April 1, 2004
Entrepreneurship Through Homeownership
Five years ago, Kara Turner had to sell her home. “I loved the house,” she says, “but I needed the money for my day care business. So I moved in with my mom.”
But not for long. Two years after selling her $150,000 home, the 34-year-old proprietor of Primary Colors day care in Durham, North Carolina, became a homeowner again. “In fact, I bought the same house,” Turner says. “My business had grown to the point where I could afford to keep it going and own a home, too.” She repurchased the home for $160,000.
Turner credits her husband, Kenny, a financial analyst who works for a mortgage company, with helping her make the transition from entrepreneur to business operator. Turner had decided that her business was near tapping out and needed to expand in order to increase revenues. Opening a total of four centers, she quickly learned that she was stretched too thin. “Kenny helped me to get organized, so I wasn’t running around on $2 errands, as he put it,” Turner recalls. “I cut back to two centers—the two largest—and I feel like I have much more control over my life.”
With her husband’s help, Turner not only became the owner of a profitable business but also a property owner. “I always thought of renting space for my business,” she says, “but Kenny kept showing me spreadsheets, demonstrating the advantages of buying. So I now own two commercial properties, which I rent to my day care centers as the sole tenants. While my center is making money, my real estate has appreciated, too.” The two buildings, bought for $1 million (largely financed with bank loans), are now valued at $1.2 million, giving her some equity in the properties. In addition, she estimates the value of her business (begun a decade ago with an $11,000 investment) at upward of $250,000, which does not include the estimated value of her buildings.
“Finding and holding on to good employees can be very difficult,” says Turner. “In order to do so, we pay above-average wages for this industry. We also provide benefits such as healthcare, dental care, paid vacations, paid sick days, and opportunities to obtain bonuses.” Altogether, Turner puts her payroll costs at about $600,000 per year—more than 60% of her approximate $1 million in 2003 revenues. The centers serve about 150 children, ranging from 6 weeks to 5 years old, and employ about 30 full-time workers.
“I’ve always reinvested in my business, which keeps enrollment up,” says Turner. “People say that I have the cleanest centers around, with the newest toys. Following the advice of my husband, I’ve upgraded my computer system so it keeps better track of the kids’ addresses, payments from parents, employee information, and so on.” By going the extra mile to reinvest in her business, Turner demonstrates the value of DOFE principle No. 8: to support the creation and growth of profitable, competitive black-owned enterprises.
Turner also invested in closed-circuit cameras. “Our teachers are happy to have them,” says Turner. “If