10. Don't Sell at Retail When You Can Take Orders at Wholesale. Stuck (by choice) in the sparsely populated reaches of central Maine, with no phone and no electricity, Roxanne Quimby and her apiarian partner, Burt Shavitz, started a business they called Burt's Bees. Quimby and Shavitz bottled honey in kitchen canning jars, cast candles out of beeswax on a wood stove, threw the finished lot into a pickup truck, and hied off to seasonal crafts fairs. After two years it struck Quimby that "being on the road every weekend and coming back and making candles and going on the road again was ridiculous." Plus, the team's market was limited to the territory they and their tiring Datsun could span. They plowed their meager profits into an indoor space at a wholesale show and sat in it and wrote orders. That, Quimby says, is when the business took flight. "We concentrated totally on wholesale," she says, "because it was easier to open markets that way than by retail." The company now sells more than 100 gift and skin-care products and is about to launch a line of country clothing. In 1992 it'll take in about $4.2 million.
11. Do It Yourself. Because bootstrappers often come from backgrounds other than business, they mistakenly assume they don't know how to run their companies as well as the textbook-trained do. That's not necessarily so. Because Richard Cheng of Eastern Computers Inc. was a professor of engineering, when his company got a major, multiyear contract, he hired a seasoned ex-banker to be full-time "chief everything." The first year out, the banker lost money. Cheng fired him, took a leave from his college job to try to salvage something from the disaster, and turned the contract profitable immediately. The Virginia Beach, Va., company hasn't lost money since. Cheng's secret: "I didn't know the rules, so I ran it with common sense."
12. Fake It Till You Make It. Being new and tiny, how do bootstrappers assure suppliers and customers of their ability to pay or deliver? By convincing them they're not new and tiny. "One thing I realized very quickly is that people want to see fancy offices, fancy letterhead, fancy everything," says founder Michael Kempner of MWW/Strategic Communications Inc., in River Edge, N.J. He didn't have fancy anything, but he had a friend in advertising who did. Kempner moved into the friend's office at no expense, on the quid pro quo understanding that his public-relations firm would steer advertising in the friend's direction. He even moved in on the ad company's name: "I put a slash on it, added 'Strategic Communications,' and looked like I was part of a big company. It was all a mirage at the beginning. As far as my clients knew, here I was with a fancy name in a fancy office. Those were important, or people wouldn't hire me. This way, they came upstairs and saw 40 employees and thought they were working for me. I never told clients those people didn't work for me, and they never asked." Since then, the company's adjunct, MWW, has gone under. Kempner's major problem: "Now that the company's not fake anymore, I'd like to change the name; I hate it, but it's too late."
Dennis Brozak founded Design Basics Inc., a direct mailer of home-construction plans, in his Omaha home. After six family-burdening months, he signed a 30-day lease on an executive suite type of office downtown. Because of the office's formal parking lot and receptionist, "being there created a certain impression. I appeared to be the biggest there was, because others at my level were still operating out of their houses. When you add the other things that don't seem important but actually are -- letterhead, business cards, titles, someone else answering your phone, things like that -- you take on the look of size."
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Top Five Techniques for Seeming Larger than You Are
1. Rent a unit in an executive suite; clients assume the common receptionist is exclusively yours.
2. Rent a small space in someone else's big space; clients assume it's all yours.
3. Issue business cards with various titles; be your own vice-president of sales, director of R&D.
4. Deliver your product speedily. Imply it's your manufacturing that's deep, not your need to collect.
5. Never answer the phone "Hullo."
13. Get Several Bank Loans. If borrowing from a bank seems improbable to a bootstrapper, think how borrowing from four institutions must seem. Says Barry Mower of American Playworld: "We needed about $16,000. I applied for four different loans at once -- short-term loans such as those from credit unions -- on the basis of my personal credit. I had to apply for them simultaneously in order to do it; otherwise, the applications would have counted against one another. The interest was four times what it should have been, but this was desperation financing."
Top Loan a Bank Is Likely to Make
Second mortgage against your house, car, and worldly possessions
Top Dozen Loans a Bank Is Not Likely to Make
One through 12; any, if you really need the money
14. A Little Begging Goes a Long Way. Here is how Michael Zeiders of health-care provider Zeiders Enterprises Inc., in Woodbridge, Va., viewed leaning on clients to pay promptly: "If I had any receivables that looked as if they were going to be anything but right on time, pride didn't keep me from picking up the phone and telling someone I absolutely needed the money. I never encountered anybody who thought that to be degrading or considered it to be less than a professional response. They recognized that a small, new firm needs cash in a prompt fashion." A related tactic: when certain clients (mostly government agencies) were habitually late, Zeiders would "try to find the key person there who could change the code in the computer to make the payment come out on time."
