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GOOD IDEAS THAT WENT BAD : In Entrepreneur's Paradise, Even Best Business Plans Can Sink, Along With Dreams

February 03, 1989|DANA PARSONS | Times Staff Writer

Cliff Williamson had a gambler's guts and a banker's brains. With a combo like that, he figured, what could go wrong?

On paper, the thing looked like a lock: He would open a deli at the corner of heavily traveled Westminster and Beach boulevards in Westminster. From there, he could see at least three banks, as well as city and county office buildings. Those people had to eat, didn't they? To the budding deli owner, that added up to lots of lunchtime customers. Besides, his own recollection had been that whenever he spent any time in City Hall, all he heard people talk about was how there was no place around there to eat.

Even so, Williamson did not want to get overconfident. As a former partner in a successful company, he knew about the dangers of opening a new business with too much confidence and not enough capital. So, just to cover that bet, Williamson took out a second mortgage on his house so he'd have $40,000 for start-up expenses.

By December, 1986, Williamson was ready to open his doors and stand back as people elbowed their way into his deli.

Or so he thought. Within 6 months, Williamson was out of money and out of business. In the interim, he had undergone open-heart surgery for a condition worsened by the tension of what had become a full-blown business disaster. He is still suffering financially, he said, and has filed for bankruptcy in an effort to keep from losing his home to foreclosure.

For Williamson, the American Dream went poof--just as it does for thousands of businesses every year, even in Orange County, with its reputation as an entrepreneur's paradise.

Although statistics are not available for the mortality rate of new Orange County businesses, the consensus of several business leaders queried is that the success of an infant business is at best a 50-50 proposition. In a county that spawned more than 20,000 new businesses in 1988, that is a lot of belly-up businesses.

It isn't that Cliff Williamson, now 52, was unaware of the risks. "I'm an entrepreneur by heart," he said. "I had that desire to succeed. An entrepreneur is a breed of people different than any other breed in the world. They're as distinct as the Budweiser horses, the Clydesdales. It's that determination, something in your heart, you want to succeed, you're not afraid to take that chance."

Early on in his venture, however, Williamson said, he got blind-sided by several forces that stripped him of capital. Even then, he forged ahead.

"You see the problems, but a problem is a negative thing," Williamson said. "It's beating you down, but you refuse to accept it. You say, 'You're a negative, I'm not going to pay attention to you. I'm going forward. You're not going to beat me.' "

Eventually, Williamson said, he realized that was a hopeless course. "I had reached capital exhaustion and had nothing to deal with. I only had one other chip to play, and that was time. Time can be an enemy or a friend. It was my enemy, but it was also the only thing I had left. The longer I went, there was always the possibility of the glimmer of light at the end of the tunnel, that some way, somehow you can pull it out. You believe that till the day you walk out the door."

Barbara Taylor, president of the private, nonprofit Orange County Business Development Center, said entrepreneurs are lured by what many believe to be certain success in affluent Orange County. "I've heard one speaker say that if you can't make it in Orange County, you can't make it," Taylor said.

That attitude can cause entrepreneurs to make the fatal blunders of not drawing up a business plan or of starting without sufficient capital, said Taylor, whose center tries to help fledgling businesses. "They think that they have this great idea that is so persuasive to them and so completely clear to them that they don't feel the need to explain it to anyone else," she said. "They're so sure it's so great that they think everybody else will see it too."

Self-confidence, while an admirable trait in an entrepreneur, must be tempered with reality, business leaders said. "Anyone who goes into business and thinks they're going to be an immediate success without the background and experience is extremely naive," according to Frank M. Reid, executive vice president of the Fullerton Chamber of Commerce.

Reid estimated that 75% of new businesses do not survive. The problems usually are traceable to under-financing, an entrepreneur's lack of knowledge about his business or a failure to research the market to determine if a product or service is needed, he said.

Asked how people can make such fundamental errors, Reid replied, "It's the American dream. They all want to be their own boss, and they all feel they have entrepreneurial skill to pull it off. Unfortunately, most of them don't."

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