Got ID?

Chris & Cristina Capoot, both 34: Correctional Healthcare Management Inc.

"From experience, [I] knew Chris and I could start our own company and do it 100 percent better," says Cristina Capoot, once vice president for a prison health-care provider. Cristina and husband Chris took the risk in 1997 and founded Correctional Healthcare Management Inc. (CHM) in their Englewood, Colorado, home--taking a second mortgage, selling a car and maxing out credit cards to get start-up capital.

A year of nail-biting preceded the signing of CHM's first contract with a Colorado county jail. "Literally three weeks away from selling our home and declaring bankruptcy, we landed our first contract," says Chris. Since signing that contract, word has spread about the company, which handles everything from hiring nurses to paying for inmate hospital visits. Today, CHM serves 19 facilities in five states and has over 230 medical professionals on its payroll.

"We took those dice, rolled them, and our numbers came up at the last minute," Chris says. "We got that one opportunity to get our foot in the door to prove the level of service we had promised, and it's been downhill ever since." And with 2003 sales projections of $11.2 million, it should be a sweet ride.

Success Secrets

What were some of the biggest challenges you faced when starting up?
Chris Capoot: I think the hardest thing was our age; it was [trying] to convince these county sheriffs [and] commissioners that a couple kids under the age of 30 could actually take such an important component of their jail operations and manage it. The first place you're going to get sued in jail is the medical department. So the biggest challenge was [getting] the first opportunity to prove that, in fact, we had the appropriate knowledge and background to operate in this industry.

Considering it took a year to get your first contract, what were you doing to stay afloat?
Chris: Living off our second mortgage; living off credit cards.
Cristina Capoot: We started our company with no loans, no cash.
Chris: Other than our second mortgage and our credit cards, we didn't have any working capital. We didn't go out and seek SBA financing; we did it out of our own pocket.

Why did you want to do it that way?
Cristina: Because our company is so unique. We had approached the bank we were doing our personal banking with, [and] they weren't interested in giving us collateral to start doing more marketing.

We didn't need a lot of money to start up because we're in the service industry. We needed that first contract, that first monthly check to start making our payments to our nurses, and once we got that first contract, everything worked out very well. Cash flow was not an issue.

Why didn't you give up?
Cristina: Because we knew enough people in the industry that believed in us and they just kept saying, "It's going to happen, it's going to happen; these things don't just happen overnight." We knew if we could get one contract, that would be our opportunity. And if that bid wouldn't have worked out, we would have said we can't do this anymore.

When did you first feel like this business was going to be a success?
Cristina: Probably a year after we landed that first contract and the phone was ringing with other counties saying, "We want you to do our jail as well." Knowing that we didn't have to bid on some of these contracts, that made us feel very successful. I think we knew [then] we were going to make it.

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This article was originally published in the November 2002 print edition of Entrepreneur with the headline: Got ID?.

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