Surviving Retirement

We launched the new line by having batches of twenty five made up to utilize the newly refitted machines and to fill in during slow times with the traditional business. While all of this conversion was going on, Ellen took the designs to a technical fashion designer who reviewed them and offered several suggestions to improve the manufacturing process. The first was that four of the six designs were literally made out of one piece of fabric. Instead of cutting each piece first and hemming then, she suggested that we have all of the fabric cut to one size and shape. The machines could sew the hem at the size required and then the excess could be cut off. This eliminated several steps in cutting and fitting the material to the machine properly to make sure that improper hems wouldn't result. The other two designs were more intricate in that they had a fairly simple skirt that had a multi piece top to cover the upper torso. She suggested that the top be a separate item that would be made out of one piece more like a serape. Besides the option of mixing and matching skirts and tops, each piece was quickly and easily made.

The other thing she suggested was that since all of the skirts required some type of attachment in one or two places, we should add a well reinforced button hole as required and offer a variety of choices for attachments. They could be large buttons, ties, ribbons, hooks, or buckles. Ellen loved the idea of the instant accessorization of the outfits for different occasions. I liked the simplicity of the design for manufacturing and shipping. We didn't offer these new designs until we introduced them to the website.

The traditionally made ones were quickly accepted by the store customers and we were selling ten or so of each style each week. When we were ready and launched it on the website, we were getting ten orders a day. The ten new machines could easily produce this quantity and we realized that we could handle up to ten a day per machine. We hit that mark at the end of the year after they were introduced. The on-line business continued to expand with the At Home line leading the growth.

One of the things that Ellen had started doing in our first year was that she would send an e-mail twice a year to our repeat customers asking them about what they wanted or needed. We discovered that the fashion marketing industry was constantly trying to change the styles to get women to buy new things that didn't have staying power. We preferred to talk to our customers and see what they really wanted or needed. Based on their responses, Ellen would add or adjust our catalog accordingly. She also looked around for new lines to add and now, she also looked for new designs for the At Home lines. Over time, we added a number of other items like At Home in the Kitchen featuring practical and nice wear while cooking which included everything from aprons to chef pants and jackets. At Home in the Garden featured loose clothing for the garden along with hats and gloves.

We still stayed away from trendy and personal items like underwear and evening wear; we focused on comfortable and practical things. Four years after we bought the manufacturing business, we outgrew the building. Our lease with the owner had expired and he had retired to a small town some distance away. When we told him that we needed to move, he offered to sell us the building for a price that was way below the market. After thinking about it, we took him up on his offer and moved the make-on-demand business to a nearby location and left the traditional small order business in place. We had updated and modernized those machines, but not to the full level of the others. We had trained the maintenance man to become our operations manager and we seldom had problems from with group of machines. Ellen had visited all of these customers and had adjusted our service to serve them better and that part of our business was now growing again as the customers liked our quality and prices. She expanded our customer base as some of the other smaller shops closed their doors.

During this same period, Marci had suggested that we look at opening a second store in another redeveloping area of town. It too was near a college and a middle class residential area. We looked and opened our second store. Two months after that, we opened our third store in an adjacent city in a similar neighborhood. Both stores were instant successes. Marci had developed several of our employees into managerial material and we transferred them to run these new stores. We stocked them with our standard products and offered our full catalog of items to be ordered and picked up within two days of ordering. We had several malls approach us to open stores in their mega malls, but we chose to stay close to the customer base that was critical to our success.

At our ten year anniversary, we celebrated again with a two week vacation, but this time to Italy. We came back in love with Italian food and wine and with four new designs for the At Home catalog. These were simple Italian peasant wear which would be easy to make and offered a new style of comfortable wear. Melinda and her husband had kept us current on the technology front and we kept growing. We were approaching $50 million in revenues each year and weren't like many other companies that grew up quickly and then disappeared just as quickly. We stayed focused on our core business, we funded growth from internal sources rather than leveraging our future by borrowing, and we added "safe" products that our customers actually wanted. Ellen and I were taking a nice salary and saving most of it, but we weren't sucking huge amounts of money from our operations. There had been a couple of economic downturns, but we easily survived them because of our stable approach.

We broke new ground for the first time since we started manufacturing early in our tenth year. We had heard about another growing website that focused on evening wear. They seemed to be following a similar path of solid growth and stability as we were. Their focus wasn't on high fashion, but traditional "little black dress" clothing and accessories. Ellen and I had talked about them and seemed to agree that they were doing it the right way. That myth came to a halt when we were approached by a lawyer one day. Simply stated, the owners of the website had started like we had and done well until the husband started having an affair with one of their employees. His wife had gone ballistic and filed for divorce. She was demanding a large cash settlement which the husband did not have nor could he raise. In short, the business was at risk of going under unless a buyer could be found. He was exploring if we had an interest since our stability and growth was well know in the industry. He brought us their sales history and financial statements and said that he could give us a week to consider it before he would need to look for other options.

I analyzed the financials quickly and found that they were profitable, but not quite at our level. They had opened more stores than we had, but had stayed in similar reviving neighborhoods as we were. They were leveraged more than I liked, but it wouldn't be an excessive burden. Ellen evaluated their product lines and felt that our customers might find them appealing. Their operations were less sophisticated than ours and I could see potential to improve their profitability in that direction. We went back to the consultant and discussed how to approach this. He suggested two options to consider. The first was to buy out their business and merge it into our existing one. The second was to offer to buy the company and keep it as a separate subsidiary. For this approach we could offer both cash and stock. It was then that he suggested that the husband seemed to be interested in getting out and pursuing a different life and that they wife might be interested in continuing as part of the business in spite of her anger. Our banker was supportive about either option.

I called the lawyer and asked if we could meet him and the wife at a neutral location and discuss several approaches. He warned that the wife was very defensive, but that she would probably listen to what we had to offer. When he called back, he suggested a location at a nice hotel about half way between us and her home base.

We took the consultant with us and were prepared to make two offers for her to consider. The first was pretty much a distress cash sale for the business which she would probably get two thirds of the cash based on her lawyer's sense of how the divorce would go. The other offer was for us to finance her to buy out her husband's shares in the company after which she would merge her company into our company and get a 10% ownership in our combined companies. She would be retained to operate her company as a Vice President for her region at a very nice salary. We would provide our products to her stores and she would provide our stores with her merchandise. This offer required us to put up less cash, but would add both a website and more stores that should power more growth.

When we presented the first offer, her anger surfaced and we could tell that she was ready to take that offer just to shove it in her husband's face. However, when we presented the second offer, we saw her soften significantly. What resulted was the story that she loved the marketing and merchandising part of the business. He had been doing what I did, but had lost interest in it. Most of her anger was that she felt betrayed that he was ignoring the business and creating problems because she wasn't comfortable with all of the nuts and bolts things. His affair actually just added fuel to the flame that was already building. This approach would let her continue doing what she liked to do and promised an even greater return for her over the long haul.

She slept on it that first night and Ellen and I spent the night making love and feeling fairly confident that we now had a partner. In the morning, we agreed on the second offer including the price for the stock over breakfast. She actually suggested that we lower the stock price so that he would get less. Her lawyer just smiled. He and our consultant spent the day structuring the deal and we and the woman, whose name was Rachel, spent the next two days talking about details. Actually, she and Ellen spent most of the time talking about customers and ideas for growth. I began to get the picture of how they operated and felt that it would be an easy conversion.

The resulting deal was two parts. We invested the money for her to buy out her husband which he eagerly accepted. A week after their divorce was finalized, we signed the merger papers and Rachael became our partner. We had to put up $5 million in cash to make this deal and a year later, I had converted their operations to blend with ours and we saved over half of that amount. More importantly, we had added $10 million in revenue, the profit level of what was now called Rachael at Night was higher than our JoEllen products lines. Between Rachael and Ellen, new products for both lines came easily. The one operational thing that I focused on was to fill in the gap between our two locations with stores to create a unified front throughout our region. We made Marci the Regional Manager for store operations and named local managers in each area to develop that area.

At fifteen years, we were a $100 million dollar company with plenty of room to grow. It was then that things happened to change our lives completely. The first was that Rachael told us that she was going to get married again and wanted to reduce her daily participation in the operations of the company. She had met and had dated an investment banker for a year. They had fallen in love and wanted to start a family soon at his location farther east. We of course gave her our blessing. At that time, both Ellen and I realized that we were also getting tired of being so deeply involved in the business and we began talking about pulling back some.

It turned out that Rachael's investment banker talked to some of his clients about us and the next thing we knew, we were visited by another lawyer. This time he wasn't trying to sell something; he represented someone who wanted to buy something: our company. It was the heady time of internet marketing and even startups were selling at ridiculous prices. We sat there as the man said that he represented one of the major retail companies and he offered us $750 million dollars for our business. The offer was for half cash and the other half in stock of the retail giant. Neither Ellen nor I knew how to respond. I had thought that the company was worth about a third of that and felt proud of our efforts. But this was three times as much as I thought. The cash portion alone was more than I estimated the worth of the company.

We talked to the banker, the consultant, and our investment advisor and they all gave us the same answer; "Take it."

Two months later, we signed the papers, the cash was transferred into our investment account to fund our newly developed investment plan, and Ellen and I left for a month long vacation to Italy again. We thoroughly enjoyed our month of traveling around and exploring the little out of the way places that are so prevalent in Italy. Ellen kept seeing things that she wanted to sell and I kept seeing ways to make and ship these items. We both knew that we wouldn't be able to do any of this for two reasons. First, the new owners wanted to put their people in place and we were no longer part of the company that we had built. The second was that we could not start a new business in the clothing business for ten years. We could do anything we wanted outside of the clothing business, but we didn't have an interest in anything else.

When we came home from our trip, we went to our condo, the same one we had lived in for the past ten years, where went to bed and made love for a long time. The next morning, we got up and made coffee and sat down and looked at each other. Ellen said the words, but I was thinking the same thing; "What are we going to do today?"

I had no idea. We had spent all of our time working on the business and had developed no outside interests. We also had no close personal friends; only employees who were friends. We had no place to go and nothing to do and we didn't have a clue what to do next. We were thirty five, wealthier than we ever imagined we ever would be, and we had no idea what to do today much less next year.

We decided to take a road trip and visit our parents. That was good and killed two weeks. They were both almost jealous that we could now do anything we wanted. They didn't seem to comprehend that we didn't know what we wanted to do. They simply said, "You will figure it out. Be patient."

We were patient but we weren't figuring it out. Within a week after we got home, we were almost dreading getting out of bed in the morning because we would have to face another day with nothing to do but eat.

Chapter Two

On Thursday, Ellen heard a woman on the local NPR station talking about their work with potential retirees and how to prepare themselves for life after work. She called the woman's office to talk to her. The woman was busy, but her secretary scheduled us to come in the next morning at 10:00. Ellen accepted and told me what she had done. I was elated that we had something to look forward to and we actually acted excited for the rest of the day.

The next morning, we arrived a little early and the smiling receptionist gave us a couple of pages to fill out. The first was the usual basic information and the second a questionnaire that had places for both his and her answers. When we were finished, the receptionist led us into a nice and comfortable office after offering us coffee. We thank her and poured ourselves a cup before we settled on the couch to wait. It only took a moment before another door opened and woman of about fifty entered while looking over our information sheet in a file. She had a puzzled look on her face, but when she looked up the puzzled changed to very confused.

"Excuse me, are you that Magnons?"

Ellen answered, "Yes, we are. Is there a problem?"

"Um, no, not at all. I was expecting...Let me back up and start over again. I am Dr. Susan Smith and we usually counsel older people trying to prepare for retirement. You are obviously younger. That isn't a problem; I was just surprised. May I ask what your interest is?"

It was my turn to answer, "The short story is that we just sold our business and woke up and realized that we didn't have a clue what to do with our lives. Ellen heard your interview on the radio and we decided to see if you can help us since we are sort of retired now." Ellen nodded and smiled.

Susan looked at us for a moment and then smiled. "As I said, most of the people we talk to are older, but we have worked with a number of people in similar situations to you; please forgive my confusion. However, I would like to have my husband join us. We prefer to work with couples like you as a team. Would you mind?"

Ellen replied, "Of course not; we need help from any source."

"I'll be right back." She went back out the door and returned a couple of minutes later with a man about her age with a look of an interest on his face. "This is my husband, Dr. Harold Jennings. Honey, this is Joe and Ellen Magnon."

"Hi, I am pleased to meet you. I am very interested to hear your story. Please tell us what you want us to know."

They sat down in chairs on either side of us and also joined us with a cup of coffee. Each of them had a pad of paper and pen on their lap to take notes. For the next forty five minutes, Ellen and I took turns telling them about our history and lives together. We only left out details and tried to be totally honest with them. We had nothing to hide. It was not lost on us that both of them were busy writing and asked few questions as we talked. When we finished, we took a break and Ellen and I each went to the bathroom.

When we came back, there were some snacks on the coffee table in front of us and a fresh pot of coffee on the burner. Harold began, "Let me tell you a little about us and why we are interested in you and your situation because we are very interested. I am a psychologist and as such, I focus on individuals. I don't look for the usual negative things like depression and behavior problems. I leave that to others. My interest is in the stages of people's lives and the changes that happen as they mature and age. He paused for a moment to drink some coffee and think about how to proceed.

"We used to talk about adolescence, young adulthood, adulthood, and then senior citizen and the golden years as they were called. I prefer to narrow those down further to young adulthood, middle adulthood, late adulthood, early maturity, and then late maturity. During young adulthood, people are exploring life, careers, and finding their mate. Then they go forward starting to fulfill their dreams and plans. There usually aren't a lot of problems except practical ones in this period. The second period is middle adulthood. People have settled in trying to fulfill their dreams and move forward. This is also when they begin to have children. The problems during this period are usually with the women. They begin to struggle with balancing motherhood versus career. During the later part of this period and early in the late adulthood stage is when she has resolved these issues and the children are growing and life is relatively smooth. The problems in late adulthood are now usually with the men. We generally refer them as being the middle age crazies. They feel trapped in a continuation or more of the same. They have affairs and domestic tension grows.' He paused again and refilled his coffee.