“The rule,” Professor Hunt said, “is that I am never, ever going to come to you with suggestions. That’s not how business works.” It was our first session of the Build a Business seminar since I’d bought the pizzeria. We were all supposed to have chosen a business by now, though the five new students who’d enrolled in the wake of Professor Hunt’s media circus had an extra week to decide.
“I don’t know about that,” I said. “I’ve only owned The Leaning Tower of Pizza for three days, and I’ve already gotten a ton of suggestions.”
Professor Hunt sent me a knowing grin. “Sure, you have. You’ll hear from customers, from classmates, from staff, from anyone with an opinion. You’ll get thousands of unsolicited suggestions, some good, some horrible. But right now, I’m talking about expert advice. Never expect a top business consultant to come to you and tell you where you’re going wrong.”
“So what do we do if we need advice?” Owen asked.
“Seek it out. Just like in the real world. Feel free to come to me with any questions, and I’ll do my best to offer guidance. But I’ll never seek you out. And if you don’t want my advice, that’s fine. Just know: if you fail to make money, you’ll also fail the seminar.”
That was news to me. I threw up my hand. “Wait, you’re saying that if I lose money on the pizzeria, I’m going to fail?”
Professor Hunt laughed. “Relax, Ty. You’re already making money.”
“Well, sure, ’cause of the free publicity. But Bartley was losing plenty.”
“Okay, okay, calm down.” She put up her hands. “I shouldn’t have used the term ‘money.’ It’s too vague. Let’s break money down into cash, profits, and revenue.” She wrote these words on the whiteboard. “Who can tell me what those mean?”
“Revenue is the amount of money you bring in,” said Darren, an athletic junior who rarely spoke up.
“Correct. Now, who can tell me the difference between profits and cash? Yes, Jenna.”
“Cash is the amount of money you have in the bank at any time. I guess profits would be the amount of cash you’ve made over time, right?”
“I’m afraid not. Anyone else want to take a swing at it?” Professor Hunt paced in front of the room. “No one? Very well, then let me ask you this. Is it possible for a company to have no profits and still be in business?”
“Sure,” I said. “Look at The Leaning Tower of Pizza.”
“Actually, let’s not look at your pizzeria just yet. Let’s start with a more famous example. Uber started in 2009. A decade later, in 2019, they hit $13 billion in revenue. Their losses that year exceeded $8 billion. Yet, that same year, they went public, and their valuation immediately hit $75 billion. Why?”
“I guess investors believed the company would make money in the future and kept pouring their cash into it,” Jenna said.
“Correct. And it’s not just investors. Banks may offer loans. Governments may give loans, grants, or tax breaks. That’s all cash. Which brings us back to the question: what’s the difference between profits and cash?”
“Well,” I said, “you can spend cash.”
“Exactly. Ty, how would you feel if someone came into the pizzeria and tried to pay you in profits?”
“Uh…I’m not really sure what that means.”
“Precisely.” Hunt approached the whiteboard and wrote, Profits are a fiction. Cash is a fact.
I remembered Carrie’s comment that profits were fungible. But that didn’t make them a fiction, did it?
Artemis continued. “When I said you’d fail the seminar if you failed to make money, I was speaking about revenue.” She circled that word. “How many pizzas have you sold since you opened?”
“Around 250.” That number was a little generous. On my second day, orders had dropped to 80, and yesterday only 72. Ted’s assumption that my uptick in sales was just the publicity, unfortunately, seemed spot on.
“Then don’t worry about failing the class. You’ve already brought in revenue, right?”
“I guess.”
But I’d guessed wrong. Soon after I opened for lunch, who should come in but my old boss.
“Hey, Mr. Bartley, great to see you back.”
“I’m no longer your boss, Ty.” He reached out to shake my hand. “You can call me Cal.”
“Well, great to see you back, Cal.”
“It’s good to see the place hopping. I see you’ve already had a nice bump in customers.”
I grinned sheepishly. “The article in the school paper was a big help. Everyone’s curious to check me out.”
“It seems so.” Bartley’s expression clouded with disappointment.
“Can I get you a pie? On the house, of course.”
“No thanks, Ty, I can’t stay long. I’m starting my new job tomorrow, and I need to get my office set up. But I checked my bank account and had a nice little surprise waiting for me this morning.”
“Nice not having losses from this place drawing on your savings, huh?”
“That is true, but I was speaking about an unexpected $782 deposit.”
Deposit? “Where did that come from?”
“Your credit card transactions, Ty. They’re still connected to my account.”
I smacked my forehead. How could I have overlooked that? I was so focused on getting pizzas in the oven, I’d thought little of where the money was going. But no money, no pizzas.
“Don’t worry, Ty, I wouldn’t be here if I wanted to rip you off.” Bartley patted my shoulder. “As hard as this is for me, I’m rooting for you. How about if I just use that money — and whatever else comes in until we get this fixed — to offset what you owe me?”
My old boss kept smiling, but he was hoping to boost his cash flow while squeezing mine. The only debt I owed Bartley was on the furniture, at $200 a month. The first installment wasn’t due until the end of the month, and I had no intention of paying it early. I had plenty of bills due before then, and I needed all the cash I could get.
“I can see from your face that my solution isn’t entirely to your liking,” Bartley said. “I tell you what I’m going to do. I’ll write you a check for $782. Once you get an account set up and move the transactions over, we’ll add up how many more accidental deposits I’ve gotten, and you can come by my place and pick up a second check for that amount. How does that sound?”
My shoulders relaxed. “Very generous, Mr. Bartley.”
“The name is Cal. Good luck, Ty.”
The door had hardly closed behind Bartley when Carrie was at my side. “You didn’t change the credit card processing?”
My shoulders tensed again. “I’ve been pretty busy if you hadn’t noticed.”
“This business is about an inch away from going under if you haven’t noticed.” Carrie smacked my shoulder. “Failing to collect the money you’re due will be the death of this place.”
“I know, I know. But there’s been so much to think about. I just figured that would transfer to me like everything else.”
“Guess you figured wrong.”
“Obviously.” My eyes grew hot. “So what do I need?”
“You’re the business owner, you tell me.”
I blew out a long breath. “OK.” I grabbed an order pad and started writing. “I’ll need credit card processing. Plus, a place for the money to land, so that would be what? A business checking account?”
“I guess so…” Carrie pointed to the next line on the pad. “We also need a credit card to pay for supplies. Bartley paid for a ton of stuff that way.”
“Right. So, where do I go to get all this?”
She rested a hand on her hip. “You really are clueless, aren’t you?”
“I’m new at this, OK?”
“Maybe that professor of yours can help you out?”
“I suppose. She said we could ask her when we needed advice.”
“So what are you waiting for? Ask. Ask.”
I fired off a quick email to Professor Hunt. A half hour later, her response arrived, complete with recommended places to open accounts. I asked Carrie, “Are you okay running things alone while I go take care of all this?” I started pulling off my apron, but I didn’t get very far.
“Not a chance, bub.” She pointed a finger at me. “You’re on my time now. You take care of all this when you’re not on shift.”
“Yes, Boss.” I strapped the apron back on.
Just then, a scrawny guy with long, unkempt hair stepped into the pizzeria, presumably a freshman, given the dazed look in his eyes. “Can I get a slice?” he asked Carrie.
“Sorry, we only sell pies.”
The freshman’s face fell. I realized the look in his eyes wasn’t dazed but hungry. Given how often I’d been forced to skip meals, I was surprised I’d missed it.
All our pies were made to order, except for the staff pie, which we kept behind the counter to snack on while working. Unfortunately, we tended to get creative with that one. I’d made this pie myself with spinach (the only way I got any greens in my diet), red pepper, and pineapple (which, in retrospect, was a mistake). Because of the pineapple, we hadn’t torn through it, and three slices remained.
I held up the pizza tray with the remaining slices. “I’ll sell you a slice of this if you want.”
“How much?”
Something told me that every dollar counted for this kid, much like it had (and still did) for me. “Two bucks.”
“I’ll take it.”
Carrie raised an eyebrow. “We’re selling slices now?”
“Looks like.” I slid the slice into the oven to heat up. Only as the cheese started to bubble did I realize I’d just made my first real business decision.
The next morning before class, I went to the bank Professor Hunt recommended. She’d even sent an introduction to the account manager.
“I can offer you credit card processing for the very attractive rate of 2.9% plus $0.35 per transaction,” the manager said.
Fortunately, Professor Hunt had also sent me links to her favorite online processors and advised me to come in ready to negotiate. “That sounds high to me. I’ve checked online, and I can get better rates.”
“Look, are we the cheapest? No, I’ll grant you that. But there are advantages to doing your card processing through a local bank.”
“Like what?”
“Like we’ll actually know who you are. If something goes wrong, we can work with you. You won’t get personalized attention at a big online processor. Plus, if we’re running your credit card transactions, we’ll be more inclined to give you a line of credit down the road, as we can always retain your transactions to pay ourselves.”
“I’m a small transaction business. I don’t mind if the 2.9% is a bit higher than elsewhere. But the $0.35 is a killer.” I’d run through all my numbers the night before so I wouldn’t sound like an idiot. “If someone runs a credit card transaction for a $2 slice, I’ll pay 18% of the bill just to process the card.” It was a good thing I’d started selling slices just the day before. The percentage on the pies didn’t sound nearly as high.
“Tell you what. I’ll keep the 2.9%, but I’ll drop the per-transaction fee to $0.25.”
From my research, I knew it was hard to get a per-transaction fee lower than $0.25. “I’ll take that.”
“Great. Do you need the equipment?”
“I have point-of-sale equipment left over from the previous owner.”
“It all looks the same, but it’s fairly proprietary. Take a picture of what you have when you get back and send it to me. If you don’t have something that works on our system, you’ll need to buy it again. But I can spread out the payments if it helps.”
I could use all the cash I could get but didn’t want to appear desperate. “A payment plan sounds best. I want to keep my cash flow as high as possible.”
“Makes sense,” he said, either not sensing my desperation or hiding it well. “In a few months, if the credit card transactions you’re running remain consistent, we can look at getting you a business line of credit. But since you’re already running your transactions through us, I can be a little more generous with the limit on your credit card, assuming you need one.”
“Yes, please. And a checking account.”
I left the bank with a business credit card carrying a $15,000 limit. They had one card with an introductory rate of 0% financing for the first nine months. That would have been a real blessing. As Professor Hunt said, profits were a fiction, but cash was a fact. On that card, I could have made the minimum payments and gotten the equivalent of a $15,000 loan. And by the time I had to pay that in full, I could have qualified for that business line of credit he mentioned. Unfortunately, my credit rating was too low to qualify for that card. The one I got had a whopping 24% interest. As long as I paid the card in full each month, I wouldn’t pay any interest. But if I ever ran short on cash, those charges would sting.
Professor Hunt entered the pizzeria just before opening the following day, bearing a gift-wrapped package. “I brought you a little something.”
“You didn’t have to do that.”
“It was my pleasure. Go on.”
I tore open the wrapping paper. There, framed between two sheets of glass, was a dollar bill.
Professor Hunt beamed. “I paid Bartley $10 after the signing to get your dollar back.”
“You paid $10 for a $1 bill? Aren’t business professors supposed to know the value of a dollar?”
Professor Hunt’s hands flew to her hips. “You better believe I do, and let me tell you, Ty, that dollar could be worth thousands to this establishment.”
“How?”
“You’re the student who bought the pizzeria for a dollar! Display that bad boy prominently, and people will point to it, ask about it, and they’ll remember this pizzeria because this is a place with a unique story, a place where a student like them took a bold chance and succeeded.”
“If I succeed,” I said.
“I’m counting on it. And speaking of which, how about selling me the first pie of the day.”
“The pie is yours, but the pizza is on the house.”
“The hell it is.”
“Really, it’s the least I can do after all the support you’ve given me.”
Professor Hunt leaned over the counter. “I’ll make you a deal, Ty. Once this place is profitable, and I mean really profitable, not just squeaking by, I’ll let you treat me to all the free pizzas you want. Until then, I pay full price. Agreed?”
I had to smile. “Deal. Now, what would you like on your pie?”
Carrie slipped into the shop just as my professor left with her pizza.
“You’re not giving out more free pizzas, are you?” she hissed.
“This pie was paid in full, I’ll have you know,” I said. “What do you mean by more?”
Carrie slid around the counter. “Your girlfriend came in last night, ordered a pizza, and just walked out without paying.”
“Come on, she’s my girlfriend.” I leaned back against the counter. “What’s the point of owning this place if I can’t share it with friends?”
“You may own this place, buddy.” Carrie grabbed her apron and wrapped it tightly around her waist. “But technically, half the profits belong to me.”
“Fair.” I shrugged. “Then how about you can also share with friends?”
“How many friends?”
“Uhh…”
“And how do I choose which friends?”
“How am I—”
“And if they’re real friends, shouldn’t they be supporting this business, rather than bleeding it dry?”
I stood there frozen. Her logic sounded too much like Professor Hunt’s rejection of free pizza to ignore.
Carrie cocked her head. “Hadn’t actually thought this through, huh?”
“Not exactly.” I bit my lip.
“And now your buddies expect endless freebies, don’t they?”
Gulp. “Something like that…”
“How about this: No one gets free pizza.” Her finger jutted into my chest. “And you can blame it all on me. I’m out of here in a few months and could care less what you peon sophomores think of me anyhow.”
I pushed her finger away. “So you’ll play bad cop?”
“Exactly.”
I started chopping onions. It was gonna be another tear-jerker of a morning.
“Check it out,” I said to Carrie early the next week. “My new checkbooks just came in.”
She turned from the oven. “Just in time, too. We’re three days late on the electric, and we’ve got four other vendors we need to pay by the end of the week.”
“How much?”
“Just over $2500.”
“You realize I don’t even have two thousand in my account.”
“We had a decent weekend. That money should hit your account in the next few days, right?”
“Well, yeah. But rent is also due next week. There’s no way I’ll have enough to cover everything at this rate.” I decided not to mention the Homecoming tickets I still needed to buy.
“And I don’t mean to be a jerk about this, but I also need to get paid. I’ve got rent of my own due. You were supposed to pay me on Friday, but I didn’t say anything as I knew your accounts weren’t set up.”
I sighed. “Right. Let me pay you now.” I wrote out the first of my checks, this one for $628. “Not sure how I’m going to get the rest of it. My dad told me that whatever I do, I shouldn’t rely on credit card debt. ‘That 24% interest rate will sink your business into a hole faster than a gopher can snatch a turnip,’ he said.” That conversation the night before had been the first time I’d told him about the pizzeria. I should have sought his advice before buying it, but I’d been too afraid he’d talk me out of it.
Carrie folded the check and slipped it into her backpack. “Dad jokes aside, you have to get cash somehow.” She patted my shoulder on her way back to the toppings station. “It’s a bummer. We almost had a huge order earlier.”
“How much?”
“$1200.”
“Wow. What was it for?”
“Some intramural frisbee tournament they’re running later today. They wanted pizza for the after-party.”
My shoulders slumped. “Oh right, the Hat Tournament.”
“Hat Tournament?”
“They throw everyone’s name into a hat and draw teams at random. I was supposed to play, but, you know.”
“You had to be here.” Carrie gave my arm a squeeze. “I get it.”
“Must have been Marques who called. Nice of him to try to throw the business our way. What happened to it?”
“The numbers just didn’t add up. They have too many people signed up to play and not enough food budget to cover the order.”
“How much did they have?”
“They have the full $1200, but they need over $2500 worth of pizza.”
I put my hand over my eyes and quickly ran through the numbers. Then I pulled out my phone.
“You’re not seriously thinking of taking it, are you?”
“I can’t afford not to.”
“You realize, Ty, that it costs you well over fifty cents on the dollar to make a pizza, right? You’re going to make nothing on the order.”
“This isn’t about profits, Carrie, it’s about cash. I need the $1200 now to pay this month’s bills. Even if I ring up $1200 in expenses filling the order, I won’t have to pay most of that until next month.”
“So you’re just going to push it off?”
“I need time to turn this place around. The way I look at it, if an order like this can buy another month of keeping the doors open, I’m not in a position to turn that down.”
Carrie chewed her lip. “I guess I hear that.”
“Besides, when you take out my fixed costs, it doesn’t cost me anywhere near $1200 to make $2500 worth of pizza.”
“What’s that supposed to mean?”
“I mean, whether I fill the order or not,” I said, counting on my fingers, “I’m still paying the same rent, I’m still paying the same for the ovens, I’m still paying you to work here whether we’re working at full capacity or half.”
“You’re not expecting the two of us to fill this order alone, are you?”
“No.” My phone was already at my ear. “While I’m calling Marques, see if any of the other staff can do an extra shift.”
Carrie grabbed her phone. “Fair enough. The extra labor and ingredients won’t be cheap, but they won’t be $1200 either.”
“Exactly. And even if they were, right now we need the cash. We’ll worry about profit margins later.”
