If the shoe doesn't fit, start a company

By Deborah L. Cohen

CHICAGO (Reuters.com) -- If the shoe fits, wear it. If not, start a company.
            As a former college basketball player with a size 11 foot, Kathryn Kerrigan knows all too well about difficulties tall women face trying to find stylish shoes in larger sizes.
            She began wearing boys’ athletic shoes after a growth spurt in elementary school that would eventually cap her height at six feet. The problem continued to dog her as a teenager when she couldn’t find the right shoes for special events like her high school prom.
            “It was always an issue,” recalls Kerrigan, 28. “We’d go to every Nordstrom, Niemen Marcus and Marshall Fields, and we’d just scour for something simple and black.”
            The shoe dilemma was, of course, a natural fit for Kerrigan’s final MBA project at Loyola University Chicago. Today her three-year-old company, Kathryn Kerrigan Inc., offers fashionable, upscale footwear through its own Web site and Amazon’s new shoe destination, Endless.com, as well as at various boutiques around the country. The business is projecting more than $1.5 million in 2008 yearly sales.
            The fledgling operation, based in the Chicago suburb of Lincolnshire, is also talking to national retailers Saks and Niemen Marcus about distribution. And Kerrigan is planning to launch a separate line of couture clothing to complement the classic pumps, wedges and flats she sell for about $250 a pair and up.
            “Kathryn has a really great niche,” says Karen Williamson, owner of Barefoot Tess, a Baltimore, Maryland-based online retailer site specializing in shoes from sizes 11 to 15, who carries the line. “It’s a niche for someone who needs the big sizes, who wants the better shoes and is willing to pay for it.”
            It wasn’t an easy road, says Kerrigan, who jokes that she started the company on  “a shoestring budget.” With no formal design training, she attributes much of her fashion sense to the example set by her stylish grandmother. 

Breaking the mold

            After using her MBA business plan to secure a bank loan of $35,000, Kerrigan began learning more about the shoe business by scoping out industry trade shows, where she talked to endless suppliers in search of a factory willing to take on the expensive start-up costs of developing a line of larger-sized shoes.
            It was a frustrating pursuit that led to a lot of no, thank you’s, says Kerrigan, who explains that each size of every style requires the construction of a separate shoe form costing roughly $2,000.
            “I could have had a million dollars and I couldn’t convince these factories to make the shoe because no one had made the mold in the larger size for women’s shoes before,” she says. “None of these factories would help me make the pattern for these bigger molds.”           
            She finally found a factory in Alicante, Spain, a Mediterranean region known for high-quality shoe-making, that was willing to work closely with her – and help her develop her shoe acumen. For some seven months Kerrigan apprenticed in the factory, learning the technical nuances of turning fine leather into stylish footwear. 
            “I didn’t know anything about how shoes were made,” she says. “ I had to know it 100 percent.”
            Back home, she had more homework to do, absorbing complicated details of import laws, tariffs and the like. Kerrigan now travels to Spain several times a year to work out new designs at the factory.       

Starting out

            Early on, Kerrigan ran the company out of her parents’ home in the Chicago suburbs, using nearby rented warehouse space to stock the shoes. She relied heavily on her father, a retired executive with the Federal Reserve Bank of Chicago, for financial advice; her mother, a former school superintendent with a passion for shoes, became the company’s president.
            Like many entrepreneurs, Kerrigan is loath to give up control, and has eschewed taking on outside investors; even so, she works closely with an advisory board comprised of industry veterans. Her organic approach to growth demands flexibility. When she realized she didn’t have the capital to sustain a business based solely on a Web-based selling model due to the high cost of stocking large quantities of shoes, Kerrigan shifted more attention to a budding wholesale operation.
            “We had wholesale business, we had orders, we filled them and that was great,” she says. “We didn’t have to carry inventory.”
            Apparently, the tall girls wearing Kathryn Kerrigan styles like Ginnys, Tamras and Wendys have created so much buzz that women with smaller feet want to own them as well. The company’s response has been to extend the line; Kerrigan now offers sizing from 6 to 15.
          “All of sudden you go from never being able to pick out shoes to being able to pick out what you like,” says Sally McGee, a 37-year-old Stamford, Connecticut resident who works for a hedge fund and owns 10 pairs of Kathryn Kerrigans. “Everywhere I go I’ve gotten compliments.”

(Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com)