It might be hard to imagine an improvement on the sawhorse. But carpenter James H. Olmsted devised one, and consumers are snapping it up.

The company Olmsted founded, McCoy Industries Inc. of Lafayette, Colo., sold $500,000 worth of sawhorses in its first six months of manufacturing, starting in October 1981. The company expects to report sales of $4.5 million for the 12 months ending next March.

In 1979, Olmsted, a partner in a small construction company, realized that most do-it-yourselfers didn't have the skills to build a sturdy sawhorse, an implement used in many home repair jobs. He decided to design one to be sold in kit form and assembled in minutes.

He ran into Kenneth Lucas, manager of sales and marketing for a small publishing company, who, like Olmsted, had been looking for a new line of work. Lucas signed on as a partner and, for three months, he studied the sawhorse market and drew up a business plan. To get started, the two raised about $33,000 from friends and relatives.

The sawhorse kit -- and Lucas's business plan -- impressed a local investment banking firm Hackert/Modesitt Investments Ltd. of Denver. It lent the two entrepreneurs $150,000 and helped them open a $425,000 line of credit at a Denver bank. Meanwhile, the Denver "penny stock" market was booming, and in May 1981, OTC Net Inc., a brokerage house, persuaded investors to buy 6 million shares of stock in the company at 50 cents a share. A few months later the penny-stock market took a plunge, and underwriter OTC Net went out of business. McCoy shares were trading for about 13 cents in mid-June.

But Olmsted and Lucas, now chairman and president, respectively, had $3 million to spend. They acquired $1.5 million worth of high-speed automated woodworking equipment and installed it in a modern new plant: With the equipment at full tilt, their 15 employees can turn 50,000 board feet of lumber into 8,000 "McHorse" sawhorse kits in an eight-hour shift. The kits retail in hardware stores nationwide for $12, less than one-third the price of some produced by competitors.

McCoy Industries has branched out into such other wood products as a rocking horse, a toolbox, and a workbench -- all in kit form and designed to be mass-produced on automated equipment. "We make an unglamorous, low-technology product," says Lucas. "But our factory is state of the art."