Bootstrapping: Great Companies Started with Less than a Thousand Dollars

Tweet

Much of the partners' cash went for gasoline. They packed a car with samples and hit the road, visiting coaches at big-time football programs. In frantic forays, they visited three colleges a day. "It might be breakfast at the University of Tennessee, lunch at Georgia, dinner at Alabama," Shine says.

To get a coach like Bear Bryant at Alabama to promote the business, Shine and Russell would contract to pay him $1 for each "Crimson Tide" shirt they sold. The coach provided the season-ticket mailing lists, and, Shine says, "in our mailings, we'd have a picture of the coach and local alums wearing our garments. Everything was geared to get the cash in first. Then we'd order the products from the manufacturer and mail them out." And to promote the line, Lord Russell ran its ads -- featuring Bart Starr, who never charged for his endorsement -- for free in Sports Illustrated whenever that magazine failed to sell all its pages.

Sales hit $86,000 in the first year. By 1971 Lord Russell had a dozen college-football powers in its fold, but Shine, worried that the company was open to competition on the college front, set his sights on a marketing license from the National Football League.

Needing financial backing for such a big move, he and Russell recruited five local investors and renamed the company Logo 7. "Nobody invested a lot -- our entire capitalization was $60,000," Shine says. "But based on our partners' guarantees, we got a line of credit for $300,000." Shine knew Tex Schram, president of the Dallas Cowboys, who leaned on NFL commissioner Pete Rozelle to grant a license to Logo 7. The rest, as they say, is history.

Indianapolis-based Logo Athletic, as the company is now called, is the second-largest licensee of the NFL, marketing a full line of jackets, sweatshirts, hats, shorts, and the like. Cowboys quarterback Troy Aikman is the company spokesman, and such telegenic quarterbacks as Steve Young, Drew Bledsoe, and Dan Marino are under contract to wear the "authentic merchandise" on the sidelines. -- J. F.

Do-It-Yourself Factories
Buschman Corp. · Founded: 1978 · Start-up capital: $500 1994 revenues: $2.7 million

You gotta hand it to Tom Buschman, who exemplifies bootstrapping in its raw and pure form -- opportunity seized and exploited with old-fashioned elbow grease. Buschman spied his chance in 1978 while working as a maintenance electrician at Avery International, a paper-manufacturing plant in Cleveland. The company was experiencing a 50% failure rate for metering rods, critical components of the paper-coating system. Buschman said he could make better rods, and Avery promised to buy them.

Buschman had little money, but he was clever with machinery. Keeping his regular job -- and using $500 in overtime pay -- he scrounged in junkyards for materials to construct a little factory in his basement. "There's a feeling you need tons of money and bank financing and all kinds of crapola to start a business," he says. "I traded hard work for capital. If I needed a tow motor, I'd find something at a junkyard, change the engine and transmission, and rebuild it. I had the time. What I didn't have was the money. Later, you have the money but not the time."

Within a few months he was selling Avery rods with a mere 2% failure rate. To augment his business with Avery, he advertised in trade journals. Buschman had precious few customers when he quit his Avery job to go full-time on his venture, but he and his family lived frugally. "I drove an old black-and-white police cruiser," he says. "It had glue in the shape of a sheriff's badge on the doors, where the stickers had been. People called it 'Car 54.' I used to go to business meetings in a coat and tie and park way down the street -- that's how embarrassing it was."

While Buschman labored in the basement, his wife handled the books.

When space got tight, they moved to a ramshackle house on a commercial lot. "We were still bootstrapping," he recalls. "I redid the house myself and put up the factory building pretty much alone." The company had outgrown two more locations by 1992, when Buschman purchased a huge old warehouse in Cleveland. "We've got 14 acres under one roof now," he says. "We won't have to move for a while. And we've set up a new company by leasing out most of the place to other businesses."

With 20 employees, quality products, and customers throughout North America, Buschman is still in no hurry to change his frugal ways. The comical Car 54 is gone, but he's still burned about a software installer who charged him $412 for one day's work. He's never had a bank loan -- and he still builds his machinery in-house. -- J. F.

 PREV  1 | 2 | 3 | 4 | 5 | 6  NEXT 

Read more:

Sign-up for our Finance Newsletter

Email Address: