State of the small business community
By Jim Kendall
This column originally appeared in the November 2, 2015 Daily Herald
Ever wonder what’s driving your small business counterparts?
Conversations with three of the suburbs’ top Small Business Development Center managers – Harriet Parker, who runs the SBDC at Waubonsee Community College, Aurora; Sybil Ege, who does the same at Elgin Community College; and Tom Cassell, Harper College, Palatine – provide some insights:
* We’re still not comfortable with technology.
“Non-Millennial entrepreneurs are struggling with technology, especially social media and digital marketing,” Cassell says. “We see a lot of (business owners) looking for help with websites and asking questions about which social media platform is right for them.
“(Social media) is a cost-effective way for many businesses to reach their market, but there’s a learning curve.”
* We’re still starting up, but money is an issue.
Start-ups aren’t the traditional bakery or one-person consulting firm. Ege notes start-ups in sports-related businesses – fitness, skateboard training, soccer and golf, for example – pet daycare, training and grooming; and craft brewing.
“I’m shocked,” she says. “A lot of these start-ups require retail locations that are expensive.”
* There’s significant activity in the business buy-sell marketplace. “Succession planning is the major new thing I’m seeing,” says Parker. “We don’t do formal valuations, but we talk about defining what’s valuable about the business – and what buyers will look for.”
Cassell sees “an increased interest for new business owners to purchase an existing business (rather than start their own). “We’re helping with valuation, helping negotiate a fair offer and finding the financing they need to move forward.”
Parker describes her role as more of “A resource for the beginning of the transition process. We talk through the process – what business owners exploring a sale are thinking, what they need to get from the business.”
When family is involved, the conversation focuses on family dynamics, including whether the children want to take over. “There’s more psychology involved,“ Parker says.
* Capital is an issue. Always. In fact, Parker says a lack of capital is one reason she sees fewer potential start-ups.
“Capital and customers” are the main concerns, Cassell says. ”Start-ups are concerned with initial funding and the cash flow needed to keep the doors open. Owners who have been in business for a while are looking for new customers and a cost-efficient way to reach them.”
Ege hears a familiar refrain: “Bankers tell me they’re loosening up – and that they mean it this time,” she says, adding, however, that tough lending regulations mean every “i” must be dotted and every “t” crossed.
“Business owners,” Ege continues, “still are not knowledgeable enough about finances.” As a result, “They don’t present well” when it’s time to talk to the banker.
Parker says the general difficulty of obtaining bank financing leads “a lot of people” to explore – although not necessarily use – such alternative lenders as OnDeck Capital and Kabbage. Both are online lenders, and rates tend to be high, Parker says.