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Doors hinge on high-tech
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April 20, 1998: 4:20 p.m. ET
SBA helps entrepreneurs secure funding for innovative process
From Correspondent Susan Lisovicz
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NEW YORK (CNNfn) - When two enterprising entrepreneurs pooled their expertise in a new venture, the Small Business Administration helped them solve one of the classic new-business problems -- cash flow.
With a well-crafted business plan in hand, partners Robert Stuart and David Cox qualified for a loan that made it possible to invest in the high-tech equipment at the heart of the idea without jeopardizing the funds needed to cover monthly overhead.
Stuart studied wood science in college and worked in the wood products industry. When he returned from an overseas job, he searched for a promising business opportunity.
He hit upon a concept for manufacturing low-cost, custom wood doors and persuaded business friend Cox, who knew the marketing end of the industry, to join him in the venture.
The two launched Consolidated Fiber Co., which produces doors with intricate molding and other custom woodwork.
A skilled artisan might be able to turn out one a day, but Consolidated Fiber turns out 30 of the doors in the same period, thanks to new technology.
Stuart, the company's director of manufacturing and marketing, said the company's process enables it to do the work in a fraction of the time required by a competitor. (150K WAV) or (150K AIFF)
The concept combined new manufacturing technology with an innovative wood product. The idea was to produce a wooden door that looked hand crafted, but was actually made by a high-tech design and manufacturing system. Designs are computer generated and a special computer program directs the routers that carve out the design.
The process creates a door costing about one-third of one produced by traditional methods.
Stuart and Cox decided to call their products Bolection Doors, which means they contain a molding that projects outward from the surface.
The doors are made of an innovative wood material known as medium-density fiberboard.
"Most people are familiar with particle board, which is fingernail size particles. (Ours) are manufactured further where they are mechanically refined down to the fiber," Stuart said.
The compressed fiber surface allows one piece of construction, which produces a door more durable and problem-free than conventional doors.
The pair started turning their idea into a reality in June 1996, setting down all the necessary steps on paper. Their business plan indicated the start-up venture could operate competitively as a low-cost producer.
By August, Stuart and Cox were ready to buy equipment. At a machinery show, they arranged financing through a leasing company. Before finalizing that deal, they decided to explore other options.
"One of our biggest factors was cash flow. We were trying to see what we could do to reduce our monthly payments," Stuart said.
They discovered the SBA's 504 Certified Development Company Program designed for small businesses creating jobs in the community. Loans are awarded for major fixed assets such as buildings, land and equipment.
Stuart said the SBA option turned out to be a big money saver.
"We were able to get a better rate and extend the payment from five-year payback. The SBA loan means saving about $1,700 a month in payments," he said.
Consolidated Fiber opened for business in January 1997 in an old stove-making foundry in Greensboro, N.C.
Cox said introducing customers to a new product made from a new material was extremely challenging and took a little convincing, but the pair ended up pulling it off.
"Surprisingly, architects have embraced us from the outset. To our surprise, they've been very knowledgeable," he said.
The company initially started out with 4,000 square feet and have more than doubled that to just under 10,000. They've also grown sales for seven straight months.
The growing company now employs seven workers, including two Bosnian refugees, fulfilling the SBA's hope that the business would help the community.
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