From the April 1999 issue of Entrepreneur

When Julia Duren arrived from Hamburg, Germany, at the San Francisco Airport in 1982, she was a 30-year-old mother with two children, ages 5 and 2. Her second husband, an American, was doing life at San Quentin. She had almost no money and no friends, family or contacts to speak of. But Duren knew something about leather, and she had a dream.

That put her on the road to success. Today, she's the largest shareholder of K.L. Manufacturing Inc., a Larkspur, California, firm that had revenues of $1.2 million last year. She has 24 employees, all of whom have profit sharing, 100 percent health benefits, paid vacation time and all the other benefits successful businesses can afford. But the ups and downs Duren endured are perhaps better-suited for the trampoline business.

"I was scared as hell," Duren says of her arrival in the United States. She had only a tourist visa that didn't allow her to work or live in the country, despite her recent wedding, and had to immediately apply for her green card. It's easy to speculate why she would marry a man serving a life sentence, but it was a real marriage, maintains Duren, who was married for seven years before she sought a divorce.

With two little girls to feed, Duren knew she couldn't have achieved her career goals in her homeland. "I had specialized in leather and was doing some innovative stuff," says Duren, who was designing clothing for European musicians. "It was very difficult back then to be an entrepreneur in Germany because there were strict regulations as to what kind of degrees you had to have to train other people. I knew I couldn't hire and train workers if I needed them."

In fact, hiring workers would be a long way off. When Duren arrived in America, she had $2,000, which was quickly eaten up by her first and last month's rent in San Rafael, California, and the purchase of "a very beat-up car." When she ran out of money, Duren pawned two family heirlooms, a diamond bracelet and a gold watch, for $600, and bought a sewing machine and some leather.

The car died its final death after a month, and Duren and her daughters had to sleep in one bed, but the family was going somewhere: Keky and Leila were going to day care, while their mother searched for clients for her handmade jackets. "I went from store to store and pretended I was a rep, and got some orders. Then I'd hop on the bus, pick up my kids from the public day care and make the things," says Duren. "There was a long period when I slept three and a half hours a night."

Too Good To Be True

One day a shop owner asked if Duren could make a purse to match the leather jackets. Sure, Duren responded, having absolutely no idea how to pull it off.

"You use different tools for jackets than for handbags," explains Duren, "so I designed a handbag almost like a garment. I kind of stumbled across something nobody was doing."

This first bag was well-received. Duren developed more styles and began pulling in $6,000 a month in sales. By 1984, she had attracted an investor, a friend of a friend of a--well, you get the picture. The cash infusion allowed her to set up camp in a cushy studio and hire five employees. Soon, $6000 per month became $25,000. "This is too good to be true," Duren thought.

She was right. Soon the investor hit financial troubles and took them out on her. He yanked all her new equipment and accounts receivable. Worse, he liquidated her inventory, telling clients they were getting the merchandise at a last-chance, going-out-of-business discount. He was going out of business, but Duren wasn't; nonetheless, she now had no equipment other than what she'd started with years before, and with no materials to work with, no money was coming in. After releasing her employees, Duren was back to where she started.

Fortunately, Duren found out what her investor was up to and managed to convince her clients that she was still in business, though she was again a one-woman show. To make things worse, she was dealing with a more personal dilemma at the same time. On a day shortly before her investor pulled out, Duren was in San Francisco delivering her goods to a fashion show when she received a phone call from a hospital emergency room. Leila had been run over by a car. Chasing after a ball at her baby-sitter's house, she had run into the street.

Leila was in a coma for seven days, and Duren remained by her side the entire time, talking day and night because the doctors said the mother's voice might awaken the little girl. "It was so scary and surreal," says Duren. Keky had witnessed the accident, felt responsible and refused to go to the hospital. Aside from a friend who brought over some food, Julia Duren was all alone.

Refuse To Lose

When Leila awoke, her pelvis and foot were broken, but she hadn't suffered any brain damage. Nursing her back to health took two months. Without insurance, Duren faced the medical bills knowing that she barely had the equipment or materials to do business even if she had had the time. When she finally did, she was practically down to her last dime, but she knew her priorities: "If there was a choice between buying some `luxury' food--at that time, that would have been yogurt--or a glossy folder to present my merchandise in, it was the folder, hands down."

Yogurt? A luxury item? Well, not after Duren convinced the posh department store Nordstrom to carry a few of her handbags in 1985. "[That] was a challenge," she says. "They'd ask me, `When will you be ready to ship?' and I'd say, `I have everything in stock,' which was a lie, of course. So they'd place the order, and I'd have to get that order done."

The orders kept coming, especially for wallet organizers, a then-new item that combined the functionality of a wallet with the look of a purse. By 1986, Duren again needed help and took on an apprentice. By 1989, Nordstrom wanted enough wallet organizers that one apprentice wasn't enough. An acquaintance connected Duren with a factory in China that could make her products for a fraction of what she would have had to pay in the United States.

Remember Tiananmen Square?

The massive uprising, the demonstrations, the tear gas, the bullets--Duren's factory was in the midst of it. But she kept receiving reports from the factory that her deliveries would arrive without a hitch. Finally, four weeks before a large order was due for the Christmas rush, there was still no shipment from China. Duren realized she--and her one employee--had better tackle the project themselves: 800 wallet organizers to create by hand, on top of their other orders, at a $25 loss per item.

When the wallet organizers from the factory in China finally did arrive, they were too shoddily manufactured to meet Duren's standards. Although she owed $80,000 to investors and her leather supplier, she chose to write the shipment off as a loss rather than compromise herself and sell it. She was forced to file Chapter 13.

It took Duren two and a half years of a scheduled four to work her way out of debt, but she didn't spend that time with her mind solely on her creditors. Instead, she applied herself aggressively to growth, hiring and personally training several employees, establishing her factory in a former supermarket in Larkspur, and increasing production. Although she had barely escaped the 1989 debacle with her business, she had escaped with her reputation, and companies recognized that no matter how far set back she was, she'd continue to provide an exceptional standard of quality.

Duren incorporated what had been Julia Duren Co. in 1993 as K.L. Manufacturing Inc. (after her daughters). That year, Nordstrom's vendor of the year was Estee Lauder, but in 1994, it was K.L. Manufacturing. "That was special for me," Duren says, "because in the whole United States, I was a very small fish, but within that one store where we were competing, I was neck and neck with the real big guys."

Along the road to such success, Duren has given more to her business than anybody could ask of her. Entrepreneurs don't start businesses because they envision 20-hour days. Up against her personal life, the business has almost always come first. She put the folder before the yogurt; she put reputation before money; she puts employees before Julia Duren. "Every single penny that I've had," Duren says, "before taking a higher salary or something, I invested in employee benefits. If they feel happy, they're going to turn out a good product."

Today, she's primarily designing handbags, which generally sell for $75 to $300, and predicts sales of $1.8 million in 1999. Duren has seen her purses in such movies as Pretty Woman and The Woman in Red, as well as on the shoulders of women around the world. Her factory is moving into bigger digs later this year, and Duren's engaged to a financially stable, terrific guy. Everything is going great--but this time, thing's aren't too good to be true. They just seem that way.