Michele Petersen

A New Year...A New Business?

By Michele Petersen, Vice President, Amoskeag Business Incubator

Many of us make New Year's resolutions. Some we keep. Some we do not. Some may involve personal goals and ambitions, such as weight loss or fitness, and others revolve around career. Perhaps, you're at a point in your life where you're ready to launch your own business and you're thinking that 2010 is the year to do it. You know you have a great idea for a service or product, but you're not sure just where to begin.

You can start by answering some basic questions. Who are your anticipated customers?  How will you reach them?  Make a list of your competitors and evaluate why customers will select you instead of them. How are you different? Will you have a competitive advantage as a result of building a solid reputation in your industry, or does your product or service lend itself to price positioning? Perhaps the location of your business will give you the upper hand.

Once you've explored the competition and feel confident that there's room for you, take a close look at the finances. Project your sales out over the next three years and be realistic. Consider the time and cost of securing these sales. If you're the sole business owner, there are only so many hours in a day.  In fact, my review sessions with business owners have revealed that one of the biggest challenges they face is time management and staying on top of the priority list. Another challenge faced by business owners is securing initial funding. Personal savings, support from friends and family members, bank loans and even credit cards are all common sources of funding for small business start ups. You'll want to determine which route you should take.

Evaluate the financial feasibility by developing a budget for the next three years that includes an estimate of your expenses and then compare to your anticipated revenues. Ultimately, you'll want to look at the bottom line and ask yourself if these are numbers that you can live with. If you answer, "yes," you may be ready to become a business owner or at least ready to contact one of the many resources available in New Hampshire that assist with small business ownership.

One of the best places to begin is right on our state's Web site - http://www.nh.gov/ - where you'll find an entire section devoted to this topic. Click on the business tab to view information about: business entity selection; registering your business and/or trade name; licensing; employment regulations; business plan development; budgeting; and the list goes on. Another excellent Web site is http://www.nheconomy.com/ which features the NH Business Resource Center and the NH International Trade Resource Center; both are programs of Hampshire's Department of Resources and Economic Development. Contact information is listed so that you can connect directly with staff.

New Hampshire is also home to numerous incubators and co-working environments. A Google search of "business incubators in NH" will display a variety of options. Business incubators provide a supportive environment for early stage businesses that typically includes affordable office space and technical assistance. An example of one such resource is my employer, the Amoskeag Business Incubator (abi), which currently houses 20 full time businesses and another ten in a part-time Affiliate Program.

Typically, there are unique resources available for the companies residing within a given incubator. For instance at the abi we offer businesses access to our business support committee, a panel of professionals with various areas of expertise who generously donate their time and talent. We also offer assistance with assessment and goal setting, and the coordination of interns from several area colleges and universities, which can be an invaluable resource for a small business.

In addition to our in-house support, we often refer our clients to other agencies who offer an array of services, many of them at no charge. In addition to the state resources previously listed, we encourage contact with the NH Small Business Development Center (SBDC), the Women's Business Center (WBC) and the Service Corps of Retired Executives (SCORE). All of these programs fall under the US Small Business Administration and more information can be found at http://www.sba.gov/. Another invaluable resource is MicroCredit-NH, which provides access to networking opportunities and loan capital, and can be found at http://www.microcreditnh.org/. You can access links to all of these agencies through our Web site at www.abi-nh.com/resources.

In summary, if you're interested in launching a small business, don't think you have to go it alone. The resources noted above offer a comprehensive mix of information and one-on-one assistance. In addition, they all offer trainings and workshops to enhance your business skills, many of them on-line so you can take them at your convenience.  If you do decide to carry through on your New Year's Resolution and pursue your entrepreneurial endeavor in 2010, I wish you much success! I look forward to answering your questions.

Michele Petersen is Vice President at the Amoskeag Business Incubator in Manchester, where she has been employed for two years. She provides business coaching to start-up and early stage companies, oversees the Affiliate Program and conducts marketing and public relations for the Incubator. Prior to this she served as Director of Economic Development at Families in Transition, where she directed the agencies social entrepreneurship endeavors, and marketing and public relations efforts. Early in her career, she worked in the areas of human resources, and then communications, which provided a smooth transition into marketing and public relations.

Michele earned an MBA from Plymouth State University with a focus in marketing, and holds a bachelor's degree in business administration with a concentration in human resources from Southern New Hampshire University.

Michele sits on the Business Advisory Board for University of New Hampshire in Manchester. In 2008, she served on the Marketing & Public Relations Committee that helped launch Speed Venture Summit, an entrepreneurial event that connects companies with investors, and in 2009 she chaired the committee.  Michele is a member of the Public Relations Society of America, the world's largest organization for public relations' professionals, and a member of the New Hampshire Economic Development Association.

QUESTION (abbreviated): I am an industrial designer and my wife is a mixed-media artist. We have lots of ideas and very few resources. Should we consider starting a business while I am between contracts for other companies? I contract as an Electrical/Mechanical designer and use my ideas for other people. I want to use my ideas for myself. But capital is limited and resources are small...How do you start this process? How do you live and pay bills while the "idea" takes off? How much are investors willing to help during the start-up process? Are there Grants to finance the R&D of an idea and get a small business going?...I am leery of saying what my ideas are. I have thought of ideas before, saying "Wouldn't it be great if we could..., only to see these ideas sold on late night TV or trade magazines six months later!...I need help to do it.

ANSWER: Thank you for your question.  To begin, please know that it is very difficult to start a business without financial resources. For that reason, many business owners keep some kind of steady employment while pursuing their business start up. Others partner with an individual or organization that can provide the financial backing. This would require your willingness to give up a piece of your business. Venture capitalists are typically looking for companies with high growth potential and they're typically looking for those companies that are beyond the "idea stage." In addition, there are grants that you can pursue, such as SBIR funding.

However, before you pursue venture capital or grants, I believe it would be most helpful to you if you could connect with a business counselor who could help you focus and put together some strategies on how best to move forward. I suggest that the best place for you to start is to contact some of the resources that I listed in my article. For example, both SCORE and the SBDC have a variety of excellent on-line resources and also provide one-on-one counseling, which I feel would be the most appropriate starting point for you. Both of these organizations can be reached on-line at http://www.sba.gov/services/counseling/index.html.  Also, you should take comfort in knowing that confidentiality agreements are required as part of the business coaching process for both of these organizations.

I hope this is helpful and I wish you much success in your endeavors.

QUESTION: I was looking to start a new business, where should I go?

ANSWER: As mentioned in a previous answer, the SBDC is an excellent starting point. Their Web site (http://www.nhsbdc.org/) offers valuable information and even free on-line workshops. Their FAQ's (frequently asked questions) link provides answers to some common start-up questions, and provides instruction for pursuing one-on-one business counseling. I also recommend that you check out http://www.microcreditnh.org/ an organization that supports microenterprises by providing business training, loans of up to $15,000 and numerous opportunities to network with other business owners. Thank you for your question and best of luck!

QUESTION: We are starting an Adventure and Recreation business in Weirs Beach and I would like to know more about obtaining financing to build and start our project.

ANSWER: Thank you for your question. There are many options for funding a start up. Many business owners provide the initial funding, through savings or by tapping into their home equity line of credit.  This not only provides you with starting cash, but demonstrates that you're serious enough about the business to invest your own money, as well as your time and talents, which is appealing to an investor. Another option is to seek support from friends and family members, which can be tricky. If you go this route, be sure to clearly establish terms of repayment so there won't be any surprises later. And, of course there's always credit cards. I have seen businesses go this route as a way to tide themselves over until revenues can cover their expenses, but approach with caution.

If you've exhausted these options, you might consider talking to a banker about a commercial loan. Either way, it's important to establish a relationship with a commercial banker even before you need the loan so that when you're ready to borrow, they're already familiar with you and your business. When selecting your banking establishment, be sure to choose one that is well versed and an active participant in the SBA loan programs. Without knowing more about your specific circumstances, I wouldn't venture a guess at which loan would work best for you, but your banker should be able to walk you through the process. You can also find a listing of the SBA loan options by visiting http://www.sba.gov/ and following the financing links.

Another option would be to pursue financial support in exchange for either equity or royalties by a venture capitalist or angel. These options are usually reserved for high growth businesses and I'm not sure if you would fall into this category, but you can learn more at http://www.granitestateangels.com/ or http://www.northeastangels.org/. I hope this is useful and wish you much success!

QUESTION: I have started a property maintenance company specializing in REO's and cleanouts of foreclosed home including plowing, landscape, carpentry ext. Is there anything you could do to help with getting jobs. I have e-mailed every broker and asset company I could find. I joined the Ocwen network and the REO network.

ANSWER: Thank you for your question. I did a quick on-line search and observed that there appears to be lots of competition in your realm of business, which means that you'll have to work hard to gain market share. In this kind of business, I'm inclined to think that word of mouth is one of the top referral sources. Kudos to you for reaching out to brokers and asset companies via e-mail, but in this case I'm not so sure e-mails as the initial contact are going to get the job done. Instead of waiting for the business to find you, you'll have to find the business.

One way to do this, is to put yourself out there, in person. For example, you might consider becoming a member of the NH Association of Realtors (http://www.nhar.org/), the Home Builder & Remodelers Association of NH (http://www.hbranh.com/), or the NH Bankers & Brokers Association (http://www.mbba-nh.org/). You might also consider attending Chamber Events and keeping an eye open in Monday's business section of the Union Leader for events that might attract your customers. Networking will help you make contact with potential clients, and then you can follow up with an e-mail and/or phone call.

Another thought, it's important that you establish credibility in your industry, and on your Web site you state there that a high percentage of your business is repeat customers. Perhaps some of those customers would be willing to write testimonials to help build your reputation and even make referrals. Remember that building a business takes time and the daily grind can be overwhelming, so try to focus on what you've been able to accomplish and move forward from there. I wish you continued success.

QUESTION: I'm in the very beginning stages of trying to start up a wedding event center and banquet hall. Can you give me the name of somebody who would be willing to meet with me personally and discuss the right direction I should be taking?

ANSWER: Thank you for your question. I have a couple of suggestions for you. First, I highly recommend Lois Matheson, a business counselor from the WBC (Women's Business Center). You can reach her at 623-7383 or LMatheson@ComenBiz.org. There are some costs involved with the WBC such as $75 membership and $25 for counseling sessions, but I believe the first session is free. They also have a mentoring program and other services. I would suggest that you call Lois to get more information. Another option is to contact a business counselor from the SBDC (Small Business Development Center) such as Andrea O'Brien. She can be reached at (603) 801-0686 or andrea.obrien@unh.edu. They do not charge for services and if she feels another counselor would be more appropriate for you, she'll make a referral. I wish you much success!

QUESTION: Is a business plan required for a non-profit seeking grant money and/ or for a business related/ expansion loan?

ANSWER: Since a grant is very different from a loan, you're really asking two questions. I would recommend that you contact the New Hampshire Center for Non-profits for information regarding grant requirements. You can visit their Website where they have a "Grants Central" section with some great resources. The Web site is http://www.nhnonprofits.org/.

As far as the requirement for a loan, when applying for any kind of loan no matter the source, I would recommend creating an Executive Summary with the following three sections: 1. The amount of money that you're requesting; 2. What you will specifically be using the money for; and 3. How you will pay it back. It's been my experience that banks prefer this information in an easy to read 1-3 page document. The "How you will pay it back" section can include historical profits, letters of intent to purchase, former loan payback successes, etc.

Getting back to your original question regarding the business plan requirement, having one demonstrates that you've done your homework and that you've taken a look a key business components such as your competition, marketing strategies, anticipated sales and expenses, etc. Since you're looking for an expansion loan, perhaps you can simply update your original business plan. I'm of the belief that a business plan should be a working document and if you've made good use of it, you can use it to demonstrate that you've accomplished past goals. So, although, a banker may not ask for a business plan, you can certainly present it along with your Executive Summary. They may or may not read it diligently, but it's a chance to demonstrate that you're serious about your business and to show past successes.