Small business owners face challenges
It has never been easy to start a small business or to keep it going. Acquiring startup money is always one of the challenges. In Wyoming, officials say they want to develop more businesses, but unless you are a technology company, it can be difficult to find the necessary support. Wyoming Public Radio’s Bob Beck reports.
BOB BECK: Laramie Economic Development Director Dan Furphy says funding small businesses is scary for lenders.
DAN FURPHY: The failure rate is extremely high I think it’s something along the lines as 80 percent fail within the first two years. So, what that means is banks and others who are putting their capital into a business have to be very conservative in making sure they’re not risking their depositors’ money…etc.
BECK: Furphy spent most of his career as a banker and he says the general reason small businesses fail is that business plans didn’t account for early hurdles including the slow times.
FURPHY: Late January through March and April, it’s a tough time to do business in Laramie. People have spent their money, they are holding tight to their purse strings and so you gotta be able to survive those slow periods of time and so you gotta have enough capital to support your business through those periods.
BECK: The Wyoming Business Council has worked hard to help a number of small businesses get started and offers an array of support to not only help them stay in business and grow.
But Business Council CEO Bob Jensen also admits that not all small businesses are equal. He says there does seem to be more support for unique or high tech businesses and he agrees that the traditional retail business owner can have a tough time getting started. But he also maintains that hurdles can be overcome. Jensen says those interested in starting new businesses need to find a way to make themselves known to potential investors or those who provide loans. Working in a specific business for a long time or being active in local organizations can help.
JENSEN: If you are visible and have demonstrated your credibility in almost any circumstance that’s an advantage for you. In terms of trying to get out in front of people who might have the resources to fund your business.
BECK: This is inside Gateway Fuels and Gateway Liquors at the corner of highways 230 and 130 in Laramie. It features a gas station, this convenience store and an adjoining liquor store. It has been open for a little over a year. The three partners are all in their mid 30’s with Laramie business backgrounds. Rajeev Patel’s family owns and operates hotels and owns property. He says without those local connections it might have been tough to get funding.
RAJEEV PATEL: It’s having that local bank that knows my family, knows what I’m about, that gets my foot in the door, where other banks wouldn’t even bother.
BECK: Patel also credits his father’s advice to be active in non-profits and local organizations for helping him gain credibility for the project.
PATEL: And honestly that’s what helped me out tremendously when I decided to do my own business and like I keep saying that they know me is cause of that. My work through those boards and non-profits, people really get to know who you are.
BECK: So Patel was able to get funding, but there are some unforeseen costs. Sometimes local communities want you to rebuild roads, improve the local infrastructure, or want you to change your building plans. Patel laughs and says it was an education working with the city of Laramie and the Wyoming Department of Transportation.
PATEL: We knew we had to talk to WYDOT we knew we had to talk to the city of Laramie, we didn’t know there were these huge walls we had to climb to get past these entities.
BECK: Jon Benson runs U-W’s Wyoming Technology Business Center…a business incubator. He’s proud to say that nobody who’s graduated from the center has gone bankrupt. Benson says if you want to start a small business, you should focus on something that provides a product to another business versus providing a product for a consumer.
JON BENSON: If you are solving a problem for another business, then I can figure out what’s gonna cause you to buy. And in business to consumer companies it’s tougher. It’s tougher to figure out what the values and the needs are to the people you are trying to sell to.
BECK: But Benson says they have had companies that cater to consumers, but they take a unique approach.
BENSON: We just graduated a company called Tiger Tree and they sell to people who have problems with beetles killing their trees. And the neat thing about that business is that we can spray your tree and it won’t die, but we are going to have to spray it again next year. So we are going to get continuing revenue.
BECK: Benson says another key is to avoid loans. He says they can take a long time to pay off and will require you to have a lot of success right away. Benson says it’s always better to raise your own money. For Wyoming Public Radio, I’m Bob Beck.