Bootstrapping: Great Companies Started with Less than a Thousand Dollars

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"We spent every waking moment pursuing clients, signing them up, getting the work done and the bills out, and following up to get paid as quickly as we could," Williams says. "From time to time we hired clerical help to type contracts and invoices. We'd get cash advances on our credit cards to pay them -- that was our 'bridge financing' for five months. But when we took a $200 advance, we knew we had a matching receivable or we would not have done it. We wanted no part of debt. We held our breath all year," he recalls. "By the end of 1986 we had grossed $100,000, so we were able to draw out living expenses."

Since then CRT has grown to 14 employees and has expanded its cost-reduction services beyond taxes, to utilities, waste disposal, freight, leases, and so on. Williams is thankful he started humbly. "Bootstrapping," he opines, "teaches you solid business principles that benefit a successful company more than any other training. We made sure our customers were pleased, because we depended on them for our next meal." -- J. F.

(Re)Model Start-Up
BOWA Builders · Founded: 1987 · Start-up capital: $5,000 1994 revenues: $1.7 million 1995 projected revenues: $3.2 million

As classmates at the University of Virginia, Joshua Baker and Larry Weinberg pledged one day to start a company together. After graduation, Baker joined Exxon Chemical as a chemist, and Weinberg, a certified public accountant, signed on with Arthur Andersen. But two years later, in mid-1987 -- true to their word -- they teamed up in Arlington, Va., scraped together $5,000, and plunged into the home-remodeling business.

Weinberg had spent his summers in construction work, and a third partner had tools and a truck. "He was with us for only three months," Baker says, "but he helped get us started." They hired a few employees immediately and quickly learned the nuts and bolts of the trade.

With no money for stylish living, the partners shared a room in Baker's parents' house, and Baker tooled around in a beat-up Firebird with 200,000 miles on the odometer. "It was a wreck," he says. "I'd park it where clients wouldn't see it."

A small, run-down office in Arlington served as headquarters -- to be a player, Baker believed, BOWA Builders needed a business address. "Clients have never had to come in, but the ones who have are impressed that they're not paying for high overhead." His policy on office furniture was, and remains, clear -- never pay for it. "My chair must be 40 years old," Baker says, "and my desk I got for free."

The partners took a professional approach to job costing and accounting. Their first big purchase was a personal computer -- not what you'd expect for an undercapitalized start-up, but it set a classy tone that mattered in Washington's upscale suburbs. "While the competition was doing handwritten proposals, we gave customers something nice in print, on letterhead, in a folder with our logo on it," Baker says. As for marketing, they devised low-cost methods to promote their service. A direct-mail piece targeted a neighborhood of nearly identical houses. "One of our architects designed a flier that showed an image of a house that -- just coincidentally -- looked like those houses," Baker relates. "You opened it up, and it showed the house renovated."

The partners also assembled media kits. "Larry's girlfriend worked for a marketing firm and told us about reporters' expectations," Baker recalls. "So we sat down at the computer and composed materials that generated a fair bit of local press."

By 1991 Baker felt sanguine enough about business prospects to junk the Firebird, and he now drives a new Honda. "I thought about something fancier, like a Range Rover, but that wouldn't be in keeping with the company's spirit," he says. "We still try to be lean and mean." -- J. F.

Leveraging: a Contact Sport
Logo Athletic · Founded: 1968 · Start-up capital: $250 1994 revenues: $230 million

It's probably fair to say that Tom Shine owes his company to Bart Starr, the great Green Bay Packers quarterback of yesteryear. Shine was an assistant football coach at Indiana University, where Starr taught a clinic for high school coaches. "Bart was wearing a blue golf shirt with the Packers' helmet embroidered on it," Shine recalls. "It looked sharp, so I decided to put an IU helmet on shirts and sell them to our team."

Shine had $250 and a credit card with a $1,000 limit. But he didn't need much. He collected cash from the coaches and players, and only then, money in hand, did he order the shirts. "We were making pocket change," he recalls.

But the business grew, and before long Shine had a partner, Bob Russell, a medical student who had captained IU's Rose Bowl team. He chipped in $200, and they named the company Lord Russell. "Bob had bought a house for $14,000, and he rented out rooms to med students to pay the mortgage," Shine explains. "The entire company was located in one room in the basement. I had a desk, an answering machine, and a PO box -- we sounded legitimate. But the house was a real pit. To light the stove, you'd turn on the gas and throw in a match, then stand back and watch that baby explode from all the grease."

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