From the September 2000 issue of Entrepreneur

It's almost too much to imagine. SATs taken with Bics. Pinnochio made of plastic. Beavers and woodchucks going hungry at night. Wood shop class wouldn't exist. Surely Woody the Woodpecker's animated film career would never have begun, not to mention all the food that would have remained in our teeth in a toothpick-less society. And Tom Sullivan, 41, would be without a business.

Which would be a shame, considering how long and hard he worked to get it.

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A world without Lumber Liquidators. Now, that's not so hard to imagine. Lumber Liquidators is an estimated $25 million company with its headquarters in a suburban part of Boston. It's a wood-selling enterprise that was started in 1992 by a man who was still reeling from a heavy $400,000 loss in another venture, and was zero for four at least in trying to start successful and enduring businesses.

If anybody was going to turn wood into a gold mine, Sullivan didn't seem like the guy to do it.

Before he started Lumber Liquidators, Sullivan had run a construction enterprise off and on for a number of years. Sullivan wasn't necessarily a business flop, but he wasn't exactly in the running to be a rich owner of a Fortune 500 company.

All his pre-construction-company ventures have also achieved less-than-stellar results. From 1977 to 1992, he lost $400,000 with a company of his that refurbished homes. During the same period, Sullivan spent one year trying to syndicate a travel series on television and radio stations. "It was mostly an excuse to travel around the world," admits Sullivan, who did manage to get 10 TV stations to carry the program, but their participation would have been maybe enough to let a film crew travel crosstown in a bus and still turn a profit. So he ditched that idea.

Sullivan had always been trying to make a buck. His father owned his own home-building business, and Sullivan says he'd wanted his own company "just as long as I can remember." When he was 4 years old, he talked his younger sister into trading her new bicycle for his old one, and as a young boy, when Evel Knievel was a household name, Sullivan would build wooden ramps in his family's driveway and sail into the air from one to the other on his bicycle-in front of a paying audience of neighborhood kids.

And now, it would have appeared to any casual observer, Lumber Liquidators was destined to be one in a growing list of Sullivan's failed or stalled businesses. His newest idea? Sullivan had noticed that lumber mills often had large piles of unwanted, distressed, mismatched wood lying about. Maybe he could sell it to the public.

 


Geoff Williams is a prolific writer who frequently contributes to Entrepreneur, but he got a C- in his high school wood shop class.

An Oak-Kay Idea

The idea didn't seem like a natural moneymaker-for a teenager des-perate for some summer spending money, maybe, but not an adult looking to build a successful enterprise. At least, it didn't seem like a good idea to anyone else, not even the truck drivers he bought wood from: "I could tell that they thought I was crazy," muses Sullivan.

His family seemed to agree with the truckers. Sullivan is the oldest of 11 children, and the only one of them to become an entrepreneur. None of his siblings made fun of him when he started his new company, but Sullivan admits, "they probably just thought it was one more crazy thing I was starting."
Not that you could've blamed any of them. Sullivan had struggled financially for years as he attempted to carve out a niche for himself somewhere in the business world. And it certainly took a long time for a niche to make him rich. At one point, he was renting a building to a woman with a dog-grooming shop . . . and sleeping in the back room. "I would actually go into the [shop] in the mornings and take a shower in the bathtub that she would wash the dogs in," recalls Sullivan.

Sullivan had always been talented when it came to opening the doors of new companies. It was keeping them open that was the hard part. "I really like starting things and getting them going," says Sullivan, who got Lumber Liquidators off to a banner beginning.

For his grand opening, Sullivan bought up lots of seemingly useless lumber, stored it in a warehouse and had a Friday-through-Sunday sale. "At 7 o'clock in the morning on Friday, there were probably 10 cars in the parking lot," says Sullivan, with more than a hint of a Boston accent. "The [neighbor businesses] were furious with me. All these people were driving around in their station wagons, trying to find out where this wood was being sold."

Never mind. Lumber Liquidators was a hit. It made $20,000 in its first week. "This is a lot better than contracting," thought Sullivan, who immediately started phasing out his construction company in favor of the new wood-selling venture.

But it wasn't easy. Sullivan had to find huge quantities of unwanted wood, and, while it was cheaper than the brand-new stuff, it wasn't cheap. Often, he was spending more than $1,000 on an enormous load of lumber, buying it from a factory with dozens of such wood piles. But Sullivan, who recalls he rarely had more than $5,000 in his checking account in those days, could never afford to buy all the lumber at once. So Sullivan would pay for a pile and ask the factory owner to keep the old wood around until he could sell the first load and have enough money to buy the second. It was a seemingly endless cycle.

He couldn't afford to hire an ad agency, so he created handwritten ads, which actually "stood out in the paper," he says, and were more effective than what he'd paid big agencies for when he was losing that $400,000 way back when. "I kept everything at a bare minimum. I didn't have much choice, because I had bare money," says Sullivan, chuckling.

Then there were those harrying times a customer would ask to purchase an entire trailer-full of wood from Sullivan, who then had to arrange to have it delivered. "I'd have to pay the driver when he got there. So I would go meet the driver, give him a check, then get the customer's check and run to the bank and deposit that so I'd be covered," says Sullivan, who doesn't remember any of the checks ever bouncing. "It was always pretty close, but it worked."

Sullivan stayed busy. During that first year, he worked 12-hour and longer days, 363 days out of the year, only taking holidays on Thanksgiving and Christmas.

Branching Out

Three years into his toiling, Sullivan had stockpiled enough money to specialize in selling woods that are ideal for hardwood floors, and that's what he's been doing ever since. And while they buy the grade-A hardwood material, they haven't stopped searching for the unwanted wood to purchase.

Sullivan continues to work hard and long hours, which might be why he's remained a bachelor all these years. He's a soft-spoken, quiet, modest man-you get the feeling, when talking to him, that if he ever rescued a stray kitten from a fire, he would keep his deed to himself. Even Sullivan's headquarters reflects his modesty: It's an unpretentious 16-foot-by-16-foot room. "I keep it pretty lean," he says.

In fact, a casual observer to his office would probably never imagine that Lumber Liquidators has 15 locations around the country, and adds a new warehouse every few months. Lumber Liquidators is in all four corners of the United States: California, Florida, Maine and Washington. And in 1999, Lumber Liquidators brought in $18 million, $9 million more than his firm brought in the year before. When it's suggested that Sullivan should be pretty proud of himself, he is his usual understated self: "I had to make something work, eventually."

But he does offer one anecdote that shows just how far he's come. Sullivan says a truck driver once dropped off a shipment and confirmed to an employee that everybody used to think Sullivan's lumber business was a big joke. "Geez, we used to laugh at that kid when he first started, and now he's got stores all over the country," the truck driver admitted. Nobody's laughing now.


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