Nick Yonano, 31, spent his money carefully when he launched Tea
Body's Inc., a Turlock, California-based gourmet iced tea
company, in 1995.
The former attorney financed his company through his savings and
modest borrowing from friends and family. His vision? To develop
iced teas and market them to specialty food stores throughout the
United States. To achieve that end, he watched his pennies,
meticulously planning each step.
The tough part, he says, was determining how much money he'd
need. "The idea was to eliminate nonessential
expenditures," Yonano says.
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When he reviewed his estimated costs, he figured $60,000 should
allow him a modest start. So he sold his Porsche 911 for $18,000
and tapped into his savings. Soon, he was in business.
Yonano's most significant costs were in product development.
"About half the start-up money was apportioned to buying
quality teas," he says. The rest of his costs were allocated
to marketing, promoting and packaging.
It didn't take Yonano long to realize that his business
would cost more than he imagined. Originally, he thought he could
finance his company's art, graphics and logos for around
$5,000. But once he began getting estimates starting at $25,000, he
increased his own estimate to between $10,000 and $15,000.
Fortunately, Yonano was able to find an artist who worked from home
to create the graphics for his fledgling company. The job's
final cost: $12,000.
And when it came time for market research, rather than paying
rates of up to $10,000 for the help of an expert, Yonano did it
himself for only $1,200.
Rent? That was easy: Yonano converted his garage into a blending
facility. Later, he moved to a small, rent-free office in his
parents' company until he could afford the $600 monthly rent
payment for his first official office.
Even with such meticulous planning, $60,000 in start-up fees
barely covered it. To keep the company afloat, he borrowed $20,000
from his parents.
Today, Yonano's cautious financial strategy is paying off.
Last year, sales jumped 250 percent, from $50,000 to $175,000. This
year, he's confident sales will reach the $300,000 mark.
Even though things are looking better, Yonano is still a
cautious pragmatist when it comes to projecting his finances. To
save the business money, he didn't take a salary until last
year. "My salary ranges between 2 percent and 5 percent of
sales," he says. "I plan on keeping it that way until
we're well on our way."
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