You Would Have Thought the Money Was Made of Rubber Bands: CEO Marissa Levin on Starting Her Business from a Costco Line of Credit

by Jill Foster on April 13, 2009


Guest contributor Marissa Levin is Founder and CEO of Information Experts. Launching a new Women Grow Business series on sales strategy, Marissa was named a 2008 BRAVO Award winner by SmartCEO Magazine (which honors the region’s 25 most influential women CEOs). Describing her true passion as “helping other business owners be successful with their own business growth”, Marissa can be reached through her blog Marissa Levin.

Launching a business Costco style:

  • Paper towels? check.
  • Laundry detergent? check.
  • Sandwich bags? check.
  • Bottled water? check.
  • …and a $50,000 Line of Credit to jump-start my business and buy office furniture? check!

That’s right… my very first business “funding” came from Costco (known as Price Club in those days), in the form of a 24-hour approved, $50,000 Line of Credit, which was available because of my strong personal credit history.

Many entrepreneurs start their businesses by investing personal savings, racking up credit card debt, or borrowing from friends & family. None of these options were viable for me, so I went to Costco after being approved by the Small Business Administration for a business loan (but I refused to pay the outrageously expensive loan origination fees).

At the same time, venture capitalists were throwing loads of money.
And they were throwing it in the directions of companies that had fantastic ideas but no experienced leadership and no solid business plan to lead them to profitability. With our $50,000 Line of Credit, we stood on the sidelines watching these companies burn through these funds at an unbelievable rate — doling out outrageous salaries, all-expense paid vacations, and new cars to new hires, and inhabiting the most beautifully designed office buildings while providing catered meals and on-site massage therapists –- and of course never progressing toward profitability and the ability to pay back the investors.

We watched these companies crash and burn.
And then attended their asset auctions where we purchased their Herman Miller office furniture, and custom-designed cubicles with Corian surfaces and glass block partitions, for pennies on the dollar. We used our purchases to furnish a low-end office suite in the basement of a Herndon, VA office building and an “office” with no finished ceiling in a warehouse park.

My team and I stretched that $50,000 so far that you would have thought the money was made of rubber bands.

Fast forward more than 10 years later.
And that Line of Credit has long been supplemented by bank loans and additional lines of credit. But our conservative approach to spending still permeates our organization. While we continuously re-invest in the organization and in our employees (and have since moved from the basement and warehouse), we continue to approach our purchases cautiously and analytically. We appreciate the investments required to attract & retain top talent, and the financial commitments needed to pursue large government contracts.

I have often felt that I am walking a high-wire without a net.
There is no escaping the fact that bootstrapping an idea that grows from a kitchen table to a multi-million dollar consulting firm is incredibly stressful and risky. Throughout the life of the company, I have often felt that I am walking a high-wire without a net, and that never rang truer than when a customer defaulted on a $250,000 payment many, many years ago.

Especially with my husband Adam as a Senior VP of Information Experts, our family truly has all of our financial eggs in one basket.

So reckless spending is simply not an option.
With two young children, and dozens of employees depending on us, reckless spending is simply not an option. And when I speak at various universities and business groups whose seats are filled with eager yet inexperienced entrepreneurs, I drive home the importance of maintaining a high personal credit score through fiscally responsible financial management.

A critical asset for launching your business: a healthy personal credit score
It is [new entrepreneurs'] personal credit score that will lead them to their first business loan or line of credit. Especially in today’s economic climate, a good business idea alone will not generate financial backing. There must be some proof the borrower has a sense of financial responsibility and accountability. In addition,

…often a business owner’s personal relationship with money and their approach to financial management will set the tone for how money is managed in the business.

If a business owner is impulsive and irresponsible with personal financial purchases, and doesn’t respect the value of a dollar, it won’t be long before the business suffers as well.

The two greatest liabilities of any organization
Ultimately, financial management inside of a company boils down to how the business owner values money. A long-time advisor once told me that unmanaged growth and under-capitalization are the two greatest liabilities of any organization. Through my experience with my own company, and with companies around me that have both failed and thrived, I most definitely agree that these are liabilities.

But I believe it is the business owner’s personal relationship with money that makes the biggest difference. Managing money with logic, rather than with emotion, will ultimately lead to smarter and more financially-rewarding payoffs for everyone.

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Marissa leads company efforts at Information Experts to create technology-based integrated communications and human capital plus learning strategies for government agencies — as well as for organizations across vertical markets. Check back later this month at Women Grow Business as she shares more on cultivating sales (in any economy).

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