NOGALES, Ariz.—Alex and Nora Badillo arrived in Nogales in 1992 as young newlyweds with only $1,500, a trailer and a dream of owning a tire business.
Relocating from Los Angeles, the couple knew no one in this border town in southern Arizona and had no idea what the cost of starting a business would be, according to Nora Badillo. However, their naivetÃ&Copy; worked to their benefit as it helped them to persevere.
“Had we known what it would take at the beginning, we probably would have been too cowardly to have done it,” she said.
When they found a suitable location near a swap meet by a sewer wash, they offered the owner of the property a leasing deal but asked if he could waive a deposit and wait a couple of months for rent in exchange for their promise to care for his property.
“He kind of looked at us like, 'What the hell are you thinking?'” Ms. Badillo said. But he agreed to the terms, she said, when they convinced him the worst he could get out of the deal was having his building and land cleaned up for free.
The Badillos soon learned that to open their tire dealership—Alex's Tires Inc.—they needed to adhere to the city's request for a fence, which cost $1,200. Ms. Badillo said the price tag for the fence did not deter them from pursuing their dream even though they only had $300 left for utilities, permits and paint.
“We continued,” she said. “We were very positive. We didn't want to ask our families for help. Alex and I wanted to do it on our own.”
As luck would have it, a produce truck pulled into their location as they were getting the building ready to open for business, and the driver asked if they wouldn't mind selling 5-pound sacks of oranges for him because the town's markets were closing for the night and he wanted to get home, Ms. Badillo said. He promised that he would split the revenues with them.
“We said, 'Oh sure, unload them.' We needed money,” Ms. Badillo said. “…He unloaded all the oranges and so we started selling oranges to all the people who were going into the swap meet…. That's how we made another $1,600.”
With extra money from the sale of oranges and from pawning one of Mr. Badillo's gold chains, the couple paid their bills. With bright orange paint they found on sale at 75 percent off because it was the Halloween season, they then painted their new store orange and opened for business—selling used tires—on Oct. 28, 1992.
The couple started out employing one tire buster and sharing the daily workload, according to Ms. Badillo.
Today, Alex's Tires operates two outlets in Nogales: its original seven-bay store and a 37,000-sq.-ft. location that includes a 14-bay store, corporate offices and a warehouse. The Badillos built the latter outlet a year ago and plan to open a 12-bay, commercial-only store eventually but are still negotiating a deal for a potential site.
In Nogales, countless trucks bring produce from the Pacific Coast and Mexico during the fall, and many of those vehicles come to Alex's Tires for new tires or tire service, Ms. Badillo said.
Both outlets still are painted bright orange because of the company's history of selling oranges to raise capital and the cheap orange paint they originally used. The dealership employs 42 and finished 2006 with nearly $8 million in sales, she said.
Mr. Badillo's family emigrated to Nogales from Mexico, and his brothers Gabriel and Fernando work for the dealership as general manager and sales associate, respectively.
Alex's Tires has grown into a full service operation selling Michelin, BFGoodrich, Uniroyal, Goodyear, Sumitomo, Toyo, Cooper and Mastercraft brands, and Ms. Badillo said the tire inventory is worth $1 million. Custom wheels and imported tires from China also are part of the company's product portfolio.
Over the years many of the dealership's customers have referred friends and relatives to the Badillos' business. The dealership also sponsors local youth soccer and scouting programs and community events instead of buying TV, radio or print ads for exposure, Ms. Badillo said.
Many who live in Nogales are Mexicans or Mexican Americans like the Badillos and naturally feel comfortable doing business with Alex's Tires, she said.
The company's reputation and integrity also have created loyal customers. “We stand behind our product and our adjustments, not just the pretty picture of giving you a good deal and selling you four tires,” Ms. Badillo said.
Besides the passenger and light truck tire segments, Alex's Tires also sells and services agricultural, earthmover, off-the-road, passenger, light truck, commercial, industrial, golf cart and wheelbarrow tires. A few years ago, the dealership added a 4x4 depot to service the vehicles of off-road enthusiasts.
“It just started with the right ideas and wanting to work,” Ms. Badillo said of her growing business. “We started doing a little bit with used tires.…We reinvested money in our business and every dollar we earned, we just expanded and brought in something else.”
However, she acknowledged that when Alex's Tires was in its infancy, she and Mr. Badillo struggled on their own to learn how to operate a tire business. Outside of a loan from the Small Business Administration they borrowed when they bought a warehouse, Ms. Badillo said their tire manufacturer suppliers offered them no educational resources on business management and leadership or benchmarks until after they had proved themselves as entrepreneurs.
“Now we've moved on as of last year to a new phase of our business where we are managers, we are making the executive choices, we are reinvesting where we need to,” she said. “We are making the informed decisions,...(but) it took us 15 years.”
Learning how much inventory to carry and what to buy also were challenges the Badillos had to learn the hard way, she said, adding that she wishes there was an organization new entrepreneurs could turn to for help.
“I think that within any trade that when you're starting out, they should have resources and say, 'Come and look at this.… If you have $5 don't go buy $5 worth of tires. Buy $3 (worth of tires) because you might have to sell them on credit, and then you have to buy some more.
“We had to learn the hard way,” she added. “…(W)e had a lot of inventory, but we didn't have the money to pay back our payables.”
That's when she and Mr. Badillo realized they had bought SKUs at what they thought were good deals but were actually obsolete. Now, she said, Alex's Tires has created a buying committee to prevent any impulse purchasing of tires or wheels.
Prior to founding their dealership, only Mr. Badillo previously had worked in the tire business, helping out in his father's tire shop in Caborca, Mexico, before emigrating illegally to the U.S. to work various jobs. He helped his father stay in business by purchasing used tires in the U.S. and shipping them back to him to sell for profit.
Ms. Badillo, a Mexican American and native of Los Angeles, earned a computer accounting degree from a community college and met her husband in barber school. “I went to barber school so I could put myself through college,” she said. “That was a stepping stone. We were each other's competition.”
They married as soon as she finished her degree and moved to Nogales because it was a border town and only 2 ½ hours away from Mr. Badillo's family home in Caborca. During the late 1980s, Mr. Badillo became a legal U.S. resident through federal amnesty granted to illegal immigrants at that time but didn't pursue and attain his U.S. citizenship until after the Sept. 11 terrorist attacks. Ms. Badillo said that event and the changes it brought convinced him that U.S. citizenship would provide him more security than residency.
“When you're an immigrant for a long time, you just hope that you're going to come, follow your dreams, make your money, find your treasure box and go home and enjoy it in your own home country,” she explained. “Then after awhile you figure out that you're no longer a foreigner. You've become one more member of American society.”
When they founded Alex's Tires, Mr. Badillo was 25 years old and his wife 21. They now are 40 and 36, respectively, and have a 12-year-old son Daniel and 11-year-old daughter Laura.
Ms. Badillo said she is very proud of her business and how far it's come in nearly 15 years, acknowledging that the couple never wanted to quit even though the beginning of Alex's Tires had so many obstacles.
“We want to be a good example for future generations because it's all about hard work and being unselfish,” she said. “We don't do this for the money even though that will come. It always does if you do it right. We did it because it was a dream and because we really wanted to do something useful with our lives.”