The Small Business Professor

Entrepreneur’s Expansion Financed by City Grant

Mike Tiernan has been in the grain elevator equipment business in Amarillo, Texas since the early ‘70s. His brother was into electronics and had a special knack with anything mechanical, so when he asked Mike, a recent West Texas State University graduate, to come into the grain aeration business with him, Mike readily agreed. Mike loved selling the large fans that cool and dry the grain in the silos, but the best part was selling something he and his brother manufactured themselves.

Tiernan’s grain aeration business, as Mike plainly puts it, is regulated by God and government. If God doesn’t bring good weather and crops are bad, then farmers and cooperatives don’t have the money to replace equipment and since only God understands what government policy will be with regard to grain prices, expansion can be a risky business. After his brother passed unexpectedly from a heart attack in 1977, Mike plowed himself into his work, but continued to be at the mercy of this seasonal and cyclical business. He hated having to lay off good workers, always tried to help them find other jobs, and continued to incur high training costs for new workers since many of those laid off had found other jobs by the time he could afford to hire them back. After years of watching the seasons and the skies, it became clear that he needed to bring in another business that was more independent of Mother Nature.

In 1978, Tiernan was looking for opportunities that took advantage of the metal fabrication equipment he already had when a man called and asked him to go and measure a barbecue in someone’s back yard to see if he could create one just like it. Tiernan had always liked to barbecue, after all he is from Texas, so he decided to see if he could improve upon the barbecue grill and sell it to others. Tiernan’s reputation for custom barbecues spread by mouth-watering word and the business grew for several years.

Then, in the late 90’s someone asked Tiernan to build a patio fireplace, but this required expensive equipment and Tiernan didn’t have the capital. Enter the Amarillo Economic Development Corporation’s Enterprise Challenge, a contest for grant money to help local businesses expand and hire additional workers. Tiernan entered his patio fireplace design and won 1st place and a $33,000 grant to hire workers, buy equipment and promote his product. Soon, discount giant Costco picked up the fireplaces and Tiernan’s business grew by 300%. This growth continued until the fireplaces became so popula, that they were undercut by less expensive foreign imports. Tiernan ended up getting out of the patio fireplace business completely by 2002.

Still, Tiernan had more equipment, experience, and the knowledge of how to start building new products from scratch. His experience with the patio fireplaces taught him that he needed to build high-ticket custom pieces that could not be so easily replicated if he was to continue to grow his business. So, his next foray was into the manufacture of custom outdoor cooking islands, which accept any brand of grill. Quite elaborate, some of the islands even have refrigerators, stereos, umbrellas, and burners and can be manufactured in different sizes, colors and finishes. Now, Tiernan ships the cooking islands direct to almost anywhere through his web site, www.icookout.com and has also opened his own retail space in a converted corner of his manufacturing plant. He sells through distributors and specialty retail stores as well.

The Small Business Professors' Words of Wisdom

Mike Tiernan has mastered the art of change as a management technique for the challenge of running a business with huge fluctuations in gross profits. Now, with a solid core staff, he hires temporary workers when sales warrant and keeps layoffs to a minimum. He continues to manufacture grain elevator equipment, but is constantly searching for the next trend that fits into what his plant can manufacture to keep the business growing. He knows that keeping your eye on the ball is what keeps his business cooking.

Case History: www.icookout.com

Entrepreneur’s Strategy: Apply for grant money to help finance business expansion.

Could This Work For Me? Many cities and counties have economic development money available to help small business owners. Investigate what’s available in your town.