Small businesses can compete against larger companies by specializing.

"The visual identity that can be conveyed with simple symbols is so powerful and of such key importance to so many businesses and institutions," he says. "A great logo is a real work of art because of what it can accomplish. In themselves, logos are simple. That is the fascination for me. That is the challenge, too: coming up with ideas to generate interest in people's minds with a simple design."

To be sure, big companies have been built on that concept, with image-identity specialists such as Landor Associates culling clients from the ranks of the Fortune 500. When AT"T spun off its technology business several years ago, for example, it turned to Landor to come up with the name Lucent Technologies and the stylized broken circle that is its logo.

However, corporate identity is not a business milieu with a lot of opportunities for a sole proprietor. To leverage his love of graphic arts and of communicating ideas through a visual medium into a viable business. McIlhenny would need a niche. He found it, almost by accident.

McIlhenny had been dabbling in graphic design, creating posters, signs and menus for local businesses, for a number of years when he was approached by a client to make a banner for a hot-air balloon race in the early 1980s. "The fellow who organized the race liked my work, and one thing led to another," he recalls. "After that, I got hooked on the idea of making banners, and I decided I wanted to make my living doing that."

At the time, McIlhenny was working as an instructor of technical drawing at a college in the Gettysburg, PA, area, where his family has lived since the mid-1700s. So it was fitting that his first big commission was to create a suite of banners for graduation ceremonies at Gettysburg College.

Today, commissions form other colleges and universities account for a large percentage of the work done by McIlhenny Banners, and recognition of the quality of his work has spread among the educational community largely by word-of-mouth. McIlhenny's company is thriving, and he does virtually no advertising at all.

The Gettysburg College commission was the spark that prompted McIlhenny to leave his teaching job and devote full time to his fledgling business. However, he had other challenges to face.

Creativity can play a role in solving all kinds of business challenges.

"My first obstacle was space," he says. "I was working out of a small apartment in town, and I just needed more space."

The solution to that challenge would come about a year later, in the unlikely form of an abandoned former Esso gas station. Located on a main route through Gettysburg, just a few hundred yards from where McIlhenny grew up, the gas station died a natural death when a highway bypass was built and siphoned away much of the passing traffic, he says. With the need for a large open work space pressing on him, McIlhenny recalled the place where he used to fill his bicycle tires with air as a boy.

The abandoned building was perfect for McIlhenny Banners' needs. The load of the roof is supported by two huge steel beams, allowing an expansive open work space in the area where car repairs had been done years ago. The site came with some environmental baggage in the form of underground storage tanks, as is the case with most former gas stations, but McIlhenny's interest in the property came at a serendipitous time.

"We made our offer to buy right after the bank had repossessed the property," he explains. "The tank removal and ground remediation was a complicated and expensive undertaking, but because the bank was anxious to get the property off its books it assumed responsibility for it."

To be a true business pioneer, you have to think outside the box.

Because McIlhenny and his wife, Ruthmary McIlhenny, planned to use the converted gas station as both a work space for the business and as their residence, getting the property up and running and creating a design to make that strategy work was the next challenge. They met it with an open design that blends the living area into the work space with moveable trellis walls and a creative approach to decor.

"My wife and I love this place. It blends living and working into a single, cohesive existence," McIlhenny says. "A lot of people have trouble juggling their work and non-work lives, but we have managed to blend it into a constant kind of thing. Most of the time it doesn't even seem like work. What we do is very clean and very quiet--basically, cutting and sewing cloth--and that lets us literally live and work in the same place."

One challenge that often accompanies a truly specialized niche business such as McIlhenny Banners is that growth and success require the entrepreneur to be something of a ground-breaking pioneer. More often than not, that process starts by trial-and-error and evolves into diligent research and a willingness to think "outside the box."

In McIlhenny's case, it began with the hot-air balloon race assignment. The pilot of the balloon told McIlhenny that the banner would have to be lightweight and suggested he use nylon. McIlhenny bought some ripstop nylon--the kind used to make sleeping bags and parachutes--and painted a big logo on a 30-foot banner.

"It looked great, but when the balloon came down, you could literally peel the letters right off the banner," McIlhenny says. "What I didn't realize at the time is that nylon is very smooth, so paint doesn't adhere to it well. I figured there had to be another way to do this."

Another way, indeed. After some consideration, McIlhenny decided the answer was to cut the letters from material and sew them to a banner backing. That he didn't know how to sew and didn't own a sewing machine seemed only minor obstacles. "I just taught myself to sew and bought a sewing machine at a yard sale," he states.

The theory was great, but in production the process presented some problems. When nylon is cut with a pair of scissors, it starts to fray at the edges. Sewing with a zigzag stitch will cover the raw edges, but that dulls the contrast between the letters and the backing material.

Reading about parachute makers in a trade magazine, McIlhenny learned they use a hot knife to cut their material. "I got myself one, and that has turned out to be our most significant tool," he says. "It doesn't cut the fabric, it melts it, so the edges don't fray. We don't have to do zigzag stitches, which allows us to create graphics with very clean edges that photograph very well. Nothing ever looks fuzzy."

Computers are helping all kinds of businesses find new ways to do things.

Over the years, McIlhenny has used the same combination of "out of the box" thinking and self-directed learning to address new problems and challenges as they have occurred. For example, the Gettysburg area was once home to a thriving garment industry, long since departed. But many retired garment industry workers still live there, and McIlhenny taps their sewing skills when he has projects that are too large.

Similarly, although his design process still tends to start with a thumbnail sketch on a piece of paper, McIlhenny has learned to adapt the power of the computer to his business in recent years. He acquired his first computer in 1997, and up until then all pattern-making work had been done by hand.

"Now I can take a thumbnail sketch, generate it in the computer, print it out on paper to get approval, then bump it up to full size," he explains. Although there is still a lot of hand work involved, the computer speeds the design process and makes it faster and easier to process and changes clients might request.