Two college kids bought a custom T-shirt company with their savings. Now it's a $40 million business.

Fresh Prints is a successful company that started with a terrible decision: ”We pretty much bought the company from founders blindly without doing any due diligence," says Jacob Goodman. This was in 2011 when Goodman and his friend Josh Arbit were students at the Washington University in St. Louis. 

At the time, Fresh Prints was a failing custom apparel business run by other students. At the time of acquisition, they had just five “Campus Managers,” i.e. students who ran the business at their schools. Today, Fresh Prints has more than 600 Campus Managers.

The two pals paid $16,000 for it. They anticipated that it would be educational. They were accurate. Within a month, they were scammed by a customer for $8,000 and owed $25,000 for licensing royalties that the founders hadn't reported. However, once they found a solution, they began to innovate; as a result, Fresh Prints now employs 290 people full-time and generates $40 million in revenue annually. This is what they did.

Step 1: Building the proper foundation

The two friends requested a 30- or 60-day payment extension from their suppliers (printers, wholesalers, and FedEx) after informing them that they were experiencing a brief cash flow issue. Most responded positively; it was a lesson in having an open dialogue. Then, to create a solid base from which to build, they obtained licences from the colleges and fraternities whose logos they wished to print on their clothing.

Step 2: Build a sales engine

Since their intended audience was students, they decided to carve out a sales team of students. Initially, they recruited their college pals and trained them via video meetings. Later they established a referral campaign and cold outreach on LinkedIn.

Step 3: Separate from the competition.

The market for custom apparel was crowded, but Fresh Prints saw an opportunity. They zeroed in on trendy graphics and debuted their premium apparel line with a sweat set (a set of matching sweatpants and sweatshirts), which became extremely popular on campus and generated more than $1 million in sales in its first year.

Step 4: Redefine the company.

They put much effort into changing from a custom apparel company to a fashion brand. Meanwhile, they're branching out into corporate America with clients like Google, Amazon, and Uber for a brand-new source of income called "swag management" — customised mugs, water bottles, sweatshirts, notebooks, and other stuff for events like annual retreats or holiday gifts, for example.

Step 5: Never forget the basics.

Fresh Prints continues to be accessible to students as it expands; it now has 625 campus managers directing sales.

According to Goodman, the most important lesson is perseverance - you may have to fail many times and experience rejection and failure before you succeed. The question is: are you learning every time you fail?