You think you've got problems? Imagine trying to build a reputable business in an industry like aluminum siding, pawnshops, or barter

You haven't seen Tin Men? You gotta see it. Get the tape," says Steve Bedowitz as he leans forward in his chair. "All the scams they pulled in that movie are true. Those things happen in this business."

Bedowitz fishes a wad of cash from his pocket. "I liked the one about the salesman who says to his client, 'Now Joe, if you re-side your house with me, I'm going to give you $100 for every person you refer to me.' " Bedowitz peels three $100 bills from his money clip, laying them neatly, Ben Franklin side up, on his desk. "Now, let's face it, a lot of people in this world haven't seen $300 in one place before. The client signs that contract for $6,000. The salesman has, of course, included the $300 in the cost of the contract. Greed takes over."

Bedowitz sells aluminum siding, or -- to be more precise and up-to-date -- vinyl siding and other home-improvement products. His company, Amre Inc., grossed $252 million last year. The largest company in the siding business, Amre was #84 on the 1988 INC. 100 list of the fastest-growing small public companies. "I'm proud of this business," he says. "When people ask me what I do, I always look them in the eye and say, 'I'm in the siding business.' "

Some around Bedowitz have lost -- or never had -- the faith. "My ex-wife was so ashamed of what I did for a living," he says. Bedowitz recalls one vain effort to save the marriage by driving into a posh neighborhood of Austin to show his wife that even the rich used siding. "I told her, 'Pick a street.' Three houses down I pointed to a house and said, 'What's that?' She said, 'Wood.' 'Look again.' We got out of the car and walked up to the house. It was aluminum siding. When people think of aluminum siding, they always think of people on the poor side of town hanging crap off their houses."

Bedowitz's career began its lucrative descent 12 years ago. As a partner in an Austin ad agency, he had a client who was a siding wholesaler. In doing market research, Bedowitz discovered that the business was, well, kind of screwy. "Siding was a $3-billion-a-year industry, and the biggest company I could find did $8 million. I said to myself, Wait a minute."

It was an industry in which shiftiness had been honed to an art form. Salespeople closed deals, took down payments, and then took off. Siding companies went bust on Friday, only to resurface again on Monday in another town. Salespeople once traveled the circuit like preachers in search of a flock to fleece -- the Midwest in summer home-repair season, then to Florida and Texas in winter to work the retirement crowd. Conventional wisdom held that any effort to consolidate the industry would end with partners who would rip one another off and employees who would leave to go into business for themselves. Steve Bedowitz disagreed.

He and a partner each put up $3,000 and borrowed another $10,000 to start Amre in 1979. "The first thing I did was get a storefront in a shopping center. You could drive by and see my place of business. I wasn't working out of the back of a pickup truck. People knew where to find me."

Amre prospered, and Bedowitz started wondering how he could expand beyond the city limits. But who in his right mind would trust an out-of-town siding salesman? That's when Bedowitz became a licensee of Sears, Roebuck & Co., paying the company 15% of his sales in return for recognition as a Sears-approved seller and installer of siding. That was just the ticket. Now when people opened their homes to charming strangers bearing slick brochures and asked the inevitable question, What other work have you done in the neighborhood?, Amre salespeople could forthrightly invoke the Sears name.

If siding is the business from hell, Sears is the paragon of retailing. Last year 78% of all U.S. households shopped at Sears. Sears has been around for a century. Today Amre, which has been around for a decade, sells and installs siding in 77% of the country. It might as well be Sears's siding division. Says Bedowitz, "We represent Sears, and Sears is known for value, not for cheap."

Cheap is something Steve Bedowitz had been struggling a lifetime to escape. His father died when Bedowitz was four, forcing his mother to go to work. She scrimped; she saved. She bought things secondhand, and they were always breaking. Bedowitz vowed that he would always go first-class, always buy the best. "Look, the single biggest investment 99% of people make in their lives is in their house. I'm not going to go around putting a lot of junk on people's homes."

Bedowitz's philosophy of "telling the truth" and using the best materials and local contractors "we can get our hands on" dovetails a third strategy that has driven the company's success: the intensive use of computers. When the siding business first caught Bedowitz's attention, he visited the $8-million company that led the industry. He noticed something that gave him hope: "They didn't believe in computers." By the time Amre reached $4 million in sales, it had a mainframe. It has since bought four more. The computers are constantly crunching demographic data to generate an unending stream of information for advertising and direct-mail campaigns.

Bedowitz, who started his market research with a box of 54 crayons he used to mark return envelopes mailed to different zip codes around Austin, believes that Amre's use of the latest technology defines the company's essence. "We are experts at generating leads. We are not necessarily a siding company. We are a direct-consumer-response company. I can sell someone BMWs. I can sell someone computers. I can sell anything."

Well, almost anything. Three years ago Amre, now based in Irving, Tex., acquired a company that installed wooden decks. Because the wood was "a living organism," as Bedowitz puts it, heat and moisture would change its shape. Pretty soon, customers with warped decks started calling. It was a mess. Eventually, Amre closed down the division.

Better to stick with the dead stuff.

The Texas economy has been hit hard, and Jacksboro Highway heading west out of Fort Worth yields evidence of the attendant pain. Body shops, used-car lots, discount furniture houses, and cut-rate appliance stores crowd one another along the road. One storefront sells nothing but batteries. Another has furniture -- very used -- displayed in the parking lot.

As Butch Barton, a diminutive, flush-faced man, negotiates his Lincoln Town Car down Jacksboro Highway, he recalls the time he once resorted to going to a pawnshop. "I borrowed $150 on my model 1100 Remington shotgun. I needed that $150." Now, as a vice-president of Cash America Investments Inc., a chain of 141 pawnshops that operates in six southern states, Barton's needs are no longer quite so basic.

Ninety-five of Cash America's shops are in Texas. They are clean and reasonably well lighted places that do their best to dispel the menace and the mystery of the pawnbroking business. Sixty percent of Cash America's customers are women, who often do business during the daylight hours and bring their children with them.

Barton pulls up to the Cash America store on Jacksboro Highway. Inside, the proprietor, Julie Kelly, is hanging ferns in the barred window. The store has the homey feel of a department store in the 1950s, before the big chains ruled America. It sells everything from toasters to welding equipment -- at eminently reasonable prices. In a back-room safe, pieces of jewelry are stashed in crisp brown envelopes with cellophane windows, recorded so carefully they might as well have been cataloged by a curator.

Earlier, over a lunch of barbecue, baked beans, and jalapeos washed down with Dr. Pepper on a 90-degree day, Barton had said, "We try to loan people whatever we can, even if some old lady comes in with a toaster and all we can give her is $5. That $5 may make the difference in the world to that lady. You're there to help that person. Jack says you should never, ever feel that you have power over another person's life. If you ever get to thinking that way, he'll fire you in a heartbeat."

Jack is Jack Daugherty, the man who put Cash America together. His offices in downtown Fort Worth are cool, dark, and carpeted. Prints on the paneled walls depict the gentility of English country life a century ago -- a bit of a clash with the gritty ambience of Jacksboro Highway circa 1990.

Daugherty, a laconic sort, speaks in a thick, languid drawl. He gives the impression of a man at ease, which is fitting, perhaps, given that he runs the largest chain of pawnshops in the world and the only publicly held company in the business listed on a major stock exchange. Cash America has appeared on the 1989 and 1990 INC. 100 lists. The numbers, meanwhile, are arresting: sales have doubled, to $87.5 million, in the past two years; pretax profit is 30%. "Now, that's what I call a profitable business," says Daugherty. "And we've just scratched the surface." He says that there are 20,000 independent pawnshops out there waiting to be bought and a customer base of some 70 million people. "Have you seen the movie Top Gun?" he asks. "We are in what's called a 'target rich environment.' "

Jack Daugherty, like Steve Bedowitz, carries his cash in a money clip, which he now brandishes to make an essential point about his line of work. "Now, I learned back in college that accounting was done either on a cash basis or by the accrual method -- credit. Well, we're talking about a group of people [Cash America customers] who do their accounting by the cash method. They get their paycheck, cash it, and pay their bills. Now what's wrong with that? That's the way this country started." In a credit-crazed country, Daugherty asserts, his customers are victims because they often choose to deal in cash and nothing but. "The majority of our customers are not on welfare and never have been. It's the working class, with family income ranging between $18,000 and $28,000." Daugherty adds that 30% of the population are not bank customers, which puts them in his target market.

Back in 1969 Daugherty had just sold his share in a business and was looking for something else to do. He met the head of the Texas Pawnbrokers Association on a hunting trip. Daugherty, armed with the usual suspicions, inquired about the trade. "I asked him, 'Can I make $600 a month doing this?' He laughed at me and said, 'If you can't make $1,000 a week, you shouldn't be in the business.' "

Daugherty wanted in. He subsequently served a rigorous apprenticeship under the association's head. He earned no salary for 10 weeks. He was chastised when he failed to take notes. One day he was told to wear a nice pair of slacks to work the next day. They were going to go out and lease space for a shop.

Daugherty ran that one pawnshop for eight years. It was a money machine. In his first year, 1971, the shop grossed $62,000, good money in those days. But by the decade's end he was bored, so he hired a manager to run the shop. The price of oil was rising fast, and with petrodollar signs in his eyes, he sank every dime of pawnshop profit -- not to mention another $800,000 in loans -- into the oil business. By 1983, with the price of oil crashing, Daugherty was all but bankrupt.

He returned to his pawnshop and set about paying his debts. He called all his creditors each day, starting at 7:45 a.m., for four weeks. He told them all that he intended to pay them back. Every dime. Finally, they got so sick of hearing from him, they told him to stop calling. "Just send the money when you've got it."

Daugherty paid all his debts. The attendant goodwill and trust set him up for a serious foray into the pawnbroking business. He would take a disdained, unregulated, fragmented -- and very profitable -- industry, and pull it together into one corporation. Setting in place rigorous standards and relying on computer technology to enforce them would make the business hum. It would also, as Daugherty puts it, "bring a dirty business into the light." He raised about $9 million in private offerings. To expand the business and increase its legitimacy, Daugherty took Cash America public in 1987. That gave him the opportunity to go on the road in the United States and Europe and sell the company to the financial community. In places like New York City and Boston he was often met with blank stares and pointed questions. In Europe that was not the case. "They understood right away. We had $16 million worth of stock to sell. By the time we came back we had orders [from underwriters in Europe] to sell $100 million worth of stock."

Jack Daugherty labels what he has done in building Cash America "a put-together." But Daugherty was putting together pawnshops. He wasn't exactly selling frozen yogurt. That presented a marketing problem. He finally decided to position Cash America as a loan business. It was -- a bank. Like Amre, a siding company that calls itself "a consumer-response company," Cash America had been given a new definition in the mind of its CEO.

Like any well-run bank, Cash America made collateralized loans. But unlike a bank, it would make those loans in five minutes. It would lend amounts as low as $2 (at annual rates as high as 240%). No matter how often someone defaulted on a loan, Cash America would always do business with that person again. It would never string the customer up by the thumbs. (For good reason, of course. It always had the merchandise to sell if the customer didn't come back.) Cash America advertised extensively on radio and TV, "the way a bank would advertise for a home-improvement or car loan," says Daugherty. "It was a bonanza."

Cash America had no trouble convincing its core audience of what it was up to. But what about the more established world, whose first reaction was fear or suspicion of a shadowy business? Laws regulating the industry vary from state to state. "We want a good set of rules to go by," says Daugherty. A year before the company opened its first store in Florida last March, it realized there was little regulation there. It was a situation that invited rip-off artists, a situation that Cash America, a public company, could ill afford.

The company lobbied the Florida legislature. It wanted background checks on all people going into the business. Did they have criminal records? Did they have the financial capability to stay in business longer than a fortnight? Cash America wanted the hours when pawnshops could be open regulated -- just as they were for any other retail establishment. It wanted minors barred from making transactions with pawnshops. It wanted every piece of pawned merchandise to be scrupulously recorded along with a piece of identification from the seller.

Daugherty says that once the legislators realized he was there to help them, he was given a role in drafting the legislation. That, in turn, gave him the opportunity to educate them about the business and the needs it met. "We could tell them that one-third of the people in the United States have no bank account, no MasterCard, no Visa," Daugherty recalls. "We are the only alternative for them."

Cash America, like Amre, relies heavily on computer technology to impose order on a previously undisciplined business. It also uses that technology for demographic research, to figure out where to put its stores. Of course, sometimes that can seem like overkill. "You could stand in the front door of 90% of our stores," says Daugherty, "and see a Colonel Sanders Kentucky Fried Chicken, a Payless Shoe Store, and a Family Dollar store. These are our best neighborhoods."

To explain what they do, people in the barter business often invoke an apocryphal historic moment: the exchange of Manhattan for $24 worth of trinkets. The seductive appeal of the incredible deal is timeless.

The barter business in its modern incarnation is made of more prosaic stuff. Computers tie thousands of businesses into a network, permitting them to trade goods and services instantly, for "trade dollars," which they can then use to buy other goods in the system. The net effect is to decrease a business's cash outlay, increase its internal cash flow, and reduce excess capacity or inventory.

For years, barter was an economically appealing idea waiting for the right technology to come along and make it practical. That happened in the late 1970s, with the advent of the personal computer. For the first time businesses could be instantly linked on a sufficiently large scale. The variety of goods and services available was broad enough to make active trading possible and the network viable.

That's when the trouble began.

People set up barter exchanges as tax dodges or schemes that would promise their members Manhattan for less than $100 and hold the beads. The organizers often drained valuable goods and services out of the system, leaving hapless members with worthless trade dollars, nothing of tangible value, and a huge confidence deficit. Collapse ensued. This became such a recurring event that there soon arose a term to describe it: barter burn.

Matthew O'Hayer got into the barter business in 1983, when the burn was at its hottest. In Austin alone, there were no fewer than seven barter companies, and state prosecutors were after two of them. Today, after the shakeout, Austin has just one barter company -- O'Hayer's. With 5,000 members, it is the country's largest exchange -- and, in 1988, its first year of eligibility, it ranked #374 on the INC. 500 list.

"When I first got into this business," says O'Hayer, "and I'd go to a party, people would ask me what business I was in. I told them the barter business. They'd sort of look down at the floor and quickly walk away. One time a chiropractor told me that he had gone to a barter exchange and had a bad experience. I told him that was funny, I had gone to a chiropractor once and had a terrible experience."

Barter Exchange's awareness of being in an industry that historically has flown by night is evident when you set foot in the place. Most of the men wear white shirts and dark suits -- conservative business attire that seems incongruous in Austin, a college town and music mecca, hometown to such denim-clad troubadours as Willy Nelson and Jerry Jeff Walker. "People expect to walk in the door and find us wearing green eyeshades," says O'Hayer. "We run this business like a bank, so we have to look like bankers." The company's sense of spit and polish extends to its clean-desk policy. When employees leave the office -- even to go to lunch -- they must sweep their desktops clean of any extraneous papers.

Barter Exchange, though privately held, acts like a public company. It has been audited every year of its existence by a Big Eight (now the Big Six) accounting firm. In 1984 O'Hayer brought Everett Keech, then a vice-dean of the Wharton School of Business, in as the chairman of the board of directors. Also, through a private offering, O'Hayer sold 19.5% of the business to a number of savvy and conservative East Coast investors with ties to Wall Street and Fortune 500 companies.

O'Hayer says that "to be in the barter business, you've got to be more than a businessman and more than a promoter. You've got to understand economics." He knew he had to run the business as tightly as Paul Volcker ran the Fed. Although Barter Exchange is only a $5-million company, O'Hayer has invested more than $1 million in software alone. Every member gets a credit line, with every credit line exceeding $5,000 strictly collateralized.

Typical members include any business from the local convenience store to midsize companies that have excess inventory or capacity and want to conserve cash. While some large companies like GE and Caterpillar have their own in-house barter departments, Barter Exchange has also done deals with divisions of Seiko, Toshiba, Southwestern Bell, several airlines, and national car-rental companies. Barter Exchange makes its money by charging its members 10% of each transaction and a monthly service fee.

While the average barter company has one trade broker per 300 clients, the ratio at Barter Exchange is one per 58. Its brokers are located in 17 franchised and company-owned offices around the country, while all the paperwork is processed in Austin.

Today O'Hayer, at 35, does his best to keep his company visible -- and aboveboard -- by being one of the movers in the industry. He's active in the industry's national trade group. In 1985 he worked to get legislation passed that would increase controls over the industry. The bill failed to pass the U.S. Senate, so O'Hayer has since been active in promoting more stringent self-regulation of the barter business. He joined and chaired the barter accounting-standards board in Washington, D.C., and chaired the organization's ethics committee for two years. "We work closely with prosecutors in a lot of states where there are perceived or actual problems." He helps them make their cases against less scrupulous exchanges.

O'Hayer is philosophical about the industry he's in. It may take a while to shed the sleaze. That, of course, amounts to a perverse sort of challenge. "All new industries attract slimebags," he notes. "Look at medicine in the nineteenth century, with all the snake-oil salesmen traveling around." More recently, he says, such nascent ventures as health spas and time-sharing condominium schemes have had their problems. "This business had a rough beginning," he says. "Then there was a shakeout in the early '80s, and now there are a lot of good companies going for the brass ring. We feel we're going to be the first to grab it."