That happened to Dan Graham, CEO of BuildASign.com. With two friends he’d known since high school, and a fourth partner who had once been a client of theirs, Graham set out to build a web development company. Along the way, they hit upon the idea of designing a web site that let people design their own signs online.
“We knew the most expensive and risky part of running a sign shop is the upfront graphic design work that went into each sign job,” Graham said, noting that one of his partners’ parents had owned a small mom-and-pop sign shop. “A customer typically gives you a call and asks for a quote on a sign. They come in and want to see a mock-up of the sign. It may go through several revisions, and then the customer decides they don’t like it, and they don’t pay for it. So the company has sunk a lot of cost into quoting that sign, and spent money on the graphic design, and without any revenue. So, shops have to spread that cost across those customers who do end up buying. It lowers the margin across all orders.”
Graham and his partners figured they could do better by automating the process and selling software to the sign shop owners. “Prices could be posted online,” he said, “and by utilizing some of the new web technology like sample templates, customers could customize their sign with their own name and number, add their own logo and play around with the style and layout – when they are done, the price is there, and customers can buy.”
But it didn’t work out that way. It turned out that shop owners didn’t want to design their signs online – they believed their customers wanted something they could see and touch. They wanted something tangible.
Graham and his partners – friends Ty Barho and Blake Borgeson, and former client J.R. Kraft – knew they had a good idea, and decided to pursue a “ready, fire, aim” strategy. They built their website as a sideline to other development projects in the hopper, and with some basic online advertising, they soon started attracting customers.
Too many customers, it turned out. “It was working too well,” Graham said. “At several points we had to throttle back our online advertising because we were looking for people who could actually make the signs because we had no way to make them.”
Their customers were across the country, and they expected three-day delivery of their signs. But Graham and partners had negotiated low prices with an Austin sign shop, and the shop wasn’t going out of its way to service Graham’s customers. Graham, who was finishing law school at the University of Texas at the time, joined the production line at the shop to get the signs out on time. Then he would head for his 100-square foot office to cut checks for the sign shop, to pay for the signs they had just made.
“It was really demoralizing,” he said. “For the most part, we were leasing their machines at a very expensive rate.”
They decided that they’d have to buy their own printer and make signs themselves. Graham said that was a big decision: “We were all software geeks, we were not manufacturing people, and we were not sign people. We had no interest in any of that space, because we were doing our programming thing.”
He and his partners had earned $20,000 by outsourcing production to local sign shops – and it was enough to buy a sign printer. They leased 1200 square feet of space, moved in the printer, and started producing signs. BuildASign officially started on January 1, 2006. By the end of that month, the company was turning a profit, and all the partners were getting paid. “We were very surprised by how quickly it grew online, and the market was coming to us and helping us really define what we wanted to sell,” said Graham.
They still had to learn about the sign industry, said Graham. “We were definitely very competent in certain areas like general business principles, management, accounting and the correct way to organize and run a company. We were very confident in that respect, and definitely not at all confident in the sign industry category.” But sign printing, types of ink, types of drying and curing times, installation mechanisms – those were all new.
“A customer would call and say, ‘Hey, I’m on your site and I’d like this sign in a different size, do you have that?’” Graham related. “My partner would put his hand over the phone and yell at me, ‘Dan can we do this?’ I’d jump on my keyboard and create the new product. Then I’d hear, ‘Ma’am, if you wouldn’t mind refreshing your screen. . .’ then it would be there and the customer could buy it. That’s the kind of ‘by the seat your pants’ business we did in the early days trying to find our niche.”
They’ve found their niche. In 2010, BuildASign expects to take in over $20 million in revenue. Graham credits technology and innovation for building the company. “We were building technology solutions that would run our machines for us. We could prioritize which order was going out the door next; we automated as much as possible the entire process. So today, our website runs everything – it runs our customer service, our production equipment, our front end website, all of our reporting and all of our administrative functions. Everybody logs into buildasign.com whether you’re operating a printer, answering a phone or designing a new website.”
Since its start as a four-person company, BuildASign has added employees. It now has its own full time web development team. That’s one thing that distinguishes BuildASign from other sign companies, Graham says: “For the most part if you look at sign companies who have strong web presences, they are going to be sign people who have decided to come to the Internet. We’re the other way around. We’re Internet people who decided to come into the sign industry.”
Also key to BuildASign’s success is the caliber of employees. Graham says most people in the sign industry aren’t technologically sophisticated, and he and his partners had to look elsewhere to find good hires. “We were forced into finding people who were very talented and really didn’t have much sign experience,” he explained. “We’ve been extremely successful at that – now they are all sign experts, and, they’re sign experts who are 100% more passionate than anyone you’ll find in the sign industry.”
What lessons does Graham have to share with other potential bootstrappers? To steal the Nike slogan – just do it. “Getting out there and just doing it and engaging your customers before you do the mountains of research, works,” he said. “You might feel like you need to create the perfect marketing or business plan, but taking an idea and running with it a little bit and seeing what feedback you get and what kind of results you get, does work. We’re constantly putting things out there to see what the response is, and how customers react, then we can adjust, reload and fire again when we see where the bullet hits. That’s been very successful for us.”
Links to accompanying bootstrapping stories:
Mar 13, 2017 Comments Off on Building Innovation
#TexasCEO's 10 Most Read Articles Of 2017 #2 The Changing Of The Guard: San Antonio’s #Economic #Development Future texasceomagazine.com/features… @SanAntonioEDF #1 Deep Roots In The Heart Of #Texas: The Kaspar Family’s #Holistic Approach To #Ranching texasceomagazine.com/features…
#TexasCEO's 10 Most Read Articles Of 2017 #4 @Jim_nyquist: At The Inflection Point Of #IIoT texasceomagazine.com/features… #3 Building #Innovation: @turner_talk Builds On Empowering Individuals texasceomagazine.com/features… @Turner_DAL @TurnerSouthTX #MiddleMarket #entrepreneurs
#TexasCEO's 10 Most Read Articles Of 2017 #6 The Cilantro Diaries: #Business Lessons From The Most Unlikely Places texasceomagazine.com/book-rev… @lgomez123 #5 From #Franchisee To #Franchisor: How Gordon Logan Built @SportClips texasceomagazine.com/features… #MiddleMarket #entrepreneurs
#TexasCEO's 10 Most Read Articles Of 2017 #8 #Mexico Is The New #China by @DrPippaM texasceomagazine.com/departme… #7 Growing The Next Generation Of Texas #CEOs: #CEO-to-CEO #Mentoring texasceomagazine.com/features… #Texas #MiddleMarket #business #entrepreneurs
#TexasCEO's 10 Most Read Articles Of 2017 #10 7 Top Trends That Will Shape #Texas In The Coming Decade by @KenGronbach texasceomagazine.com/departme… #9 Peter Huff Of @BlueSageCapital: A Generalist In The Specialized World Of #PrivateEquity texasceomagazine.com/features… #Texas #MiddleMarket