Michael Franzese, a former capo (vice-president) of the Colombo mob family in New York, decided to quit his former life and go straight. After spending years in prison, Franzese now writes inspirational books and speaks to churches, schools, businesses around the world on the values of faith and love—and also on how to run businesses well.
Franzese, who was dubbed by Life Magazine as “the mob’s young genius,” had legitimate businesses such as car dealerships, leasing companies, auto repair shops, restaurants, nightclubs, movie companies, travel agencies, video stores. He had a Lear jet, a helicopter, houses in several states. He also had “illegal and silent interests in businesses that included loan shark operations, labor-union affiliations, gambling, a talent agency, a sports agency, and a wholesale gasoline conglomerate” that did not pay proper taxes.
In August 2014, Franzese gave a riveting talk in Singapore, avowing that crime never pays.
Caveat: Use Franzese’s business strategies in legitimate businesses.
In the past two weeks, we have looked at these strategies from Franzese: Work hard and focus. Choose employees and advisers wisely. Listen and think. Conduct sit-downs, not meetings. Keep your cool. Avoid gambling. Now we discuss the last four tips.
Avoid huge debt
“An untold number of businesses are lost every year by taking on debt they can’t pay,” says Franzese in his book “I’ll Make You an Offer You Can’t Refuse.” He enumerates banks such as AIG and Lehman, the US Big Three auto companies, consumers who could not pay for their houses.
“Mob guys love to loan money to businesspeople in trouble. The loans are always high-interest and secured but rarely documented. Default and your bed might be the only thing that is not snatched from under you. And though banks and so-called legitimate lenders employ different techniques than mob guys, they can be pretty cold when it comes to foreclosing on security when a loan is in default.”
Rise from failure
“It’s not how many times a person fails that necessarily matters,” says Franzese. “It’s what a person learns from failure and how he reacts to it that leads to either ultimate success or ultimate failure. What information can you take away that will benefit you the next time around? What can you learn so you will never repeat the same mistake twice? How will you allow it to affect you internally so you don’t give up, but keep on moving forward?”
After his release from prison, Franzese was broke. It was not easy treading the straight path, and it took Franzese almost seven years, two business failures, several emotional and financial consequences, to discover what his new career would be.
“Failure can show you defects in your plan, reveal defects in the execution or timing of a plan, identify weaknesses in a team, or highlight otherwise undetected variables at play,” says Franzese. “It is a tough teacher, but it can teach you your strengths and weaknesses in a way that no other teacher can.”
Sometimes our best-laid plans do not work. Sometimes it is just bad luck. But that does not mean that we should stop trying.
“If you haven’t made a bad deal,” says Franzese, “you just haven’t made enough deals yet.”
Stick with what you do best, delegate the rest
Franzese says we lie to our kids when we say, “You can be whatever you want to be in life.”
“Bull,” he says, “simply not true. Filling our young people with false hopes and unrealistic goals will end up being far more damaging to their self-esteem.”
The same situation holds for business. We cannot do everything, and we cannot be good at everything. “Not everyone is qualified to run a business. Some of us are better employees and workers than we are owners or operators.”
Recognize your strengths and weaknesses. Play to your strengths, and get others to do what you cannot.
Operate with integrity
When his illegal gas cartel was making him millions a week, Franzese could not give it up, even if he knew that the Feds were closing in on him. In retrospect, he says that “had I closed it down and gotten out early, I might have saved myself a stretch in prison and millions of bucks in fines and legal fees. But greed kept me locked in the game.”
Instead of greed, this former mobster recommends integrity. Shortcuts are possible, but rarely work in the long run.
“Everyone struggles. Nothing guarantees success, but having integrity will make along with hard work, experience, the right support staff, and a little luck, it’ll help you achieve success in business. Without integrity, your success will be fleeting.”
Next week: Strategic planning
The author is on the board of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail msanagustin@ateneo.edu). E-mail the author at blessbook.chua@gmail.com.