Month: March 2014

Starting a Business: Subway

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Image   I had the pleasure this morning of speaking with a very successful local businessman (Bryan-College Station area, East Texas).  He owns around 20 Subways, 4 Church’s Chickens, and a few Pizza Huts, all in the state of Texas.  We met at Starbucks and discussed how he got started as an entrepreneur, the challenges of being an owner/manager of a company, and what it takes to succeed in business.  Here are some of the things I took away from this conversation:

-If you really believe in yourself and the business model, then go ahead and do it; don’t hesitate

-Work hard; do all of the things that your employees do (washing the bathrooms, mopping floors, cleaning windows, etc.).  This shows that you care about the business, aren’t afraid to get your hands dirty, and that you wouldn’t expect your staff to do anything that you wouldn’t do yourself.  This will gain you much respect among your employees.

-It takes about $200-300k to start a Subway (franchise fees, equipment costs, land/rent, etc.); you can probably get financing for about 60-70% of the costs, with the rest paid in cash.

-The hardest part of business (especially the food industry) is finding good help; this can be remedied somewhat by going to churches, community service organizations, etc. to ask around and seek out honest/hardworking/cheerful people to hire.

-Make sure that you love what you are doing and that you believe in it.

 

Relationship between EPS growth and S&P 500 Returns

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Relationship between EPS growth and S&P 500 Returns

This is a chart I created in Excel depicting the relationship between EPS growth and stock returns, using the S&P 500 as a proxy.

-One notable observation one can deduce by scanning this chart is that the market usually turns up about 12 months before earnings do

-You can now use this chart to study the markets and gain historical perspective