FORTUNE — Before Taylor Swift, Steve Martin, and Mumford & Sons made it hip to strum a Deering banjo, Greg Deering made the instruments by hand in his garage, one at a time.
His wife Janet would load the banjos into their station wagon and try to hawk them to L.A. music stores, which often said no to the upstart company. Even after landing accounts, they scrambled to pay their bills and struggled to shake off the image of banjo players as toothless hillbillies in overalls.
At times, the Deerings wanted to give up. But they had a pact — they would make banjos no matter what. “We would say, ‘We can’t give up,'” says Janet Deering. “So let’s figure it out.”
Did they ever. From that inauspicious start in 1975, the Deering Banjo Company of Spring Valley, Calif., has grown into North America’s largest banjo maker, riding the instrument’s current boom in popularity. The company owns an estimated 80% to 90% of the U.S. market and has almost doubled its sales since 2009, to a projected $5 million this year. In the past year alone, sales are up $1 million. In January, they expect to sell their one hundred-thousandth banjo. Instead of banging on music store doors, they have a one-year back order on new instruments.
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Deering is not just the nation’s dominant banjo purveyor. It’s also a brand that’s attracting a new breed of young musicians. Taylor Swift strums a six-string, $2,100 model. “Taylor has really brought a lot of new people to the banjo,” Janet says. “Just watching her play, they buy banjos. It’s a wonderful thing.”
Steve Martin, Keith Urban, and Winston Marshall of Mumford & Sons are all Deering banjo players too.
The current roster of A-list musicians playing a Deering represents a 180-degree turn from the 1970s, ’80s and ’90s, when Nashville shunned the banjo. Zen Crook, an old-time Nashville session player, told a company official how a fellow musician warned him, “Don’t let anyone know you play the banjo because it will be the kiss of death of your music career.” The Deerings say the banjo backlash hurt them early on. “We felt like we couldn’t climb out of the box,” Janet says. “I had country artists say, ‘As soon as I cut a record with a banjo, they cut it from the album.'”
Greg Deering credits Emily Robison of the Dixie Chicks. “They told Emily she couldn’t play the banjo, and she told them to stuff it,” he says. “She said, ‘Either I play the banjo, or we walk.'” She used an electric Deering banjo she bought at age 15. Keith Urban also widened the instrument’s appeal, recording with a Deering far from Nashville in his native Australia.
From the time he was a kid listening to The Kingston Trio, Greg says he has always loved the banjo. “It’s a primitive sound,” he says. “It has a haunting quality to it.” Greg was a good banjo player, but he was a better craftsman who honed his skills building model airplanes with his father.
In 1969, as a 19-year-old student at San Diego State University, he made his first banjo because he couldn’t afford the $700 Gibson banjo he longed for. He and his buddies, including Bob Taylor (who would go on to guitar-making fame) formed an instrument-making co-op called The American Dream.
In 1974, the co-op closed. The next year, Greg and Janet, who met at church after she watched him play hymns, started the Deering Banjo Company. In the early, lean years, they would eat from their garden and chicken coop, scrounge for tools at a salvage yard, and rush to the bank to deposit any profits before their checks bounced. After they hired four employees, the neighbors complained, so they moved their operation to a small plant.
Pricing was a challenge initially. Greg wanted to put as much value as possible into each banjo, but when Janet tried to sell a $175 model, store owners would ask, “What’s wrong with it? Why is it so cheap?” The next week, they raised the price to $275, and still the stores wouldn’t bite. Only after they raised the price to $375 did they start racking up orders.
The Deerings now rely on a skilled workforce of 47 craftspeople, some of whom were carpenters and others who trained on the job. With fluctuations in sales, keeping a core crew posed a challenge. During the recent recession, Deering’s sales skidded from $3.4 million in 2007 to a low of $2.4 million in 2009. The company shrunk down to what the Deerings call an ” irreversible minimum” of 31 workers. “We spent two weeks with barely enough sales to make payroll,” Greg says.
But they wanted to keep all their best employees, so they had everyone in the shop read a book about lean technologies called The Goal: A Process of Ongoing Improvement. They moved machinery to a central location so workers did not have to walk as far, and Greg developed new, more efficient machines. When sales picked up, they could produce banjos faster and for less.
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Deering’s current offerings span the market. Their entry-level $500 banjos compete with Chinese imports. They also make custom-made, high-end instruments such as the Banjosaurus, which features an intricate mural depicting dinosaur evolution on the neck. George Grove of the Kingston Trio plays it onstage when he is not lending it to the American Banjo Museum in Oklahoma City. Anyone who wants to fork over $60,000 can have one custom-built just like it. Often, it’s rich amateurs, not professional musicians, who spend tens of thousands on a banjo as a piece of art.
To keep banjo fever hot, the Deerings advertise in magazines, on the radio, and even on the side of a bus, under the tagline “Relax and Enjoy the Sound. Play the Banjo.” The company has sponsored banjo giveaways through the Facebook page of the Celtic punk group The Dropkick Murphys. To register to win, people have to submit their email address. “Within minutes, we’ll get 10,000 to 15,000 emails,” Greg says.
This fall, the Deerings traveled with Mumford & Sons, setting up a tent and giving free banjo lessons to 2,000 fans in two weeks. “Within 15 minutes, I can teach you to strum and play two songs,” Greg says. They also travel worldwide, visiting dealers in 11 countries, and sell to other countries online.
Jamie Deering, the Deerings’ daughter, is in charge of artist relations and also travels with bands. She has been mentioned as a possible successor, but Greg says she doesn’t want to go through the decades of struggle she saw her parents endure. “In order for her to take over, we’re going to have things running really, really well,” Greg says.
Besides, Greg, who is 63, and Janet, who is 59, say they have no plans to retire anytime soon. They ignore advice to take their company public or cash out. That, after all, would break their pact. “We just want to make banjos,” Greg says. “It’s all about the magic of the music and the magic of banjos.”