Stuart Utgaard, president of Stuarto’s Olive Oil Co. Photo by Tom Eblen
Since moving to Lexington in 2010 to start Stuarto’s Olive Oil Co., Stuart Utgaard has grown his business from one store in Hamburg to a second in Chevy Chase. Sales are up nearly 60 percent this year, he says, and his startup debt should be repaid within two years.
But this isn’t a typical entrepreneur’s success story. It is more of a comeback tale. Utgaard’s career could best be described by an old saying: The bigger they are, the harder they fall.
Minnesota’s Twin Cities Business magazine once described Utgaard as a master of mergers and acquisitions, that region’s biggest dealmaker in the 1980s and 1990s. Utgaard said he put together 108 deals worth more than $1.7 billion.
Already a multimillionaire, he bought a sporting goods store called Sportsman’s Warehouse in 1996 and built it into a chain of 73 stores in 33 states. Utgaard acquired all the trappings of success: luxury homes, fancy cars, even a Learjet. Then, he lost everything.
“I went from owning a private jet to sleeping in my car in cemeteries and church parking lots with no food,” he said.
How did Utgaard climb so high only to fall so far? It is a long and complicated story, which he can describe in great detail. The dates and numbers are seared into his memory. He even wrote a self-published book about it: The Sportsman’s Warehouse Story.
Here’s a short version: Utgaard built his company on debt. That worked until a new computerized inventory control system failed and made it difficult to track orders, deliveries and customer purchases. That caused sales to plummet as the economy slowed. Sportsman’s Warehouse violated loan covenants at the worst possible time in 2008. When Wall Street’s house of cards began collapsing, credit markets evaporated.
Unable to borrow more money, Utgaard lost his company to his lenders. Because he had personally guaranteed some of the debt, he was forced into personal bankruptcy and lost everything he owned, about $15 million of assets.
Utgaard even lost the Wisconsin farm where his family had operated a chicken hatchery for more than a century. It was there, as a boy, that he first learned about business and hard work, cleaning equipment and boxing chicks for sale.
He went through a messy divorce and was unable to find work as an executive. So the former Ernst & Young regional Entrepreneur of the Year decided to move to Lexington and become an entrepreneur again.
Why Lexington? Utgaard said he had gotten to know developer Patrick Madden when he was negotiating to build Sportsman’s Warehouse store No. 63 in the Hamburg development. Madden was willing to lease Utgaard a small retail space behind that store as a place for him to start over in business.
“When I came here, I literally had $20 in my pocket,” Utgaard said. “But some of my friends were still crazy enough to loan me money after I went bankrupt.”
He thought there was a good retail opportunity in premium olive oil. People are using a lot more olive oil because of its health benefits, but, because of lax international labeling laws, much of it is of low quality, diluted with less-healthy oils.
“This will become a good business and generate a good cash flow,” Utgaard said.
But he doesn’t expect to become America’s olive oil king; he just wants to get back on his feet. Utgaard is doing some business consulting, and he said he might take a corporate job again one of these days.
Utgaard has reflected on the hard lessons he learned at Sportsman’s Warehouse, which he shares in his book and in speeches to university business students.
Among those lessons: have ample cash reserves to carry your business through lean times; don’t personally guarantee business debt; minimize bank borrowing; if you need outside equity, a large number of small shareholders is better than a small number of larger ones; even when things are going well, assume you could lose everything; set up an independent income stream or trust fund to provide for your family if your business fails.
But this was Utgaard’s biggest lesson: Never give up.
“I’ve been blessed with a good mind and business skills, and I’m not afraid to work,” said Utgaard, 67, recalling how Harland Sanders was about his age when he started franchising Kentucky Fried Chicken after his Corbin restaurant failed.
“You have to assume things will get better,” he said. “You have to try.”