THE BUSTED KNUCKLE GARAGE

May 2008

CFG: Going Where Banks Simply Don’t Go

CFG has been financing small companies and multi-million dollar businesses alike for over 34 years. They’ve provided critical capital to thousands of companies, many of which have compelling, fascinating stories. One such company is the Busted Knuckle Garage, a unique enterprise that had a great concept but not enough capital to reach the next level.

Creative Beginnings

The story behind the Busted Knuckle Garage is akin to the muscle cars that inspired the company’s logo and image: hard-working, gritty, and full of action.

Warren Tracy, CEO of Busted Knuckle Garage (or “BKG”), started the company with a great name and a distinct logo – a hand with a finger-tied bandage grasping a wrench. A car lover since his teenager years, Tracy had endured a lifetime of busted knuckles while working under hoods.

BKG thus became the foundation of a great marketing concept. Tracy developed a wide range of gifts, collectibles, personalized items, clothing, skin care, and even coffee that carry the distinct BKG logo and brand. These products are targeted at the widespread and immense car culture around the world, where the image of a busted knuckle is synonymous with mechanics and fabled grease monkeys.

The Dilemma: Managing Growth & Success

In 2007, Busted Knuckle Garage snagged a very big catch: Mac Tools. The automotive tools giant wanted to distribute the company’s products through its catalog.

Sales went through the roof. Orders exceeded initial estimates by 8x and one night saw 1,100 orders via fax alone. The success was phenomenal – BKG hired six additional staff members just to keep up with the orders.

BKG, however, also had a problem. Payment terms with Mac were 90 days but increased inventory was necessary to meet the new demand. The resulting shortage of working capital was becoming problematic.

Tracy approached multiple banks for a line of credit but was universally turned away: BKG had a lack of collateral, no track record, and cash flow problems. Ultimately, Tracy was facing issues that are all too common for small businesses and start-ups.

The Solution: CFG

To solve BKG’s problems, Tracy’s local Small Business Development Council referred him to Tom Klausen and CFG’s Phoenix office. After an initial consultation, Tom and CFG realized that BKG was indeed a promising company; it just needed fuel to start racing to the top.

Consequently, CFG provided the company with a full service factoring facility. The facility enabled Busted Knuckle Garage to manage cash flow, meet the increased demand for its products, and develop new strategies for growth.

“CFG took the worry out of the equation,” says Tracy. “CFG supported our monthly payables and allowed us to grow with confidence. We weren’t wasting any energy on unnecessary and unproductive anxiety over receivables. CFG basically made our expansion possible.”

Beyond just writing checks, however, CFG’s executives gave Tracy insightful tips on how to manage the facility and reach the next stage of his business. Tracy knew that CFG’s expert advice and timely capital could turn a stalled entrepreneur into a high revving business machine.

Keeping the Pole Position

Today, BKG indeed has become that high revving business machine. With CFG’s factoring facility, the company is overcoming immediate challenges, satisfying expanding demand, and sustaining its growth. “CFG has provided responsive, flexible, and thorough attention to our needs. They’re intimately involved in our present and future planning strategies and I wouldn’t have it any other way,” notes Tracy. “Every entrepreneur could use this kind of help,” he added.

Now, BKG is selling its products through Home Depot, JC Whitney, its own e-commerce web site, and a wide range of additional distribution channels. BKG’s logo and unique products are fast becoming popular hits in the automobile culture and gift markets. And with a partner like CFG, Tracy and his pit crew can clearly see the checkered flag of business success just ahead.

If you’d like to learn more about how CFG may be able to help your financially challenged clients, please contact us.

To learn more about CFGs accounts receivable management programs, please visit www.cfgroup.net or contact us at (800) 757-5195.