Those early years taught Sutherland that he could always endure by running lean. That would become his edge. Sutherland remains a determined avoider of debt. He has no business loans, and he recently built a new quarter-million-dollar house sans mortgage. He was the general contractor on the job, and he used subcontractors whom he happened to insure. Dealing with them--now good-old-boy style--Sutherland figures he saved $50,000 on the house.
Sutherland and Walton spoke often about the seductions of money. "Sam always had this belief that you can't spend more than you're taking in--that leverage will always come around and bite you." Conversely, Walton told Sutherland, tough times magnify opportunity for those who avoid debt. "Sam always said that there will come a time when big opportunities will be presented to you, and you've got to be in a position to take advantage of them."
Sutherland also reasons that by dealing with his own--and not other people's--money, he is more in touch with his costs because his equity is on the line. "I know exactly what my costs are before I do a project. I know exactly how many nails, how many pieces of lumber it's going to take," he says.
As we pull into Greers Ferry, population 724, Sutherland outlines the deal that has brought him here. "I'm looking at 10 acres. They want $25,000. I may offer 20." At the offices of Preferred Real Estate, Sutherland is greeted by an agent, Carolyn Hall, a dark-haired middle-aged woman in jeans and a sweatshirt. The two quickly fall into a discussion about the property. Sutherland wants to build mini-storage lockers in which vacationers at a nearby lake can store their boats and RVs. There are some houses adjacent to the site, but farther down the road is a motel and a country store. Is the area commercial or residential? "What about planning?" Sutherland inquires. Hall almost seems not to understand Sutherland's question. "We don't really have any planning in town. You could put a zoo in the middle of town and nobody would care," she says.
On the way out to look at the land we pass a freshly built mini-storage facility, and Sutherland slows the car to admire the product. "Good God, this guy is throwing up some storage units here," he says. He does some quick math in his head and finds a chink in his prospective competitor's armor. The owner has opted for poured slabs of concrete, when crushed rock would have done fine. That's overkill--too much expense just for keeping boats out of the rain. Down the road, Sutherland takes a left onto a dirt road that heads back through what appears to be a budding pine plantation. As he and Hall get out and walk the land, thick with thorns, more real estate chitchat ensues. "The lay of the land is critical," says Sutherland. There can't be too much slope. He'll need to see a topographic map. "Anybody ever perked it?"
"Don't know," says Hall. One of the two owners, she relates, is in the music business in Memphis.
Sutherland has previously gleaned that the partners paid $20,000 a year ago and suddenly want to sell. "Something went sour between them," Hall confides to him. Back in the car, Sutherland says, "I try to catch people in distressed situations."
Sutherland recalls Sam Walton relating to him how back in the late 1970s, when Wal-Mart had about 250 stores, he received a call from the chairman of Kmart offering to buy Wal-Mart. Walton replied, "Gee, that's funny. I thought we'd buy you." The Kmart people were amused. After all, at the time Kmart had five times as many stores as Wal-Mart. But Walton knew that termites were gnawing at the footings of Kmart's house. The company was overleveraged and lacked focus. Kmart was a retailer in distress. Walton could see that, and he knew it was time to seize the moment and go for the jugular. In the sluggish, high-interest-rate economy of the early '80s, Kmart faltered and Wal-Mart ate its proverbial lunch.
Back at Hall's office, Sutherland borrows a calculator and pores over a plat map. He can't believe how microscopic the property taxes are--just $110 a year, and even after he develops the site, he doubts if they'll exceed $500. He concludes, "I'll make an offer for $18,000."
Hall leaves the room to find an offer sheet, while Sutherland confides, "I've already done my checking on this. I've been over to talk to three of the people on that road. He's really hurting; he wants to dump it. She doesn't know that." The seller, Sutherland has learned, had asked his three neighbors if they wanted to buy the land.
Kent Sutherland left Becton Dickinson in 1988 and went into business for himself. He became an agent for Farmers Insurance. He specifically chose Farmers over other insurance companies because with that insurer he would not be a direct employee but an independent contractor. That gave him the freedom to explore other business opportunities beyond insurance.
Sutherland describes insurance as a "lazy man's business." Many agents do a poor job of cross selling--peddling a home policy, but not a life-insurance policy, to a client, or vice versa. Sutherland was not a lazy man. He won Farmers' "Order of the Blue Vase," awarded to the agent who sells the largest number of life-insurance policies in his first four months on the job. Sutherland's record--114 life policies--still stands.
