When emotions get in the way Featured

10:04am EDT July 22, 2002
He had a hunch the business wasn't on the best financial footing when he bought it in January 1989. The numbers didn't quite jive. But Todd Boyer had a personal attachment to Penguin Ice Cream, a small, campus area shop a short jaunt from his apartment at The Ohio State University.

Boyer had worked there for nearly two years, supporting his young family while finishing college. He liked and trusted the owner. Most of all, Boyer knew if he didn't buy the shop, the owner would probably close it.

"The expenses were not in line with what my experience was in managing the store," Boyer admits. "It didn't seem like the numbers were entirely accurate. That should've been a red flag to me that I should've backed away from it. But I was really in love with the idea by then. My wife and I were both in school.

We had a daughter who we didn't want in day care. We knew we could bring her to the shop with us if we bought it ... it was a means to an end."

So Boyer, a 24-year-old journalism and history major, convinced himself he could turn around Penguin Ice Cream. Then he convinced a high school buddy, who bought a share of the business.

"We wanted to run it until we could pay off what obligations we had and then sell it off and split up the profit," Boyer explains. "We had no grandiose plans to franchise or open other locations."

In the end, it was all they could do to get out of it with their shirts intact.

Welcome to retail

Retail sales can be hard enough with the long hours and fickle customers. But add to that the seasonal slumps and thin profit margins of an ice cream shop and you've got very little room for error.

Boyer's plan was to maximize profits by keeping employee hours to a minimum.

"I expected we could squeeze more money out of the business working more hours myself and my wife," he explains.

The shop soon became an extension of their home. That wasn't always good.

"It was hard sharing my family with my business," he says. "There was a lot of competition for my time and attention."

Grabbing the attention of customers was another concern-especially during the sparse winter months. Boyer began experimenting with Penguin's menu, introducing hot-food items in addition to his lineup of frozen confections.

"That was popular for a while, but it became more of a financial drain," he says. "There wasn't enough traffic to enable us to keep it fresh and available right away."

Boyer also remodeled the shop's interior to make it more inviting, but vagrants started taking refuge there to hide from the cold. That wasn't good for business.

Then there were the floods, the break-ins, the robberies, the tuition increases.

"Our customer traffic dropped off by almost one-third [in the fall of 1990] after OSU's tuition increase," Boyer says. "We were too far down the priority list for students after that. Once they paid for tuition, books, pizza and beer, there was no money left over for ice cream."

The transient nature of Ohio State's student body didn't help either.

"We'd get some loyal customers, but they'd move to a new apartment the next year or their class would end and their traffic patterns would change," Boyer says. "Ice cream is an impulse product. Most of our business came from people walking by."

Still, the shop had its moments. A warm spring day could bring upwards of $700 in sales-a good deal more than the $100 per day Penguin often brought in during the winter months.

"We'd work 100 hours a week and sock a lot of money away during the good months," Boyer says. "We were meeting our expenses until the third year. Then we had to put more money into it to keep it operating. It was a good fit for our family at times with the flexibility of hours and schedules, but it got to a point where we had to decide if it was worth sinking more money into it. We were putting more money in than we were getting out and it didn't look like it was going to get any better."

Boyer traditionally closed the ice cream shop for three weeks each December since the cooler weather combined with OSU's winter break kept customer traffic abysmally thin.

"When it was time to close shop that December, we decided it would be foolish to open it up again in January," Boyer says. "You kind of swallow hard when you make a major decision like that. You've invested personal effort and creativity into it. That was our life for five years. We knew it would be difficult closing, but it would be more foolish to put ourselves deeper into debt."

A sticky mess

When Boyer shuttered Penguin Ice Cream in late 1991, he was thousands of dollars in debt.

Boyer says he considered looking for a buyer, but he knew the odds of finding one were slim. Besides, he thought it might pose an ethical dilemma.

"I couldn't, in good conscience, sell for anything near what I owed," he explains. "Rather than saddle someone else with a struggling business, we decided to move on."

Friends helped Boyer clean out the ice cream shop and prepare it for closing. He sent letters to his landlord and suppliers notifying them of his plans. Then he scraped together enough money to hire an attorney. Good thing. Some of Boyer's suppliers didn't take the news of Penguin's closing very well.

"Some suppliers ended up suing us," he says. "We had in the neighborhood of $30,000 still outstanding at the time we closed. Most of them were pretty reasonable about what we could afford."

Boyer tapped into his personal savings to pony up the several hundred dollars he owned one supplier who wouldn't settle for partial reimbursement. That was the "last little nest egg" Boyer had saved. Suddenly, he was on the verge of personal bankruptcy. Though his attorney considered it a serious option, Boyer couldn't stomach the thought.

"What was most distasteful to me was I saw it as the ultimate sign of failure," he says. "Not only couldn't you make it work, but you couldn't meet your obligations to other people. I didn't want to do that. It seemed smarter to scrape by."

Landing on his feet

Boyer made ends meet after Penguin's closing by working odd jobs, such as painting and roofing, for a few months before landing a position as clerk of the statehouse press room. Today he's a public information officer with the Ohio attorney general's office.

"I don't think I have a true entrepreneurial temperament," Boyer now says. "It's nice to be able to walk away from work at the end of the day and not worry about it."

Still, he says owning a business was a worthwhile experience.

"Given the same circumstances and the same opportunity, it would be hard not to do it again," he confesses. "While I regret we couldn't keep it running a little longer and sell or close it cleanly, it was a great ride. It gave me an experience a lot of people don't get to have."

In hindsight, having someone with more objectivity look over Penguin's financials before the sale would've been helpful, he says. The same goes for knowing more about business in general.

"A lot of the financial aspects of running a business I learned on the fly," Boyer says. "I talked to counselors at SCORE. I talked to other business owners on campus." It wasn't enough.

"It was painful at the end ⊃ It was like losing a child, but I was doing what was right. I truly believe closing the store was the right thing to do.

"You learn a lot about yourself when the success of an entire business rests upon your shoulders," Boyer concludes. "I think you're only better for that in the end."