Risky business

Entrepreneur, May, 1999 by Elaine W. Teague

All entrepreneurs face start-up problems. But in an industry where the clients face the hazards. these adventurers had to find insurance or head back to the land of the employed.

Today, business is booming for Fulcrum Learning Systems Inc. in Redondo Beach, California. The company's organizational development seminars capitalize on cutting-edge experiential education trends, and Fulcrum's adventure-based learning programs cater to a steady nationwide clientele of Fortune 1000 companies, community and youth organizations, and sports teams. Building their company from the smallest of beginnings, Fulcrum's co-founders, J. Linwood Paul and Leslie Bourne, were bitten by the entrepreneurial bug a decade ago.

But the heady exhilaration of making their own way in a field they knew like the backs of their hands was tempered by administrative realities. In an industry where clients are regularly put in controlled-risk situations, qualifying for liability insurance would be no easy task - especially for a company with no mack record to prove its safety. It's the single element that can make or break an adventure-training company, says Bourne: "Without insurance, there is no business."

Paul and Bourne were no strangers to challenges. By 1989, they had worked as independent contractors for more than five years for one of the nation's leading adventure-based learning companies. While traveling around the world, they'd learned the business from the ground up and successfully coached thousands of participants. The pair often acted as lead instructors or day captains in the absence of the company's owners.

Paul and Bourne's personal cachet was growing, and clients were wondering out loud if and when they'd start their own adventure-based learning business. But the realization that it was time to make their move came slowly. "On our fifth trip to France, when Leslie and I were leading a team, we looked at each other and said, 'Hey, we can do this.' How did we know? Because we were [doing it]," remembers Paul, 44.

Bourne, 37, says, "It was what we were preaching to clients. We'd go out and assist groups of people in establishing their dreams and goals and values, and help them realize how big they were. Through that process we both [realized] we needed to take that step, too. It [became] important for us to push ourselves to another level."

BUT WHAT IS IT, ANYWAY?

Just what is experiential education - and why did corporations and small businesses pay a total of more than $500,000 last year to give their executives and employees the Fulcrum experience? "That is the question we're asked," says Bourne. "We create experiences that magnify real-life situations. Then we give a person or group an opportunity to look at that experience and see how it relates to their lives and how they might want to change something to [make it] work more beneficially."

Whether it's rock climbing, swinging across a river from one side of a cliff to another, or navigating a military-style ropes course, the training involves "a series of very difficult tasks that usually takes place at heights," says Paul. "When [participants] successfully face the fear and meet the challenge we provide, they discover tremendous strength within themselves, which they draw from to meet other challenges that are more familiar, such as expanding their business or negotiating a contract. Adventure is the deepest, most visceral, most easily integrated teacher on the planet. There's just no better way [to learn]."

LEARNING THE ROPES

Ready to take off on their own adventure, the first hurdle for Paul and Bourne was getting the company they were working for to support their breaking away. "It was difficult," Paul says, "because we were dealing with people who were the best in the business, who knew they'd given us everything." But in the end, the company's owner gave the duo his blessing, Paul says. "He told us, 'Congratulations. Most people only talk about doing this.' And he wrote us an absolutely outstanding letter [certifying our experience and expertise]."

Thanks to the sterling, no-loss reputation of the company they'd worked for (and the letter of certification), the fledgling partners' first application for liability coverage was approved by an A-rated company. The pair was grateful for the lucky break until they got the premium quote: It was in the $10,000 range.

Paul and Bourne's only available start-up cash, culled from their savings, was roughly $12,000 - barely enough to cover one quarterly premium at the rate they were quoted. With no client base to speak of and minimal financial assets, the would be entrepreneurs realized they couldn't afford the premium rates charged by an A-rated company. So after going through two brokers and applying with 17 insurance companies, the partners finally landed a B-rated company (a firm with less assets available for claims than premiere, A-rated carriers).

With policy in hand, Paul and Bourne were off and running. Within weeks of formalizing their partnership, the partners negotiated a large contract with the U.S. Department of Justice. Operating on a shoestring budget, they purchased equipment for the business in stages and paid themselves next to nothing. Word-of-mouth and referrals kept the duo busy. Their dream was unfolding on schedule.