Business News Daily: When you first began, did you have a formal business plan? If not, how did you lay the groundwork for your business?
Lynn Magnusson: We did not have a formal business plan. We did it for fun. When we owned our second restaurant – it was called the White Elephant – it was like a garage sale bar and grill. Everything was for sale in it; it was a really cool place. My brother and law, John, has an eye for that sort of thing and tastefully decorated it, and as things were sold we needed to replenish it. As a new mother, I didn't have a full time job at the time, so I would go out to buy new things and got involved in the auction world. I ended up doing a clean out of a home with a lot of 1950s boys' toys and we were there for a long period of time. I decided I enjoyed it enough to pursue it for academic purposes. I wanted to learn how to do the research properly and act in a fiduciary manner for clients.
The first time someone asked me for an estate appraisal and I was so overwhelmed and didn't know how to value items, so the next day I approached the American Society of Appraisers and enrolled in property valuation classes to learn how to do it. My husband Drew … enjoyed it too and that's when we discovered, truly, that he had a photographic memory. That came in handy and he really liked it, doing the research and the treasure hunting aspect of it. Then it just sort of seemed like a good thing to pursue when we sold Rascal's, [the comedy club we owned at the time.]
BND: How did you finance your endeavors, both initially and as your business grew?
LM: We sold Rascal's and that carried us for a few years while were developing this business, and the goal was always to make sure that it paid for itself. Whatever it took to pay our bills, we were covering that with the business.
BND: How much did you invest?
LM: A lot of time and effort. It really took seven years to develop the client base and get our names out there. During that time there was a great investment in my education. The schooling and the classes that I took were not inexpensive at the time. This is kind of pre-internet, where I had to go to great distances to acquire this specific kind of knowledge of appraising. The first class [the American Society of Appraisers] offered was in Atlanta and I had to fly there, stay for a week and take 40 hours of classes, and an exam – that's a hefty investment of time and effort. There were three other classes in Washington, D.C. Each class wasn't just $1,500 or so, but also all the other expenses … and I was a young mom at the time. It was very hard. My classes at NYU … took about four years. I had to go into the city every Wednesday night for three hours.
BND: Is your business today what you originally envisioned at the outset or has it changed significantly over time?
LM: The biggest change in the industry was the internet, because all things came to be known. What was once thought to be rare was found out not to be rare. Now you see everything. That's the biggest change, along with research methodology. I wouldn't say that it really affected the business, because we just evolved with it. At first, it was very difficult to actually find credible data because it hadn't been entered online yet. There were years until eBay came along. They were the first search engine that was actually productive for us; we could actually see what items sold for. Price databases grew from there. Auction houses began to report their results to a master database created by a third party. Subscription databases were created, so once that got into the flow – it probably took about 10 years – then we were competing to collect data.
BND: What are some lessons you’ve learned? Is there anything you would’ve done differently?
LM: I think I would have gone to work for somebody else. It's not possible and not my state of mind, but I think that'd be really good experience. I had to reinvent the wheel; nobody helped me and it was very difficult. Fortunately, my undergraduate degree was in business so I had a bit of experience. I've made it work all these years and it's still an amazing thing to me every single month. I still can't believe I paid my bills at the end of each month by having fun. I'm enjoying what I do and it's still challenging, but now I'm trying to develop the business so I can take more time off for myself.
BND: What were the most important factors that contributed to your success?
LM: I think having a good grasp of your checkbook is really, really important. I think you have to stay within your budgets and that's not always easy when you're trying to make investments in your business. When we were growing from our space in our house to one outside of the home, it was a really big risk to invest $800 a month. Then we eventually doubled the size of our office space and hired more people. Managing that checkbook is really important. Also, knowing what you have as far as managing contacts and clients. It's taken us almost two years to really establish a contact management system. It was purchased with the intent of best managing the resources we have. After 18 years that's a lot of people. This helps to establish relationships.
Being an appraiser and running a business is difficult. Running a business is a whole separate job. It's never ending. Running a business is huge and then there's being an appraiser. It's impossible to do both jobs well. I've managed to do them okay, but I couldn't do it without help. If I didn't have my husband I don't know where I'd be. And we have a fabulous team surrounding us.
BND: What are the next steps you want to take as a business owner? How do you see yourself achieving those goals?
LM: My goal is to become more of a teacher, so I'm writing some outlines of classes to teach to attorneys. That's my ongoing project. I'm writing five classes and hopefully we'll be able to offer continuing legal education to attorneys. I'd also like to manage from a distance. I already work 24/7, so I thought I don't have to be on site. There's no reason I can't work from afar. I'd like to continue to manage while enjoying the rest of my life. I can talk to clients while I'm on a hike or at someone else's house, and I want to get comfortable with that. I think that the 9 to 5 is old school in a lot of businesses; yes, there are times you want to rely on as those when business people usually communicate with each other, but if we talk at 7 o' clock at night that's not terribly inappropriate.
BND: What is your best advice to someone with a great business idea who is ready to give it a shot?
LM: I think it's really important to really develop some sort of financial plan. Do the math. Try to figure out what your expected expenses are going to be and what your expected revenue is going to be, even if all you can do is look out six months. For at least six months to a year, you should have a general idea of what is going on financially. And get help. If you need an assistant, even a virtual assistant, those things are available to you. Take advantage of them so you can continue to build your business six to eight hours a day. Seek out help whenever you think "Oh my God I can't handle this." Seek help and train other people to help you.