When he found out his boss was taking a vacation and he'd be out of work for two weeks, Joe Serrato decided to strike out on his own. With some broken-down equipment and staunch determination, he transformed himself into a contractor.
Great Companies Started for $1,000 or Less
COMPANY: Serrato Drywall Inc. BUSINESS: Drywall construction FOUNDED: 1994 START-UP CAPITAL: $400 1999 REVENUES: $1.5 million 2000 PROJECTED REVENUES: $1.8 million
For 12 years Jose Serrato worked for a drywall contractor in Dallas, preparing newly built walls for the sprayer, who applied textured finishes. In July 1994 he learned that the contractor was taking two weeks off for a tonsillectomy. That meant that Serrato, who was then 33 and the father of four children, would have to go two weeks without pay. Serrato asked to borrow the spray equipment during the lull so he could seek work on his own.
His boss said no.
"I decided I just didn't want that job anymore," says Serrato. He had already been thinking of striking out on his own and had bought a broken-down spray rig for the rock-bottom price of $400 (new ones cost about $25,000, according to Serrato) and fixed it himself. For a power source he hooked up an automobile engine to the sprayer; he couldn't afford a standard air-cooled motor. The makeshift contraption carried him through three or four months, although it broke down at least once every day that he used it. Finally, his mother-in-law lent him $2,000 to buy a proper motor. He also got a total of $1,500 in credit from two materials suppliers.
In the beginning he was just one guy with a spray rig, but Serrato never hesitated to act bigger than that. "He would sometimes get in there and act like he knew what he was doing," even when he wasn't sure, says his wife, Kathy. Serrato's big break came, ironically, after a contractor delayed paying him for a job. When he complained, the developer wound up offering the drywall-construction contract to Serrato. Never mind that he had experience only in the spraying phase of drywall construction. Serrato figured that he could hire workers who knew the rest of the process. "At the time I was very scared that I wouldn't be able to handle the whole thing," he says. But the gamble paid off, launching Serrato as a full-service drywall contractor. Today he fields as many as 10 work crews, who work for him as subcontractors.
Although Serrato is now an established contractor, for years he resorted to bootstrapping gambits that were at the margins of modern business practice. "We didn't pay taxes for the business for two or three years," admits Kathy Serrato. In 1997 she and her husband finally cleared things up, hiring an accountant and paying the back taxes plus interest and penalties that they owed. The Serratos have been running their company out of the dining room of their cramped three-bedroom house. (They are moving into a larger house this summer.) Kathy is the office manager. She kept all the company's records on paper until 1998, when the Serratos splurged on their first computer. Six of the company's seven vans were bought used -- and with cash. It wasn't until last year, Kathy says, that she persuaded her husband to buy a new van and to finance it.