http://ozarkspub.vo.llnwd.net/o37/KSMU/audio/mp3/msu039s-small-business-and-technology-development-center-provides-debt-counseling-sma_68581.mp3
RANDY: Starting up a new business is always fraught with potential risks, whether you’re starting totally from scratch or you’re opening a franchise of an existing company (as you’ll hear on this afternoon’s installment!). Missouri State University’s Small Business and Technology Development Center, located in its spacious new facility in the Robert W. Plaster Center for Free Enterprise and Business Development on Jefferson Avenue, is becoming the go-to place for numerous aspects of business know-how and entrepreneurship... including the tricky issue of managing business debt. The Center is, among other things, a “small business incubator.” That program’s Coordinator, Brian Kincaid, explains that a small business incubator helps entrepreneurs progress from “start-up to stability.”
BRIAN KINCAID: The “small business incubator” is a program designed to support the successful development of young companies. And we do that through an array of business support resources that are offered both within the incubator and its staff, and also through its network of contacts. So it’s a place to create and cultivate a community and collaboration between businesses, in order to help each other succeed. And if done correctly, incubators create an entrepreneurial “ecosystem” that can be a catalyst for regional and community development.
RANDY: But it’s almost inevitable that small start-up businesses are going to experience debt problems. Center Director Rayanna Anderson and her staff do a LOT of debt counseling, in part because start-ups usually require bank loans... and following the banking crisis of a few years ago, the regulations—and the banks themselves—have tightened up.
RAYANNA ANDERSON: I find it more difficult for our small-business clients to get business financing than it was before our latest recession. However, in southwest Missouri and especially in the Springfield area, we have lots of great banks, and we do a LOT of small-business lending here. In fact, we do almost as much small-business lending as the whole Kansas City market. So it’s a VERY good area for small businesses, and we have been recognized nationally for it.
RANDY: Rayanna Anderson defines “business debt” as a “structured re-payment”, where one goes to the bank to try to acquire a loan to purchase inventory and equipment—basically, to secure additional working capital—and the loan must be repaid. So good sales projections and financial analysis are VERY important: how much cash will a start-up business actually NEED? There are guidelines—“financial industry standards”—by specific business type, to help a business owner understand what they will need financially to make a go of it. The Small Business and Technology Development Center offers many of these resources... but Rayanna says entrepreneurs don’t always do their homework.
RAYANNA: Lots of people can have great ideas, but the devil is always in the details. One of the steps sometimes that I see entrepreneurs skip is really assessing their market, evaluating their competition, and really evaluating what the MARKET POTENTIAL is: what kind of percent(age) of the market that they think they can obtain... and connecting the dots to how they’re going to promote, and how they’re going to differentiate their business from others. Statistically, they’re going to tell us that after five years at least 50% of start-ups have failed. So we want to do some things to reduce the odds of that happening. And there are a lot of things that can be done. The SBTDC has been on Missouri State University’s campus since 1982, and every year we help around 200 businesses with that type of information.
RANDY: Rayanna says it’s vital to develop of good BUSINESS PLAN right from the get-go.
RAYANNA: We ask that they start by attending our class on “Building the Ultimate Business Plan”—walking them through the process of establishing a plan that’s going to make them successful. We’re going to tell them things they need to know: we’re going to help them explore ALL the different methods of financing, how that works. What are their resources, you know, how much is really required of them? What kind of loan can they expect? How many years can they finance? What’s a good rate? All those questions that, until you’ve been through the process, may be difficult for you to ascertain. Entrepreneurs typically have a couple of key needs. While most of them know how to prepare their product, provide their service, their need really lies, usually, in two areas, and that’s marketing and finance.
RANDY: The Small Business and Technology Development Center helped their clients get $14 million last year—and NOT just from banks. Rayanna Anderson says the number-one financial resource used by start-ups is FAMILY and FRIENDS, because banks don’t finance one hundred percent. Small business owners have to possess some equity up front. And that’s a story we’ll tell this afternoon at 4:30, when you’ll meet a local business owner trying to emerge from debt. Meanwhile, for more information about the Small Business and Technology Development Center, call 837-2617. For the Sense of Community Series on KSMU and at www.KSMU.org, I’m Randy Stewart.