around to the Ledger office and I’ll tell the bookkeeper not to send you any bills for advertising until you ask for them.” Mr. Hires was a man of action. He knew that without venture, nothing could be gained. He accepted Mr. Child’s offer. An inch advertisement ran daily from that time on in the Public Ledger. Slowly, but steadily, it began to pull. When at last the profits from the advertising were sufficient to justify Mr. Hires’ asking for his bill, it amounted to $700. But it was a good investment. It provided the capital upon which the Hires’ business was founded. For ten years Mr. Hires plowed all his profits back into advertising, keeping only enough out for a bare living for himself. He became one of the largest national advertisers in the country, with annual appropriations amounting to more than $600,000. When a product has good repeating qualities it is sometimes possible to interest advertising agents in extending credit in order to get a business started. If an idea offers mass advertising opportunities, some of the larger agencies may accept stock in a company to offset the advertising bills. Among the well-known products now on the market which have been started in this way, or which are partly owned by advertising agencies are: Pepsodent, Barbasol, Bon-Ami, Sapolio, Palmolive soap and Van Camp’s beans. It will be noticed that all these products have two things in common: (l) They are articles which can be sold to the general public, and (2) they repeat quickly. This last qualification is important, because generally you have to spend an amount equal to the selling price of the first purchase in order to induce a person to try a product. Your only chance, therefore, of making a profit on your advertising is the repeat factor of the article. It must have real merit, and it must have an outstanding feature that will lend itself to mass exploitation, either over the air or through the press. Another way to finance a business is to organize a stock company and sell the stock to friends and local business men who have surplus funds to invest. In following this plan, it is important to keep the voting control yourself, otherwise you may find that after you have the business out of the red and into a money-making position, you have been eased out of the picture. Incorporate your company for twice as much as the capital required, and keep 51 per cent of the common or voting stock in payment for the idea or the patents or whatever it is that makes the business attractive. It is better, however, to finance a business out of its earnings, on a payas-you-go basis, rather than to organize a stock company. The reasons for this are: (1) When you sell stock to others you are in effect taking them in as partners. The more partners you have, the less control you will have over the policies of the business, and the greater the danger of dissension. (2) Minority stockholders, unless they are employees, contribute little to a business beyond the initial capital. There is no reason why they should be given 49 per cent of the profits. They are entitled to a “rental” for the use of their money, and the risk they take, but in the case of a successful business, common stock dividends often represent a return of several hundred per cent a year. The best way of raising the money you need to start your business, and the way which in the long run will prove most profitable to you, is to find something that you can sell. Let the commissions accumulate in a bank until the balance is enough to enable you to start in a small way. Then, by the simple process of putting back the profits into expansion, as Mr. Hires did, let your business grow. In this way you will keep control and will not have to share an unduly large proportion of its earnings with others. In this connection you will find on pages 341 to 359 of this book a number of suggested items which you can sell. If you lack the necessary capital to start in business, you will probably find something described in that chapter which can be successfully sold in your community. By this plan you can soon accumulate a thousand dollars or more for business capital.
The Story of the Cash Register
ONE of the outstanding examples of American business successes is the National Cash Register of Dayton, Ohio. It is a monument to the genius of its founder, John H. Patterson. It is a demonstration of what a man with an idea and a lot of determination can accomplish, because probably no product ever made had such poor prospects for success as the cash register when it was introduced in 1884 by Patterson. That it was a useful invention no one denied, but because its value depended, so it seemed, upon the assumption that a business man’s employees were dishonest, it encountered terrific opposition from retail clerks. Mr. Patterson’s success was due in a large measure to taking what seemed to be an insurmountable objection, and turning it into a reason for buying. Cash register salesmen were taught to turn the opposition to their advantage by pointing out to employers that when they put temptation in the way of their clerks, they shared the guilt of any clerk who pilfered the cash drawer. They brought the issue to the proprietor of the business by pointing the accusing finger at him rather than at his clerks. And as so often happens, once the right approach to the selling problem was found, the business began to grow. Even to this day, the leadership which this great company enjoys in the field of selling all over the world, can be traced to its policy of turning objections into reasons for buying. In the words of a famous cash register salesman: “Sell your man with the weapons he hands you.” John H. Patterson did not invent the cash register. His early experience had been in the coal business. When he was 40 years old, he came to Dayton and paid $6,500 for the controlling interest in the National Manufacturing Company, which held basic patents on a cash register. It was a crude device that functioned by punching holes in appropriate columns on a strip of paper. There seemed to be no demand for the machine at all and Patterson’s investment in the enterprise came to be a standing joke in the community. In fact, Patterson’s old associates made so much fun of the cash register, he offered the seller of the stock a bonus of $2,000 to release him from his contract. However, the seller wouldn’t take it back as a gift! When his offer was refused, Patterson made up his mind that he would go into the business and make it a success. Perhaps it was fortunate that Patterson knew nothing about manufacturing. For, if he had, he probably would not have touched the proposition. He would have known the difficulties of running a business without an established demand for the product. But Patterson didn’t know that “it couldn’t be done.” In December, 1884, he changed the name of the concern to the National Cash Register Company and from then until his death at 78, he “slept, ate and drank” cash registers. No one else could see a future for cash registers, but he refused to change his vision just because others could not see ahead. He started absolutely from scratch. He had to improve the cumbersome old machine; he had to find and develop a market; he had to create advertising to sell his product; he had to develop salesmen to do the selling. One might say that he invented modern salesmanship, because until that time, most selling was just order taking. By 1888, the company was beginning to make itself a power. It weathered the panic of 1893 and later depressions. Patterson worked day and night against almost insurmountable odds. There were times when, had he admitted to himself the possibility of being bankrupt, he would have failed. He wouldn’t recognize failure—he could not fail. By constantly improving his product, his sales methods, and his manufacturing facilities, he built up in Dayton a world-wide business that has earned millions of dollars for the Patterson family. It shows what a man with an idea and a lot of “guts” can do.
How J. C. Penney Made His First $1,000
JAMES C. PENNEY’S first job paid him $2.27 a month. Thirty-two years later, he was the successful head of a great business, with more than 1,000 partners. He was just the average small-town country boy. Was it luck? Not at all. It was a combination of enthusiasm, vision, and singleness of purpose, backed up by work. He admits that hard work alone will not bring you success. But hard work and a definite goal will do the trick. After clerking for some time in a store owned by T. M. Callahan and his partner, young Penney was offered a chance to become a partner in the business, with a new store to manage. His savings amounted to $500—not nearly enough. But the two partners agreed to lend him the additional amount needed at 8 per cent. However, Penney was shrewd for his years, so he shopped around and found he could borrow the amount from a bank at 6 per cent. The new store opened April 14, 1902, with a capital of $6,000, a third of which was Penney’s. It was a success from the start. The sales for the first year amounted to $28,891.11 and Penney’s share of the profit was well over $1,000. While the long hours and the incessant work connected with selling customers and buying stock may have seemed like drudgery to many, it was fun to Penney. Merchandising was his field. This was the work he wanted to do, and here was the opportunity. All he needed was the energy to put the business over, and he had plenty of that and to spare. By 1904, J. C. Penney had opened his third store. It was about this time that T. M. Callahan and his first partner decided to separate. They offered to sell their interest in the three stores to Penney. He lacked the needed amount to buy, but such was their confidence in him they accepted his note for $30,000. The stores were known at this time as the Golden Rule stores. The unusual idea J. C. Penney developed from the very beginning was the building of managers. He built up his men and sent them out to open new stores. They in turn likewise built up managers and sent them out to open still other new stores. In this manner, each new store would accumulate enough capital to start the next store. Each manager who opened a new store, of course, shared in the profits of that store. Thus each man selected by J. C. Penney to branch out developed not only business, but men to handle the business. Here was the idea and the vision. One look at the recent sales figures, running well over $250,000,000, shows it succeeded. TheStoryof“MorningGlory” TomatoJuice THE Snead family of Evanston, Illinois, were up against it, just as thousands of other families were in the early days of the depression. Two sons ready to go to Dartmouth and Father Snead out of a job. A less determined family might have decided that “luck” was against them and let it go at that. But the Sneads are not quitters. So they put their heads together and decided to get the agency for some lime drink which would mix with native gin, and see if it could not be sold to the supposedly well-to-do people along Chicago’s North Shore. But the North Shore did not get very much excited about the Snead family’s lime ricky. One day when the Snead spirits were down close to zero a friend on a downstate farm sent the family a case of very fine seed tomatoes. Not knowing what better to do with them Mrs. Snead decided to convert them into tomato juice. Being a good neighbor she sent a few bottles next door. The neighbors made a great fuss over it. Mrs. Snead began to wonder if perhaps her husband and the boys might not be able to do better selling tomato juice the way she fixed it, than they were selling lime ricky. The family went into a huddle, and since the lime ricky business was getting no better fast, they decided to try Mother Snead’s idea. They would call it “Morning Glory” Tomato Juice— because it made you feel glorious, regardless of how badly you may have felt the night before. The idea of fresh, homemade tomato juice, squeezed from choice seed tomatoes took hold in great shape. The Sneads charged more than the grocery stores charged for tomato juice, but nobody complained. People are that way. The late Colonel Simmons used to say: “The recollection of quality remains long after the price is forgotten.” The Sneads were careful to keep the quality up by making arrangements with a chap who grew tomato seeds, and therefore had the choicest varieties. They took over his entire crop and squeezed and seeded it for him. In that way they not only obtained juice that had a superior flavor, but they got their raw materials at rock bottom prices. Most important, however, it gave them a talking point—and a good talking point may mean the difference between success or failure. It was not long before the Sneads were selling all the tomato juice they could make in their kitchen factory, and had to enlarge their facilities. They rented a plant alongside the railroad tracks and began to think in terms of a nationwide market. They considered all the various ways of getting distribution. They thought of selling through brokers, as so many food product manufacturers do. But the brokers told them their price was too high. They thought about employing college men to sell house to house. But that idea would take too much capital. Finally, they determined to stick to the plan they had so successfully used on the North Shore. So they picked out a few social leaders in selected cities, people like the Drexels and Biddles of Philadelphia, and wrote and told them about “Morning Glory” Tomato Juice. The idea of serving tomato juice that was made to order had a real appeal. The orders began to come in. When Mr. Snead had the endorsement of these prominent people, he went to the exclusive hotels in those cities and gave them the opportunity to serve the same brand of tomato juice to their guests as the first families in the city served on their breakfast tables. With the hotels lined up, the idea of serving “Morning Glory” Tomato Juice was next suggested to the railroads. The Pennsylvania Lines, always alert for something better, ordered a trial supply and featured it on the menus of their crack trains. Next the Illinois Central fell in line. In that way “Morning Glory” Tomato Juice got advertising worth thousands of dollars, without the Sneads having to spend a thin dime. Before long the Snead business was going “big guns.” Today, what started out as a stop-gap during the worst period of the depression is now a full-fledged business handling not only tomato juice but other food products as well. This family’s hard-earned success simply proves the often overlooked truism that to sell the masses, first sell the classes.
How the Great Wanamaker Business Started
JOHN WANAMAKER had saved $1,900; his brother-in-law, Nathan Brown, had $1,600 that he was willing to risk in a partnership. “Why not begin?” said Wanamaker to his brother-in-law. He figured that any time was a good time to begin—provided you really did begin. Business conditions were bad—the national depression, that had followed the closing of many banks in 1857, had caused unemployment, low wages, and the demoralization of manufacturers and wholesalers. Philadelphia, especially, was saturated in gloom. It was 1861, the threshold of the Civil War. However, Wanamaker’s mind had been made up and in February, 1861, he signed a lease that put his store into business. At 23 he was ready to assume the responsibilities of a business, regardless of national affairs, business conditions, or the well-meant advice of friends who had tried to discourage him from the undertaking. The store fixtures cost $375 and some clothing fabrics $739. The store opened April 8, but little was sold for several days. Plenty of people passed the store, but very few entered it. Then the books showed an entry of $24.67 worth of “gentlemen’s collars, cuffs and neckties,” sold April 18. In the meantime the $3,500 which John Wanamaker and his brother-in-law had scraped together was fast disappearing. It was just a question of how much longer they could hang on. Fortunately, there was an opportunity to buy the stock of a clothing manufacturer who was nervous over the effect which the war might have on business. Wanamaker took over the stock on thirty days’ dating and invested all the money he had left—$24—in six advertisements in the Philadelphia newspapers. This happened on April 27, 1861. The advertisements did what was expected of them and the entire stock was sold in two weeks. From then on the business grew, under the Wanamaker policy of putting every dollar that could be spared into advertising. By 1869 Wanamaker & Brown were the largest retail dealers in men’s clothing in the United States. With the death of Nathan Brown, John Wanamaker & Company was organized to do a general business. Today it is one of the great stores of the world, and a monument to faith in advertising. It was Wanamaker’s method to expand constantly and depend upon advertising to fill in the open spaces. What his rivals called his foolhardiness was grounded in a supreme faith in the power of advertising to build volume, and the realization that volume attracted volume. When business came upon any dull times or during a panic, it was always Wanamaker’s policy to increase and expand his advertising appropriation as his sales increased.
Mrs.MacDougallTurned $38 into a Million
WHEN Alice Foote MacDougall, of New York City, was left a widow in 1907, with three little children to support, she turned to the only work she knew outside of handling her household duties—coffee blending. With a capital of $38, she decided to continue her husband’s coffee-broking business. It was uphill work. There was much antagonism on the street, and coffee-men in the business gave her just six months to last. However, she gradually became established and the six months passed. Her little office included a borrowed desk and a second-hand chair. Not only did she have to overcome the prejudices against a woman in this business, but she had to learn the simplest routine of running a business. Most of Mrs. MacDougall’s accounts were clubs, hospitals and sanitariums. In the beginning, she solicited orders by mail, but she realized that she would have to make personal calls to secure more business. She mapped a radius of seventy-five miles from New York and traveled this territory for several years. Two years after she started in business, she was taking in $20,000 a year. However, the profit on this amount was small as the net profit on each pound of coffee was only about four cents. Several years later, having built up a reputation for good coffee, she opened a small coffee shop in the Grand Central Terminal, serving coffee and simple foods. Within a year from the time the shop opened, she was serving 8,000 customers a month. Gradually this shop led to a chain of six eating places, each patterned after a typical European scenic spot. Mrs. MacDougall was a success; people flocked to her restaurants. They liked the leisurely, foreign atmosphere. Her tea rooms at this time earned as high as $1,684,000 a year. Then came the depression! In 1932 like many another, Mrs. MacDougall went broke. The six restaurants went into receivership. Mrs. MacDougall, however, had fought business difficulties before and came out ahead. She didn’t cry “stop” now. At the age of sixty-five, she made a comeback and is now the mistress of a chain of three restaurants. She is again stressing “atmosphere” in her restaurants and the public is once more putting its stamp of approval on her undertaking by giving these restaurants its patronage. Once more Mrs. MacDougall is on her way to making an outstanding success. How Otto Schnering Made His First $1,000 IT WAS back in 1914 that Otto Y. Schnering, then twenty-one years old, went into business for himself. He had only a few dollars capital. He rented a little office and established himself as a manufacturers’ agent, struggling along against unpredictable odds, but gaining business experience. Then came what he thought to be his real “break.” In 1916 he learned of a candymaking machine he could buy for $100. “Fortunes have been made in the candy business,” thought Schnering, so he bought the machine. The first day the machine was delivered, he put it into operation. He worked until midnight and made a batch of what he believed to be very fine candy. The next day he took this candy and arranged with a few shopkeepers to sell it for him on consignment. Then he returned to his office and made up a second batch. He was to discover that his candy did not go well. When he made his second call, very little of it had been sold. This did not discourage him. He had embarked upon a career as a candy manufacturer. The thing to do, he figured, was to find out why his candy didn’t sell, and then make candy that would sell. Unwittingly, Schnering had made a mistake that thousands of others have made when they decide to go into any kind of manufacturing business. He made a product that he liked, instead of one the public liked. There are thousands of manufacturers today who are slowly going bankrupt because they do not follow this simple principle. They often try to force their ideas on the public, when it would be so much easier to make something that the public actually wanted. It did not take Schnering long to discover his mistake. He found out that three types of candies sell best, namely, chocolate, caramel candies and candies containing peanuts. He concentrated on making candies of this type, and his candies sold, though not as well as he anticipated. Schnering then experimented with many kinds of candy bars. It took him three years before he had hit upon the ideal combination, one blending chocolate, caramel, and peanuts, and the way the candy-public took to this bar justified his experiments. He later decided to call the bar “Baby Ruth,” because the word “baby” was familiar to every small child and adult, and because the common name, “Ruth,” was easily pronounceable by man and child. He priced it at five cents. The success of this bar was immediate. To make a candy bar that will sell successfully does not require a candymaking machine. You can start in your own kitchen, and by following the principles outlined above, may, in a few days, work out the formula for a successful selling bar. Candy formulas are not subject to copyright, but the trade name of the product may be registered in the Bureau of Patents and Copyrights, and its use denied to anyone but yourself. The experience of every candy manufacturer, however, would indicate that the best kinds of candy to make would be candies made from chocolate, since chocolate candies are always in demand. Kitchen-made candies, chocolate creams, dip caramels and other types sell better because they are fresher, and there is an unlimited demand. A market is always ready in the local stores, where goods placed on consignment, that is, with the understanding that you will take them back if not sold within a specified time, are generally accepted.
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