Keeping on Track

Jacqueline Patterson fled civil war in her native Nicaragua in 1978 and obtained her bachelor’s and master’s degrees in engineering in Montreal. She moved to Los Angeles in 1983 to begin work on a segment of the Metro Red Line. In 1990, she established her own consulting firm, obtaining small credit lines from banks for financing. Maintaining good credit and establishing personal banking relationships has allowed her firm to grow to a $4.5-million business today. Patterson was interviewed by freelance writer Karen E. Klein.

*

When I founded my company, I opened a general business account with Bank of America for $150. I had also saved up two months’ worth of house payments, knowing that it would take at least that long to get paid as a subcontractor.

At first, I worked alone at a desk in the prime contractor’s office and I paid bills and did marketing out of my garage. About a year and a half later, I got a subcontract on the Metro Link system and I needed to hire a couple of designers to work for me.

There were times that year when I had to put my payroll on my Visa card, because I needed to pay my employees every other week but I was on a 60-day payment schedule from the prime contractor! It was an expensive proposition because of the interest rates I was paying.

In 1993, I went to Bank of America with a business plan and asked them for a $10,000 line of credit. I had to put up personal assets, including my home, as collateral. It was pretty scary, but since I had the subcontract I knew the money was coming in; it was just a matter of financing the cash-flow situation. At that time, $10,000 was enough to extend operations between paydays.

I think it was a good idea to secure that small line of credit, use it and pay it off promptly because the bank saw activity on my account and they had a good history with me. Then, when we won two big jobs on the Pasadena Blue Line and had to add five or six employees in 1994, the bank agreed to extend my line of credit from $10,000 to $25,000.

That was a very nervous time for me because we did not have the cash flow and we were definitely undercapitalized. Fortunately, later in 1994, we won our first job as a prime consultant, meaning we did not have to face that long lag time between pay cycles because the prime gets paid directly by the client.

During 1996 and ‘97, we concentrated on writing a real good business plan and showing the bank how we had done. We succeeded in increasing the line of credit to $100,000, and now we’re looking at increasing it again.

I think it was helpful that I established a good, first-name relationship with my bank representative and built up trust. That way it has not taken so long to get my loans approved. Also, I have a policy of never abusing the credit. I pay it off right away, and my personal credit record is impeccable.

I also think it was important that I planned my growth. Sometimes small companies cannot say no to a job, and they wind up overextending themselves. In 1993, I actually declined two contracts because I didn’t think I could handle more than the two we were already working on.

Today my payroll is $56,000 every two weeks. We’ve come a long way from the days of charging it to the Visa and having $150 in the bank! We are working on commuter rail projects in Los Angeles as well as Seattle; Austin, Texas; and Mexico.

I think I’ve achieved what I have through common sense and a lot of discipline, because many times it was tempting to do things that I now realize would have been harmful for us. Taking small steps and taking time to grow slowly has helped us a lot.

* More Small-Business coverage on D4, 6

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

At a Glance:

* Company: J.L. Patterson & Associates Inc.

* Owner: Jacqueline Patterson

* Type of business: Engineering and transportation consultant

* Location: 725 Town & Country Road, Suite 100, Orange

* Founded: 1990

* Employees: 36

* Annual revenue: $4.5 million