When sacrifice equals success - Korean American business owner of King's Beauty Supply Distributor Inc

Nation's Business, July, 1994 by Cheryl Jarvis

Twelve years ago, Tae Wan Cho said goodbye to his native South Korea and set off, he says, "for more opportunity and freedom in the United States." He left behind a wife and two daughters so he could fully focus on launching a business. What business, he had no idea. He also had no capital and no credit rating. He spoke little English.

Cho, who had worked in an import-export business, stayed in Harrisonville, Mo., with an American friend who had served in South Korea. He read in a trade magazine about strong growth in sales of hair-care products for African Americans and decided to open a store in St. Louis. One factor in locating there was the metropolitan area's affordability.

He applied for a $10,000 loan from a local bank but was turned down. He then borrowed $3,000 from the friend in Harrisonville and $2,000 from his landlord in St. Louis.

Cho signed a lease for 500 square feet of space on the first floor of a vacant downtown building, where the second floor was condemned. "It was all I could afford," he says. He called the store King's Beauty Supply "because King is a common and respected name in the African-American community," and he painted the name on the window.

The first day, Cho sold $40 worth of merchandise; the first month, he rang up $3,000 in sales. But he couldn't afford to heat his shop that first winter, and much of his merchandise froze. Cash flow was such a severe problem that he could stock only two items of many of his products. He decided everything he made would be reinvested into the business.

"I spent no money on myself," he says. "I paid my bills before I ate. I had no radio, no television, no chair, no sofa, no bed. I did not turn on the heat or the air conditioning in my apartment because I knew I couldn't pay the bills. All I had was a blanket and a 10-year-old Ford Pinto." Cho spent his weekends in the Pinto driving to Kansas City, Mo., to buy the products he would sell during the week because he couldn't afford the freight charge for truck delivery. He bought as much as the Pinto would hold, about $1,000 worth of shampoos, conditioners, relaxants, and gels.

For three years, he lived this way, working seven days a week, 10 hours a day. Whether he was selling or sweeping in the store, hauling merchandise, or shivering in his apartment, he recalls, he was thinking about the business.

Finally confident that he could make a living, he sent for his family. Shortly after they arrived, he opened a second store, which his wife, Young Suk, managed.

Today, Cho, 52, operates nine retail stores in St. Louis and sells his products wholesale all over the United States. His company, King's Beauty Supply Distributor, Inc., generated $7 million in sales in 1993, and Cho expects sales of $8 million to $10 million this year.

From the old, unheated shop, the company has grown to occupy a 30,000square-foot warehouse. Huge trucks arrive daily, with as much as $100,000 in merchandise.

Cho now has a $1 million line of credit at the same bank that turned him down for a loan years before.

He attributes his success not only to hard work but also to a good reputation and advertising. "In the beginning," he says, "manufacturers wouldn't see me because I was so small and I knew nothing about the product I was selling. So I started studying the labels, questioning the manufacturers on the phone, and talking a lot to my customers. I made it a high priority to become knowledgeable about what I was selling."

The strategy worked. Manufacturers started coming, and they brought with them advertising allowances for their products. A standard practice among retail owners was to take the allowance-- about 3 to 5 percent of the wholesale price--and distribute inexpensive fliers that cost less than the allowance, then pocket the rest. But Cho used every penny for television, radio, and newspaper advertising.

At one radio station's suggestion, he started in-store promotions. While the station advertised and organized these events, Cho got the manufacturers to pay for the prizes, which have ranged from tickets to rock concerts to a trip to the Bahamas. Hundreds of consumers flock to these once-a-month Saturday events and consistently generate the company's biggest sales.

Today, Cho and his family are nestled in a 4,300-square-foot home in an affluent St. Louis suburb. In the garage are a Mercedes-Benz for him and a Jaguar for his wife, Young Suk, who, as vice president of the company, manages the stores and staff. The couple's plans include distributing in China and countries in Africa; profit sharing for their 51 employees; and, in five years, taking the crosscultural company public.

"When I started out," says Cho, "I had no idea that I could do this well. But I still have a long way to go and a lot more to learn."

Cheryl Jarvis is a free-lance writer in St. Louis.