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Adrian Coulter, owner of XL Feet of St. Paul, has trod fresh ground to provide shoes for men with big feet.
Coulter, 34, has survived the precarious first several years in which most small businesses fail.
The entrepreneur is one of the thousands of minority business owners who are putting out a shingle at a much faster rate than the overall market.
But minority-owned businesses also have a high failure rate, due to low capital, difficulty securing credit, limited business experience and other challenges, according to local small business advocates and a recent Federal Reserve study.
"It's been a challenge," Coulter said during a rare breather on a December Saturday in which his online (XLfeet.com), telephone and in-store sales set a single-day record of $9,300. "I started out with some shoes, a van and a vision. If the venture isn't exciting enough to keep you up at night before you start it, then it's probably not worth pursuing."
Coulter secured critical expansion capital last year from a community lender, after several years of business counseling and after cleaning up a credit deficiency from a decade ago. XL Feet generated profitable sales in 2017 of about $1.3 million, up more than 50 percent from 2016.
Coulter, who works six to seven days a week, plans to add one or two full-time employees in 2018.
More than 90 percent of Coulter's sales come from online and telephone orders, which he fills from his warehouse. It is about three times the size of his XL Feet store, east of downtown St. Paul. And two of his in-store customers drove at least two hours to try on boots and shoes for their extra-large feet.
Coulter, a Minneapolis native, started working at McDonald's out of high school. He was promoted to management training at $9 an hour before he quit to sell phones at a couple of area Verizon stores.
"I was in my 20s making $50,000 to $60,000, selling cool electronics, with benefits and a 401(k) match," he said. "I left … because I have a size 16 foot. It was really difficult to find shoes.
"I used to ask my tall customers where they bought shoes. There was the former Roberts Shoes on East Lake Street and sometimes outlet malls. But it was hit and miss. I thought there was a business opportunity."
One of his customers was a businessman who told him to study the industry.
Coulter went to a shoe fair and struck a deal with Zota, maker of inexpensive dress shoes. Then it was Thorogood Boots of Wisconsin. They made very small orders of a dozen or so pairs that he would sell online and deliver in his van.
He was running out of savings in 2010 when then CEO Joe Selvaggio of Microgrants, a nonprofit that provides up to $1,500 grants to the working poor and struggling minority businesses, gave Coulter $1,000 to close an order with Florsheim for two dozen pair of big shoes. He sold them at a nice profit in several days. Coulter leased space for a store, in 2011, inside a carpet operation in the same complex where he now has a storefront and warehouse.
Coulter enrolled in business counseling at the Metropolitan Economic Development Association (MEDA). It advises struggling minority businesses and also has a loan portfolio approaching $17 million. MEDA, a licensed small business lender, is supported by banks, foundations and others who support its mission of helping minority businesses prosper and become "bankable" by traditional commercial banks.
Coulter had bad credit after he lost a Minneapolis duplex he had bought as an investment at the height of the real estate boom before the Great Recession. He couldn't meet the mortgage while starting XL Feet. The property's value also plummeted. Coulter couldn't refinance, and the bank foreclosed.
Colter blames himself. He also lost thousands of his savings in that duplex. He has since restored his credit rating.
In 2016, Venture Bank and MEDA provided a $90,000 term loan and a line of credit that allowed XL Feet to markedly expand inventory and sales. Coulter now is one of the bigger sellers of large-size shoes and boots in the Midwest for shoemakers like Florsheim, Columbia, Propét, Wolverine, Thorogood and New Balance.
Last fall, Coulter donated $1,200 to Microgrants in appreciation for the $1,000 grant that kept him going in 2010.
"Adrian had cashed in his 401(k) retirement plan and was struggling and grossing about $6,000 that year, when we made that $1,000 grant so he could place the order with Florsheim," recalled Microgrants CEO Don Samuels, who succeeded Selvaggio. "He's coachable. He listened to his MEDA business counselor. He worked hard.
"He's very personable. Modest but assertive. And he is a respected small business and community leader. We've used him to talk to other [fledgling] business people. He's grateful."
George Jacobson, veteran leader of MEDA's Minneapolis business center, said too many small minority enterprises fail because the owners lack the savings or the generous rich uncle, the knowledge about credit history and the capacity to navigate the ups and downs of the treacherous first years in business.
"They often approach lenders poorly prepared," Jacobson said. "Most do not know how to apply for commercial credit, the secrets of debt service, leverage and liquidity."
He added, "Going to a bank … can be intimidating. MEDA [helps] address these barriers."
Coulter said the yearslong struggle has been worth it.
"Thanks to the support of my siblings, my parents and MEDA … I have graduated to freedom," said Coulter. "I owe so much to those who look like, yet came before me. I am truly standing as a free man on their shoulders."
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.
