Neighborhood Watch

Eye To The Future

Optical work, with its emphasis on mathematics and precision and the principles of physics, appeals to Michaels. Also, he reasons that if he could deal with teenagers in the classroom, he should certainly be able to satisfy customers for eyewear. His first optical business was part of an HMO on Long Island, but the organization failed. He then worked for an optician near Eighth Avenue and 23rd Street. At that time, he had wanted his own shop but hadn't been ready. Then "this opportunity came up" in an area he liked.

As with most entrepreneurs, Michaels is reluctant to divulge to an outsider the precise financial details of his tenancy or his capitalization, but he reports that he has signed a multiyear lease that he finds "comfortable." In New York, most commercial leases contain a clause that permits the renter to stop paying and vacate the space if the business fails, an important comfort to a start-up venture. Most storefronts in this area rent for around $75 per square foot per month, which would put his rent at a hypothetical $3,000 per month. Rents have been creeping up and, in the process, changing business assumptions: Whereas in the past, businesses could figure that rent would cost them one-quarter of their gross income, now they must figure it at one-third of their gross or more. The hypothetical $3,000-a-month rent will likely require Michaels to sell something like 20 pairs of glasses just to meet it, and twice that many pairs per month to meet his other expenses, pay himself a modest salary, compensate his optometrist, and begin to amortize his start-up costs, which neighborhood observers estimate at between $35,000 and $75,000.

The start-up money, Michaels says, came from his own savings and from "people who believe in me." Michaels certainly appears to be a man on whom friends might reasonably bet: He has a business plan and is experienced at his craft, if not completely as an entrepreneur, and he has what is probably the correct philosophy (and budget to match), one that recognizes it will take time to build a client base and that for a while outgo will likely exceed income. Whether his shop will be different enough from the competitor down the avenue to be commercially viable, say, within the year, is a toss-up.

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This article was originally published in the March 1998 print edition of Entrepreneur with the headline: Neighborhood Watch.

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