The team at J&M Entertainment learns to navigate a new program during their weekly staff meeting on Oct. 3. Katharine Lotze/Signal
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It is commonly known that most new businesses close the doors after a very short period of time. The statistic most quoted is that eighty percent of start-ups fail within two years.

The number of firms that survive to the five-year mark is about 4 percent. Staying in business beyond that, well, the odds are very slim.

Despite those odds, J&M Events celebrated being in business 36 years earlier this year. Founded and led by Jorge Lopez, the business has grown, stumbled, gone sideways and has evolved to meet the demands of changing market forces and demographics.

The son of immigrants, Lopez and his family worked packing onions for Boskovich Bros. His family moved to the Santa Clarita Valley in pursuit of opportunity.

Lopez has deep roots in the community and he, his family and his company are well known for contributions to various nonprofit efforts through the years.

Passion for music

Lopez had many jobs while growing up which included time at K-Mart, a local florist shop, a grocery store and even being a door to door salesman for Fuller Brush at the age of sixteen.

Eddie Cole, President of Matrix Concepts with the 1971 vintage Penton Motorcycle he used to ride which is displayed in the lobby of Matrix Concepts in Valencia. Dan Watson/The Signal
Eddie Cole, President of Matrix Concepts with the 1971 vintage Penton Motorcycle he used to ride which is displayed in the lobby of Matrix Concepts in Valencia. Dan Watson/The Signal

But it was his passion for music that led Lopez to enter broadcasting school. Graduating from the Columbia School of Broadcasting, Lopez proceeded to work as an on-the-air talent for 15 years.

During his broadcasting career he started J&M Entertainment, a DJ company doing weddings and other social events. J&M stands for Jorge and Mark, a former friend who decided to move back east to pursue his own passion. Mark left the company in 1998 and the partnership ended on a positive note.

J&M has now matured into a full service entertainment and production company.

Hardships and Rewards

As many owners who read this column realize, starting and growing a business is the most difficult job they could ever sign up for. The hardships are many; the learning curve is steep, long and expensive. And while the rewards can be generous, they can also be sometimes fleeting.

Lopez, however, attributes his business longevity to six main lessons, some which he continues to seeking mentoring on even now.

  1. Transition from expert to owner

The first learning curve is in making the transition from technical expert to business owner. When it comes to business, ignorance is not bliss, it can be very dangerous.

Jorge Lopez, owner, president and CEO of J&M Entertainment, stands in the company's Valencia warehouse on Oct. 3. Katharine Lotze/Signal
Jorge Lopez, owner, president and CEO of J&M Entertainment, stands in the company’s Valencia warehouse on Oct. 3. Katharine Lotze/Signal

Being a talented DJ was great, but Jorge discovered that there was much more to running a business than playing records in front of a crowd.

The knowledge gap of marketing, sales, inventory control, equipment purchasing, accounting, creating and tracking a budget, forecasting, human resources management and in other functional areas was huge. This led Lopez to understand the value of having both strategic and operational (annual) business plans.

2. Managing Growth

The second was in learning to manage a company of just a few employees, to a firm with 25 or more employees, and developing a management team to direct functional areas, people and processes.

At this point, the typical billed event was more than just a person or two playing records. The events had expanded to include lighting, extensive sound equipment, technical production including video projection and video editing, and event coordination at larger venues with larger audiences. The company had a combination of full and part-time staff on the payroll.

To grow his business Lopez realized that he needed to hire more people – better people. And it became very different from running a company where everyone reported directly to him, compared to having a management team which directly supervised employees.

Through this, he learned the purpose of developing and nurturing both a management and a leadership team to create the processes, policies and training program resources to take the company to the next stage of growth while ensuring ongoing quality control.

3. Learning to Lead

Lesson three was personally transforming from operating as a manager to a leader. To hire and maintain a great team, Lopez believed that he had to continually “sharpen the saw” and improve his own leadership and other skills.

He became a business and leadership education fanatic; always reading books, attending seminars, watching DVDs, attending business retreats and joining business mentoring groups.  The lessons he learned were shared to inspire and motivate his team members.

Lopez says that his “must read book for every owner” is The E-Myth Revisited by Michael Gerber. He believes that any owner can improve focus and productivity if the intention exists. One exercise from the book used repeatedly by Lopez over the years is to make a list of every task done, and then to highlight the ones that he enjoys or is the best in the company at. What’s left behind serves as the job description for the next person J&M hires.

4. Managing cash flow

Every owner knows that cash is king. But learning how to manage or improve cash flow was a game-changer for Lopez’ business. This was the fourth lesson learned.

Using the annual operational plan as his guide, Lopez identified the critical numbers for weekly, monthly, quarterly and annual success. This includes a strong focus on each step of the sales funnel that has been charted for each department.

One of his critical numbers is the breakeven analysis which is used to make adjustments to profit margins, profit expectations and cash flow. This impacts the timing of new hires and employee scheduling.

Lopez was an early adopter of these tools and he created the means to improve cash flow by making it easier for his clients to put down deposits and to make payments along the way before an event.

Also, accepting credit cards and encouraging clients to pay on-line reduced objections to buying due to the overall costs of an event, and enhancing client commitments to an event – particularly when the customer is an individual making the payments for a wedding or other social event.

Because equipment is used in every event, Lopez learned to keep a close eye on whether to “lease or buy.” Outsourcing equipment lowered gross profit margins, and impacted cash flow. Payback calculations are now performed regularly.

5. ‘Adapt, Differentiate or Die’

Understanding and accepting that “change is imminent” was and remains the fifth lesson learned.

Lopez never feared change or the disruption of having been in the middle of the technology and distribution revolution of the music industry.  At the same time, but more rapidly adopted, were the changes in the methods people preferred to communicate: from phone calls and message pads to voice mail and faxes, to pagers and email messages, to social and business media sites each with their own communication systems (Facebook and LinkedIn, as examples).

At J&M these changes impacted client acquisition, retention and expansion of the business into new segments; requiring employees to pay more attention to technology and communication channels because it was important to remain relevant to the sales funnel. A poor review on Yelp, for example, could cause prospects to question the quality of the services J&M provides.

Those same forces impacted the ability to attract and retain talent. A negative posting on Glassdoor might suggest that a potential employee seek employment elsewhere.

Lopez understands that change is part of business and he has coined a phrase “Adapt, Differentiate, or Die.”

This thinking has helped Lopez to avoid becoming stagnant by being creative in his outlook and to continually be developing new services to offer clients and to consider new ways to deliver them.

As an example, the J&M Entertainment Division has had to adapt from every changing advances in technology going from records (33rpm/45rpm) to 8-Track tapes; Cassettes to CDs; and Minidiscs to iPods; and Laptops and mobile devices. That’s the equivalent time spanned from the Wright Bros. to Neil Armstrong (66 years)  – all taking place in less than 25 years.

6. Mining capital

Securing lines of credit and loans is not always easy for small businesses and it has become more difficult since the Great Recession.

This is the sixth lesson learned by Lopez. Despite the lack of appetite by lenders to loan money, growing a business requires investment of capital.

While it is important to pay attention to interest rates and terms and conditions of credit, Lopez was able to find alternative funding that allowed him to turn purchases into positive cash flow.

When he had been outsourcing $20,000 a month in equipment rentals, he secured funding from an asset-based lender for new equipment. That equipment was used in J&M client events, returning positive cash flow several times over the monthly payment amount and improved gross profit margins. Traditional lenders would have not considered this kind of arrangement.

Changed business owner

Jorge Lopez isn’t the same man that started his business working out of his garage and a spare bedroom when Jimmy Carter was president. He is older, wiser and can now laugh about the mistakes he’s made. But everyday Lopez works on, not in, his business is probably the biggest lesson he’s learned which he in turns passes along to his peers.

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