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Last Update: Friday October 20, 2017

Key Idea: Put Your Own Skin in the Game

Each of these business put their own money on the line!  We begin with Joe Fergus (COMTek) who used his personal savings to launch his business and nearly ran out of cash before he made his first sale. We also hear from Mark Gross (Oak Grove Technologies) and Jodi Johnson (Oberon). More...

Key Question:

A: 

Yes.  You have to use your own money to start and you will have to use your own money to grow a business.  All of the cases in this episode represent the traditional way founders fund the launch of a new business.

Joe had savings from his eight years at Bell Labs while Mark and Jodi borrowed against their homes.  When Dave left his last job he had a pile of cash since the business had been sold and he had some ownership.

Bankers don't take risk and a baby business is a risk.  Bankers expect you to get started, prove yourself, develop financial statements then come to them for a line of credit or for loans to buy a building, equipment or technology.  Forget the idea that you will get a startup loan from a bank.  Those do not exist.

If you are able to get a loan to start your business, it will be a personal loan.  If you don't have cash, a home or any assets, the best way to launch is to borrow money from family and friends. 

Think about it

How much money will it take for you to start a business?  Are you sure?  We know of owners who thought they needed $500,000 and they were able to start with $25,000.

Who would loan you money from your circle of friends and family?  Who do you know in the industry who might extend you credit?  Do you have friends and family who would work for you for free?  Would your current company fund you?

Clip from: Veterans Think Big

Let us celebrate and honor the contributions of our veterans. 

Washington, DC and the nation:  Defenders of freedom. Patriots.  Veterans.   These people come from every part of society and from every corner of the nation.  They get special training and they serve their country.  Some enter combat and some get injured. In one way or another, they all come home,  and are discharged or retire from the military.  Many join the workforce and begin re-creating their life with the special honors and experiences of being in the US military.

Meet four veterans who came home and started a business and each of them has become enormously successful.  They have all been creating jobs for many years now and are all highly respected within their industry.

In this episode of the show they each tell how they started companies to provide services to the military.   They explain that doing business with the federal government is different than selling goods and services to the private sector. 

All three have fast-growing businesses that range from $26 million to $70 million in annual sales.

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COMTek

Joe Fergus, Founder

3684 Centerview Drive Suite 100
Chantilly, VA, VA 20151
703-961-9080

Visit our web site: http://www.comtechnologies.com

Office: 703-961-9080

Business Classification:
defense contractor

Year Founded:

Put Your Own Skin in the Game

VOICEOVER:  Joe Fergus is founder of Communication Technologies, Inc. COMTek)  which provides a range of system integration services to the federal government.  He didn’t have a partner to help him get started but he had some savings.

JOE FERGUS:  One of the things I did at Bell Labs is that I invested into the Bell system savings plan.  And by the time I left the lab I had roughly about a hundred, a little more than, a thousand, which I was able to use to get started with.  But by the time I got my first contract,  it was just all about gone.  You know, all but maybe a thousand of it you know what I mean.  And then when you get your first contract you have to perform, it takes time to perform and you have bills and people to pay and salaries and payroll to make.  So, it’s a while before you’re able to actually pay yourself.

VOICEOVER:   The sacrifice paid off.  Today Joe’s company is doing $60 million in annual sales with nearly 1,000 employees. 

HATTIE:  This is Mark Gross.

MARK GROSS:    I started Oak Grove April 19th of 2003, so we, we’ve doubled in size in revenue and people every year.  Today we have about 160 people.  Our revenues are about $24 million. 

MARK:    I started it feet first 100 percent.  I didn’t do it part time.  And what I tell people to start and grow a business it’s an 80 hour a week job.  You can’t do it part time.  

HATTIE:  How did you fund your life?  When you quit the corporate job and had the idea for a piece of software you wanted to develop,  how did you fund that time frame?

MARK:  Well, we did for a short period of time.  The way I funded it was, was through savings, through credit cards and I remortgaged my houses.  At one point, I had about $100,000 in credit cards maxed out.  That’s certainly not fun.  Of course my wife thought it was 50K, $50,000.

HATTIE:  You didn’t tell her about the other 50?

MARK:  Well, I had to keep a little secret.

It took me four years before I could take a vacation.  One reason was I didn’t have the time and the other reason is I didn’t have the money.  So, you know, it takes a while to establish yourself and it’s very humbling.   I went from being a very successful corporate sales person to being humbled and I think that’s good for people.  I think it was good for me but some people have a hard time with that.

JODI JOHNSON (Oberon):  In the early days we self-funded the company for two years until we have a line of credit with our bank and when you’re working with someone that you completely trust you never worried about the checkbook and who’s writing checks and what are they going for.

The exciting thing is we started hiring people.  We got work and we’re making payroll which meant we needed more money.  My husband and I refinanced our house and all the money from the refinance went into the company’s account until we had a line of credit.  There were a couple of different times as we ramped up payroll was much richer than it had been  and we needed more money so that came out of our personal financing.  So the only loan I got for the company was re-financing my house.

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