Learn to Run the Numbers

Can you start a business without going to the bank? Tom Sherburne thought so, and judging by the success of his company, Shred Ready, a manufacturer of high-end kayaking helmets, he was right.

Sherburne launched Auburn, Alabama-based

Shred Ready in 1996 more or less out of his own pocket. He used revenues from the kayaking school he started that same year, the Southern Outdoors Center, to get Shred Ready off the ground. Once Shred Ready turned a profit, he reinvested all of its profits back into the business. To launch and grow the company without the help of outside financing, Sherburne put off paying himself a salary.

"We didn't start out with anything," says Sherburne, who during the early days often had to dip into his personal checking account to give Shred Ready a small loan when things got tough.

In the beginning Shred Ready's growth was slow. Sherburne spent two years researching and designing Shred Ready's first helmets: the Shredder and the Storm Trooper. Then problems with a subcontractor slowed the manufacturing process.

Sherburne also attributes part of Shred Ready's slow start to his unwillingness to spend too much time with the accounting side of the business. As a result, the company had cash-flow problems on a regular basis. To jump-start things, Sherburne finally wrote a business plan in the company's second year of existence, which forced him to start paying close attention to the numbers. Sherburne says he learned the accounting side of the business as he went along.

Sherburne says the key to getting through the leaner start-up period was keeping his overhead low. To keep expenses and overhead at a minimum, "you've got to do the numbers and trust your gut instincts," says Sherburne. Once Shred Ready made it through the tough times, Sherburne continued funneling the profits right back into the business to ensure its continued growth.

Today, despite its humble financial beginnings and accounting pitfalls, Shred Ready's growth is now exponential — the company produces thousands of helmets each year and it brings in five times as much revenue as the business that originally funded it. Last year Shred Ready's revenue doubled, and Sherburne expects similar growth in 2000 and in the future, when he expands Shred Ready's line to snowboarding helmets.

Ultimately, Sherburne says getting a business off the ground by your own means just takes time and determination: "It takes a lot of patience and being able to tough it out."

— Kevin Casey