Surviving, Prospering, Growing By Capitalizing on Media Attention

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Ed holmes turns disaster into opportunity.

All Ed Holmes wanted was a quiet Sunday at home. But while watching the NBA championship game on television, the phone rang. It was Holmes' fire alarm company: His business was in flames. Holmes raced to the headquarters of his 3-month-old firm, Ebony Iron Works in Portland, Ore., only to find 100 firefighters struggling to control the blaze. The fire destroyed 50% of his production shop, causing $300,000 in damage. At that time, Holmes was in the midst of completing his first three contracts, which totaled about $200,000. "I had already used all my working capital," he recalls. "After the fire, I knew no one would loan me anything. So my only access to funding was the money I was paying myself." Finding a Silver Lining Because Holmes had launched his steel-fabrication business on a shoestring, he didn't buy business-interruption insurance. He carried a minimal level of general-liability coverage, which didn't defray the monthly rent. The local newspaper covered the fire and its aftermath. Holmes told reporters he didn't know how he'd survive. That's when he realized the disaster's silver lining. "Everyone knew about the fire," he says. "If I could pull through, it would show the community that I could make it through my toughest time, that Ebony Iron Works was here to stay. So I decided to turn the negative into a positive." Rebuilding From Scratch To stay afloat, Holmes didn't draw a salary for the first year. His family lived off his wife's income, while Holmes plowed about $70,000 back into his business. Soon after the fire, Holmes and his four employees moved materials into an adjoining building that he leased temporarily. They managed to complete the three contracts on time, impressing his customers and generating additional business. By the end of its first year in business in 1995, Ebony earned $590,000 in sales — only 40% less than original projections. "Sweat equity helped us through that period," Holmes says. "One of my first contracts was a $150,000 project with a 10% profit. After the fire, it cost me $190,000 to complete the job. But despite the financial pain, I knew my ability to deliver would pay off over the long run." Investing in Success By 1996, Ebony earned $1.2 million in sales. After buying a 30,000-square-foot property in 1998, production doubled. By 1999, sales were $3.2 million, with expectations of hitting $4 million in 2000. Holmes attributes his success to many factors. In 1997, he qualified for the SBA's 8(a) business-development program that provides technical assistance and federal contracts. But most important, Holmes scored a public victory. His clients still remember the fire. They know that Ebony survived and prospered after such a massive disruption. That's the kind of advertising Holmes could never buy. Writer: Morey Stettner
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