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Thursday, Sep 29, 2022

Entrepreneurs Learn How to Win at All Stages of the Game

From a one-man, one-bedroom apartment operation in 1976 to a 300-employee company with a 75,000-square-foot facility today, Modern Postcards defied the odds when it didn’t become one of the 90 percent of small businesses that fail in their first five years.

Steven Hoffman, chief executive officer and founder of the Carlsbad company that offers high-end direct marketing materials, started out as most young entrepreneurs do, with a plan that hinged on one of his passions , photography.

So did newbies to the small-business world, Tim Oliver and Carl Gustafson, co-owners of Tag for Dogs & Cats in Hillcrest. Founded in May 2004, the retail business that specializes in pet care is halfway there to surpassing the daunting five-year failure rate that Hoffman has already conquered.

Although their businesses broke into the local economy three decades apart, Hoffman, Oliver and Gustafson all faced the same basic hurdles to starting a small business.

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Joe Molina, business consultant with MiraCosta College’s Small Business Development Center of North San Diego County, counsels new and would-be business owners on those hurdles.

“Most businesses encounter similar challenges: financing, permits, marketing, business plans and location,” Molina said. “Affordable location is probably one of the main challenges for new businesses. Some locations are becoming or have become somewhat out of reach to small businesses.”

Parking Issues

Although Gustafson and Oliver found their spot on a busy section of University Avenue quickly, thanks to a tip from the previous shop owner, they had to accept less-than-ideal parking on the site.

“There was that fear of ‘Would our business be successful?’ ” Gustafson said.

Gustafson knows many people in San Diego don’t like to park even just one block away and walk to a store, even though they’ll walk the equivalent of several blocks trekking through a mall.

“My biggest issue is the parking misconception by far,” Gustafson said.

Being prepared to take the good with the bad is something all aspiring small-business owners should do, said Rod Means, district director with the San Diego chapter of Service Corps of Retired Executives, a group similar to MiraCosta’s center.

Known as Score, the group Means helps run out of his private Mission Bay office is a nonprofit with more than 11,000 volunteers and about 400 chapters nationwide.

In San Diego, there are about 80 volunteers who, like Means, are current or retired business owners and business experts who counsel, advise and mentor new and aspiring entrepreneurs.

“The biggest thing that I can recall myself, I’ll say, is the uncertainty of it all,” said Means, who is now retired but has owned several oil and petroleum businesses in San Diego since 1970.

Gustafson’s corporate experience working for a Seattle staffing agency led him and Oliver to prioritize their own staffing plan for Tag for Dogs & Cats.

The pair has five employees, who all receive benefits and higher-than-minimum-wage pay. Gustafson said he and his partner decided early on that despite the hefty cost, they would have to sacrifice profits in order to have loyal staff.

“That was a challenge as far as looking at the expense of it,” Gustafson said. “It’s super expensive compared to the corporate offering we were used to.”

A Time For Everything

Although health care and the ability to offer benefits to employees is a hot topic now, Means insists it’s only health care’s turn at garnering the public’s interest.

“There’s no doubt that health insurance is not going to be less anytime soon but it all goes in cycles, like when workers’ comp costs were so bad,” Means said. “Now you don’t hear anything about that, do you? But before it was a big deal.”

Hoffman knows about payroll sacrifice, too. During his first 18 years in business, he was his own lowest paid employee.

“I was never in it for the money; as long as I had food to eat and my rent was paid, I was happy,” Hoffman said.

Because his business deals with large-scale printing projects, Hoffman must budget for high-priced equipment. His first printing press was $25,000 and the costs have only gone up with time. Finding funding for such big purchases is another major setback to building a new business.

“The key thing that I thought was the misconception that banks will loan you money for a good idea, which they won’t,” said Hoffman, whose first business loan was co-signed by his father.

Hoffman believes it’s the same today as it was 30 years ago as far as securing funding goes, but the number of sources and opportunities for capital has increased.

MiraCosta’s Molina agrees.

“Financing is much easier than it was 10 years ago,” Molina said. “Clients need to understand that ‘credit’ is a big issue, and clients should ‘fix’ their credit before approaching a lender.”

Published reports citing a National Federation of Independent Business study state that during the lifetime of a business, only 39 percent are profitable, 30 percent break even and 30 percent actually lose money. What those 39 percent do right is make a plan, according to Score’s Means.

“They wouldn’t drive from here to New York without some sort of map, and the same should go for a business,” Means said.

For many, their plans start with licenses and permits. Means and MiraCosta’s Molina agree that the first question many entrepreneurs have deals with getting the necessary permission slips.

“Every city has its own requirements,” Molina said.

Although many are standard issue and relatively easy to obtain, others can be challenging. For instance, home-based businesses in which the owners welcome clients from time to time to go over paperwork or discuss projects are generally not allowed because they drive traffic to residential areas, Molina said.

But rather than letting this fact discourage new business, Means advises people to look at the whole picture.

“It’s hard to explain to people who are going into business for themselves to take off their obey the law hat and put on their entrepreneur hat,” Means said.

Starting a new business takes risk, he said. He uses the example of people who speed on the freeway, making a dollar for every mile above the speed limit they go. When they’re caught, it’s unpleasant and they usually have a fine to pay, but if the amount of the fine pales in comparison with the profit that’s been made, it may have been worth it.

“You have to be out of the box,” Means said. “You can’t be vanilla anymore.”


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