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Caterer to the Stars
Tomkats · Founded: 1986 · Start-up capital: $2,000 · 1994 revenues: $4.5 million
Without enough money to open a restaurant, Thomas Morales combined his meager cash with a large portion of inspiration. In 1986 he started a catering business. The $2,000 borrowed from family funded a mailing that yielded Tomkats' first three catering jobs. The next year, when the crew of the film Twist of Fate came to town, Morales was ready to offer his catering services. Twisting facts, he assured the producer that he was equipped with a mobile kitchen, and he won the job. He swallowed hard, pressed for a $10,000 deposit, and, money in hand, flew off to Phoenix, where he put down $10,000 toward the purchase of a used mobile kitchen, on which he promptly painted "#3."
But Mobile Kitchen #3 didn't completely outfit him for the task. He used $300 Tomkats had earned over its first year to rent a U-Haul, tables, and chairs, and he relied on coolers to keep the food iced -- limiting current inventory to only one day's worth of food. Still, he had plenty of help -- his nine siblings and his mother all pitched in. "They ensured my success," claims a grateful Morales. Within a year he broke down and hired two employees, whom he paid a percentage of revenues so that, Morales explains, he "wouldn't have to carry them." Today, nine years after he started the company, his mother still keeps the books. She's 72 years old and doesn't use a computer, but she's the one who caught an incompetent accountant. "She sniffs out any fishiness," says Morales.
Tomkats now employs 34 full-time employees, who run the company's catering, restaurant, and concession operations in its newly renovated 12,000-square-foot headquarters. But bootstrapping is not dead at Tomkats. Morales himself, who until 1990 drew only enough money to keep his family clothed and fed, controls expenditures by paying employees a cut of profits on top of a base salary; barters for goods and services; and prepares Tomkats' advertising in-house to qualify for an agency's 15% discount on media buys. -- R. A. G.
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Piano Woman
Time Line Productions Inc. · Founded: 1989 · Start-up capital: $2,500 · 1994 revenues: $2 million
Pianist Lorie Line's day job at a construction company paid the bills, but her evening job, playing piano at Dayton's department store in Minneapolis, provided her with her first customers when she formed Time Line Productions, her own recording company.
During her first year as Dayton's pianist, Line collected the names of shoppers who had stopped to ask if she had made recordings. By 1989 her list of potential customers had grown to 500, and she decided "not to wait for a major label to pick me up. It never would have happened." Her husband, Tim, cashed in his 401(k) for $2,500, and Line made her way to San Francisco to work with pianist George Winston's engineer to record an album. After two work-filled days, she paid him $1,000 and returned home with a master tape. Another $1,000 went to a design firm to develop packaging for the first run of tapes and CDs. And when Line found a printer willing to wait 60 days for payment, she was able to make the most of her monthly Dayton's check.
By persuading Dayton's to let her sell her new album while she played its selections and by collecting $20 per hour for doing so, she dodged the industry's high start-up costs, effectively providing her own advertising and promotion. The first day was the test: she arranged the tapes and CDs on the piano, nervously sat down to play, "took a big breath," and found customers responding to her opening chords. She sold 40 copies the first day. "I remember it vividly," she says. "I started to play 'Terms of Endearment' because it was the first song on the album. Someone took a tape and had it rung up, and I thought, 'Yes!' "
Line remained at Dayton's until late 1993 and reports that in the early years of her company, nearly everything she made went back into her business. She claims she always drew enough money to get by, though she does admit that "it was practically nothing -- I was the last one paid," and that she relied on her husband's salary for life's necessities. Her stinginess with herself paid off in 1994, when Time Line Productions obtained a $200,000 bank loan earmarked to buy a 3,800-square-foot office building, pay the company's taxes, and hire a vice-president of sales and marketing (husband Tim).
Time Line Productions' albums are now carried in more than 15,000 gift and specialty stores nationwide, as well as in Musicland, Sam Goody, Best Buy, and, of course, Dayton's stores. And the company also handles all arrangements for Line's touring orchestra.
Does Line recommend the seat-of-the-pants sales tactics that worked so well in the early days of her business? Playing a piano, she cautions, can have its downside. At the end of one particularly pressing day, Line realized that 12 hours of piano playing was way too much -- she'd developed a painful bruise on her posterior. -- R. A. G.
DO YOU HAVE WHAT IT TAKES?
Find out if you have the skills -- or the stomach -- to be a bootstrapper. Take this quiz
1. How many hours a week are you willing to work?
* 0-40 (0 points) * 41-60 (1 point)
* 61-80 (3 points) * 80 plus (5 points)
