Business Neophytes Share Perils Three years ago, in North Sioux City, S.D., a husband and wife launched a new company called Radiosophy, hoping to produce high-definition radios. But after setbacks, they say their story is a cautionary tale for entrepreneurs.

Business Neophytes Share Perils

Business Neophytes Share Perils

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Three years ago in North Sioux City, South Dakota, a husband and wife launched the company Radiosophy to produce high definition radios. But after suffering setback after setback, they say their story is something of a cautionary tale for entrepreneurs.

Bill Billings and Sue Nail struck out on their own with the goal of living the American dream. They thought they'd create their own business, building and selling lots of high-definition radios, and live happily ever after. But it hasn't exactly worked out that way.

"Would I do it again? No way," said Nail. "I just had no idea it would be this much work and this much of a challenge."

"It's been so hard on Sue," Billings said. "I would not put her through that again."

But the couple thought it was a smart move three years ago when they formed Radiosophy.

He had just left his job at computer-maker Gateway and thought putting his contacts in overseas manufacturing to work was a good idea. She had worked at Gateway in the 1990s and could bring her public relations skills to the business.

There also was a need. In 2004, high-definition radios did not exist. Radio stations were creating high-definition signals to compete with satellite radio, but existing radios could not receive them.

Some friends, family and a few outside investors agreed that Billings and Nail had a good idea and they invested in the company. But that $500,000 – including the couple's life savings — didn't last long. The high-definition radio pioneers encountered immediate and significant challenges.

First, they were delayed in developing a receiver for high-definition signals. Then, their overseas manufacturer backed out at the last minute. And just as the company prepared to unveil its latest radio, the president of the company, Jeff Garreans, died in an auto accident.

"I've probably cried more in the last three years than I have in my entire life. I've had some real health issues within the last couple of years," Nail said.

Another hurdle for the company was education. Consumers either didn't know what HD radio was, or they didn't believe it would ever catch on.

More and more people can hear high-definition signals these days. They're now available on 1,300 stations across the country, double the number from last summer.

Rob Enderle is principal analyst with the Enderle Group, a technology consulting firm in San Jose, Calif. He says the number of stations has reached a critical mass.

"With any new technology there are always questions until it becomes ubiquitous. And it is not widely spread enough to be out of the woods but it is certainly coming," Enderle said.

Last year, 200,000 high-definition receivers were sold. This year, predictions are for nearly 1.5 million. But did the high-definition market bloom too late for Billings and Nail's enterprise?

They debate this every day.

Said Billings: "If we would have waited a year, we would have spent less money and been right where we are today."

"Waited three years," added Nail.

"Well, I don't think we could have waited until today to start," Billings responded.

"I do," was Nail's retort.

Even though she says she wouldn't do it again, Nail isn't ready to give up on entrepreneurship either. She believes the company has turned the corner.

Radiosophy's second radio, which debuted in spring, is the only tabletop model aimed at the low-end of the market. It sells for about $100.

Nail is now encouraged because the radio is getting good reviews and selling by the hundreds each month.

Another good sign, for Nail especially, is that the financial stress is no longer so bad that she throws up every morning.

Pat Mack reports for member station South Dakota Public Radio