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Top Five Sectors with Exploitable Downtime
1. Steam engines and turbines
2. Asphalt paving and roofing materials
3. Shipbuilding
4. Aircraft and missile parts
5. Transportation equipment, space
vehicles
Source: U.S. Bureau of the Census
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3. Do Consulting. Countless businesses have been launched on initial revenues radiating from consulting contracts. All you have to do is know more than your clients -- not difficult. Wind River Systems Inc., of Alameda, Calif., started with one consulting contract, over the course of which the company's now widely sold retail products were developed. The approach, according to founder Jerry Fiddler: "We'd ask, 'So, you'd like an automated system? We'll do it cheap, because there are some general-purpose pieces we want as part of our repertoire as a software company; in return, we'll retain rights to them.' "
4. Establish in Locales with Lots of Vacancies. Even the most tenuous of bootstrapped enterprises can carve out favorable deals in areas where landlords are desperate for the slightest promise of tenancy. Around 1986 Houston was one such setting. Things were so bad then, recalls Forrest Henson Jr., who in 1986 founded chemical distributor JTS Enterprises Inc., that landlords would grant large concessions simply to sign up a renter. Henson struck an arrangement for a three-year lease that called for virtually no rent early on. "The lessor gambled that we'd both last three years," he remembers fondly. Act fast if a prime location is available cheap, Henson advises. Houston has already recovered. "You could still do it in some areas of town," he says, "but no longer in the area I'm in."
The Five Most Vacant Metropolitan Areas
1. New Orleans -- 28.4%
2. Miami -- 26.1%
3. St. Louis -- 26.1%
4. Houston -- 25.9%
5. Dallas -- 25.8%
Source: ONCOR International (as of year-end, 1991)
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5. Operate out of Your Home. Not only did Barry Mower, founder of $14-million American Playworld Inc., in Ogden, Utah, work out of a home office, he demonstrated and manufactured his first product -- a basketball backboard -- in his backyard. But, Mower says regretfully, "I could only do so much like that before I had problems." The town-father flaw: his home wasn't zoned for business. The bootstrapper solution: "We rented a storage building, one of those small garages, to establish a commercial address -- and actually did some of our work down there, too."
6. Take out an Ad; See What Happens. Some newspapers and magazines offer casual terms, leaving the ad taker sufficient time to determine whether his or her wares have market appeal before the bill comes due. For its first boating-equipment catalog in 1989, The Rigging Co., started in a Portsmouth, R.I., basement, bought a small ad in a monthly sailing magazine. As founder Jim Miller describes the process: "I wanted to advertise in advance, not having any sense of whether anyone was interested in the wire and stuff we'd be selling. I used a photo to represent the cover. When I got back 5,000 requests -- probably 5% of the magazine's readership -- I thought, Hey, this must be a good idea!" It was. The company hit more than $1 million in sales its next year.
Three Good Vehicles for Your Initial Ad
1. The Wall Street Journal: two-inch-by-two-inch display ad costs $3,488; only requirement is insertion order on letterhead; bills anybody in 30 days, no money down
2. Barron's : two-inch-by-two-inch classified ad costs $1,072; bills in 30 days
3. Electronic Buyers' News: One-inch-by-four-inch display ad costs $1,460; bills in 30 days but will knock off 5% if you pay in advance
. . . And Three That Are Not So Good
1. PC World: Inside cover costs $27,140, plus a 15% premium; credit required for new customers
2. Macworld: Inside cover costs $24,995; new companies pay in advance
3. PC Week: Two-inch-by-two-inch display ad costs $6,300. Runs credit check
Source: Inc. research
7. Skimp on Payroll. Maritime Services Corp., of Hood River, Oreg., which outfits the interiors of cruise ships, employs craftspeople of various disciplines. One cost savings, says founder George Selfridge, is that craftspeople generally have their own tools. More important, "one of the considerations of working for a bootstrapped start-up [with long-term job potential] is that often it's willing to do jobs for a little less. The key to making it as a bootstrapper is to start profitable from the very beginning. And the way to do that is not to pay very well."
8. Get Customers to Pay Fast. The Rigging Co.'s Jim Miller claims an average collection time of 28 days. "We use our newness and smallness as a lever. It's an appeal that's kept everyone paying us. Otherwise you wait -- and wait."
9. Coddle Suppliers. Some bootstrappers take it out of their vendors. But Brian Shniderson, of Premiere Merchandising Inc., in Inglewood, Calif., looked to his customers. "We never put carrying the business on our suppliers. We put it on our clients. We'd tell our clients, We're giving you good service at a great price, we're working our butts off, and we need to be paid within 10 days. We made sure the suppliers got paid no matter what. That way, there's nothing they wouldn't do for us."
