Even under the best of circumstances, taking the entrepreneurial plunge requires courage. But for a first-time business owner to willingly take on the challenge of rebuilding a business from the roots up takes true grit.
After a leveraged buyout from its founders in 1991, the once-successful Raleigh, North Carolina, residential playset manufacturing company Woodplay had plunged into bankruptcy and receivership. By late 1993, the company was up for grabs to the highest bidder.
Enter Jim Sally, 40, and Tom Marenyi, 48, who were searching for a business to call their own. "We knew nothing about the company," recalls Marenyi, who spotted a notice in the local paper indicating that only one purchase bid for Woodplay was before the court; additional bids would be accepted during a seven-day "upset" period.
Marenyi and his brother-in-law Sally had several purchase criteria in mind: a quality product, a good name, market potential and a solid formula that could be improved upon. The partners' hasty research revealed that Woodplay products were well-made and well-regarded in the industry. They also discovered that, even with limited catalog distribution, the company had ranked high in its niche market for years before its troubles.
Encouraged by Woodplay's seeming potential, Marenyi says, "The decision was made to put in an upset bid, and much to our surprise, no one countered it." Marenyi and Sally (along with Jim's father, John Sally, as a silent partner) became the new owners of the capsized company just two weeks later.
"[The purchase price] just bought us the assets," says Marenyi. "We still had to get the thing cranked up." Together, the partners coughed up several hundred thousand dollars more from their savings for working capital. Marenyi dove in to handle marketing, finances and administration while Sally took charge of manufacturing operations, purchasing and technology.
Salaries could wait, the new business owners agreed; they'd do whatever it took to fund the company internally. Purchasing Woodplay with their personal savings was the beginning of a commitment by the partners not to go into debt to bring the ailing company back to life.