Fire Your Franchise Consultant

Introduction:

As listeners to this podcast know, Dana White has a remarkable array of opportunities before her, including company-owned hair salons, franchised salons, salons on military bases, hair products, and point-of-sale software. But, especially since the pandemic, Dana has struggled to get traction. This week, special guest Ami Kassar, an expert in small business finance, guides Dana through a discussion of how she might prioritize those opportunities and get them financed. Ami and Dana consider such questions as: What should she do first? Should she continue to pursue franchising, where she’s already sunk a lot of money? Or should she focus on opening company-owned salons at Fort Bragg and in Dallas? And should she be looking for an investor? If so, how important is it that she maintains control of the business? Or should she try for a bank loan? And if so, what kind of pitch is likely to impress a bank? As the conversation continues, a plan emerges.

— Loren Feldman

Guests:

Ami Kassar is founder and CEO of MultiFunding.

Dana White is founder and CEO of Paralee Boyd hair salons.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Dana and Ami. It’s great to have you both here. As regular listeners of this podcast know, Dana has a concept, which is a hair salon for women with thick and curly hair, that has tremendous potential. She has some remarkable opportunities that are within her grasp right now. But like most business owners, she has limited resources, which is why I invited Ami Kassar here to join us today to talk through those options and see what we can figure out, what might make sense for Dana, because she’s got so much going on.

So to start, let me see if I can quickly sum it up, Dana, then I’ll give you an opportunity to correct anything that I get wrong. You are at the moment pursuing franchising. You have already a significant amount of money invested with a franchising consulting firm that is helping you prepare your offering. But you need more money to market that opportunity and attract potential franchisees.

Number two, you have a contract with the U.S. military to open a company-owned salon at Fort Bragg. And you’re in further discussions with the military to open additional salons on military bases—not just around the country, but around the world. Each one of those salons, of course, will require money to build them out, get them running. You have a company-owned salon that you are right now in the process of moving from Detroit to Dallas, which you’re hoping will be a better market for your offering. And at the same time, you’re also developing branded hair products to be sold in all of these salons, both the company-owned and the franchised. Did I get that right?

Dana White:
Yep. And there’s one more.

Loren Feldman:
Please.

Dana White:
The technology.

Loren Feldman:
Oh, right. How could I forget? You have a software system that you use to run your salons.

Dana White:
It helps us operate a walk-in only hair salon.

Loren Feldman:
You have something you’re using now, but you’re building something from scratch? Or you’re trying to develop what you have?

Dana White:
We have your standard salon POS system, but all the POS salon systems are appointment-based. And so we’re doing a lot of data capture by hand. And what would really benefit this growth is if we had a tech solution that manages internal and manages external customers while they’re in the salon. That would be great. And when I speak with people who develop technology, they say, “Man, your tech could in essence be worth more than the value of your company.”

Loren Feldman:
And do you have somebody working on this now? Or that’s something that you want to get up and running?

Dana White:
I have a company that I want to work with, but again, you need the money to kind of get them started.

Loren Feldman:
There we go.

Dana White:
Yeah.

Loren Feldman:
Have you totaled up how much money you need for all of these opportunities?

Dana White:
I have. Roughly about $13 million.

Ami Kassar:
[Laughter] Okay.

Loren Feldman:
Welcome to the conversation, Ami. What questions would you have for Dana? What else do you need to know to help her assess how she proceeds from here?

Ami Kassar:
Let’s slow down and break it down.

Dana White:
Yeah, let’s do that.

Ami Kassar:
Dana, tell me about your business as it stands today. I don’t want to know anything about your dreams, your future aspirations. What have you got today?

Dana White:
What I’ve got is a salon in Detroit that is struggling—not because we don’t have a customer base. It is because it is really hard to get licensed cosmetologists here in Detroit. The staffing issue is huge here.

Ami Kassar:
And what was your revenue at that salon last year?

Dana White:
Oh, wow. We never really quite bounced back from COVID, so I think it was about $200k. I’m sorry, we did $232k.

Ami Kassar:
And is it open today?

Loren Feldman:
Dana is in the process of closing this salon, because of those struggles. She’s got a location in Dallas that she’s ready to build out. But also, you should know that COVID had a big impact. The salon was closed for a period of time. It’s had a big impact on being able to hire employees to work there. Much of her customer base doesn’t come into Midtown, where she’s located, the way they used to. So there’s been a lot going on.

Ami Kassar:
Okay. How long ago did you open the salon?

Dana White:
2012, so it’s been nine years. It’ll be 10 in November.

Ami Kassar:
And how was it doing pre-COVID?

Dana White:
Very good. We were close to $400-something-thousand dollars in revenue with two locations.

Ami Kassar:
And you were making money?

Dana White:
Yes.

Ami Kassar:
Okay. And now, are you at one location?

Dana White:
Yes.

Ami Kassar:
All right. So let’s get rocking and rolling here, okay?

Dana White:
Okay…

Ami Kassar:
Can I give you my first piece of blunt advice?

Dana White:
Yes.

Ami Kassar:
Fire your franchise consultant. You’re not ready to franchise.

Dana White:
I agree.

Ami Kassar:
I don’t know how much money they’ve taken from you or who they are, but the whole premise of a franchise is that somebody’s buying into a proven concept. And your concept isn’t proven yet. It might have been proven pre-COVID, but it’s not proven in today’s world. So put yourself in the shoes of someone who’s potentially interested in buying into your franchise system. And they are going to say, “Well, how do those stores do?” And right now, for the last two years, you don’t have any kind of a clean answer to that question. So my first piece of unsolicited advice is: It’s time to put that franchise stuff on ice.

Dana White:
It’s on the back burner. Absolutely.

Ami Kassar:
Next question. Tell me about this deal to build this salon on the military base. What does it look like? How does it work?

Dana White:
Yep. So it’s us. They came to me because they had some safety and security concerns for some of their armed forces women on base. And they needed a hair salon that could cater to a wider market. They saw how segregated hair was with some of the other brands that they had thought to go to, but they said, “Your brand appears to be pretty diverse to us. You can do all types of hair. And so, would you consider opening on Fort Bragg, which is the largest installation we have in the United States? They don’t have a salon there. Would you consider opening there?”

And so they gave me the numbers from what that salon did before they had a hurricane that hit, and the owner just decided not to come back. And so they hadn’t actually found somebody to take that place. So they showed us the numbers, and we said, “Well, how did this do?” And you know, the numbers were just okay. And they said, “Well this is just with us opening the doors. There was no marketing. There was really no effort and all of the stylists were just independent contractors, so it wasn’t a branded salon. We expect you to do a lot better than this. We hope that you’ll be able to do a lot better than this when you come in and brand it.” And they’re willing to help do that. They actually do the marketing. We just provide the content.

Ami Kassar:
Okay, so how do the economics of that deal work? Who pays to launch the store? Do they have revenue share with you or anything? Is there real estate? Is there a lease? Is there rent?

Dana White:
So, AAFES works at the pleasure of the DoD—

Loren Feldman:
Explain what AAFES is.

Dana White:
AAFES is the Army and Air Force Exchange. They’re a very large company, and so they’re the ones responsible for putting the exchanges on the bases. So in essence, they bring a little bit of home on base for their armed services people, and they have exchanges all over the world.

Loren Feldman:
They’re like the owner of a shopping mall essentially.

Dana White:
Exactly. It’s the mall on base. And so how it works is the exchange charges you retroactively a percentage of your last month’s sales. So you negotiate what that percentage is, and that’s how they make money. And then when it comes to marketing, you give them the content, and they put it on the military television, social media, and exchange radio, which is all over the base.

And then they’ll help with hiring. They’ll put job postings out. They just help get the word out. But Dana and Paralee Boyd, this would be a corporate location and not a franchise run by AAFES, so Dana would be responsible for bringing on your operations manager to manage these military locations and have managers and staff on ground to run them.

Ami Kassar:
Cool. Where is Fort Bragg? I’m sorry.

Dana White:
Fort Bragg is in Fayetteville, North Carolina.

Ami Kassar:
All right, I should know that. Shame on me. How much money do you think you need to get that location up running and going before it turns a profit?

Dana White:
Two hundred and fifty thousand dollars, and that includes about five months of working capital. The number for that location is going to be a little less than the other bases, because there you have insurance money that they haven’t spent for the hurricane that hit back in 2018. So they’re setting me up to white-box the space to my specs. They’re waiting on drawings. And then we’ve got to get money to the architects to do that. And then once they have the drawings, they’ll be able to set it up, and then we can just come in and make it our own and brand it. So we’re thinking about $250,000 before we’re profitable.

Ami Kassar:
Okay.

Dana White:
And I’ve applied for an SBA loan to cover that.

Ami Kassar:
Okay, and how’s that going?

Dana White:
I don’t know. We’re waiting to hear back.

Ami Kassar:
Okay.

Loren Feldman:
Who did you apply with? Is it with a bank that you had a relationship with?

Dana White:
My bank, yep. PNC Bank.

Ami Kassar:
Oh, boy. Okay, I didn’t say that. Now… [Laughter]

Dana White:
You did. You really did.

Ami Kassar:
What about moving the store to Dallas? What’s that going to cost you before that turns profitable?

Dana White:
I have so many numbers going in my head. So right now, that’s a lot cheaper, because we’ve taken over a former salon space. And again, that landlord is amazing. So they’re completely white-boxing, doing everything I need to do in order to get in there. We’ve started with a budget of $75,000, and we’ve just gingerly chipped away at that. We haven’t eaten a great portion of it at all. It’ll be tight. There’s a lot of marketing going on that starts in June, getting the butts in seats, and we’ve got a good model.

There’s another direct competitor down there, and she’s been open since March of 2020. She had to close due to COVID. I think she opened up when the state opened up again, and that was in 2020. And she’s on her third location. I was down there. I tried to get in and couldn’t get an appointment for three weeks out. So the demand is definitely there.

Ami Kassar:
Where do you live?

Dana White:
I live in Michigan.

Ami Kassar:
How in the world are you going to manage a salon in—

Dana White:
I’m not. I’m going to relocate to Dallas.

Ami Kassar:
And how in the world are you going to manage the launch in Fayetteville and a launch in Dallas?

Dana White:
Well, I have a team, so it’s not just me. I have two ladies who work with me, and this is what they do. They are operations managers and regional managers and opening locations at Great Clips, Sport Clips, Lady Jane’s in PS salons across the country. So it’s not just me.

Ami Kassar:
Okay.

Dana White:
And I have a stylist trainer who will also be able to pop in and train the staff before we open, so there’s a total of four of us right now.

Ami Kassar:
How much money do you need to turn this technology into something?

Dana White:
Upon speaking with that group, they said about $250,000. That allows for the app, for the customers to use to see what the wait times are, if any, amongst locations. And it also allows for our use on the back-end.

Ami Kassar:
Who owns your business, today?

Dana White:
I do.

Ami Kassar:
One hundred percent?

Dana White:
One hundred percent.

Ami Kassa
What do you know and understand about technology and apps and all that stuff?

Dana White:
Quite a bit. I used to work in the IT world, many moons ago. Well, it’s not that I don’t know enough to be a part-time chief technology officer. I just don’t have enough bandwidth on my plate. So that would be part of this ask, is to get some staffing for somebody who can go back and forth with that company to get done what I need done. But I’ve really been able to hold my own in those conversations with that company to communicate what I want with their team.

Ami Kassar:
How important is it to you to stay in control of your company?

Dana White:
That’s a great question, and one that I’ve been really thinking about. Initially, it’s very important. But as we grow, it’s going to be less important. And let me explain why, Ami. Because I have a very loyal customer base. And even the conversations I’ve had with private equity and private conversations I’ve had with VCs, they, too, understand that if this is not a Black-owned company too early, you lose your market share. That’s part of the draw of getting people in the door, is them coming and supporting a Black-owned business, a woman-owned business.

Ami Kassar:
So let me ask you a tough question. Just for a minute, forget the technology option. It’s gone away, and the franchising option has gone away. And you have two options left on your plate: to expand it to Fayetteville and do the military base, or expand to Dallas.

Dana White:
And do the corporate locations. And we also have the products, too.

Ami Kassar:
Put the products away. We didn’t talk about those. We’re gonna put those aside for a minute or two. And you’ve just got Fayetteville, and you’ve just got Dallas. And you went to bed tonight, and one of them disappeared overnight. So you only had one left. Which would you be more disappointed to lose?

Dana White:
Dallas.

Ami Kassar:
Why?

Dana White:
Because it’s a broader market. With military, although Fort Bragg is a very large base, it still only has a certain capture rate. And even though that capture rate allows me to make more money than I was making in Midtown, it also allows for us to grow within the military. When you have a Dallas or a private location, people can come from all over. People can’t come from all over to the Fort Bragg location.

Ami Kassar:
Okay. Tell me about the products business. I forgot about that. Thanks for reminding me.

Dana White:
We have five products that we want to generate SKUs for. We’ve already talked to the white label company that we want to work with, and that’s going to be about $30,000 per SKU. So it’s about $150,000. That’s the other part that’s exciting about the military, is they have already agreed to put our products in their exchanges—not only on the bases that we have salons, but on other bases as well, where they see the sales could be high. Product in any hair salon is the moneymaker.

Ami Kassar:
What does the $30,000 get you? In other words, what did they do for that $30,000?

Dana White:
Yeah, so it’s private label, private formula generation, and then you get so many units. You get thousands and thousands of units. So we’ll have thousands of units on deck that we could use in our back bar and that we can sell in our retail. Actually, it’s quite affordable, if you look at the cost per unit versus buying it offline or buying it through another wholesaler. But you just have to buy a lot of it, which is a lot. One hundred and fifty thousand dollars is a lot of it.

Ami Kassar:
Dana, who wins the race: the tortoise or the hare?

Dana White:
I don’t know. It depends on the terrain, I guess, the climate. I don’t know. There’s a lot of factors in the race: if it’s raining. I don’t know. Fire. I don’t know.

Ami Kassar:
The reason I asked you that question—it’s not meant to be a trick question—is the answer is: It depends. Sometimes the tortoise wins, and sometimes the hare wins.

Loren Feldman:
That’s what Dana said.

Ami Kassar:
Ultimately, you have to decide how you want to run the race. So for me—and Loren’s been with me for, what, fifteen years, Loren? And Loren watched me sweat my business out for years and years and years, and sweat payrolls and every kind of cash flow trick you can ever imagine in the world and then some more. Do this and do that.

And you know what? I did it. And I got through it. And now we’re doing great. And it was torture, but I still control my company. I chose the slow lane. I have friends—and Loren saw me through some of this—who were raising private equity and venture capital and going 100,000 miles a minute and raising tens of millions of dollars at a time—and in my opinion—screwing small businesses left, right, center in the process, building FinTech companies. Sometimes I’d walk into their fancy offices in San Francisco or Manhattan, and I would say, “What the hell’s the matter with me?” That tension would give me angst. And yet, I chose to stick to my guns and bootstrap my way through. And I’m glad I did.

So there are different ways for you to go about building your business. And let’s talk about that. If you want to be the tortoise, in my opinion, you’ve gotta pick no more than two to start proving your concept. And you’ve got to slow down and be okay with that choice. And the two that I think you’ve got to pick are Fayetteville and Dallas, if you can get both, and put everything else in the parking lot. If you don’t want to do that, in my opinion, and you want to do it all, you’ve got to go try to raise equity and likely give up control of your company today. And that is a decision that you have to make.

I’ll tell you a story, and it’s in my first book, The Growth Dilemma. Early on in my practice, a woman called who had built, supposedly or purportedly, the world’s greatest horse shampoo. And some jerk, who if it was up to me I’d have him arrested, had taken the only $40,000 she had to her name to write a beautiful business plan that I think weighed more than my newborn. And she was doggone determined that she needed $5 million to build her factory and hire her management team so she could start selling her products.

And I said to her, “Have you sold anything yet?” And she said, “I can’t sell until I have my factory and my equipment.” And I said, “No disrespect, but you’ve got to rip up that business plan. And you’ve got to go find a co-packing facility. And you’ve got to start knocking on doors and see if people are interested in buying your product and start getting some cash flow. You’re years away from having a factory.”

My opinion about what your dilemma is: It’s the fastest path to cash flow and the most reasonable ask. The most reasonable ask from a lender is enough money for some combination of Fayetteville and Dallas and put everything else in the parking lot if you want to stay in control. And then you’ll slowly add it later, through debt or equity, but you’ll start to have cash flow going.

If you don’t do that, which is fine, and you want to do it all at once, all much faster, go look for an investor and be ready to give up control of your company and work for the man or the woman. That, in my opinion, is the choice you have to make now. And we can talk about how to get the SBA loan and this and that and the other, but it’s sort of binary, in my opinion. If you want to keep in control and do it on your own, you’ve got to be willing to take pieces of your vision and put them on ice for now.

Dana White:
I have a question. So in regards to the SBA loan, let’s say I get a decision, and the decision is no. What would you recommend that I do to get Fort Bragg funded?

Ami Kassar:
Well, let’s be clear of the first thing. If PNC says no, that doesn’t mean you’re disqualified for an SBA loan. That means that PNC said no. Respectfully, I sort of have disdain for big banks. There are many much more aggressive SBA lenders out there other than PNC, and if I were you, I wouldn’t just be waiting for PNC to give you an answer. Put some more feelers out in the water and see who bites.

But it’s very important: When you present to a lender, you’re telling a story. You’re telling a different story to a lender than an investor. Lenders manage risk, and investors buy dreams. And when you’re talking to the lender, you want to prove to them that you expect to be cash flowing in a few months. And it’s about the first one or two stores. There might be more later. But if you tell a lender your goal is to be a $30 million business that’s gonna lose $18 million in the next 12 months, they’re gonna throw you out of the water. You’ve got to pick a narrow lane, minimal risk, and stay focused.

Loren Feldman:
Ami, what else would you need to know from Dana to assess whether she is a good bet to get an SBA loan, whether from her current bank or from someone else?

Ami Kassar:
The question would be, Does Dana have decent credit?

Dana White:
I do.

Ami Kassar:
Are her personal tax returns current?

Dana White:
They are.

Ami Kassar:
Does Dana own a house or own any real estate or have any collateral to offer?

Dana White:
I don’t.

Ami Kassar:
I’m not worried about the house but I’m worried about: Is there good credit?

Dana White:
Yep, I’m in the 750s and higher.

Loren Feldman:
You have an existing loan, right? An EIDL?

Dana White:
I do. Yes.

Ami Kassar:
Yeah, that’s not going to mess anything up. It’s about presenting the story to a lender in a way that speaks their language, and going to a lender who’s okay with projection-based loans and likes Dana’s story.

Loren Feldman:
How do you find that bank, Ami?

Ami Kassar:
I’m not here to sell my services. We are happy to help if you’d like. People can go and research top SBA lenders in the country and stuff like that. Reach out to them individually. I would not wait in the black hole somewhere in PNC for them to make a decision for you. People make that mistake all the time. They assume their bank is the SBA, and it’s not. PNC is one of the 1,400 banks or so in the country that does SBA loans. Who says they’re the best for you?

Loren Feldman:
Ami, I was surprised to hear you say that much depends on the story you tell the bank. I thought the story was more for a potential investor, and that banks were more interested in cold hard numbers. You’re suggesting that there are banks that take other factors into account? Can you give us any guidance?

Ami Kassar:
Let me clarify that. It’s what you tell them. If you present a projection-based loan to a bank, and you say to them, “We’re going to grow from zero to $10 million in 12 months. And we’re going to lose $4 million this year, but it’s okay, because in three years we will be worth $100 million,” they’re not going to read past page one of your application.

If you say to a bank, “We’re going to open one or two stores. These are the investments. This is how long it will take us to be cash flow positive. These are our historical experiences in Detroit. Here’s our relationship with the Army and what they’ve committed to marketing for us, et cetera. And we expect to be profitable in four months. And we’re not going to be a $10 million business in 12 months. We’ll be an $800,000 business or $600,000 in 12 months that’s gonna make $75,000,” that starts to be language they can understand.

But if Dana puts in a business plan to a bank, “I need money for this cool technology. And I’m going to build these apps and these great products. And we’re going to launch them nationally. And we’re going to do this, and I have a franchise consultant going, and this and that. They’re going to smell a rat. That’s not the language, in general, that banks understand. And it’s not that that language or that plan is wrong. But if you want to take that plan, Dana, which is fine, go find an investor.

Dana White:
You’re absolutely right. And when it came time for putting our business plan together for the SBA, we kept it solely on Fort Bragg. And I agree with you about putting it in the parking lot, putting on ice, the products, the technology, and the franchise marketing.

But here’s how I define ice. I’m not going to not pursue it. Because I understand getting this funding—let’s say somebody gave me $250,000 tomorrow for franchise marketing. It’s still gonna take time to put the team together to generate the content, to get the exhibit booth ready, to get that designed. All of that takes time. So that, to me, is putting it on hold. We are not out the gate selling or awarding franchises. And we’re not actively doing it right now, because there are other things we’re doing, which are Fort Bragg and the Dallas location. It’s the same thing with the products. However, I would say that once we get the military up and running, product should be right behind it because of their interest and eagerness to get me on their shelves in other exchanges.

Ami Kassar:
I got it. And you can add things and evolve things every three or six months.

Dana White:
Okay.

Ami Kassar:
But imagine how you would feel if you were cash flowing. In my opinion, your first objective should be to have cash flow.

Dana White:
That’s it. I agree.

Ami Kassar:
You’re making some money. Awesome. Then you can go to your bank and say, “Hi, guys, hi, ladies. Look at it! Here’s where we are in six months, and here’s our profit, and we’re making our payments, no problem. Now I’d love to add this piece to it, and I need a little bit more money. What do you say?”

Dana White:
I agree. That’s the priority, and it’s so much a priority, it was, “Get your head out of the woods, Dana. What do you need to do to make money?” And if that means you need to move your Detroit location to Dallas—understanding that market, doing your homework, which I’ve been doing for months—then that was the decision I made, instead of trying to just make it work here.

Ami Kassar:
What are you still paying your franchise consultant?

Dana White:
I’m not. They’ve been paid.

Ami Kassar:
Good. Dump them—for now. You’re not ready to franchise this thing until you have a proven model of being profitable.

Dana White:
I agree. And quite honestly, they would agree with you, too. They said, “A franchisor should not be able to sleep at night if they’re trying to sell franchises to somebody when they’re not profiting.” So they’re on the same page with me.

Ami Kassar:
Okay. My advice to you is add another two or three lenders to your mix, focus on Fort Bragg and Dallas as your business plan.

Loren Feldman:
Ami, how helpful is the military contract to Dana?

Ami Kassar:
I think it’s totally helpful because it’s a much more—at least from my perspective—interesting story: Well, she’s got this contract, and it’s unique, and it’s a captive market, and they’re going to do the marketing.

Loren Feldman:
With the potential to open on other bases as well.

Ami Kassar:
With the potential to open on other bases.

Dana White:
We’re already working on the Germany contracts.

Ami Kassar:
Oh my gosh, you gotta slow down!

Dana White:
Well, see, here’s the thing: Yes, but it doesn’t mean that Germany is opening next year. These contracts take time.

Ami Kassar:
I get it. I know. All I’m saying is that, when I started my first company 27-28 years ago—I don’t know, in the dotcom-bubble days—I got my first meeting with investors. And I stayed up in my apartment for two nights, and I built this incredible business plan. And it was one of those, “We’re gonna be a $100 million business,” and I was convinced I needed $2 million dollars.

And we sat down, and a friend of mine, who’s now—even though we lost that company—become a great mentor of mine. He ripped up my business plan and he said, “Tell me what you can do with $250,000.” And I looked at him like he was stone crazy. And I actually wound up selling them 40 percent of my company, I think. And it didn’t work out, which is okay. In my opinion, your single most important objective: Dallas and Fort Bragg open and cash flowing. Period.

Dana White:
Period. I agree.

Loren Feldman:
Dana, is that completely making sense to you?

Dana White:
It is Waterford Crystal clear. And it’s like he read my journal. Like up at five o’clock in the morning, you know, when you can’t sleep, you whip out your journal, you write this down. And this is what’s in there. My goal—and I’m so passionate about it—I’m packing up here and I’m going there. And I’m gonna watch that and make sure.

You know, sometimes people say, “Well, do you feel that opening in Detroit was a mistake?” No, I had nine years to get my sea legs. And I’m opening differently than I did when I was opening both Midtown and in Southfield. We’re starting marketing before we’re even done building out the space and trying to drive traffic. We’re trying to get press on board so we can generate buzz.

When I opened it was, “Oh, I’ve opened? Oh, now I’ve got to tell people.” Hand out some flyers. I just got back from there about a week ago—again, setting things up, looking things over, getting to know the landlord, looking at the space. And so this is a different Dana than it was back in 2012. And I didn’t want my ego to get in the way and say, “Well it should be able to run without me being there.” No, I’m starting over, and privileged to be able to do so. A lot of people, when a unit doesn’t work, they have to just pack it up. I don’t have to do that. So what I’m going to do is, I’m going to move, in essence, down to Dallas and make sure that it starts running.

Ami Kassar:
Let me challenge you on one thing—and sorry for being pushy—but you said to me before that picking between Dallas and Fort Bragg, you would pick Dallas. Correct?

Dana White:
It can make more money.

Ami Kassar:
Why?

Dana White:
Because it’s open to a larger market.

Ami Kassar:
That may or may not be true, because at Fort Bragg, you might be able to charge more?

Dana White:
Not at all.

Ami Kassar:
Okay.

Dana White:
Because that’s the beauty of the exchange. They pride themselves on being at a cheaper price than what you get off-base.

Ami Kassar:
Okay, but it’s a captive market. And it’s potentially a more scalable market, and potentially a market that you can scale without having to franchise.

Loren Feldman:
There are a lot of people on that base, right Dana?

Dana White:
So for my market, there are 79,000 women on base. But the work of that is, on-base hair salons have never been well-received. They don’t trust them, so we have to kind of start from behind and work our way forward. Whereas in Dallas, 40,000 of my market are within a five-mile radius of my door.

Ami Kassar:
How many other salons are within a five-mile radius of your door also?

Dana White:
None that do what we’re doing. And I don’t mean to be exclusive, but none that cater to African American women. None. The next one is about 10 miles away, maybe 20 miles away.

Ami Kassar:
And how important is that, that it caters to an African American woman?

Dana White:
Hair is segregated. Black women don’t go where white women go. White women don’t go where Black women go. And there’s nothing in that area for my market.

Ami Kassar:
And how do you find the next Dallas? My only point is, you could do a great store in Dallas, but then you’ve got the challenges of franchising, which is really hard. And if you can get the military base right, suddenly, you can scale that and stay in control of that and potentially not have to franchise.

Dana White:
Right.

Ami Kassar:
Maybe you don’t have to choose. And maybe you can do both. But I challenge you to think about if you had to choose one, and you were going to focus—because there’s a great discipline in focus and really launching one versus the other—I challenge you to think about which one is smarter to focus on.

Dana White:
I think it’s the corporate locations. I’ve thought about it. You mean over the military versus the corporate locations?

Ami Kassar:
Correct.

Dana White:
I think it’s the corporate locations. I think with the military, it’s great, and I think we’ll make money. But I think we are capped. We’re also thinking about people and families that are deployed. There’s a lot of movement on bases, right? So the person who was your customer four months ago isn’t your customer anymore, because that person’s husband just got shipped to North Dakota. Or this person’s wife just got shipped to North Dakota.

Ami Kassar:
How many locations could Dallas tolerate?

Dana White:
Dallas could do five to 10. But I’d like to keep it on the smaller side and do five.

Loren Feldman:
Is there any part of you that would like to push back on Ami’s encouraging you to go the slow path? Are you at all still interested in trying to find an investor and do more of this and do it more quickly?

Dana White:
Yeah, I think pushback is a hard word because—if I hear him correctly—he’s saying, “Slow and steady wins the race.” I don’t disagree with him. In 10 years, I don’t know if I want to own Paralee Boyd. I really don’t think I do. I think I want to build it so I can sell it.

I don’t mind being 20 percent owner of a $100 million company. I don’t mind that. Because the goal is to sell it and maybe be retained, if I’m qualified, to be the CEO of it with a CEO salary. But I’m 45 now, and I’m looking at the ripe old age—ha ha ha—of 55, saying, “Okay, what do you want to do?” I don’t know if I want to keep going at this clip.

And I will preface this by saying: This could change. I could learn. I’ll be honest: My Detroit time bruised me, battered me a little bit. And I’m nervous. I’ve got Detroit baggage. But it’s because I opened in a market that wasn’t as dense. We don’t have a million people here in Detroit.

Ami Kassar:
Here’s the thing. In business, we’re constantly making decisions. And if we’re lucky, we’re right 51 percent of the time. I can’t tell you how many decisions that, looking in the rearview mirror over the years I’ve made, that retroactively, I think were the wrong decisions. But I don’t cry over my spilled milk. I try to learn from them, but you make decisions, you move on. Quit crying over Detroit. You learned. It’s okay.

Dana White:
That’s it. I agree.

Ami Kassar:
My only advice is: Pick your lane. Decide which way you’re most comfortable with. And then go make it happen. If you are going to spend your time hunting for investors and for $5 million of investment from one investor, and then the $250,000 loan from lenders, you’re not going to do either well. So it’s: What do you want to do for the next six to 12 months? And if you’re saying, “I’d rather be cash flowing and have more proof of concept before I go out to investors,” then stop worrying about it. Focus on the lenders and get it done.

If you say, “You know what? Go big or go home,” stop looking for lenders, and start focusing on the investors and building your plan accordingly. But where people get, I think, confused or stuck is if they can’t get out of the mush. And whatever you pick, God bless. It’s not my place to say what you pick. But I’m encouraging you to pick and focus.

Loren Feldman:
All right, my thanks to Dana White. Dana, as always, thanks for being so open and sharing all the details with your journey. I appreciate it. I know our listeners do too. And Ami Kassar, thank you for taking the time. I really appreciate it. This was really helpful, really enlightening.