Start small, think big. Happy National Small Business Week!
Whether it’s opening a 50s-themed diner or a gluten-free pet food company, small business owners are the “true backbone of America,” says Steve Calkins, vice president of business solutions at Office Depot.
Calkins kicked off National Small Business week yesterday at the headquarters of Office Depot in Boca Raton, Florida.
With 56,000 associates across the country, Office Depot isn’t exactly a small business. But Calkins, who started his career at a stock boy at a local athletic apparel shop, said that they still have the same business outlook as when the company became incorporated in 1986.
“While our corporate profile may have changed, our outlook has not. You’re the force driving our business forward,” Calkins told the group of small business owners and investors gathered at the kickoff.
Also speaking at the conference was Maria Contreras-Sweet, who heads the U.S. Small Business Administration. Contreras-Sweet, Calkins, and other experts in the industries shared their tips and insight on what it takes for small businesses to become successful today — and the resources that can help you get started.
Here’s Debt.com’s takeaway….
1. Be harsh on yourself — but bold
“Just because you can fry an egg doesn’t mean you should open a restaurant,” says Toula Amanna, owner of Flashback Diner. An immigrant who came to the U.S. at 18 to go to college, Amanna opened the first Flashback Diner in South Florida in 1997 with 25 employees. Today, it operates in three different locations with more than 250 employees.
Amanna says she read a lot, went to meetings and “really put myself out there” when she first got the idea to open her own business. But she stressed the importance of having lots of self-criticism if you do decide to open a business.
“You must have an ongoing business plan. A very realistic, pessimistic one,” she said.
2. Find a need and fill it
“What product are you selling that’s solving problems?” asks Yalmaz Siddiqui, director of environmental and supplier diversity strategy at Office Depot. He emphasized the need to think ahead of the consumer, of deciding how to market your product before it sees the light of day.
“The more you do your research, the better you’re going to do,” says Pamela Stewart, president of Paragon Florida, Inc., a lender to small- and mid-sized companies. “You have to stay engaged and know what you don’t know. Information is power.”
3. Back up ideas with math
“Our requirement is that businesses have a plan,” Stewart says. “The other part is financially having their house in order.”
In other words, no one is going to fund you unless you have a concrete idea of how to pay your loans back. The SBA has several outlines and examples of how to craft an executive summary, market analysis, and financial projections — all part of your business plan — to help get started with your company.
4. Learn the legalese
When you first start your company, you’ll have to decide whether you want it to be a corporation, a non-profit, or a partnership. Then, you’ll need to register your business with the state. Small businesses also have their own tax status, so you’ll need to determine your federal and state tax obligations. It’s a good idea to educate yourself on business laws and regulations, from privacy laws to environmental regulations to intellectual property laws. Survive long enough and you can hire somebody else to do this — but it can be hard to find somebody trustworthy and affordable, and you need to know at least the basics.
5. Don’t assume a big bank won’t help a small business…
Banks like Chase and Bank of America are sometimes viewed as the enemy of small business owners. Or at least indifferent to them. But that doesn’t have to be the case, says Peter Salas, Miami and Fort Lauderdale regional manager of JPMorgan Chase.
“At Chase, the financial industry has changed,” Salas says. “We’re more of a partner, providing advice and service. We have to be customer-centric. In some cases, that might mean recommending them to Paragon. We all win down the road with getting more people into the labor force.”
Last year, Chase lent $19 million to small business owners, and a significant number of that was for 504 loans backed by SBA, Salas says. An SBA 504 loan requires 10 percent down from the business owner, while 50 percent comes from a bank and the remaining 40 percent is funded by a Certified Development Company, or CDC. CDCs must be nonprofit, but they can be chambers of commerce, foundations, or trade associations.
6. …but cast a wide net for funding
The 504 loan is just one offered by SBA. They also offer loans for rural businesses, micro loans, and disaster relief loans. The SBA is going into Baltimore this week, Contreras-Sweet says, to help businesses affected by the riots following Freddie Gray’s funeral.
But you can crowdsource a loan, too. That’s what Urbio CEO Merrick Rosner did, after he had the idea for a design company that would create gardening products for urban residents with small living spaces. After first launching on Kickstarter in 2011, the fledgling company raised $77,000 in five weeks — more than 400 percent of Urbio’s original goal.
7. Know what you’re good at and stick to it
One of the best things about Urbio, according to Siddiqui, was that they “outsourced their weaknesses.”
“You have to recognize what you are and what you’re good at,” he says. Rosner agrees, saying that while he and his team are still responsible for creating imaginative designs, they outsource some of the logistics.
8. “Fail fast, fail forward”
It’s “important to fail,” Rosner says. “The important thing is to always ask questions and talk to people smarter than you.”
Urbio has made mistakes, and they’re making them right now, he says. But mistakes don’t always equate to failure, and as long as you learn from them, they’re not necessarily a bad thing.
9. Find a mentor
“We cater to the good dreamers,” says Bob Naples, a counselor from SCORE, which pairs successful current or former small business owners with aspiring ones.
“We spend a lot of time with them, teaching them how to put a business plan together, the meat and potatoes of running a business,” Naples says. SCORE has chapters all over the country. They do house calls, email correspondence, one-on-one counseling, webinars, and workshops both local and online. Many of those services are free, although workshops are usually offered at-cost.
10. Create an online presence
“As soon as you light up your website, you are engaging in international commerce,” Contreras-Sweet says. “On my second business’ website, I got responses from around the world.”
Having a strong digital platform and social media following is a must in today’s business climate, Rosner says.
“Get out there and tell your story. Create buzz,” he says. “Turn your plan into a reality.”