I made one really stupid mistake of this kind, right at the beginning of my business. When I started, I said to the original owner, the Kenton Corporation, that I would lose dollars 1m in the first year, break even in the second and make dollars 1m in the third.
In the first year we lost dollars 990,000, so I felt pretty good, but the owners said that although I knew about sales and merchandising, I needed help with the marketing side. I needed to learn about building up customers and that sort of thing.
So I remembered a friend from boarding school who was working in marketing in New York. I thought he must be an expert on this sort of thing, so I brought him into the company.
He convinced me that we should increase custom by reproducing our catalogue in magazines. When I questioned whether we could afford this, he said that we would get cheap space by leaving booking to the last minute, and that we could pay for the advertising out of the proceeds of sales.
The problem was we didn't get many sales. That was another mistake - reasoning that if people bought something from a catalogue they would necessarily buy from a magazine. They are two different people: the person going through a catalogue is already thinking of buying; the one reading a magazine is just reading a magazine. And I stupidly thought that if we didn't sell anything, we wouldn't have to pay for the advertising. Instead, we had bills for dollars 1m.
The first thing that happened was that Malcolm was fired from the company, and we haven't really been friends since then. But the real lesson is that you should not be afraid to ask the obvious question: the worst thing that can happen is that you get laughed at. I've found that in the theatre. Because I'm the new boy, there are sharks waiting to get your money. In the last one-and-a-half years I've learned every lesson. I'm getting to be a pro.
It was a wonderful mess and just at that point the parent company was having severe financial problems. They said they would have to close me down. I tried to tell them that it was a one-off mistake. They said that was a likely story. In the end the company was sold to Meshulam Riklis and I told him I wanted to buy it. Originally, he said it wasn't worth anything, but he let me buy it for dollars 1m, plus dollars 500,000 out of the profits I said I was going to make - and I could spread it over five years.
We went on to build up the company. If I had not made that huge early mistake, I would have had a profitable company, but I would not have owned it - and would have been very unhappy. So it worked out in the end. But my philosophy is that everything works out.
I do feel that people are afraid of the consequences of things. One of the main things in business is to ask what is the worst that can happen. If I don't do that, I get into trouble.
Roger Horchow, 64, is a businessman- turned-theatre-producer who might have made a mistake putting his money into his passion for the music of Gershwin. But his first co-production, Crazy for You, which opened in London last week (see Critics Pages), has been an award-winning hit in Tokyo and New York. Born in Cincinatti, Ohio, he attended Yale University and worked in retailing and merchandising in Texas after serving in the army. He set up a mail order company, called the Horchow Collection, in 1971 and sold it to General Cinema in 1988 for dollars 117m.
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