From the September 2004 issue of Startups

Going with the notion that there are a lot of people who wish they were running their own businesses but aren't, Office Depot commissioned a survey in February 2004 to find out why startups often never start. As it turns out, most people have the same excuses for not beginning their own businesses.

According to market research and consulting firm Harris Interactive, which did the recent workplace trend survey for Office Depot, a whopping 40 percent of American office workers have considered starting a business, only to reject the idea. Their excuses? Thirty-seven percent of those polled haven't started their own company because they lack the funding, 28 percent said they feared losing their job security, and 23 percent said they had no viable business idea or plan.

We happen to think that when it comes to starting your own business, excuses are just that-excuses. Not that there aren't valid reasons for being cautious when starting a business, but excuses can spiral out of control. People have a way of using excuses as a crutch, keeping their aspirations hobbled for life.

And so we decided to talk to three entrepreneurs who had every reason to let an excuse get in the way of starting a business-and decided to pursue their dreams anyway.

No Money

Tara Krapes, 33, has a business that is poised to make at least $2.5 million in sales by the end of 2004. Not bad, considering she began her company in 2002 with $1,050 from her own savings.

Vesta Executive Housing, based in Cincinnati and named for the Roman goddess of hearth and home, offers executives temporary housing for 30 days or more. Krapes has relationships with 42 top-notch apartment complexes in the area. When a client comes to Vesta, Krapes either has space ready for them, or, more often than not, she has to lease a new apartment for 12 months and hope that after her tenant leaves, she can fill it quickly. She almost always does-she currently has zero vacancies.

It seems impossible that she could have funded this business-with 12 employees and a second office in Lexington, Kentucky-with a paltry grand. Until you learn how she did it.

It helped that Krapes had experience in her field already. All she needed was one customer to begin, she figured. Once she found one, she signed a lease at an upscale apartment complex and paid the first month's rent-$1,050. From then on, whenever she worked with any client, she always asked for the money upfront.

Krapes would invest the money back into her business by purchasing furniture and other necessities for the living quarters or her company. And the more apartments she would rent from a complex, the cheaper the rent and the more revenue her company could pocket.

But most important, by coming up with a formula that allowed her to always get her money first, she says, "We avoided cash flow problems. From that $1,050, we've been able to grow very fast. We've never had any debt or loans." Krapes quickly took on two partners, Paul Pelnar, 39, and Joel Makela, 30, friends and colleagues who both had experience that she didn't. They were also able to contribute some other items, like computer equipment, but no money.

"Eighty-five percent of people get their money from savings or the three F's: family, friends and fools," says Sutton Landry, director of Northern Kentucky University's Small Business Development Center in Highland Heights, Kentucky. "For the [others], some kind of bank loan is involved. Very few people get VC funding or angel funding."

If you're wondering what the "slam-dunk qualifications" are for getting a big bank loan, Landry reels some of them off: "Typically, it's someone who is between the ages of 35 and 50, college-educated, and who has a net worth of a quarter of a million dollars-plus a Beacon [credit] score of 700-plus-with a business plan. It almost doesn't matter how good the business plan is, as long as they have one. Ideally, they're going into a business where they have five to 10 years of experience-half of it in management. Most banks will look at that type of profile, do the credit scoring, and say 'Yeah, these people would rather die than not pay a loan back.'"

But what if you're 26, utterly broke, and wishing you had gotten an MBA instead of a degree in American folklore? Landry says if your credit is halfway decent, you might be able to find somebody to cosign a loan-and "you'll need a business plan, a good business plan," he says.

Beyond that, you're simply going to have to rely on that can-do spirit. "Starting your own business involves sacrifice," says Landry. "Unfortunately, we're not a society that's much interested in sacrifice. But on a practical side, that's how most startup businesses begin. They start part time, and they're constantly re-investing money into the business. It's the same model that a lot of immigrants have when they come to this country, where people work three jobs to build the savings they need. But instead of getting a second job, you're running your business in the evenings and on weekends."

Krapes echoes that thought. She had one serious cash crunch when she discovered how few people need housing during the end-of-the-year holidays: "We didn't pay ourselves for a few months."

No Job Security

Five years ago, when Clayton Christopher was 25, he quit a very lucrative job to start his own all-natural bottled iced tea company, Sweet Leaf Tea, in Austin, Texas.

Christopher had been working at a medical supplies company since high school, and by the time he finished college, he was a gifted salesperson with good benefits and a wonderful salary. But he had gotten it into his head that he was going to start a bottled iced tea company-he has always loved the beverage. Christopher quit his job, sank his life savings ($25,000) into the business, and moved back in with his parents, who were supportive but thought he was a little, well, insane. Every day, he worked on his iced tea company, using large pillow cases as tea bags and swishing them around in giant pots.

Before long, Christopher spent $5,000 on a 6-year-old former milk truck with 300,000 miles on it and began traveling the state, trying to sell his tea. Today, his business has surpassed the $1 million mark in sales, and his tea is in grocery stores nationwide, including Albertson's and Kroger as well as 7-Eleven stores.

Steve Donahue, a motivational speaker, life coach and author, thinks Christopher did the right thing. "Job security is a mirage," says Donahue, who has been big on desert imagery ever since he crossed the Sahara desert and wrote about it in his book, Shifting Sands: A Guidebook for Crossing the Deserts of Change. "In fact, job security is one of the biggest mirages we follow-your company could be bought out, your security manager could imitate Enron, new technology might make your project or product irrelevant."

If you need convincing that leaving your job is the right decision, Donahue suggests some alone time. "Go somewhere quiet, turn off the TV, unplug the phone, and ask yourself what really matters and what you really want."

He also suggests a "reverse risk assessment": "Ask yourself 'What are the risks if I don't leave what I'm doing?' Fast forward, and imagine yourself embroiled in the same office politics, doing the same things. Work is such a big part of our lives. Our work shouldn't be killing us-it should be feeding us."

Indeed, every once in awhile, Christopher thinks about what his life might be like if he was still in his old job-and he shudders. "Life's just too short to waste it doing something you don't want to do, like selling medical supplies."

A Few Good Resources
There are plenty of organizations that offer advice on starting your own business. Here are a few that may prove helpful:

No Plan

Jeff Goldstein, 36, plunged into his business without a business plan-but with his two best friends, Todd Eischeid and Chad Walldorf, both also 36. Today, they own Sticky Fingers RibHouse, a chain of 14 casual-dining ribs and barbecue eateries in Florida, North Carolina, South Carolina and Tennessee. They have also partnered with Amazon.com to offer their products via mail order, and their business brings in $25 million per year.

Goldstein says that the friends still don't have a business plan. His idea for a ribs and barbecue restaurant came from his parents, who moved from Tennessee to Charleston, South Carolina. They noted the lack of such a place to eat and then suggested, half-jokingly, "You should come down here and open a Memphis-style rib house, and it would go over really well."

At the time, says Goldstein, he had been working at exactly such a restaurant "for 10 months, and that was about the extent of my experience." He began pestering his friends, insisting they should go into business together. They finally agreed-after a few drinks at a bar. "But when I first called them," says Goldstein, "they thought I was crazy."

Goldstein says they didn't have a plan or much of an idea but "knew how to cook ribs and barbecue. We knew the type of equipment we had to buy, we knew the brand of ribs and pork shoulders that were the best, and we knew how important it was that those were perfect every time."

They shared the startup costs of $25,000 by persuading all their parents to cosign loans. The downside was that, because they didn't have much of a plan, they never really knew what they were doing. As Goldstein recalls, he was saying goodbye to one of the last customers on opening night and asked how everything was. The reply was bittersweet: "We didn't get anything we ordered, but it was sure good."

There was a lot of stress among Goldstein, Eischeid and Walldorf. One night, they almost got into a fistfight in the kitchen-something to do with baked beans, Goldstein recalls. When they considered opening a second restaurant, Goldstein was against it-until his partners pointed out that, with two restaurants, they wouldn't have to work near each other as often.

"Our 20s are a complete blur," says Goldstein. "We made every mistake in the book, but we covered up for it by working really hard and being especially committed to great service. We learned quickly and got lucky. Of course, some might argue that we still don't know what we're doing."

What may be more vital than a plan is settling into some sort of rhythm of doing business. Goldstein says they don't have any timetable for adding new restaurants-it depends on when an employee has risen through the ranks and fully understands how to manage and operate a Sticky Fingers. He says that they will never franchise; the only way to run a Sticky Fingers is to start out as a server or a cook.

And while business expert Frank Fantozzi recommends having a business plan-few people would argue against a plan-he agrees that, "You don't need a full business plan to start a business." More important is understanding who your client base is, says Fantozzi, president of Planned Financial Services in Cleveland. "You [need] somebody who's going to buy your product or service. If you can't do that, you're a charity."

If there's a reason for their success, says Goldstein, it's that "we're always trying to make our business better," he says. "We're successful because we don't think we're successful. If we're any good at all, it's because we think we suck."


is a writer in Loveland, Ohio.