By Writer: Jan Alexander

(MONEY Magazine) – ''I drink 20 cups of coffee a day,'' boasts Phil Johnson, 43. Maybe it's all that caffeine that has been stimulating his string of entrepreneurial ideas. The first of them came to him in 1980 when he was the Seattle branch manager for Goodhost Foods, a Toronto-based distributor of packaged coffee to supermarkets. Johnson had been eyeing the boom in specialty stores selling loose coffee beans at as much as $7 a pound. He suggested that Goodhost wholesale its beans in bulk to supermarkets, which could retail them for $1 or $2 less per pound, and then he began building this new line of business. A year later, however, Goodhost lost interest in slow-growth Seattle and decided to sell its branch. By then Johnson was delivering gourmet beans to 150 supermarkets, bringing in gross sales of about $50,000 a month. Johnson says it was the sales of old-line packaged ground coffee that were sagging. Convinced that the continuing growth of upscale pocketbooks and palates meant a robust market for fresh beans, Johnson decided to try buying out the branch himself. Sheer enthusiasm and an understanding employer carried him past the first hurdle: raising capital. Johnson was supporting himself, his wife and two children on about $40,000 a year, and he had nothing near the $250,000 that Goodhost was asking. But he scraped together a $100,000 down payment by borrowing from friends and relatives, putting second and third mortgages on his home and giving Goodhost title to one-third of an acre of % Puget Sound waterfront property worth $40,000 that he owned. Goodhost extended credit for the rest for two years at 21%. By September of 1981 Johnson was ready to hang his new shingle, Coffee Products Inc., but no money was left for operations. His solution: he turned to a way to finance the running of the business with receivables. He talked Safeway and other supermarket chains into paying their bills in 10 days instead of the usual 30 in return for a 2% discount. Smaller grocers got the same price break in return for cash on delivery. At first, Johnson's wife Donna, 44, managed the office while he delivered beans and installed the in-store display cabinets that included Plexiglas bins and self-service grinders for consumers who didn't want to grind their own at home. His son Scott, then seven, often accompanied him and helped fill the bins. With a typical workday lasting 12 to 16 hours, this was the only way Johnson could spend time with his boy. Coffee Products, sold under the brand name Millstone, brought in sales of $1.5 million in 1982, and profit was about 7%, after taxes. The next year Johnson managed to pay off Goodhost with a bank loan, and in 1984 he settled his second and third mortgages. He has yet to have a year in the red. With Millstone self-grind coffee in 700 supermarkets at $5.99 a pound, Johnson commands a $10 million empire, growing 40% a year, from which he draws $100,000 to $150,000 in annual salary -- ''more money than I ever thought I'd make,'' he says. Ever industrious, he decided three years ago that his enterprise had grown big enough to roast its own beans, instead of buying them roasted from Goodhost. A 13,000-square-foot metal building now houses both Coffee Products Inc. and its offspring, Custom Coffee Roasters, which is attracting a new market in sales to restaurants. Beyond that, he is breaking into a brand-new field, sales to offices, which he believes will one day be a bigger source of income for his company than restaurants are now. ''Businesses are beginning to see the value of serving both employees and clients a good cup of coffee,'' he says. Johnson's love of the bean is so great that he is planning several trips to far-flung coffee-growing lands -- Java, Sumatra, Kenya, Costa Rica and Guatemala -- to complete his caffeinated education. Then he will be ready for what he expects will be continued brisk expansion in gourmet coffee consumption. And he intends to keep on getting more than his share of that business.