First-million story #4 - Sometimes a big risk pays off

When most kids are seniors in college, they're writing résumés and cruising toward graduation. Not Kevin Plank. Nine years ago, when Plank was in his last year at the University of Maryland, he began developing sportswear that now outfits most professional and college sports teams and makes a fashion statement on high-school playing fields. As the founder of Under Armour, Plank, 32, presides over a Baltimore company that employs 450 people and grossed more than $200 million last year.

Plank owes a debt to sweat. As a player on the Maryland Terrapins' football team, he wore a cotton undershirt that turned into a soggy liability during games. Already an entrepreneur (he was running a thriving floral-delivery service out of his dorm), Plank began searching fabric stores for a lightweight material that would fit snugly, wick away moisture and replace the undershirt.

Once he had found the perfect fabric, Plank paid a tailor $400 to come up with several prototypes and asked his teammates to try them out. "They said the shirt was great for football -- and baseball and lacrosse, too," says Plank. "I realized this wasn't just a shirt but a marketing opportunity."

Plank hit New York City's garment district and returned with enough fabric to make 500 undershirts, which he promoted to players on major college and NFL teams. "I would ask them to try this product, and if they liked it to give one to the guy in the next locker," says Plank. Eventually, teams on both sides of the field were wearing Plank's "compression apparel" -- and showing it off on TV.

After graduation, Plank raised start-up money by maxing out his credit cards to the tune of $40,000. He tried to patent his idea, but gave up after racking up $7,000 in legal fees. For the next several years he took no salary from the business, and he lived and worked rent-free in a house owned by his grandmother. He later got a $250,000 loan from the Small Business Administration and used almost half of it to repay debts.

Under Armour is now the official supplier of compression apparel to Major League Baseball and Major League Soccer, and its garments are worn by about 30 NFL teams and nearly 100 Division I-A college football teams. It was a high-stakes gamble for a kid barely out of college, but Plank thinks youth worked in his favor. "When you're 22 or 23, there's no better time to take a big risk. Sometimes it pays off." In his case, the rewards have included buying a Cadillac at age 26 and gaining VIP access to major sporting events, such as the Super Bowl. "For someone who is passionate about sports, that's a big part of my payoff."

TIP #4: Go for broke. Just out of college, Kevin Plank ran up $40,000 in credit card debt to launch Under Armour, his sports-apparel company.

First-million story #3 - Figure out your strengths

Soon after Scott and Mandi Leonard were married in 1996, they took a big risk. Scott quit his job as a stockbroker and started his own financial-planning business. He had no clients, no income and a big mortgage -- the Leonards had just put a 10% down payment on a $320,000 house in Redondo Beach, Calif.

For three years, Scott and Mandi lived on the income from Mandi's jobs with technology companies. Employed by Oracle and PeopleSoft, she earned valuable stock options during the go-go years of the late 1990s.

By 2000, Mandi wanted to quit working: Son Griffin was a year old and Jacob was on the way. Her PeopleSoft stock, for which she had paid $6 per share, had risen to $43, and Scott was getting nervous. They decided to sell the stock, trade up to a bigger house and stash some of the money in the bank. Says Scott, "Having a safety net was more important to us than trying to get an extra $10 per share on the stock." And a good thing, too. Within a year, the price had dropped into the teens.

The Leonards also made a smart real-estate investment. They sold their first house for about $500,000 and moved up to an $800,000 house in Hermosa Beach. With an ocean view and a rooftop deck, the house was recently appraised for $1.45 million.

Meanwhile, Scott's business began to take off -- he now manages about $100 million in assets for his clients -- and once again the Leonards decided to invest in real estate. About two years ago they paid $1.25 million for a historic but dilapidated house overlooking the water in Redondo Beach. They spent about $250,000 -- mostly in cash -- to renovate the property for Scott's business. That building was recently appraised for $1.8 million.

Having astutely ridden California's real-estate surge, the Leonards have enough home equity plus savings to put them comfortably in millionaire territory. They also have about $175,000 in 401(k) and IRA retirement funds invested in stocks, which they plan to beef up now that they have renovated their business property. "I'm very much in favor of diversifying investments," says Scott. But if the real estate market turns soft, he'll take the opportunity to "look hard at picking up another property."

The Leonards owe their success to knowing the difference between a calculated risk and a gamble. They felt more confident about starting a business and investing in real estate than about hanging on to their tech stocks. "Stand back and figure out your strengths and weaknesses," says Scott, "and keep your eye on your long-term goal."

TIP #3: Know what you do best. Scott and Mandi Leonard ditched their tech stocks to concentrate on real estate.

First-million story #2 - I put my money where my mouth is

Elmo Shropshire had a day job as a veterinarian in Marin County, Calif., and a side gig as a bluegrass singer when he recorded the holiday song that put him on the map -- and put his vet business out to pasture. The song, "Grandma Got Run Over by a Reindeer," has sold 10 million copies, inspired a music video and a movie, and made Shropshire a millionaire five times over.

Shropshire first heard the saga of the tipsy grandma and the renegade reindeer after bumping into songwriter Randy Brooks, who wrote the piece, at a bluegrass performance. Convinced that the ballad suited his twangy voice and comic singing style, he shelled out $500 to record it himself and another $700 to make 500 singles. "Grandma" aired on a San Francisco radio station in 1979 and caused an instant ruckus. "Kids were calling in and saying, 'Play it, play it,'" says Shropshire.

Despite the enthusiastic reception, he couldn't find a record company to take "Grandma" national. Nevertheless, the song was frequently requested over the next several holiday seasons. Says Shropshire, "It was one of the few songs in history where public clamor rather than company hype drove demand."

Shropshire went for broke in 1983, investing $30,000 to produce his own "Grandma" music video and $10,000 to make an album featuring the song. The gamble paid off when MTV picked up the video (it still appears regularly) and Columbia Records offered him a distribution deal. In the three weeks before Christmas, the company sold 500,000 "Grandma" singles and 100,000 albums. Shropshire got a royalty check for $50,000.

The singer retired from his veterinary practice in 1995 and now works full-time on "Grandma"-related enterprises, which include sheet music, a stuffed singing reindeer and a recently released album called "Christmas in the U.S.A." Says Shropshire of his unlikely success, "I had this blind belief in the project. I put my money where my mouth is."

TIP #2: Support your idea. Elmo Shropshire, who recorded a hit holiday tune, invested over $40,000 of his own cash to produce a music video and an album.