Million-dollar babies

Home Office Computing, Feb, 1998 by Lisa Goff

It's the ultimate start-up dream: You open your doors and within the first year, rack up a million bucks in revenues. You mollify cranky employees slaving at workstations in the basement, the hall, and the vestibule; wrestle with overloaded computers that keep crashing; and almost get sucked down the ever-expanding whirlpool of bookkeeping. Whoever thought success could be so much ... fun?

Forget about nudging and nurturing. When your start-up suddenly whips into a tsunami, you've got to be ready to grab it and ride. We talked to eight fast-track millionaires who did just that. Although few of them expected spectacular first-year expansion, they stayed on top of it, whether that meant responding quickly to staffing needs or staying ahead of the marketing curve. Most found that investing in the right technology year on gave them the edge they needed to get a grip on growth. And finally, as several of our examples prove, running a $1 million business doesn't necessarily mean you have to move out of your home office.

Spinmeisters of the Universe Karen Sperling And Steven Greene, Partners Company: Sperling Greene Associates Inc., public relations Location: New York, NY Employees: 10 Launched: January 1997 Start-up Capital: $10,000 First-Year Revenues: $1 million 1998 Projected Revenues: $1.5 million

Public relations entrepreneur Steven Greene waist willing to wait for good word of mouth to build his client roster. Instead, his firm partnered with five midsize advertising agencies to provide public relations services to their clients.

"The growth in our client base has been exponential," says Greene, who opened his firm with partner Karen Sperling in January 1997. First-year revenues grazed $1 million and Greene expects to reach $1.5 million in 1998. Greene and Sperling, who started out in advertising, fought the impulse to keep a lid on growth. "The instinct is to get two or three new clients, and then say, `OK, let's slow down while we absorb this new business,'" Greene observes. "But that attitude hurts momentum."

Greene, who maintains a home office and an outside office, also credits technology with the firm's rapid growth. "Small PR firms typically have resisted automation. They tend to just lump a lot of people in a room with telephones and pens." Instead, to manage databases of media contacts and keep clients up to date, Sperling Greene uses Spinware and MediaMap software.

Dialer for Dollars Mary Bea Damico, President Company: Innovative Sales Solutions Inc., marketing consultancy Location: Valley Forge, Pa Employees: 7 Launched: January 1995 Start-Up Capital: $35,000 First-Year Revenues: $1 million 1997 Revenues: $2.75 million

After Mary Bea Damico opened her marketing firm, she took her time hiring staff and resisted moving out of her home office in suburban Philadelphia. But she raced to load up on technology and telecommunications. "I had eight phone lines installed, and eventually a TI line," recalls Damico, a marketing veteran with more than a dozen years of experience with Hewlett-Packard, Sun Microsystems, and SAP AG.

Damico started out billing by the hour but quickly shifted to a turnkey system: The price she quoted was the price she charged, regardless of the time it took her to complete the job. "That's unheard of in marketing," she says. "My clients loved it."

Her first customers were her former employers, who asked Damico to perform marketing feats far beyond the stock-in-trade brochures and fliers. That included plotting marketing strategies and crafting business plans for new products. "And at the end of it all, we'd do their brochures too," she says.

Damico's revenues hit $1 million that first year and she was the only full-time employee, based in her 400-square-foot home office. The second year, with five employees, she hit $2 million. "One person worked in my basement, where it was pretty dark, and another had a desk in my living room," Damico says. She moved into new office space in fall 1996 and expects revenues to reach $3 million by the end of the year.

Master of the Domains Ken Leonard, Founder Company: TabNet, an Internet domain name registrar Location: Napa, Ca Employees: 60 Launched: August 1995 Start-Up Capital: $20,000 First-Year Revenues: $1.2 million 1997 Revenues: $10 million

When you're getting 300 new customers a day, as TabNet did after its first six months, you need a serious bookkeeping strategy.

"We threw bodies and software at the problem," says Ken Leonard, who started out of his home with a phone and a modem in 1995. "At one point we had five [copies of] QuickBooks running on five separate computers, each souped up to support the software. And we were still getting buried alive."

Leonard eventually dug out by turning to ISP Billing Inc., a Nevada-based company that customizes Claris FileMaker Pro software for a variety of businesses; this got the bookkeeping monster under control. And now that the growth rate of TabNet, the world's largest Web domain name registrar, has slowed a tad, Leonard's had a chance to catch his breath.