The Classic Bootstrapper
A candle maker's frugal ways recall the bootstrapping techniques of yesteryear
Don't look to Paul Aldrich for clues on how to bootstrap in the new economy. His is a tale of classic wisdom.
Aldrich, who lives in Topsham, Maine, started his company in 1992 with $20 borrowed from a friend. Applying copious amounts of Yankee ingenuity, frugality, and hard work, he grew his business to $30 million in annual revenues after seven years. From his story emerge seven timeless bootstrapping rules:
Rule 1: Defy adversity. Aldrich had been without steady employment for two years when he began, at age 38, to indulge a candle-making hobby at his kitchen table. His hot-tub distributorship, Heaven on Earth Hot Tubs, had gone bankrupt in 1990, and Aldrich had applied for as many as 20 to 30 jobs a week. "I was losing out to people with master's degrees for menial management jobs," he recalls. His wife, Sally, supported the family on her $50,000 nurse practitioner's salary and moonlighted on the second shift at a local hospital. To pursue his candle making, Aldrich borrowed $20 from a family friend to buy wax, fragrance, and dye.
Rule 2: Know an opportunity when you see it. "I would give the candles away to family and friends, and they would ask for more," says the soft-spoken Aldrich. "I was so excited about making candles that sometimes I'd wake up at 3 a.m. and start melting wax." Yankee Candle, now a $185-million company in South Deerfield, Mass., was then the best-known American candle maker. Aldrich differentiated his products from Yankee's by using square, rather than round, containers and by fitting his candles with two wicks instead of one. He began selling them at local crafts shows.
Rule 3: Look for freebies everywhere. Like every good bootstrapper, Aldrich didn't allow his limited resources to dissuade him. He researched glass manufacturers in the Thomas Register, a directory of corporations organized by product, calling only those with 800 numbers. Identifying himself as a candle manufacturer, he would cajole them into giving him free samples. "Every day the UPS truck would drop off containers of glass," says Aldrich.
Rule 4: Carpe diem. On a trip to Florida in December 1992, Aldrich acted on a whim. "I was driving through the Poconos, and I saw billboards for a candle store," he recalls. "So I stopped in and told the owner that I had a bunch of candles in apothecary jars that I was giving as Christmas gifts." The owner trudged out to Aldrich's Dodge Caravan, took one look at the candles, and told Aldrich to call him as soon as he returned to Maine. "He was my first customer," says Aldrich. "It was a $3,400 order."
Rule 5: Draft your family and friends. Aldrich and his wife set up production in the kitchen of their three-bedroom split-level home, enlisting weekend help from family and friends, who were "paid in candles." Even Aldrich's seven-year-old daughter pitched in, as did his two older daughters, on weekends. "I'm sure we violated child-labor laws," Aldrich quips. Neighbors commented on the aromas wafting from the Aldrich home, but few had any idea that the family was running a full-blown business in the residential area. "I'd have to load the candles in my minivan and go meet the trailer truck at the edge of the neighborhood," Aldrich relates. The one time he tried to sneak a truck into the neighborhood, the driver blew his air horn at 6 a.m., virtually blasting Aldrich and his neighbors out of bed.
Rule 6: Think of cash as king. Like many entrepreneurs who are initially strapped for capital, Aldrich never forgot his early cash-flow lessons. He has always ranked his customers as an A, B, or C, according to how quickly they paid him. In the peak season, he'd take care of his A customers -- those who paid him within 35 days -- first, which lowered his average accounts-receivable turnaround to 36 days. (Aldrich's research revealed that the industrywide figure at the time was 42 days.) That speedy return, coupled with the 45-to-60-day payment terms that he negotiated with major suppliers, secured a critical cash-flow edge in his favor.
Rule 7: Remain true to your humble beginnings. Since Aldrich took on a manufacturer's representative to market his candles at gift stores throughout New England, Village Candle's annual growth has averaged more than 100%. But Aldrich has remained cautious. "We only grew within our means," he says. "I could have grown the company 200% to 300% a year if I had wanted to borrow money, but then you lose quality control." Thoroughly committed to using internal financing, Aldrich has rejected overtures from bankers wanting to lend the company money to fuel faster growth. "Our philosophy," he explains, "has always been to build the business one brick at a time."
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.