A successful business needs a number of factors to come together in order for it to move forward and, one of those things, is, of course, cold hard cash. When a company’s coffers are empty or dwindling, recovery can be tough and, owners will try almost anything to raise cash, including running promotions, taking loans and creating partnerships. In 1973, however, Fred Smith, founder of courier company, Federal Express, tried a somewhat different approach!
From ships to trucks
In 1971, Fred Smith, a former member of the Marine Coprs, bought the controlling interest in Arkansas Aviation Sales. Having spotted a gap in the delivery market, he then raised $80 million in loans and investments to fund his new company which would become known as FedEx. Now serving over 20 countries worldwide, FedEx began operations in 1973 and specializes in fast international deliveries for businesses and individuals. The company is currently worth $57.37 billion.
A U Turn for company finances
Despite the mammoth funding which had been raised, Federal Express soon began to experience financial problems due to the rising price of fuel and, the company began to spiral into debt. With bankruptcy just around the corner, Fred Smith found himself with just $5000 left in the company account and not a single willing investor on the horizon, a last ditch meeting with General Dynamics failed to deliver the funding required. Faced with an almost certainly bleak outcome, Fred made the somewhat shocking decision to travel to Las Vegas directly after the meeting with General Dynamics – where he won $27,000 at the Blackjack table. Afterwards, Smith said, ‘The $27,000 was decisive, but it was an omen that things would get better. I was very committed to the people that had signed on with me, and if we were going to go down, we were going to go down with a fight. It wasn’t going to be because I checked out and didn’t finish’. By 1976, FedEx had reached a revenue of $75 million and the rest, as they say, is history. Thanks to Fred Smith’s daring gamble, Federal Express is now one of the most well known and trusted companies on the planet. This month, Fred stepped down as FedEx’s CEO, but continues to keep an eye on things as Executive Chairman.
Starting up a business almost always involves an element of risk and, many fail before they even get off the ground. While we wouldn’t recommend gambling to save a business, Fred Smith’s story shows that, as well as a large dollop of business sense, courage and determination can ultimately pay dividends when it comes to getting ahead. As for you, we recommend some nice slots, poker and blackjack as entertainment, not an attempt to raise money for your business.