(MONEY Magazine) – In this age, with the economy mired in a slump, high-paying jobs drying up and the heady promises of the 1990s Internet boom behind us, it may be hard to imagine what kinds of opportunities exist for innovation and wealth. These seven entrepreneurs have no such lack of vision. Despite the sometimes daunting odds and financial risks, they are building businesses. Armed with optimism and ideas, they are realizing their dreams.

THE PRACTICAL IDEALIST

DAVID KARR A neophyte pursues wealth on his own terms

Like many college graduates, David Karr left school with a notion that he believed could make a profit--importing an exotic herbal drink called yerba mate--and make a difference. "One without the other doesn't work for me," explains Karr, 31. The gourd, though, did not work. "We were doing product demos in stores and offering samples in a traditional carved gourd," Karr recalls of his early marketing efforts. "Some people weren't so sure about drinking from it." Showing up at outdoor festivals and natural food stores armed with samples and an irrepressible spirit, he created a buzz about the drink and his environmentally friendly mission. But a year into the business, sales were trickling in. "We knew we had a product that could appeal to everyone," he says, "but growing the business meant reaching that mainstream audience." Could he lose the gourd without losing its essence?

Karr discovered yerba mate in 1996, when a friend from Buenos Aires, Alex Pryor, told him about a 20,000-acre rain forest in Paraguay that his family owned and wanted to preserve. "He gave me some yerba mate, and that was it," Karr recalls. Yerba mate, brewed from the leaves of a rain-forest plant, has a caffeine kick like coffee but is reputed to have health benefits--a lifelong allergy sufferer, Karr says the beverage cured him. "Yerba mate is revered in South America," he insists. "I thought, why not bring it to the States?"

Though the first attempt at a business plan was met with polite smiles but little cash, Karr was not discouraged. Using his entire life savings of $14,000, he packaged a line of samples. He and majority partner Pryor called the company Guayaki, after an Argentine tribe. With samples in hand and his heart on his sleeve, Karr managed to swing a $50,000 SBA loan in 1997. "It was a small local bank," he says. "They bought into our passion more than the plan." Pryor supplied the tea; brand development and North American sales fell to Karr. The money ran out quickly. "I ran up about $70,000 on low-interest-rate credit cards to keep the business alive," Karr says. In need of help, he hired fellow social entrepreneur Chris Mann as CEO. The first priority: more financing. Another SBA loan, this time for $100,000--again, mostly on passion--"saved us," says Karr.

In 1998, Pryor returned to South America, but he agreed to continue providing the herb in exchange for 15% of the business. Karr hit the road full time. With Mann at the office, he and his brother Steven spread the yerba dream--and their ideas about social and environmental responsibility--to stores and festivals from a VW van painted with images of the rain forest. They hired a sales rep and five regional salespeople, introduced iced drinks and began attending serious trade shows. It turned out to be a banner year, with $175,000 in sales. By 1999 the group was ready to leave Karr's apartment for an office in San Luis Obispo, Calif.

Guayaki now has 25 employees in the U.S. and, with $2.1 million in revenue last year, is breaking even. Guayaki claims 70% of the yerba mate market in the U.S., with products in Safeway, Trader Joe's, chains like Whole Foods and Wild Oats, and specialty stores in all 50 states. Now Karr is taking aim at the $20 billion specialty-coffee market. He's betting on the mate latte, which can already be found in coffee shops. The challenge is to hit the shelves in 2005 with a bottled version. Right now, Guayaki is seeking $1 million to $2 million in private equity. Though no one is highly compensated, Karr is confident that wealth will come naturally if they take into account more than the bottom line. "We're in this for the long haul," he says, "and we love what we do."

THE SERIAL ENTREPRENEUR

LORI HON This energetic problem solver loves what's new

Lori Hon can't keep still. "I'm one of those people who always need to be doing something," she says. "It's not easy for me to slow down." At 34, she has already founded two successful businesses and sold one of them. "I rarely get through a day without some sort of business idea," she says, and when she decides to pursue one of those ideas, she does so with a fierce determination. Then once the business is up and running, once the headaches are gone, she finds that she's ready to move on.

After graduating from college in 1991 with a degree in advertising, she decided to take a year off before joining a firm in Denver. For the interim she took a position as manager at a Boulder snowboard shop. As she tells it, it was there, her first day on the job, that everything changed. "I was alone in the store and the phone rang and it was a debt collector," she recalls. Two others called that day. The store, she explains, "was $100,000 in the hole and nobody was doing anything about it." Instinctively she rose to the challenge; in just six months she consolidated three stores into one, launched a series of clearance sales and paid back the creditors. "I was thrown in the fire and found a way out. It was invigorating."

Four years later, Hon opened Twist snowboard shop with about $250,000 from a Japanese firm; after a year, Hon and a partner each borrowed $50,000 from friends and family, and bought out her financially troubled backers. Annual sales had reached about $500,000 when Hon dreamed that she'd opened a sushi restaurant. "It may sound hokey," she says, "but that's how it started." Just like that, Twist closed down. "We returned what merchandise we could, liquidated everything else, even the sign, and terminated our lease. There was no profit margin, but I was able to pay back my investors."

Meanwhile, Hon lined up a financial backer for the restaurant, negotiated sweat equity (emphasis, Hon notes, on "sweat") for a share of the business and lived off her savings. "I spent every day, sometimes the night, for over a month working," she recalls. The first Hapa opened in July 1999. It was a tremendous success; a second restaurant and then a third followed in little over a year. By the end of 2001, the restaurants were grossing $3.5 million to $4 million a year combined. But Hon again had itchy feet, so she sold her stake.

Her latest endeavor is Gray V, a subscription music service for restaurants that's similar to Muzak--"but for cool people," she points out. In an industry where chefs are celebrities and waitstaffs wear Prada, music is one area that Hon says has not caught up--so she's making it happen. Gray V customizes play lists not only by music type (salsa, yes; merengue, no) but also by the pace of the business, so that what is playing for the lunch crowd is not what you hear during dinner.

After about a year developing Gray V, Hon has put in nearly $200,000, carrying $40,000 on five credit cards and $68,000 on a home-equity loan. She's invested all her savings ($50,000) and borrowed about $25,000 from friends and family. "Sure it's scary, but I don't really think about the risk," she says. "I just focus on where I'm trying to get." With $75,000 in sales thus far, she projects sales of $160,000 by year-end, and--if Gray V takes off in hotels as well--$4 million in 2004 and $17 million in 2005.

THE MARKET TRUE BELIEVER

SHAWN BALDWIN This financier has kept his faith in Wall Street

Shawn Baldwin has no time to talk. "We closed the American Financial Realty IPO yesterday," he explains breathlessly. "In this market? It's been insane. Hang on." He stops to attend to one of the phones ringing in the background. Baldwin, 37, is Wall Street hustle personified: fast-talking, name-dropping and clearly fixed on the bottom line. His investment banking firm, Capital Management Group, not yet two years old, already has 130 institutional clients and has participated in seven initial public offerings. Got a minute? "Sure! Hang on..." Phone rings. "Sorry, gotta jump." Click.

Baldwin purchased his firm just nine days after Sept. 11. "Prices were plummeting," he recalls. "People just wanted cash." In the midst of despair, Baldwin saw the opportunity to grab his dream and own his own shop. "Hey, I lived and worked on Wall Street," he says. "I know how awful that day was. I tried to step back and think objectively." With the money he'd made from taking a previous firm public, he bought a municipal bond brokerage, getting, in essence, a license to do business.

With his 12-employee Chicago firm, Baldwin intends to make money by providing brokerage services to institutional clients and by selling shares of IPOs that the firm has helped to underwrite. That's a gutsy bet: The IPO market has slowed to a trickle since the tech bubble burst; three years into a bear market, trading volume is hardly robust. But Baldwin believes he's found a sweet spot. His customers are money managers who don't do enough business to attract the attention of a Merrill Lynch or Goldman Sachs. "I find portfolio managers who have between $500 million and $2 billion in assets, and offer them competitively priced brokerage services," he says.

It's been a long road for Baldwin. Ambitious from the start--he organized rap concerts as a teenager--he understood that to earn big cash he needed to own a piece of something. He joined the corporate world in 1991, first as a sales manager at American Express, then selling investment research for Optima Investment Research. That was his entree into the world of Wall Street dealmaking--"My clients were heavy hitters at Morgan, Goldman and Merrill," he says. The experience gave him the idea of taking his skills and contacts to a small firm that might offer him a piece of the pie.

In 1998 he focused on his first target: Melvin Securities, founded by Chris Melvin, the first African-American specialist at the Chicago Stock Exchange. Baldwin brought in new business, including part of the UPS IPO, but Melvin was not interested in a partner. In 1999, Baldwin turned his attention to the Internet. He negotiated with Charles Payne for a small stake in his research firm, Wall Street Strategies. They took the company public and watched the stock rise more than 500% in just over seven months. On paper, he was suddenly worth $40 million. "I didn't get that when I finally cashed out," he says with a laugh. When the market crashed, the two men parted amicably.

Today, Baldwin has a new goal: to become "one of the top five black investment banks that matter." As an African American in a white-shoe world, he's keenly aware of the value of a good Rolodex. His includes the big guns: Ernest Green of Lehman Brothers and John Rogers of Ariel Mutual Funds are among his friends. "I've concentrated my knowledge base and built relationships," he says. "They're the secrets to my success."

THE INNOVATORS

BILL GARDNER AND WILLIAM BORGHETTI This pair is betting it all on one big idea

It started, "as good things tend to," says retired engineering professor Bill Gardner, 60, over a bottle of wine with his wife. "We like to experiment, try different wines, different vintages, different corkscrews, you name it," he explains, "so it was inevitable that we'd break some corks." One evening, after doing just that, Gardner asked the million-dollar question: Does opening a bottle of wine have to be so tricky? Seven years later he and William Borghetti, his partner in Napa, Calif.'s Gardner Technologies, are ready to hit the market with two products--MetaCork, which lets wineries use a cork but eliminates the need for a corkscrew, and MetaSeal, which is a classier screw cap.

"I'm a tinkerer," says the soft-spoken Gardner, who already had 11 patents to his name. He began examining wine bottles--how they open, how they're sealed, what sort of pressure is required, what's best for the wine, whatever he could get his hands on. "I had been a mathematical engineer," he says, "but the mechanical nature of things is what really interests me." In 1996, Gardner patented the technology behind his first prototype for an alternative wine closure, and by the end of 2000, after numerous modifications, he sensed that he might have a marketable product.

Gardner felt that he'd taken his idea as far as he could; the prototypes were expensive and, in his pursuit of MetaCork, he was losing paying assignments as an engineering consultant. So he decided to hire a business consultant. Borghetti, 35, who was doing start-up consulting after selling the software company he'd founded, took on the job for 90 days.

After meeting with numerous wineries, wine merchants and industry experts, Borghetti hadn't heard yes, but neither had he heard no. So what made him decide to stay on and become a partner? "I had been out there trying to drum up interest for something new in an industry not known for change, and it was challenging," he recalls, "but there was also a feeling that we could really have something big."

Both men have thrown nearly all their resources into their business. Along with putting most of the profits from the sale of his company into the venture, Borghetti sold his 2000 Cessna and his '99 Ferrari for additional capital and refinanced his home twice so his family would have more cash for living expenses. Borghetti figures that nearly 90% of his total net worth is in the firm. For Gardner, that number is 80%. He's taken out home-equity lines of credit on both of his homes and tapped into his retirement portfolio. And travel is on hold, along with dining out--not easy when you live in Napa.

Gardner and Borghetti recognize the risk they're taking, given the wine community's historic resistance to change and the competition from cheaper screw caps--plus the chiding of friends who say, "I've got a corkscrew. What's the problem?" But they'd rather focus on three California wineries--Fetzer, Clos du Bois and Amusant--that are already using MetaCork for at least part of their production; Amusant says sales have increased by more than 300% since switching to MetaCork. That's enough to keep Gardner and Borghetti forging ahead.

THE NATURAL-BORN CEO

ROSALIND RESNICK A Web millionaire embarks on her second venture

Two years ago, when Rosalind Resnick sold NetCreations, the Internet marketing company she'd co-founded, she felt as if she'd lost her reason for being. Although enormously pleased with the $111 million price tag and her $40 million share, she was nonetheless despondent over giving up her job. "CEO was the role I was born to," she explains. Not one to sit and sulk, Resnick decided to volunteer at SCORE, a nonprofit that counsels entrepreneurs for free, until she could see her way to the next venture. It took her two days. "I realized I could do what they were doing, only better," she recalls.

A woman of supreme confidence, Resnick, 44, decided she'd open her own business counseling center. She did ask herself why anyone would pay even the modest fee she was charging when they could get help for nothing, and then answered her own question: "If you were a business owner, how trusting would you be of advice you were getting for free? SCORE and all those government agencies are well-meaning, but you get what you pay for."

It was one year after Sept. 11 when Resnick opened her new creation, Axxess Business Centers, three blocks from Ground Zero in lower Manhattan. At the exquisitely designed walk-in storefront, entrepreneurs can get a business plan, market research, legal referrals, advice on funding sources--whatever they need to start or expand a business. The initial interview is $50; business plans start at $995. Resnick has pledged up to $1 million of her own money and has, so far, spent half of that. She thought of partnering with a large corporation but kept hearing the same reaction: great idea, but come back when you have a proven business. "Corporate America is not in the business of reinventing the world," says Resnick. "They'd rather I floundered around for three years until I was successful so they can plug into an existing model. That's exactly what happened with NetCreations."

She and partner Ryan Scott Druckenmiller spawned NetCreations in 1995 as a Web design firm. When they took it public in 1999, NetCreations was known as the firm that created opt-in e-mail, an antispam system that allows consumers to receive commercial e-mail about only those topics that interest them. NetCreations' market cap was almost $1 billion within three months of the IPO, and Resnick, as the largest shareholder, was worth $400 million or $500 million--"for a minute," she says with a laugh. "It's hard not to let that go to your head."

Resnick, of course, kept her head--she certainly didn't get where she is today without maintaining fierce control over her finances. She has a vivid memory of herself working as a journalist in her twenties, standing in the aisle of a supermarket holding two containers of orange juice and trying to decide if she could afford the Tropicana. "I'm glad I'll never have to decide between two cartons of orange juice again," she says, "but I still don't see myself as a rich person." Perhaps that's because she's taking a risk with Axxess--the risk that she will not have anything to show for her work. "If Axxess doesn't take off in a big way," she says, "I'll have nothing to sell."

Resnick doesn't have the time, though, to worry about failure. She's working too hard trying to get her hours down to 10 a day while getting Axxess up and running in a few more cities by 2004. And if it all works out? She'll sell Axxess to one of those large corporations she approached last year. For a whole lot of money. "I think every entrepreneur worth his soul knows that money is the only way to keep score," she says. "Money is how I judge my success. And if I'm not making money, I'm in no position to advise others."

THE BUSINESS BUILDER

ARTURO ALANIZ A salesman nurtures a global company

Some entrepreneurs are just wired to make a deal. "My father would come back from Mexico with toys and gadgets, and I would sell them to kids on my block," says Texas native Arturo Alaniz. Since then, he has switched direction. As the founder and CEO of Progressive Telecom, Alaniz, 31, now sells cellular phones in Mexico, Costa Rica and the Caribbean. His father, whose parents had immigrated from Mexico, was a car dealer, "so I got a lot of sales training by osmosis," he says.

Alaniz attended college but didn't finish. "I worked as an agent for a collection agency when I was in school," he explains, "and I realized pretty quickly that I could run that type of business on my own." By the time he was 21, he had three employees. "We were just getting by, then I lost my biggest customer. So I sold my accounts and went back to work."

His first sales job, in 1994, was selling and activating cell phones. "Remember those huge phones, the size of small bricks?" he says. " That's what I was selling." When he visited customers who were looking to upgrade to newer, sleeker models, they asked for something his company didn't provide: a discount for their old phones. "I started paying out of pocket for the old phones just to close the sale," he recalls. Soon he had a box of used phones rattling around his car. It sounded like opportunity. "The phones worked, so I figured someone might want them." He began selling the used phones to dealers who resold them to retailers in Mexico. Soon he was advertising for phones in local papers and extending credit to buyers. When one of his buyers failed to pay for a big delivery, he cut out the middleman. Selling directly to Mexico opened up a whole new market.

Excited by the upside of his cell-phone business but not ready to leave his day job, Alaniz took on his cousin as a partner to handle the sales to Mexico. They set up shop--rent-free--in a spare room in his mother's home, just 15 minutes from Mexico. "Retailers would drive across the border, pull up to my mother's house and buy the used phones," he says. The pair made $100,000 in sales in 1997; by the middle of 1998, sales were exploding. That persuaded him to jump in full time; he took a 50% cut in pay and got a $100,000 SBA loan. Sales for the year grew to $2.1 million, and his cousin was ready to cash out. "His dreams for his lifestyle were different than mine," Alaniz explains. "So I agreed to buy him out."

By 1999 the growing business left home for an 18,000-square-foot facility in south Texas. Sales grew to $5.6 million in 2000, $14.6 million in 2001 and $27.3 million in 2002.

Now, with 80 employees in five locations in three countries, Progressive Telecom is selling mostly new phones to stores. The company works directly with several manufacturers--Modottel, Maxon (both Korean) and Audiovox--in distribution deals throughout the Americas and the Caribbean, and also sells phones to service carriers that Alaniz calls "the up-and-coming Cingulars of this world." He travels a third of the year, solidifying relationships with manufacturers and vendors. Though he's flush with frequent-flier miles, his schedule has taken a toll on his love life. "Right now," he says, "I'm really married to this business."

What Progressive Telecom does, and has always done, says Alaniz, is elementary: "We buy a phone for a dollar and sell it for two." The key to success was identifying an underserved market and finding ways to provide better products, service and value. "We go to the second-tier players with great products who are looking for distribution," he explains. "We find it for them. Our goal is to grow together." Alaniz is infectiously optimistic: "I believe that we have the potential to make this a billion-dollar-a-year company."