Don McNay: Life Lessons From the Fake Dry Cleaners

"They'd call us gypsies, tramps and thieves

But every night all the men would come around

And lay their money down" -Cher

I learned about outsourcing and other business techniques during my teenage years.

I worked at a dry cleaning business that had no dry cleaning equipment. It had two clothing racks, a counter and a cash register; nothing else. The business was located in the roughest section of Newport, Kentucky, which was one of the most economically depressed cities in America.

My bookmaker father said that "gypsies, tramps and thieves" was an accurate description of the neighborhood.

I witnessed armed robberies, streetwalkers, numerous fist fights and a carjacking. I watched a woman run over her soon-to-be ex-husband with a car.

A house of prostitution operated a few doors away. I never wanted sex bad enough to do business with the women who worked there. One offered me her services in return for a carton of cigarettes. Even though cigarettes were only four dollars a carton, it would have been a bad deal.

Their pimp did not fit the pimp stereotype. He was a pot-bellied, redneck, steel worker who drove a 15-year-old station wagon. He used a clothes hanger as his car radio antenna. He had a second job faking illnesses and going to doctors for pain medicine. He sold the pills until an unhappy customer decided to shoot him.

There was a diverse mixture of cultures and personalities in that neighborhood. None of them seem concerned about owning neatly pressed, dry-cleaned clothes. They bore no resemblance to the people who lived in the suburb that I lived in.

There was one factor that made the dry cleaners a smart business decision. In its back room, there was a bookmaking operation and an ongoing card game.

The back room had far more traffic than the dry cleaners ever did.

I was the "manager" of the dry cleaning section. Since I was the only employee, there was not a lot to manage. However, the experience at the dry cleaners was a better lesson in business than studying for an MBA.

I learned business techniques that were far ahead of their time:

1. Outsourcing. Once or twice a week, someone would wander in, actually wanting their clothes dry cleaned. I would take their clothes to a real dry cleaner and have them cleaned. Since we charged a markup for the service, prices were outrageously high and we had few repeat customers.

We did the marketing and someone else did the work. It is a model that many businesses follow.

2. Locating in a business-friendly location. In Joe Nocera's book, A Piece of the Action, he wrote about credit card companies locating in South Dakota because that state looked favorably upon the credit card business at a time when other states were heavily regulating it.

Picking a "business-friendly" climate is a key to business success. That is what large companies shop for: lax regulatory environments and economic incentives.

Since bookmaking was against the law, Newport was a favorable business environment for the dry cleaning and gambling operation.

With far more serious crime taking place, enforcing gambling laws was not a high priority for the neighborhood's law enforcement community. Policemen would occasionally visit the dry cleaners to place bets. On one occasion they went flying out of our building, guns blazing, when an armed robbery was attempted across the street. It was like watching a real life version of Kojak.

3. Long hours, low wages. I worked in the dry cleaners 72 hours a week during the summer and over 40 a week during the school year. I had no benefits, pension, or paid vacations, and they "forgot" to pay me overtime.

Many businesses use this "long hours, low wages, no benefits model" today.

4. Keeping operating expenses low. The dry cleaning business did not have equipment and was located in a low rent district. I was the only employee, and I was paid minimum wage.

Everyone involved in the dry cleaners is now dead. Their lifestyles as "gypsies, tramps, and thieves" cut into any chance they had to live to an old age.

None of them were well-educated, but every night when the men would come around; they had plenty of money to lay down.

This is taken from the updated version of Son of a Son of a Gambler and What to do When You Win the Lottery, which will be officially released on July 30 but available on Amazon.

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