The boss is out: Gay men and lesbians are starting their own companies and employing more people than ever before. And they don't have to hide who they are to be successful.

Life changed dramatically for Kansas City, Mo., couple Dan Dye and Mark Beckloff after inspiration struck them in 1989. They thought their idea to bake and sell healthy all-natural canine treats was a good one. What they didn't know was that it would blossom into over 40 retail stores worldwide, four books, 50 employees, a Forbes magazine cover story, and, at one time, a series on the Food Network. Oprah Winfrey has even featured their dog biscuits on her television show.

"Things have happened that we couldn't have even imagined in our wildest fantasies when we started," says the 45-year-old Dye of founding Three Dog Bakery with Beckloff, 40, his partner of 19 years. "It just goes to show you, and it sounds so trite, but you just have to believe in your dream and go for it. Because if you believe enough, it's going to come true."

Dye and Beckloff are part of a rapidly growing number of gay, lesbian, bisexual, and transgender entrepreneurs making their marks on an increasingly gay-friendly business world. They're employing people and creating commerce, and they're dispelling old stereotypes about gay business owners. "I think there's the misconception that if you're a gay-owned company, you're a flower shop or a hair salon," says Justin Nelson, president of the Washington, D.C.-based National Gay and Lesbian Chamber of Commerce. "I can tell you point-blank that if you look at the business community as a whole, a slice of that is the gay business community. Yes, we have interior design companies, but we also have manufacturers and construction companies."

Nelson believes there are between 800,000 and 1.4 million gay-owned business enterprises in the United States, and a pending study commissioned by the chamber to be conducted by the University of Pennsylvania's Wharton School will likely show that there is "a larger gay-owned small-business community than we estimate," he says.

While the challenges openly gay entrepreneurs face can be as varied as the enterprises they launch, most are discovering that being out hasn't hurt their business prospects, especially for those on the East and West coasts.

"In L.A. or New York, it's expected that you're gay in my industry," says John Nash, 41, who founded GLBT-focused ad agency Moon City Productions with business partner Gregg Lieberman in 1999. Nash lives on Manhattan's upper west side with his partner of 19 years, Robert, an art director. "In New York in particular, if you're a creative director, graphic designer, or whatever, there's more than a 50-50 chance that you're gay. I never give it any thought, because I'm walking into meetings as someone whose specialty is talking to gays and lesbians, so the client automatically assumes I'm gay. They're not ever put off or anything."

"I've always said that being gay actually makes it easier to network," says John Scharffenberger, 53, who founded Scharffen Berger Chocolate Maker Inc. in Berkeley, Calif., in 1996 with business partner Robert Steinberg. The manufacturer of high-end chocolate did $10 million in sales last year and now employs 60 people. Scharffenberger, who is single, splits his time between Berkeley and a home in rural Philo, Calif. "In a sense being gay gives you a network that other people don't have," he says. "I actually feel sorry for my straight friends who don't know this breadth of people that I know because I'm gay, because socially you end up meeting such a variety of people basically from all walks of life."

For lesbian business owners, networking is not as simple, says Amy Rutt, 38, founder and CEO of Ciracom Inc., a Fairfax, Va.-based provider of computer network solutions for small- to medium-size enterprises that opened in 2002 and now employs seven people. "I think lesbian entrepreneurs have a bonus challenge in that since we're women, our networks are different, and so our access to the three things that are critical to us--time, capital, and people--can be a little bit more limited," says Rutt, who lives with her partner of 14 years, Heather, a public policy analyst. "But I think we do get customers who are so much more focused on performance and on doing a good job. And that's the kind of customer we want to align ourselves with, people who have a high performance bar themselves and recognize that diversity is very important in the workplace and with their suppliers."

Sometimes it's necessary to sidestep the sexuality issue in tricky business situations, say some gay entrepreneurs. But that's a luxury not always enjoyed by transgender business owners. Anne Nenneau is the 55-year-old founder and executive vice president of CCN International, a manufacturer of high-quality handcrafted hardwood office furniture, headquartered in Geneva, N.Y. Though Nenneau started predecessor the Furniture Collaborative in a small garage in 1972 and helped build it into CCN, the multimillion-dollar, 100-employee enterprise it is today, she offered to leave for the sake of the firm when she decided to transition seven years ago. To her surprise, her fellow executives asked her to stay.

"I always thought that I would actually have to leave the company in order to do this," she says. "But finally it dawned on me, How do I know it's going to fail without trying? So I did. It has been a challenge, but it's been very worth it."

About six months before she planned to transition, Nenneau let those closest to her in the company know about her plans. After she was welcomed to stay, she held a company meeting at which she read a brief statement to all her employees explaining what she was doing. Some of the mostly male workers on the shop floor looked at their feet and avoided eye contact, she recalls. "But some of them came up after the meeting and shook my hand, and said, 'Jeez, you know, the best of luck. It must be difficult for you to do this, and that's cool.'"

Nenneau now serves on the board of the Washington, D.C.-based Gender Public Advocacy Coalition, which offers workplace training on transgender issues to Fortune 500 companies. Though Nenneau, who lives with her 55-year-old partner of five years, Karen Finnell, says she's received mostly gracious support and all is now calm within the CCN office, a few external sales reps continue to cause friction. "The problem with this is that too often you don't know who doesn't take it well, because you don't hear about it until much later, if at all," she says.

Indeed, in business dealings with straight-owned companies, gay entrepreneurs tend to hear either good news right away or a deafening wall of silence, Dye says. "We've had deals where everything seemed like it was moving ahead, and then at the last minute things have not worked out," he says. "There have been times where we've wondered whether our being gay has been an issue. But at least no one's ever stood up in a boardroom and said, 'Queer! I'm not working with you!' or anything like that."

Monique-Paule Tubb, 58, founder of Advanced Communication and Translation Inc., a full-service translation, transcription, and interpreting service in Bethesda, Md., with a permanent staff of five and a roster of 3,000 on call translators, says being an out lesbian has never hindered her business. "In fact, being a lesbian has opened up other markets for us," she says, "because of course the gay and lesbian community likes to give business to the gay and lesbian community." In March, Tubb, who lives with her partner of nine years, Ania, an interior designer, received the 2005 Lesbian Business Leader of the Year award from Potomac Executive Network, the metropolitan D.C.-area affiliate of the National Gay and Lesbian Chamber of Commerce.

Some gay business owners believe the struggles of simply being gay helped hone their entrepreneurial talents. "This might sound bizarre, but the people skills I've had to develop to make sure that who I am is not misinterpreted for what I am has made me a better communicator, which has made me an infinitely better businessperson," Nash says.

This removing of the "gay" label seems a primary goal for most gay and lesbian entrepreneurs, who see providing quality products or services for their customers as trumping any superfluous hawking of personal sexuality. "Absolutely our best customers are the ones who do not care," Rutt says. "What they want is good performance, regardless of your being gay or straight."

Sweet success

John Scharffenberger's chocolate company employs 60 people in Berkeley, Calif. In 2004, it sold $10 million of Scharffen Berger sweets.

5 advantages to being an out business owner

NETWORKING

"All of my investors I've met through gay friends, even though they're not gay themselves."--John Scharffenberger (pictured on page 56), cofounder of Scharffen Berger Chocolate Maker Inc.

THE FOCUS STAYS ON THE PRODUCT

"If you have something of real value, people go to that right away--and they overlook everything else."--Anne Nenneau (1), founder of CCN International

BETTER PROBLEM-SOLVING SKILLS

"Growing up gay teaches you to be resourceful. You learn how to circumvent some troubles, and you learn how to be sensitive to issues."--Dan Dye (2) (in white shirt, with partner Mark Beckloff), cofounder of Three Dog Bakery

NO AWKWARD QUESTIONS

"As a business owner, I've never had my sexuality questioned."--Amy Rutt(3), founder of Ciracom Inc.

TRICKLE-DOWN TOLERANCE

"As for our five employees, most of them are straight, but they know I'm gay. It's just never been an issue. I've never made it one either."--John Nash (4), cofounder of Moon City Productions

[ILLUSTRATIONS OMITTED]

How to schmooze

Keith Ferrazzi has a message for gays and lesbians looking to boost their careers: Network, network, network

Keith Ferrazzi has built a career on networking, and he hasn't let being openly gay get in the way. Touted as one of the most "connected" people in the business world, Ferazzi, 38, is now CEO of the consulting and training firm Ferrazzi Greenlight and the author of the best-selling book Never Eat Alone: And Other Secrets to Success, One Relationship at a Time.

A graduate of Harvard Business School, Ferrazzi was tapped early in his career as the youngest partner at Deloitte Consulting, a global marekting firm. He later joined Starwood Hotels & Resorts Worldwide, where he became the youngest and only out chief marketing officer in the Fortune 500. We asked Ferrazzi to give us a few tips from the "relationships for career success" methodology he provides to his clients.--D.A.

1 Don't Keep Score. "When you meet someone, think how you can help them without expecting something in return."

2 Skip the Small Talk. "Don't talk about the weather. Share the really human stuff that matters to everyone, but don't go overboard. No potential employer wants to hear about your cross-dressing boyfriend, despite his amazing outfits."

3 Do Your Homework. "Write down your goals and the names and types of people who can help you achieve each one. Include what you can do to help those people succeed too. This is a great start to your networking action plan."

4 Share Your Passions. "This week, just pick one activity you're already doing, such as eating dinner, getting a workout, going to church, or getting a spa treatment. Then invite a new acquaintance you'd like to know better to join you."

5 Build Relationships Before You Need Them. "Start today, because once you're unemployed, you're not networking, you're job-hunting. If you build the network well in advance of needing it, you won't look desperate and you'll have lots of options."

Should you come out in your job interview?

So you're gay and unemployed. These days it's not as clear as it used to be just how much the former affects the latter. Should you stand out and proud in a job interview? Or should you straighten up your credentials and keep your gay trap shut?

According to the experts, serious consideration of the unique factors involved is required. "While we advocate for people to be out at work, we also believe that coming out in a prehiring phase is a personal decision," says Selisse Berry, executive director of Out & Equal, a San Francisco-based LGBT workplace rights advocacy group. "We would recommend a candidate research the company's history, policies, and practices before making such a decision."

Matt Skallerud, general manager of GayWork.com, a leading online gay employment resource, says many gays and lesbians find it important to be upfront about who they are. "But until things change and there really is true equality and sexuality does not work against you with even a small minority of employers, it's hard to recommend that people lead in with something like that, knowing that it might work as a disadvantage to their futures," he says.

But those who can and do come out at work continue to change the face of an ever more accepting employment world, adds Berry. "The workplace is where public opinion is changing the fastest, and this is due in large part to people who have had the courage to be out at work and make valuable contributions to their companies," she says.--D.A.

Allen is a Los Angeles-based reporter.