Editor's note: This tour of small businesses across the country highlights the imagination, diversity, and resilience of American enterprise.

James Eldridge calls his staff, with a certain amount of pride, a "rough-and-tumble crew." Half that crew has criminal records. One recently hired employee spent seven years in an isolation cell and suffers from schizophrenia and bipolar disorder.

"But he makes some of the most beautiful furniture," Eldridge says.

And that's what matters to Eldridge, owner of Gracie Furniture, a tiny manufacturing and e-commerce business in a tiny Montana town in the heart of the Rocky Mountains. Gracie builds sustainable, durable furniture from local wood, such as white ash and beetle-killed Douglas fir. With just nine full- and part-time employees, the company is not much of a presence in the former mining town of Dillon (which--at fewer than 5,000 residents--is itself not much of a presence). But what it lacks in scale, Gracie Furniture makes up for with its impact on individual lives. It is in the business of second chances.

"These people deserve to be working and to get a second chance--or a 37th chance," Eldridge says.

Eldridge, 27, became interested in criminal justice when a close friend was caught in Texas with 10 pounds of marijuana. The friend, who was 25 at the time, did no jail time but was convicted of a felony, effectively barring him from legitimate, well-paid jobs. "I watched what happened to him," says Eldridge. "His future was grim."

As he watched his friend struggle to rebuild his life, Eldridge became convinced that the system was broken. He vowed he'd try to do something to help.

A Partnership Dissolved: a Family Business Waiting

Eldridge was born and raised in Oahu, Hawaii. After high school, he meandered for a while, spending five years in the Air Force as a medic and attending several colleges "off and on." In 2011, he discovered a college friend, James Smith, was making furniture in his garage and selling it on Craigslist. The two decided to team up.

The pair created products using basic wooden furniture designs they found on the Web. They developed a professional-seeming brand--James+James--launched a social media campaign, and sold the pieces online. Demand soared. In 18 months, James+James was pulling in almost $1 million in revenue. But by 2013, it became clear the partners had different visions for how to grow the business. Smith wanted to open stores. Eldridge wanted to focus on e-commerce. Eldridge sold his half of the business to two silent investors.

Fortunately, he didn't have to look far for another opportunity. Eldridge's semiretired father owned Montana Table, a build-to-order furniture maker in Dillon. Eldridge Sr. was ready to move back to Hawaii and planned to shut down the small operation. His son wanted to take over the business and bring it into the internet age. There were just two problems: Eldridge had recently gone through a divorce and had no money. And the noncompete he'd signed with James+James kept him out of the industry for 18 months.

Eldridge bided his time, dabbling in consulting. Meanwhile, his father put an acting manager in place at Montana Table. But without a dedicated leader, the company started losing money. "I couldn't touch the furniture. My father was willing to let the business suffer financially," says Eldridge. Using a bank loan, he acquired the company five days after his noncompete expired.

Then the real work began.

Criminal Records Welcome

Eldridge's first orders of business were a complete rebranding of Montana Table and a full e-commerce site to go with it. He decided to name the company after his younger sister, Grace, who worked in the shop during high school. ("She hated it when I called her Gracie as a kid," Eldridge says. "She loves it now, though.")

Eldridge also dropped custom manufacture, focusing instead on a few standard pieces constructed from locally sourced and sustainable wood. Under the new business model, employees accustomed to putting their own marks on unique pieces of furniture had to limit themselves to a handful of bed-frame and table designs. They also missed their old boss's management style: Eldridge says his father is an outgoing, hands-on type, who often spent three days a week building tables himself. By contrast, Eldridge lets his workshop manager run the crew day to day so that he can focus on strategy and individual employee mentoring.

"I lost everyone when I came on board," Eldridge says. Some employees left of their own accord. Others he let go because they were not a good fit for the company's new direction. "It was too much of a change," says Eldridge. "It's not something I'm proud of."

Although the mass exodus was an immediate problem, it also presented an opportunity. "The unemployment rate around here is 2.5 percent," Eldridge says. "The unemployment rate for ex-offenders is 60 percent. They're right under your nose."

So Eldridge got in touch with the nearby Beaverhead County Probation and Parole office as well as with the Dillon Job Service Workforce Center. Probation officer Claris Yuhas estimates that about 50 people in Beaverhead County are paroled each year, and many struggle to find jobs, which is a condition of parole. "It's especially difficult for sex offenders or violent offenders," she says.

In an early conversation, Eldridge talks to each new ex-convict employee about his record, just to get everything out on the table. He makes it clear: From that day forward, the record doesn't matter. "I don't care what you've done," he tells these employees. Usually, they thank him for it.

All of Gracie Furniture's ex-offender employees work in production. Of course, most people don't come out of prison with furniture-making experience. But Eldridge says that's actually an advantage. Training someone from scratch allows him to inculcate good work habits and teach problem-solving skills. A single person can't build a six-foot hardwood table, so employees collaborate and learn from one another. That's a positive change from the every-man-for-himself environment of prison.

"I put them in a place of demanding vulnerability," Eldridge says. "Intentionally I won't say, 'You're going to work with Michael or Brian.' I just tell them to do these tasks, and they're forced to ask for help."

If an employee doesn't know how to join a table, he seeks out another employee who has made joining his specialty. Now that second employee "has an identity outside of his former path. It becomes a point of pride," Eldridge says.

A Business Owner's Duty

Having solved his HR problems, Eldridge now is working on sales and marketing. Annual revenue for Gracie Furniture is currently in the six figures. The company can produce about $2 million worth of merchandise a year in its current facilities, and Eldridge's next goal is reaching that capacity. To do so, he must make the brand more recognizable on the Web, where Etsy and other sites energetically peddle the wares of artisanal makers. So he is investing in social media and email marketing. The company already distributes through some Montana stores; wholesale and white label are other potential channels.

As he scales the business, Eldridge will need more employees. He knows where to find them. "It's a duty of business owners to hire ex-offenders," he says. Not that doing so is an easy or predictable road. Already a few former employees have violated parole and wound up back in prison. Employees sometimes need to attend AA meetings or meet with their parole officers during work hours. And Eldridge often will pay medical bills when someone gets sick.

But Eldridge says it's all worth it. "Without them, I don't have a business," he says. "I need them to understand they are valued."

By all accounts, they do. "A lot of people think that just because you're an ex-con, they can treat you badly. I've had a lot of employers do that," says Lacey Galloway, 34, who was hired at Gracie in July. "James treats me as a friend, not just an employee. I'm glad he gave me the opportunity to show him how hard of a worker I am."