Slide 1 Small Business Development Centers Bill Wersell, Director - Small Business Development Center, Northwest Ohio Interviewer: Bill, thanks for joining me today to talk about Small Business Development Centers. I’d like to introduce you to our audience. In order to do that, I’m gonna let you introduce yourself. I’ve got Bill Wersell here. Bill, could you tell us about yourself and what you do? Bill: I’m Bill Wersell. I’m from Toledo, Ohio. I’m the regional director for the Small Business Development Center in northwest Ohio. Previous to that position, I was an SBDC, Small Business Development counselor that worked with the voc rehab organization, statewide organization, in Ohio and I used to cover 24 counties and all of my clients were referrals from voc rehab. I did that for approximately seven years. Slide 2 How would I gain access to your services? Go to the Small Business Development Center (SBDC) www.sbecnet.org Services are free and confidential Call and determine how they access individuals Interviewer: Thanks. If I were a person with a disability and I was interested in starting my own business, would I just go to the Small Business Development Center and try to get referred to you or how would that process work? Bill: If you’re just investigating starting a small business if you haven’t taken any steps yet, that would be your best opportunity would be to go to the SBDC. You can go online and get—you can go to http://www.asbdc-us.org Just type in sbdcnet into your computer, google search, and you’ll come to a resource from the SBDC which has a location system in it. It’s broken down by state and each state is broken down by the region. You’ll be able to identify the resources that are available to you in your local community. The SBDC is a national program funded by the small business administration and by the state department of development and usually also by the host company or organization that houses that or that SBDC office. So, the services are free and confidential and you can call and determine how they access individuals to begin with. Slide 3 What kind of services might I expect to be able to find at a SBDC? Without business experience, the SBDC will ask you to attend a seminar 2-3 hours Overview of helpful information One-on-one consultation licensing, business plan, financial projections, and regulations for government Helps you to determine anything that you need to have ahead of time before you start down the path of setting up a small business. Interviewer: What kind of services might I expect to be able to find at a Small Business Development Center? Bill: Initially, if you are not in business already, most of the SBDC centers will ask you to attend a seminar. The seminar is usually 2-3 hours and it’s an overview of the information that you need to have before you have a one-on-one consultation with a consultant. We help you to determine licensing, business plan, financial projections, and regulations for government. We really help you to determine anything that you need to have ahead of time before you start down the path of setting up a small business. Slide 4 How much assistance would a person expect to receive? Seminar & information packet including: business planning templates, planning guides, licensing, requirements, & access to the information online One-on-one consultation Needs assessment Business planning assistance Interviewer: Maybe first I would attend this seminar. Then, would I be either referred to a specific consultant within the organization that could help me further? How much assistance would a person expect to receive? Bill: In our particular center, and that’s all I can speak for, we invite people to attend this seminar. The seminar is a $10 fee at our place. In that, you get a large package of information including business planning templates, planning guides, licensing, requirements, and access to the information online as well. You also get a bookkeeping program from QuickBooks called Simple Start, which we provide to all our clients. We then ask you to sit through this particular seminar and we ask you to take a lot of notes and develop a lot of questions about what your particular business idea is. At the end, you’ll be invited meet with a counselor and setup, usually within a week to two weeks time, a one-on-one consultation. At that time, we really sit down and assess where your needs are and where you are in the planning process. Slide 5 Starting a Small Business with a Disability: How did your collaboration with VR start and how does it work? VR in Ohio identified a need Contracted with a consulting group Hired the SBDC program in our region to provide that basic counseling service VR directly refers interested clients to the SBDC program SBDC program provides the one-on-one consultation Interviewer: Most of the people who are going to be accessing our interview today are going to be people with disabilities who are interested in starting their own business. Your program is really unique and interesting and I’d really like to a little bit about how your program works in Ohio. You mentioned earlier that you collaborate with VR, which is vocational rehabilitation. Could you tell us a little bit about how that collaboration got started and how that works? Bill: Ok. Voc Rehab in Ohio identified that a number of their clients already were in existing businesses and a number of people were seeking assistance to start small businesses, particularly home-based businesses. Because the VR counselor really does not have the knowledge and the understanding of the responsibilities of going into business, they contracted with an organization in the state of Ohio named Enterprise Works. Enterprise Works is a nonprofit business consulting group. They then hire independent consultants and in our case, the SBDC program in our region, to provide that basic counseling service. So, in my area, all of the people who identify themselves to VR as either in business for themselves or have an interest in starting a small business are immediately referred by the VR council directly to the SBDC program. We then take, from there, and have initial meetings from them. Those clients are not necessarily asked to attend a seminar because we will start with one-on- one counseling. We may ask them to attend the seminar after that just so they have a better understanding of some of the concepts that they’re talking about. They will initially get a one-on-one consultation with us. Slide 6 Continued Different entry point into the program Disability is not the issue Focus is on the business concept and planning This SBDC program offers comparable services to clients with disabilities as provided to all other individuals Yet, accommodations are customized when applicable Interviewer: So they just have a different entry point into your program really. Bill: Yes Interviewer: It’s not like they walked in off the street. They’re referred by VR. Bill: Right, they’re referred by VR and basically to us disability is not the issue. The issue is business and our whole focus really is on developing the business to make sure it is a feasible, viable, and income producing business for the client that we are serving. Interviewer: So really the program you offer is not any different for that group of individuals as it would be for any person who said they want to become an entrepreneur and own their won business. Bill: Not Really. We do customize some things to accommodate for some people, especially for transportation issues and things like that. But, our focus really is on the business. We do not even really want to know what the disability issues are because they are not important to us, they are to the VR counselor but not to the business consultant. It’s that business that has to stand on its own. Slide 7 What occurs after a referral? Determine business status For new business owners Questionnaires Seminars Analysis of business idea feasibility Interviewer: Bill, if my VR counselor referred me to you because I’ve indicated that I’m interested in my own business, could you just walk me though the process of what would occur? Bill: First, we would ask if you’re already in business and if not, what business it is that you’re looking to start? If it’s a new business then we start with a whole series of questions and seminars to help you to determine whether or not your project, your business idea, is going to actually produce you income and we do that through research and development. Slide 8 Is there any standard that I would have to meet to say that my business could generate income? VR’s benchmark More than minimum wage Bill Wersell’s benchmark $15+/hour To make the income worth the stress, anxiety, etc. of owning your own business Interviewer: You mentioned if my business is actually going to generate some income. Is there any standard that I would have to meet as a VR client or even for your program is there some benchmark that I would have to say that my business could generate income? Bill: VR’s benchmark is that you obviously have to make more than minimum wage for the hours that you’re working. My benchmark is much higher than that because if we can’t help you to run a business that brings you in close to double what minimum wage is then why would you take on the responsibilities and all of the other things (the stress, the anxiety) that goes along with business ownership if there wasn’t going to be a much better time return on your time and investment than just minimum wage. So, I look to see if we can’t get people to have an income of $15, $16, or more per an hour for the work that they’re doing. Slide 9 How would I begin starting my business? Determine: business background who the customer is going to be how you are going to provide them with your product or service cost of running the business cost of marketing funding necessary monthly costs Interviewer: That’s interesting. So, let’s say that we’ve talked about my idea and we’ve determined that it looks pretty feasible that that’s going to happen. How would I begin? Bill: Well, we’d like to determine what your background is in this business. Often times we ask people if they have very little background in the business that they’re going into, to go get a job in a competing business so that they learn more about that particular business so that they can learn from other people’s mistakes and see what the customers are really looking for. Our basic focus really is determining who your customer is going to be and how you are going to be able to provide them with the product or service that you want to sell. Once we determine that, then we determine what it’s going to cost you to be in business, what it’s going to cost you to market yourself to be in business, how much funding you will need to get this business started, and also how much it is going to cost you on a monthly basis to get it going. Slide 10 Could you elaborate on that the courses you offer to your clients? Small business management classes Typically 10-week sessions (3 hrs/week) Topics covered Marketing (print, media, or online) State regulations Worker’s compensation issues Hiring practices How to buy and sell products How to make a business transaction How to market yourself Each week should be another step towards your completion of your business plan SBDC also helps with financial projections Interviewer: We were talking a little bit before and you were telling me about the courses or the classes that people can take with your program. Could you elaborate a little bit on that now? Bill: Most of the time, unless you are an existing business and you are showing that you are a successful existing business (by that I mean that you are making better than $15 or $16 per hour in owning and operating your business) we ask you to attend a small business management class. That’s usually ten weeks of approximately three-hour per week sessions. There will be a different topic each week. Usually marketing is a major focus. We will spend three to three and a half weeks on different aspects of marketing, whether it be print, media or online. We also look at state regulations, what your worker’s comp issues, what are your hiring practices going to be? Your management of your business, if you are selling an item, how do you buy it, how do you sell it? How do you actually make the transaction in your business? How do you network yourself so that people start to know more about who you are and you determine who your market is. So we’ll ask you to attend these classes. There will be homework, assignments, and research and we ask you to work on your business plan. Each week as the subjects progress should be another step towards your completion of your business plan. We also ask you to make sure that you start to identify your costs of being in business and then one of the SBDC consultants will help you to develop your financial projections. Projections will help you to know how much money it really costs to be in business on a monthly basis. From there, we have to determine how many services or products you are going to have to sell every month to cover your expenses and then to hopefully start to make that $15 per hour that is our goal. Slide 11 Is there funding available through SBDCs? SBDC does not have any funding Helps to identify funding sources Depending on the state, VR could help with funding if there is outside investment SBA does not loan money SBA guaranteed loan means that SBA is a cosigner with the client on a traditional loan Community development funding Personal investment Interviewer: You mentioned funding a few minutes ago. Is there funding available through Small Business Development Centers or in your situation, does most of the funding come from Vocational Rehabilitation? Bill: The SBDC does not have any funding. We are strictly the consulting arm of the Small Business Administration. So, we help to identify what funds are available. Part of our job is to keep our ear open as to what funding sources are available? What are the current rates? Where can we help to package up a particular business? Often times, you’ll find, or we find, that our clients might access three or four different funding sources to get a particular business started. Voc rehab can at least in Ohio and I don’t want to speak for all the other states. In Ohio, we have been able to get investment into some small business through voc rehab if there is also outside investment in the business. Outside investment can be a bank loan. The SBA does not loan money, so when you hear about someone who has gotten an SBA loan, that means that they have gotten a bank loan through the local bank down the street and the SBA has been their cosigner. The SBA will come in and guarantee the bank up to 80 percent of the funds in certain programs. Each program that the SBA has will be little different. But, basically the SBA is your cosigner and that allows you access to a bank loan. There may also be community development money available. There may be monies through cities or counties and our job is to help you identify those funds. Most of the businesses also need some personal investment. That investment usually is in the way of items that you may already have in your business, that you may have already had in your personal life. If you’re going to do deliveries and you have a truck, then that can count as your personal investment. We need to see that the client is making an investment in the business as well to make sure that they are really wanting to be in this business and that they know the risks that they have involved in developing and starting a business. Slide 12 Funding: Do I need collateral to secure a loan? Depends upon the business Depends upon the assets that need to be pledged Grant opportunities are available but are targeted and difficult to get Only borrow money you know you can repay Interviewer: I think that as I’m getting more into this, funding always seems one of the first questions that people have when they talk about starting a business. I know that probably every bank is different, but in order for the SBA to get an SBA loan or to get that cosigning happening, is it having collateral like you were just mentioning or what do I have to show? Bill: It depends upon the business and it depends upon the assets that need to be pledged. We have been able, once again this is just from my own knowledge and my own cases, we have been able to get some investment from voc rehab and use that as collateral towards the assets that the bank might need to have pledged. We try to start our businesses with as low of a factor of the loans as possible. We do seek out as many grant opportunities from VR and from other agencies as we can but they are very very difficult to get and they are very very targeted. Often times, people are not eligible just due to the specifics of that particular grant. We never want to put somebody in the position where they are borrowing money that we see they will not be able to repay. Slide 13 What about using a credit card to start a business? Damages credit Causes people to be less eligible for alternate funding Using a credit card for start-up expenses is not recommended You can quickly dig yourself into a deep financial hole Interviewer: We have a lot of people say this is really a totally aside comment in a way that I’ve heard people say that they’ve started a business by using a credit card or some kinds of those examples. Bill: We unfortunately get those people a year after they started to use those credit cards and now they are in a financial crunch. Now their credit has been damaged which makes them even less eligible to get the bank loans or outside funding that they need. That would be the last thing we would ever recommend anybody do is to put any type of business start-up expense on a credit card. Interviewer: It seems like you could dig yourself in a hole pretty quickly. Slide 14 Do you have any case study examples? Gentleman Computer literate prior to disability Son Owns business but not computer literate Now, father markets son’s products online Successful in expanded the business beyond the local area Supports Received Had the computer knowledge Needed adaptives to make computer accessible for use VR provided: Highly technical equipment Training on how to use his new equipment Interviewer: Do you have an example of someone that has been successful in being referred to you by VR and then has gone through your program and receives some assistance? Often times a case study example is very helpful when people think about how to apply it to themselves. Bill: It’s a very difficult question to answer because we have very strict confidentiality with our clients so we really are not able to advance too much information about a particular business. Interviewer: Can you give us an example without listing a business—disguise it for us? Bill: I did work with a gentleman who had quite a severe disability, but he was very computer literate before his disability. His son had a particular business and he was not very computer literate. So, the father had started to do computer marketing of the son’s products and they have combined and they are now very successful and they are selling nationwide due to the fact that the father knew how to operate the computer; knew how to access things like eBay and other auction sites; and has really developed quite an online presence for their little small business that never would have survived if they were just selling in their local area. Interviewer: What support did this individual get from your program in order to be able to advance their business? Bill: He had the computer knowledge. He did not have the adaptives to make his computer accessible to him so voc rehab was able to bring in some very highly technical equipment that allowed this particular person to once again be very active on his computer. They also supplied him with all the training he needed to interact with his computer again. Slide 15 Did that person go through your business classes? No He had been quite a successful business owner previous to his disability However- Some clients are well trained in their business practice but need small business management classes because they have never owned a business before Classes help to clarify personal and market needs as well as business planning Interviewer: So did that person go through your business classes? Bill: He did not go through the business classes because he had been quite a successful business owner previous to his disability and we determined that he did not need to take those classes. On the other hand, we have had other people who were well trained in their business. There was one particular person who had wanted to start a business from the career that they had just finished and even though her knowledge of the particular service that she wanted to provide was at the very top level, she had never been in business before. She realized after the second week when we started challenging her about going out and making presentations, just even introducing herself to someone she didn’t know and tell them about her business, she didn’t feel comfortable doing that. So she accepted that. She then started to practice at home. By the time that we asked her again, or actually she came to us and said she was ready, she had a real good presentation down and she went on to be very successful, actually filled her calendar within the first six months so that she was busy at all the available times that she wanted to be. Once again, she structured her business according to what her needs were but she identified businesses that she could sell her product to, her service to, that were available when she wanted to provide them. So it was a win-win situation for her. She continued to have a good income from the work she was doing and something that she really loved to do. Interviewer: That’s great. Slide 16 What advice would you give to other SBDCs increase their services to people with disabilities? Call your state vocational rehabilitation office Call any agency that may be working with people with disabilities You have to network yourself SBDC counselors need to be knowledgeable about the potential effects on disability benefits with starting a small business it’s important that there be a benefits analysis done on every case so that all parties involved are cognizant of the thresholds Interviewer: What advice would you give to other Small Business Development Centers if they wanted to increase their services to people with disabilities? I know we talked to some Small Business Development Centers who said that they don’t get very many people with disabilities that come to them. Do you have any advice? Bill: To my counterparts who are directors of regional center—call your voc rehab; call the state voc rehab; or call any agency that may be working with people with disabilities and get out there. You have to network yourself. The SBDC people have to network ourselves with the people who provide services to people with disabilities. It’s our responsibility as counselors to begin to have more knowledge about the needs of developing businesses for people that have disabilities and it’s not about the disability that we’re concerned about, it’s about the benefits that most of the people receive and how we need to structure financially the income of the business so that we don’t hurt anybody and have them lose benefits just due to inadequate or improper reporting. We have found that a number of people, most of the people that we’ve worked with, especially around SSDI, are able to advance their business considerably and still maintain their disability benefit until their business has gotten to a point where they are able financially to step away from their disability benefit. But, it’s important that there be a benefits analysis done on every case so that the voc rehab counselor, the SBDC counselor, and the client themselves all know when they’re reaching the thresholds that would be important on maintaining their benefits. Slide 17 Is there any parting information that you feel is important to include? Come early Don’t wait until you are a business in the eyes of the state The SBDC has seminars that people can take advantage of in order to create more informed interactions Contact your local SBDC www.sbdcnet.org Interviewer: Is there anything that I haven’t asked you that you think I should have? That’s really an open-ended question. Is there any parting information that you feel is important to include? Bill: I think the most important thing is to come to us early. Don’t make the mistake of starting down the path and doing anything that will make you a legitimate business in the eyes of the state that you’re in. Very many people come to us six months after they took out their vendors license because they’ve just gotten a letter from the state that they are in, in my case the state of Ohio, has just sent them a letter stating we’re expecting your sales tax return and you didn’t submit one. So, here’s a penalty of $50 because you did not submit the form that you’re required to submit. They come to us going, I didn’t know I had to submit this form. Yet, it was in the writing of the materials that they signed when they bought their vendors license. So, we would have advised them not to take out their business license until they are ready to do their transactions. So, please call us early. If there’s a seminar that you are required before you come to meet with us one-on-one, take advantage of that seminar. It’s designed so that you have more information, so that you can interact with us on a more informed basis. We really are here to help you but you have to help yourself for us to be of any value to you. Go to the SBDCnet website [www.sbdcnet.org], find where your local center is located, and make contact with them to find out how you can start down this process. Interviewer: Thank you, Bill. Bill: Thank you.