Stephen Heard graduated from the University of Rhode Island in 1970 with a degree in business administration. He started his career by signing up as a management trainee at Woolworth’s Department Store in Wellesley, Massachusetts. It didn’t take him long to realize he missed his calling: being by the Rhode Island shoreline and employed in the fishing industry. Nearly 35 years later, Stephen is a self-made multimillionaire, having followed both his passion for entrepreneurship and for living his life on the Atlantic coast

Heard, Stephen

Weinstein, Laurence

English

Sacred Heart University: DigitalCommons@SHU

New England Journal ofEntrepreneurshipVolume 7 | Number 1 Article 42004Cashing in on SeafoodLaurence WeinsteinSacred Heart UniversityStephen HeardChamplin’s of WickfordFollow this and additional works at: https://digitalcommons.sacredheart.edu/nejePart of the Entrepreneurial and Small Business Operations Commons, and the Food andBeverage Management CommonsThis Interview is brought to you for free and open access by the Jack Welch College of Business at DigitalCommons@SHU. It has been accepted forinclusion in New England Journal of Entrepreneurship by an authorized editor of DigitalCommons@SHU. For more information, please contactferribyp@sacredheart.edu, lysobeyb@sacredheart.edu.Recommended CitationWeinstein, Laurence and Heard, Stephen (2004) "Cashing in on Seafood," New England Journal of Entrepreneurship: Vol. 7 : No. 1 ,Article 4.Available at: https://digitalcommons.sacredheart.edu/neje/vol7/iss1/4Stephen Heard graduated from the University of RhodeIsland in 1970 with a degree in business administra-tion. He started his career by signing up as a manage-ment trainee at Woolworth’s Department Store in Wellesley,Massachusetts. It didn’t take him long to realize he missedhis calling: being by the Rhode Island shoreline andemployed in the fishing industry. Nearly 35 years later,Stephen is a self-made multimillionaire, having followedboth his passion for entrepreneurship and for living his lifeon the Atlantic coast.NEJE: Seems like you’ve had quite a successful financialride here in beautiful, scenic Rhode Island.Heard: Please don’t make it sound like it was easy, or likeit was some rags-to-riches story. My father was a Harvardgraduate and never did like the fact that I leftWoolworth’s to go back to the fish business.NEJE: Why did you?Heard:  I’ve always loved the Rhode Island coastline andI guess the fishing business was in my blood. I workedsummers during college in the Wickford Shellfish marketwhere they wholesaled lobsters and hard-shelled clams; itwas one of the few seafood markets around here in the1960s. I put in long hours, but I loved working with thefishermen so the time spent there never bothered me. Thefolks who depended on the sea for their livelihood werean independent lot, proud men all, and it certainly wasn’tan easy life. Yet many of them hung in there and did well.These days, it’s much more difficult to make your livingfrom the sea.I wasn’t cut out to be a lobsterman, but I did the nextbest thing. I quit Woolworth’s rather than have thecompany resettle my family in western Massachusettsworking in one of its stores. It would have meant beingeven further away from the ocean, so I went back toWickford.NEJE: Same company, different job?Heard: Yes, exactly. As a college graduate, I was given amanager’s position, which only means I became responsi-ble for just about everything getting done and wasn’t paidovertime. Summers were unbelievably hectic with a peakof 25 employees; winters slowed down some, so we onlyhad 15 employees during the colder months.NEJE: Somewhere along the line, you went from managerto owner. Few people get rich working for someone else.Heard: Well, the getting rich part—and it’s debatable ifthat’s what I am because I think of myself as comfortable,not rich—certainly didn’t happen right away. I had goneto work for Jack McGeough, who bought the Wickfordfish market operation in 1968 when it was still prettymuch a mom-and-pop operation. Jack really built up thebusiness; he was the hardest workingman I’d everknown, putting in 80- to 100-hour weeks on a consistentbasis.Jack taught me a lot. He wasn’t always the nicest per-son to work for, but I saw how he reinvested his money inthe business and was singularly focused on expandingthe company’s physical plant. There were other fishwholesalers up and down the coastline and things werepretty competitive. Fishermen might like dealing withyou because they felt they could trust you or there wasmutual respect. But they had a family to feed too, so ifsomeone else was paying better than we were for theircatch, well, they’d take their business elsewhere. We con-stantly had to be on our toes. We had to know what wasgoing on every minute of every day, constantly monitor-ing the fish business because it changed daily.NEJE: How did you get your shot at running things?Heard: After six years of working for Jack, he decided tosell the business to the Prelude Company out of Westport,Massachusetts. Prelude had built up a considerable off-shore lobster fleet and they began to acquire four to fivewholesale seafood companies in order to integrate theiroperations vertically. It seemed to be a sound businessstrategy, but I guess they tried to grow too quickly andran out of cash. They went bankrupt in 1978.I was employed at another seafood wholesaler whenall this transpired. I approached two people, one an oldfriend of mine and another a coworker, about buying theWickford operation; they agreed to go to bankruptcycourt with me and try to buy it. Everything had beenCashing in on SeafoodStephen HeardChamplin’s of WickfordNEJE INTERVIEW 111Weinstein and Heard: Cashing in on SeafoodPublished by DigitalCommons@SHU, 2004closed up for six months and things were pretty well neg-lected at the place, but we knew the facility was well builtand we felt we could run the operation properly.NEJE: How did you raise the capital?Heard: Pretty standard stuff. We pledged our homesand approached the Small Business Association to guar-antee a business loan through our local bank. We raisedthe incredible sum (back then) of $350,000. We paid thebankruptcy court $210,000 for the property and that leftus with $140,000 in working capital. It may seem like alot of money to hold aside to start up the business, butwe knew the reality of the marketplace. Fishermen werepaid in cash, either daily if they wanted it, or weekly.The restaurants we were wholesaling the food to inProvidence, Boston, New York, and Philadelphia didn’tsettle their accounts for 50 to 60 days. In a way, as awholesaler, we were everyone’s banker as well.Not all of our business was wholesale, just most of it.Twenty percent was retail to local individuals. That was anice cash business. (See company advertisement, page14.)We opened for business in June 1979. The first six totwelve months, we hardly took any money out of thebusiness. We each got a small salary; we were alldepending on our wives to work and carry our families.My wife, Darlene, was working for the phone companyand she was the breadwinner. She didn’t mind that at allsince she had always believed in me and knew I wantedto be my own boss all along.NEJE: Did you change the name of the company to some-thing memorable like Heard & Company?Heard: No, we retained the same name, WickfordShellfish Company, because the operation had beenaround for some 40 to 50 years so everyone around theWickford–North Kingstown area already knew about it.The smartest move we made at the beginning was toreject an offer by the Old Stone Bank, when it initiallygave us the start-up money, to take on a variable or float-ing rate loan. We wanted to know exactly what ourmonthly borrowing costs would be so we committed to a9.5 percent interest rate. Within two years, interest rateshad skyrocketed to 16 percent or higher under the Carteradministration. If we had gone with the variable rate offerwe might not have survived.NEJE: Partnerships can be tricky. Apparently your expe-rience was very positive.Heard: I’d say so! I was around 30 but my two partnerswere in their early 40s so they had more experience than Idid. That really helped. We were all friends and kneweach other socially before starting the business together.We agreed to split up assignments so each of us couldtake a piece of the operation that related best to our strongpoints. I handled wholesale accounts, another partnertook the retail piece and scheduled the employee shifts,and my second partner took over the administrativechores. We avoided mistakes that other partnerships havemade by communicating openly, trusting each other, andworking huge hours—usually 80 to 90 hours a week.That’s about 15-hour days if you figure each of us took aday off during the week.It meant sacrificing time at home, and Darlene for awhile told me she was concerned that I had become aslave to the business. I was never home during the sum-mer months, that’s for sure. It was our busiest time and itwas essential all three of us put in the hours required tomake our operation successful. Over the years, we boughta couple of vacation homes but we eventually sold thembecause we never had time as a family to use them. I wasjust too busy.NEJE: Any other bumps along the way?Heard: Actually, no. The company always showed a prof-it so finances were never a big issue. Our fish operationbecame known as a good payer so our reputation grewand grew. It was exhausting work, but it paid off. Afterabout six years of this intense effort, a local businessmanwho owned a home heating oil operation was looking todiversify, so he offered to buy us out.Negotiations dragged on for some six to nine monthsand our prospective buyer threatened to walk away andbuy another fish business. However, that deal fellthrough so he came back to us and sweetened his offer.We sold him the business for more than $1 million, whichseemed like a fortune back in 1984. We had built up theseafood operation from zero to more than $5 million inyearly revenues with our own trucks leaving every nightto New York City, New Jersey, or Philadelphia. We reallyaccomplished something!NEJE: So this meant early retirement for you?Heard: Hardly. While my partners and I built up theWickford site, we had purchased three more wholesaleseafood businesses in Wickford, Tiverton, and Warwick.As a group, we started the Tiverton Shellfish Company.This operation, along with Warwick Cove Shellfish, wasone of the largest clam dealers in Rhode Island.We were constantly looking to expand our revenuebase, whether through internal growth or through acqui-sitions. However, we always insisted that any business12 NEW ENGLAND JOURNAL OF ENTREPRENEURSHIP2New England Journal of Entrepreneurship, Vol. 7 [2004], No. 1, Art. 4https://digitalcommons.sacredheart.edu/neje/vol7/iss1/4we purchased had to include owning real estate. Since weknew we weren’t going to be in business forever, webelieved that holding a hard asset like real estate, espe-cially waterfront property, would be a good investment.And we never had to borrow money again through theSBA. We only acquired other companies if we could fundit internally.So “retirement” meant I only had to take care of threebusinesses. However, since we had added a new partnerduring one of our acquisitions, instead of working sixdays a week, I now only worked three days per week.Eventually, one of my original partners decided he hadhad enough of the fish business and left for Florida. Thesecond original partner stepped away from day-to-dayoperations to manage his own lobster boats.NEJE: So by the late 1980s, you had three wholesaleclam operations keeping you busy part of the time.Apparently, we’re not finished with your entrepreneurialendeavors.Heard: Right you are. I wasn’t really happy being just inmy late-30s and working part-time. My wife and I hadpurchased a number of investment properties around thearea, but these weren’t keeping me very busy either. So,when Jimmy Champlin wanted to retire and sell hiswholesale seafood business along with his well-knownrestaurant in Galilee, about 20 minutes driving time fromWickford, I was immediately interested. NEJE: Let’s see if I understand this correctly. You mademoney selling your first business, had interests in threeothers, owned investment properties around the town ofWickford, and you still had the motivation to throwyourself into an even bigger venture?Heard: Yes, but think of it this way: As an entrepreneur, Ihad no 401(k) plan, no IRAs, no safety net at all. So buy-ing rental properties and buying or selling businessesbecame my only way to put together enough money formy daughters’ college educations and for the future. In noway did I have enough money to retire on before I boughtinto Champlin’s.NEJE: Did you have the funding to buy Champlin’s your-self?Heard: Not even close. With two of the original partnersand a third who had been part of the Warwick Coveoperation, we put together an offer for Champlin’s andJimmy Champlin accepted it. We sold two of our threesmall clam operations and put everything we had intothe business. Jimmy held most of the financing. We paidhim $1 million for his business but only had to provide$200,000 in cash since he was willing to hold a 20-yearnote for $800,000. Then the three of us ponied up anadditional $250,000 in working capital and we were onour way. We made sure we kept the restaurant manager as ourkey employee since none of us had been in the restaurantbusiness before this. He was young and very talented—exactly what we needed to help us learn the front-endoperation. We opened officially in March 1990 but weworked in the business for three months before it changedhands so we could introduce ourselves to the fishermenand to the retail customers. Consistency of service wascritical to getting a running start. The restaurant’s location was ideal. Even though it’spretty much a seasonal business, running from MemorialDay through to Columbus Day, we had a waterfront loca-tion and we were near the ferry terminal to Block Island.We knew we could stay open from November to Apriland still draw some business.NEJE: We wouldn’t be surprised to learn that you grewChamplin’s business as well.Heard: You bet we did. In the 10 years I co-ownedChamplin’s, we expanded from seating 60 customers toup around 300. We expanded the inside tables by remov-ing some office space and then built an outside deck witha canopy that can seat 150 customers during warmerweather. Maybe we didn’t know much about how to runa restaurant when we started out, but we all figured itwould have to work if we just offered the best, freshestseafood people could eat at reasonable prices.Business boomed. We served upwards of 1,200 meals aday using only window service. We didn’t employ wait-people. My two daughters were the “deck kids” whocleaned up after the customers were finished with theirmeals. Our wives worked on the cash registers or in thekitchen.NEJE: How did you convince your wife to work in thebusiness?Heard: Oh, that was easy. If Darlene wanted to see me,she had to work at Champlin’s! We had no real summervacations since it was all taken up with work. In fact, nowthat I’ve just sold my interest in Champlin’s to my otherpartners, this coming summer will be the first one in 35years I will be able to enjoy just being out on my boat.NEJE: Why did you decide to cash out?Heard: It was time for me to slow down. I was gettingburned out and I could see my other partners were too.They were cutting back their hours and I saw that as theNEJE INTERVIEW 133Weinstein and Heard: Cashing in on SeafoodPublished by DigitalCommons@SHU, 2004handwriting on the wall. Working seven days a week wasa real killer. Plus, there were too many kids in the nextgeneration for all of them to work in the restaurant; some-one had to bow out. Finally, I couldn’t see my legacy asgetting my daughters involved in something that wouldrequire 70 to 80 hours of commitment a week. It didn’tseem fair.I structured a five-year payout in 1999 with my part-ners and I just received my last check from them. Thisdeal included selling my interest in a retail seafood mar-ket in Wickford we had purchased together in 1996 andrenamed  “Champlin’s of Wickford.”  We traded in on theChamplin brand name and got immediate customer cred-ibility.NEJE: What were the negotiations like? Things can getpretty sticky with evaluating the value of a businessoperation among partners.Heard: I know it can, but remember, I’ve had a closepersonal relationship with all my partners. We weretruly friends and still are today. We came up separate-ly with our sense of what the business was worth andthe numbers were pretty close. We had an accountantto offer advice, but it all came down to a handshake. Inall the years I’ve been in business, we have never hadanything written down. No contracts, no partnershipagreements.NEJE: Since you’re vibrant and still shy of 60, whatcomes next?Heard: Well, I’ve been thinking that over. I’m itching to getback into some type of entrepreneurial activity. I only knowthe seafood business, so I imagine it would be related insome way to that and I know I want to involve my daugh-ters and no one else. I love owning real estate and I’velearned waterfront property beats owning anything else.I know there are downsides. The rules and regulationsyou have to follow as a small business owner today arequite complex and can be expensive. Worker’s compensa-tion and health insurance premiums are going throughthe roof and the state government of Rhode Island hasbarely reacted to this crisis. It seems everyone has a handin your pocket even before you open your doors and find-ing people who are willing to work hard has become adaunting challenge.Yet I find the entrepreneurial life a great way to live. Atthe end of the day when you’re bone tired, it’s just greatto see a full cash register and remember the long lines ofcustomers waiting patiently to give you their money inexchange for an honest product. I didn’t see my daugh-ters much when they were growing up. If we go into busi-ness together, it will give me another chance to do thingsbetter and spend more time with them. Life goes awfullyquickly.—L.W.14 NEW ENGLAND JOURNAL OF ENTREPRENEURSHIP4New England Journal of Entrepreneurship, Vol. 7 [2004], No. 1, Art. 4https://digitalcommons.sacredheart.edu/neje/vol7/iss1/4

Cashing in on Seafood

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Cashing in on Seafood

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