The Junior Bridgeman Empire
“I was at Wendy’s, and I saw Junior Bridgeman working behind the counter,” the woman groused. “If that’s the best these ex-athletes can do …”
— Woman from a Forbes Magazine article on seeing
Junior Bridgeman working behind the counter at
a Wendy’s Restaurant
There are not too many individuals who can match Magic Johnson’s success as a professional basketball player and entrepreneur. On the court, he won a state championship in high school, a national championship in college, and five NBA championships as a professional. He also earned numerous prestigious awards. Often referred to as one of the best basketball players of all time, Magic’s business career has also flourished. He currently owns interests in several businesses in real estate, finance, retail, and sports franchises. According to Forbes Magazine he is estimated to be worth $500 million.
Just as impressive as Magic Johnson is a former NBA star named Junior Bridgeman. Bridgman, who played 12 years in the NBA, had a solid career, most of which was played as a sixth man—the first player off of the bench. He never won any championships and never made over $350,000 in salary. He served as the president of the NBA players union and in an era when players didn’t make as much money as today’s, he sold insurance and worked at the front desk of a Howard Johnson hotel during the off-season—something unheard of with today’s athletes.
Bridgeman retired from basketball at age 33 and bought five Wendy’s franchises in the Milwaukee area. What’s remarkable is that Bridgeman wanted to work every facet of the business so he could understand the ins-and-outs of the fast food business. Since his retirement in 1987, Bridgeman has built his restaurant empire, Bridgeman Foods, into 195 stores now worth over $400 million. He is also the owner of 195 Chili’s restaurants, 45 Fannie May Chocolate stores, and several other retail franchises in the upper Midwest.
What are Financial Statements?
“ Very little in the financial world is so complex that you cannot grasp it. The fundamentals - as their name implies - are basic and relatively uncomplicated. The only factor complicating financial information is jargon, overly complex statistical analysis and complex formulas that don’t convey information any better than straight talk.”
— Michael C. Thomsett in “Mastering Fundamental Analysis” (1998)
The three basic statements in any business are the income statement, balance sheet, and the statement of cash flows. Each statement tells you something different about a business.
The first is an income statement which shows how the company makes money as well as how the company spends it. The bottom line shows the company’s net income (income minus expenses).
A balance sheet summarizes the company’s assets, liabilities, and owner’s equity. It shows what the company owns (assets), what it owes to others (liabilities), and how much the investors own (owner’s equity).
Finally, the cash flow statement demonstrates how much cash comes in and out of a company.
Together, these financial statements act as a score card that analyzes the financial health of a company. Anyone who wants to go into business should be able to read each one of these important documents.
Starting a Business
“We were trying to catch a plane to Puerto Rico but the local flight was canceled....I made some calls .... and chartered a flight to Puerto Rico for $2,000. I divided the price by the number of seats, borrowed a blackboard, and wrote: “Virgin Airways, $39 single flight to Puerto Rico. I walked around the airport terminal and soon filled every seat on the charter plane.”
— Richard Branson
Quote from his book Losing my Virginity on
how he started Virgin
Starting a business requires not only business know-how, but also passion, discipline, adaptability, and the will to win. People who start businesses (entrepreneurs) also need money. The amount of money (capital) a person needs will depend on the type of business they want to start. Some businesses can get up and running with just a few hundred dollars while others need millions. To fund a business, entrepreneurs have several options including; using their life savings, borrowing money from family and friends, or soliciting venture capitalist companies who typically invest $1 million or more.
Many athletes have opened successful businesses including:
What is a Business Plan?
“We like business plans that present a lot of information in as few words as possible.”
— Sequoia Capital
Venture capitalist who funded Google, Apple,
Electronic Arts, Pay Pal, Yahoo
A business plan is a document that shows how you plan to run your business. It discusses the product or service the business will offer, the distribution and marketing strategy, as well as the costs associated with the business, to name a few. Anyone who starts a business should have a business plan. Business plans help you think through every aspect of your business. They also allow potential investors to understand how you plan to market your business.
It is estimated that Microsoft must sell its XBox 360 video game console at $500 to make a profit. Anything less and it will lose money on each unit it sells.
The concept of breaking even is simple—it is the point in which you make your original investment back. For example, if you invest $1,000 in a business, at some point, you expect that the activities of the business will pay back the original amount of money invested. While it depends on the business you are in, the sooner the break even point the better. In some businesses, breaking even in six months is good, while in others, perhaps real estate investing, two to three years is acceptable.
In the case of Microsoft and the XBox 360, it must sell the console for no less than $500. If, for example, Microsoft sold its Xbox 360 for $450 it would lose $50 on each unit sol d. In this case, the company would have to make up for the loss by selling additional products (games). For instance, if Microsoft made $20 off of each game it sold it would have to get each customer to purchase three games. This would bring the total sales to $60 and would allow the company to make up for the $50 loss and make a profit of $10. In this situation, the video game console would serve as a loss leader. Loss leaders are products that lose money on each purchase but the popularity of the product encourages sales of other products. With loss leaders, companies end up making money on back-end sales of other products.
What is a Franchise?
Former NBA superstar Jamal Mashburn owns 81 restaurants, including 38 Outback Steakhouse franchises, 40 Papa John’s franchises, and 3 Dunkin Donuts stores.
A franchise is a business where a person (franchisee) pays a business (franchisor or company selling the franchise) for the right to sell its products and use its brand identity. Franchisees typically pay an upfront fee as well as a royalty on sales. McDonalds is one of the most successful franchises in the history of business. When a person buys a McDonalds franchise they pay about one to two million dollars upfront and a royalty of 12.5% on sales. Franchises are usually separated by a territory. This means that if you buy a McDonalds, the company won’t sell another franchise around the corner from your business. Franchise territories can be a few miles or a whole region, e.g. Southern California.
Franchises somewhat reduce the risk of failure because the franchising business, in many cases, has a proven business model. As a franchisee you are paying for the privilege of using their brand, business model, and expertise.
Risk Taking in Business
“Choose a job you love, and you will never have to work a day in your life.”
During your life you will probably have several jobs. According to the Bureau of Labor Statistics the average person switches jobs every 4.4 years. Deciding on what profession you want to go into depends on your personality and passion. Working in a profession that you don’t like is not good for your mental or physical well-being.
There are some jobs that pay handsomely but may not be as satisfying. There are other professions where you won’t become rich but you will feel rewarded and fulfilled. Money is just one consideration when you select a profession. In 2014 CareerBliss created a study that analyzed the happiest and unhappiness professions:
It’s important to find a rewarding profession that fits your skills, personality, and passion.