THE INVENTOR: Andrew Dewberry, 43, founder of Vancouver Tool Corp. in Vancouver, British Columbia. He runs the business with his wife, Jayne Seagrave, 42.

PRODUCT DESCRIPTION: Dewberry's company specializes in home-renovation products, such as the Caulk-Rite, a tool launched in 1996 that allows users to create a perfect bead of caulk. Subsequent inventions include the Caulk-Away, the Caulk-Injector, Grout-Out and Grout-In.

WHEN YOU DREAM OF running a million-dollar business, chances are you envision employees, cubicles, an HR department and so on. But what if you could have that dream business, without any of the personnel headaches? Andrew Dewberry lives that dream--today, he and his wife, Jayne Seagrave, run a business that sells the home-improvement products he's invented, and they do almost everything themselves. By taking advantage of outsourcing and keeping costs down, this husband-and-wife team is able to focus on running the business without being side tracked by personnel issues. Here's how they made it happen:

1. DO THE EARLY STEPS YOURSELF. Dewberry's first product was made out of an acrylic plastic, and he made all the prototypes himself. According to Dewberry, money-saving measures have always been part of the mix: "I've taught myself how to do the 3-D drawings manufacturers and machinists need, and I can make a model of a steel part out of aluminum first to keep the costs down."

2. PARTNER WITH SOMEONE WHO COMPLEMENTS YOUR TALENTS. Dewberry is an inventor, not a marketer or salesperson. So when it came to selling the Caulk-Rite, he turned to his wife for help. Although she was a criminologist, not a salesperson, she was willing to make those first sales calls. "Jayne started out selling six to 12 Caulk-Rites to a local hardware chain," says Dewberry. "Her big break occurred a few months into the project at a local hardware show, where she sold our entire production [run] to four hardware store chains."

3. OUTSOURCE AS MUCH AS YOU CAN. According to Dewberry, Vancouver Tool saves money by outsourcing "the production, the blister-pack manufacturing and the assembly. We outsource everything but the paperwork and billing."

4. HAVE MULTIPLE SUPPLY SOURCES. "We have three vendors that make the product, two that assemble it, two that do the shipping, and one that makes the blister pack," Dewberry says. Having several vendors keeps prices down and protects you if one vendor goes out of business or has production or quality problem Dewberry uses Canadian vendors: "[They] might not be as inexpensive as overseas manufacturers, but they allow me more control over my business."

5. CONSOLIDATE DISTRIBUTION. The cost and effort involved in selling to an independent retailer can be every bit as big as selling to a large company. You'll have far fewer headaches and costs if you sell direct only to big customers and sell to everyone else through distribution. Dewberry made this move in 2002. "There was a lot of consolidation going on in the industry, so [our] customers were not upset," says Dewberry. "This move significantly cut both our number of shipments and our paperwork."

Lessons Learned

1. OUTSOURCING ALLOWS YOU TO DO WHAT YOU DO BEST. Dewberry is an inventor, and what he does best is create new products for his target market. Outsourcing allows him to focus on new products, rather than spending most of his time hiring new workers, putting quality control systems in place, or worrying about the day's shipments.

2. WHEN YOU OUTSOURCE, YOU ALMOST ALWAYS HAVE A LOWER MARGIN. Businesses make a profit from every unit they sell--generally called margin. From that margin, they must subtract their administrative overhead and selling costs, also referred to as SGA (Selling, General and Administrative) expenses, to generate their EBIT (Earnings Before Interest and Taxes). Outsourcing usually leads to a lower margin, because your outsourced vendor makes a profit. But at the same time, you should have much lower SGA expenses, as you can probably run your business from home or a small office. So there's a good chance you'll have a similar EBIT whether you outsource or make the product yourself.

3. KEEP YOUR OFFICE EXPENSE LOW. The benefit of outsourcing your production is that you don't need a big staff. But because you'll have a lower margin, you also need to keep your office expenses low, or those expenses might wipe out all your profits. The best situation is to set up an office at home if you can. If that doesn't work for you, be sure to go with low-rent office space.

4. KEEP YOUR MARKETING AND SALES EXPENSES LOW. Sales and marketing expenses can run 10 to 20 percent for many manufacturers. That's probably too much of a burden if you're outsourcing all your production, packaging and shipping. To keep costs down, focus on just a few customers and a few marketing activities. Trade shows are typically the most cost-effective marketing activity.