Risk-taking against the odds: the case of Lee's retail store.

Enriquez, Anita Borja

INTRODUCTION

Librada "Lee" Angoco Sablan Borja had survived the odds. Born in 1925, she was only sixteen years old when her island home in the Western Pacific, Guam, came under captivity by the enemy. Guam was one of two populated United States (U.S.) locations to be occupied by another country in World War II. An enemy of the U.S., Japan occupied Guam from late 1941 to 1944, approximately 31 months, which resulted in a loss of Lee's late teenage years. During that period, the indigenous people of Guam, or Chamorros, were subjected to intolerable hardships administered by the Japanese military. Because rapes were common, Lee's mother would periodically smear Lee's face and clothing with mud and chicken manure to shield her from being a victim of rape (Sablan, 2009). Atrocities and grenade slaughters were also threats that Lee and her family had to avoid.

Another life-changing event hit Lee at the age of 31. Pregnant at eight months, and with her three year old daughter Rose, she lost her first husband due to an unexpected illness as he slept in bed by her side. Lee's drive and determination, however, allowed her to forge ahead as a single mother. The death benefits of her deceased husband kept her and her young daughters afloat financially.

Almost several years later, Lee met her second husband and reared five additional children. An enlisted member of the United States Navy, Lee's husband spent most of his required military service tour at sea, leaving her to raise seven children alone. His earnings at the "enlisted" rank were barely enough to sustain a full household of eight dependents. Having experienced the hardship of the loss of her first husband, and the need to survive and improve upon her livelihood, must have been what prompted Lee's extra drive to pursue a path of the unknown ... entering the world of business as a sole proprietor.

THE MOTIVATION BEHIND LEE'S RETAIL STORE

Lee's motivation to establish her small retail store was primarily based on financial need. She wanted to augment her earnings, particularly since she was unemployed at the time. She decided to establish her own retail store. What Lee lacked in retail experience, she apparently made up for through sheer determination. According to Lee's eldest daughter, she didn't have any experience in running a store. She recalled her mother exclaiming, "Even if I don't really know how to do this, I want to give it a try" (Leon Guerrero, 2009). Lee's sister characterized Lee as a hard-working woman who "tried her best" to make her store work (Yatar, 2009). This is indicative of the type of inner strength of a woman who has survived the odds, a risk-taker who was delving into the unknown.

Lee's Retail Store was situated in a prime location. It was located in the lower level of Lee's two-story home, which sat on a corner lot in the central part of Guam's southern village of Agat. The space had to be renovated to accommodate the required shelving and floor space needed to operate her business. In the 1960's, construction costs in Guam were estimated to be about 10 to 50 percent higher than in the United States, depending upon the size of the project and the materials used, and the type of building (PRC D-1163, p. 24). To avoid high construction costs, Lee utilized the services of her sister-in-law's father who was a carpenter by trade, and the labor of her younger brother to renovate the first floor of her two-level home into a retail store space. According to her brother Ben, he used up his entire personal leave time while visiting Guam to help Lee complete the renovation of the retail space (Sablan, Angoco, 2009).

INITIAL CHALLENGES

Several challenges faced Lee in her pursuit of entrepreneurship. First, she had no prior business experience or training required to successfully manage and operate a retail store or any other business. Second, a more established retail establishment was located directly across the narrow two-lane street from her store, approximately 20 feet apart, and had the same corner lot advantage. A second competitor was situated a block and a half away, but was not as accessible to the majority of the village population situated centrally, where both stores existed. Finally, Lee had little start-up capital that was sufficient to acquire basic merchandise mix of canned food, snacks, and drinks, to support a small "Mom and Pop" convenience store operation.

Despite these challenges, Lee's Retail Store had the advantage of being located in the heart of the village, with ease of access and high visibility, as well as being surrounded at all sides with residents who lived nearby within walking distance. It also had the advantage of having the appropriate mix of attractions for the youth market that lived nearby and frequented the store daily. Because she was not employed, Lee also had the time to devote to her new retail venture. She was also able to tap into the services of one of her younger adult sisters and her two eldest teenage daughters (Sablan, 2009).

The store operated from 8:00 in the morning and closed at 10:00 p.m. daily, except for Sundays, when it opened at a later time. The day-to-day operations were handled primarily by Lee and one of her adult younger sisters. Although her daughters were able to assist, they could not handle the sale of alcoholic beverages. Lee managed the store late afternoon and into the evening until closing. She dealt with local wholesalers who supplied her merchandise. She also managed the inventory, bookkeeping tasks, and daily cash transactions in her own way.

The assortments of product inventory for Lee's Retail Store were provided by several wholesalers. A local bakery delivered bread and high-demand apple turnovers. A liquor supplier provided assortments of beer. A third supplier provided soda pops, potato chips, milk, ice cream, and some canned goods. Lee augmented the junk food with her signature pickled papaya and radish (daigo, or Japanese daikon) that she made.

One would assume with the attractive convenience goods sold by Lee's Retail Store, that she would have a steady stream of revenue. However, cash sales were modest at best. According to Lee's second daughter, most of the cash flow stemmed from the one jukebox and three pinball machines located in the store. These machines provided the most lucrative cash revenue stream, based on repeat customers who consisted of teenagers who frequented the store. Lee received a percentage of the cash proceeds deposited into the machines each day. In effect, because of these popular recreational machines and junk food merchandise, Lee's Retail Store became the hot spot for teenagers (Sablan, 2009).

Despite its loyal customer base, Lee's Retail Store lasted approximately three years (Leon Guerrero, 2009). The demise of the small store was attributed to several factors. Inventory control was mired by small children who would steal edible merchandise, such as candy bars and other junk food, almost on a daily basis. The lack of inventory control, coupled with the extension of store credit to local customers who couldn't pay their small debt to the store, contributed to cash flow problems (Becker, Herrera, Reyes, 2009). Without any formal entrepreneurial training, these unavoidable factors, if prevented, could have enabled Lee to survive beyond 1971, when Lee's Retail Store was finally shut down.

LESSONS LEARNED

There were noteworthy business decisions that Lee adopted along the way. Although she had no concept of what a target market segment was, she indeed had one. This segment consisted of the repeat youth customers who were attracted to the junk food and recreational machines. The popular junk food items included ice cream, candy, Lee's pickled papaya and daigo, and sodas.

Another noteworthy strategy was Lee's approach to reducing shrinkage of candy bars. Earlier incidents of candy theft prompted Lee to have the candy bars displayed in jars with screw-on lids. This was a form of retail inventory control and theft prevention. Prior to employing this approach, candy bars used to disappear from originally-displayed boxes on shelves. Unfortunately, not all merchandise which were stocked on the wooden shelves could be protected in jars with lids from the hands of young thieves who could not be seen from the cash register counter where a sole employee was stationed.

Despite the repeat youth customers, the healthy demand for her store offerings was not sufficient to keep Lee's business afloat financially. Sound inventory control and positive cash flow needed to be in place as well. These were not the case.

Upon review of Lee's business decisions or strategies, there were obvious signs of eventual business decline. First, as a somewhat family-run business, the lack of training or prior experience by any of her family members was already a problem. Second, there were no general security measures put in place to prevent shoplifting in the hidden and rear sections of the store. The shoplifting of products by neighboring children resulted in lost revenue that compounded the accumulation of uncollected accounts receivable from in-store credit. Lee recognized that neighboring children will occasionally remove items from the store and run past the cashier counter without paying. Knowing the neighborhood families, she could have easily confronted the parents of the under-aged thieves, but did not. With no advantage of installed security cameras or other measures, one employee manning the retail space could not possibly account for the whereabouts or behavior of these thieving youths, particularly in blind spot areas throughout the store. She had to maintain the cash register counter area at all times, and didn't dare leave it unattended.

Further, Lee's decision to grant store credit to frequent customers, especially family relatives and the after-school youth, which would have been appropriate for relationship marketing, proved negative for long-term survival. The continual granting of store credit to teenagers with (partially unfulfilled) words of "Tan Librada, can I pay you tomorrow?" resulted in increasing uncollectible cash from sales. While her cash accounts receivable increased, cash became scarce and were problematic towards replenishing regular weekly inventory.

CONCLUSION

Lee's risk-taking nature as a start-up entrepreneur is indicative of any sole proprietor entering the world of business. She was also characterized as hardworking, and willing to give her best towards the retail venture's success. She knew that she had a corner-lot location advantage in the central part of the village. She knew what attracted the youth market, who were loyal customers. However, Lee had no known access to small business resource assistance to enable her to succeed with her venture. With training as a retail proprietor, Lee could have avoided the pitfalls of operating her store. The training could have exposed her to the importance of having positive cash flow. Cash flow is noted as the life blood of all businesses, and running out of cash is the definition of failure in business (Campbell, n.d.). In effect, cash flow problems are responsible for causing over 70 percent of businesses to fail within their first year, and consequently attributed as the main reason for business failure (BizHelp24, 2005).

With the advent of the Internet, new retail entrepreneurs are able to gain access to advice on how to avoid retail theft. For example, one could control shoplifting and subsequent shrinkage, through such means as installing security cameras or mirrors, or posting signs throughout the store that security devices have been installed (Reyhle, 2009). Lee could also have learned other ways to avoid pitfalls that lead to small business failure.

Despite the closure of Lee's Retail Store, Lee's entrepreneurial spirit did not end. She decided to convert the store facility into a duplex apartment. She required capital for refurbishing, and was able to acquire a bank loan to make moderate renovations to separate the space into two individual apartment units. The rental income, however, was insufficient to support her seven children, so Lee eventually resorted to full-time employment with a local school district to augment her livelihood.

Like other small business owners who existed in the late 1960's and early 1970's, Lee could have benefitted from technical assistance provided by a small business development center (SBDC). SBDCs are prevalent throughout the United States, and are funded in part by grants from the U.S. Small Business Administration. As a territory of the United States, Guam received some federal government resources, primarily from the U.S. Small Business Administration (SBA) to support businesses. Founded on July 30, 1953 as an independent agency of the federal government, the U.S. SBA's mission is to aid, counsel, assist and protect the interests of small business concerns, for the purpose of strengthening the overall economy of the United States. U.S. Small Business Administration (SBA.) (2008), 1J4). As a territory of the U.S., Guam businesses received benefits from U.S. SBA programs during the 1960's (Technical Proposal B1630, 1964). However, this was not known to Lee.

The 1990's brought a greater opportunity for aspiring and existing small businesses on Guam, through the establishment of the Guam Small Business Development Center, Pacific Islands Small Business Development Center Network. Established in May 1995, this program, funded by the U.S. Small Business Administration, was situated within the University of Guam's College of Business and Public Administration. Its mission is to support the growth and economic development of the U.S. affiliated pacific islands in the western pacific region by providing high quality (free) one-on-one confidential counseling and training to existing and prospective small businesses (www.pacificsbdc.com) Hundreds of small business owners on Guam could have benefitted through the services afforded by this operation. Lee was definitely a woman before her time, and survived entrepreneurship as long as she was capable. The existence of a small business development center would have been her saving grace.

REFERENCES

V. S. Angoco (personal communication, December 19, 2009)

A. A. Becker (personal communication, December 23, 2009)

BizHelp24. (2005). Avoiding Cash Flow Problems. October 10. Retrieved December 24, 2009, from http://www.bizhelp24.com/accounting/cash-flow-control/avoiding-cash-flow- problems.html

Campbell, P. (n.d.). The 10 Rules of Cash Flow 101. Retrieved December 21, 2009, from http://sbinformation.about.com/cs/accounting/a/uccashflow.htm

Economic Development of the Territory of Guam, Part I. D-1163 (February 1966). Prepared for U.S. Department of the Interior, Los Angeles, CA, Washington, D.C.: Planning Research Corporation.

Guam History and Culture. (n.d.). Japanese Occupation (1941-1944). Retrieved December 24, 2009, from http://www.guam-online.com/history/history.htm

T. I. Herrera (personal communication, October 29, 2009)

R. S. Leon Guerrero (personal communication, October 23, 2009)

Pacific Islands Small Business Development Center Network. Retrieved December 21, 2009, from www.pacificsbdc.com

S. A. Reyes (personal communication, October 29, 2009)

Reyhle, N. (2009). Ways to Avoid Retail Theft. Retrieved December 23, 2009, from http://retailminded/blog/2009/03/ways-to-avoid-retail-theft/ M. A. Sablan (personal communication, September 28, 2009)

U.S. Small Business Administration (SBA.) (2008). By WorldLaw Direct [July 2nd]. "Overview & History". Retrieved December 15, 2009, from http://www.worldlawdirect.com/article/2951/us-small-businessadministration- sba.html [paragraph]4

L. A. Yatar (personal communication, December 24, 2009)

Anita Borja Enriquez, University of Guam