More Entrepreneurial Strategies
Small Business Grows Up
Having been forewarned about our retrospective interview, Herb
Spiegel, former director of Mercer County Community College’s Small
Business Development Center, tried the question out on his class.
“What do you students see as the greatest change in small business
over the past 20 years?” Hands shot up, and almost unanimously the
answer was technology.
This assessment coming from these future business leaders is probably
typical of the post-Boomer generation. Says Spiegel: “Of my 158
students, not one knew what the Warren Commission was, and when I pull
down a map of the European Union, their lack of knowledge makes me
wince, but boy, can these guys handle a joy stick and make any
computer dance!”
The Spiegel family has a justifiable claim to being true Trentonians,
having arrived in the city in l899. In l932 father Herman Spiegel
opened up a furniture store, which Herb, along with his brother, took
over. Eventually they moved the shop to Lawrenceville, and finally
closed the doors in l983. Along with U.S. 1, Spiegel is marking a 20th
anniversary this year. It has been two decades since he left retail
behind and became one of the area’s premier small business gurus from
his post as former director of the SBDC and instructor at Mercer
County Community College.
His own college experience dates back to l955, when he graduated from
Rutgers with a degree in marketing (then called advertising). Yet the
length of his career in small business reaches farther back – into
early childhood.
As much as anyone, Spiegel realizes how advice must evolve with the
times. “Probably the biggest change we have seen in small business
over the past two decades,” says Spiegel, “is the overall acceptance
of low overhead operations.” This breaking down of expensive protocols
and accessories has been made possible, at least in part, by the
technology mentioned by his students – but there have also been
economic factors at play.
Formal letters on company stationery, neatly typed by a secretary, now
carry no more gravitas than a dashed off E-mail note. Costly personal
assistants have been replaced by thrifty, if annoying, answering
machines and cell phones. Personal business cards and brochure can now
be entirely computer generated. Newsletters can now be designed and
typed onscreen, and then E-mailed or posted on a website – or mailed
as hard copy, possibly after being sent electronically to a mailing
service.
The technologies necessary to streamline business operations were just
beginning to emerge in 1984, and were being embraced by early
adopters. But what has changed is the general acceptance of this
cheaper, quicker method. Competition has pushed us all into a leaner,
faster mode – and gradually we have come to appreciate it.
Aiding the switch, in Spiegel’s view, is the upswing in women’s
participation in the workplace. First, to no one’s surprise, women are
different from men. They have brought novel perspectives to the marble
halls of business and are constantly pointing out new market niches.
The small and mid-size company that wants to follow this feminine lead
into such markets must invariably do so in a shoe string. It must
operate at low cost on such ventures or not at all.
So, women have changed established practices, but they have had an
even greater impact on central Jersey’s entrepreneurial scene, says
Spiegel. One has only to mingle with the Central Jersey Women’s
Network or the New Jersey Association of Women Business Owners to see
the strong feminine startup pattern.
Having taken a breather from familial duties, women return to the
workplace only to find that their best shot at upward career
trajectory is to create an outsourcing niche for a large firm. Several
surveys indicate that more Garden State businesses are now being
started by women than by men. Many of these women have little money,
and even less ability to shake some loose from lenders. So they bring
their products to market cheaply, with few of the former frills.
Women’s entry into the workplace, mass firings by major corporations,
the discovery of the thrift of outsourcing, and several technological
factors have all conspired to bring about what Spiegel calls the
home-based business boom. Since 1980 Department of Labor estimates of
workers at home has risen from four to as high as 20 percent in New
Jersey. Increasingly everyone has accepted these as not only viable
businesses, but attractive suppliers and clients. “It is now O.K. to
answer your own phone, with out having a receptionist run
interference,” says Spiegel. “People are more impressed by your
independence than by the number of folks on your payroll.”
Corporations are scooping up scores of home-based workers for dozens
of outsourced chores. Funding agencies have also finally come around.
Both banks and venture capitalists are now far more likely to fund a
person operating diligently out of his cellar than they were 20 years
ago when the plush facade was a financial necessity. Even the state
has loosened its jaws and lifted the ancient restraints on “cottage
industry.” In l984 it was easier to register a toxic waste dump in
your backyard than a kitchen-based consulting firm or graphics shop.
Now government views the home as a legitimate place for business.
Less related to cost, but certainly tied to efficiency, has been what
Spiegel sees as the steady growth in sophistication of business
methods over the past two decades. He jokes, “I was a company owner
for 26 years and never knew what a business plan was. Now I teach it.”
Gone are the days when all it took was a better mousetrap or niftier
piece of software. A thousand E-commerce firms with this premise rose
and cratered. Even if you think you can run a business off the cuff,
your backers will not. Planning, training, market surveys, and formal
courses to upgrade knowledge are now more essential than ever.
Thus, sorting out these evolutions, Spiegel sees his advice as fairly
self-evident.
Don’t spend where you do not have to. Make your workplace productively
comfortable, even fun, but forget about paneling your environs to
impress. Instead, concentrate on winning over your clients and backers
with a professional, sophisticated presentation, laced heavily with
numbers, facts and research.
Don’t hide your origins. When applying for funding, the small,
minority, feminine, or home-based business person need no longer
crouch before the lender. Never say that you “only” work out of the
house. If a bank is so medieval as to ask your husband to co-sign a
loan, laugh, and walk out. You don’t want to deal with a company so
far behind the times. And do not be afraid to show investors your
cellar operation. Most would rather seen your cash – and theirs –
spent on innovative productivity.
Don’t fail to network. This is probably the greatest mistake Spiegel
sees small firms making in this new environment. Small entrepreneurs
are not getting out. They’ve got to join the local chamber of
commerce. “Yes, that’s designed for you,” insists Spiegel. Seek out
the professional organizations in your field – and join them.
One final and refreshing wind of change that Spiegel has noted
throughout recent years is that business has become not only accepted
but also popular. No longer the haven of greedy capitalistic yuppies,
everyone of all ages in involved. “Look at Donald Trump’s show `The
Apprentice.’ People talk about it everywhere,” Spiegel says. When Tom
Peters wrote his “In Search of Excellence” a little over 20 years ago,
it was the first business best seller. Now go into the book shops and
you will find aisle after aisle dedicated to the fine art of making
money.
We can hope that the trend keeps going, and that we become less
disparaging of profit and more concerned with how to use it wisely.
– Bart Jackson
Be a Service Star
‘Distinguish yourself from your competitors by the service you
provide,” advises Arlene Schragger, of ads Public Relations and
Marketing. Schragger founded her company in 1987 after working as the
in-house marketing coordinator for an area firm for several years. Her
office is located at 2860 Brunswick Pike.
Service to your customers is one of the key ingredients to success in
business, says Schragger. “Knowing what people want and need is very
important. When people promote their business they often get caught in
talking about their company’s features; why they are the best at what
they do. But what they really need to emphasize is how they can help
their client.”
To do that, says Schragger, explain how your products or services can
benefit your client. “Tell them why what you do will help them. How
can you make them feel good? What you are really selling is your
benefit to them.”
One of the biggest mistakes business owners often make, adds
Schragger, is in not letting their customers and clients know all of
the services that they can provide. The “kiss of death,” she says, is
in hearing that a client has gone to someone else for a service or
product your company can provide. “Make sure your clients know all of
your services. Use newsletters, postcards, whatever way is feasible to
let them know about what you do and about any new services you have,”
she says.
The growing “onslaught of media,” has created one of the biggest
changes in public relations and advertising over the past few decades,
says Schragger. “The rule used to be that it took between seven and
ten impressions to gain recognition.” Today however, because we are
bombarded by so much advertising from so many sources, it is even
harder to gain that notice. “It now takes between 12 and 15
impressions for a business to gain customer recognition” says
Schragger. Those impressions don’t have to be just through traditional
advertising, however.
“You might meet a person through a networking event, then they see
your ad, then they might hear that you are a sponsor of a Little
League team.” Each of these “impressions” add up, says Schragger.
“You have to keep putting yourself in front of your clients. Don’t let
them forget you. After all, it is easer to sell to a current client,
someone you already have a relationship with, than it is to develop a
relationship with a new client.”
While we may feel “bombarded” by the many new sources of advertising,
these new areas have also made it easier and less expensive for
smaller businesses to advertise in traditional ways. Cable television,
for example, has made TV advertising much more affordable for smaller
businesses. “I think it is particularly noticeable in this area, where
we don’t really have local TV stations,” says Schragger. “I always
notice when I’m flipping channels and I see a local advertiser.”
The many changes in advertising have also led to another new way of
getting the word out, she says. There is a trend for businesspeople to
sponsor their own seminars or educational events. “Business people are
doing more and more of this these days,” says Schragger. “It is a way
to gain credibility. By sponsoring a cocktail party or networking
event or seminar you have a room of 50 or 60 people who can get to
know about you and your business.”
Another important tool for businesspeople is networking. “People find
that when they help other people get what they need, they get help in
return. When you put two people together they are going to talk about
you. Word of mouth is often the best way of advertising.”
Marketing and positioning your business should not be “a hit or miss”
type of thing, says Schragger. Instead, it should be a coordinated
campaign that includes a combination of many elements. “Don’t just
throw some things out there and see if they stick,” she says. The
campaign should include traditional advertising such as display ads in
newspapers or radio and television advertising, as well as
“non-traditional” methods such as hosting a breakfast or sponsoring a
seminar or event. Another way of gaining recognition, she says, is to
write an article for a professional journal, or having an article
written about you in a publication.
“The most important thing is to try to touch your customers and
clients every day,” says Schragger. “Come up with a plan that works
for you and stay with it.”
– Karen Miller
GigaTechnology’s Potential & Perils
It’s been a lot like a gold rush. Wild fortunes were amassed early.
Then, ‘though veins played out, prospectors still poured in, living on
dreams. But the cycles went on and substantial rewards came to those
who brought forth the right material in the right place. The business
of high tech has never been for the faint-hearted.
Maxine Ballen, founder and president of the New Jersey Technology
Council (NJTC), credits our last two decades of booming technology
with inspiring an equally explosive entrepreneurial spirit. In l985
Ballen had just joined mentor Bill Rouse of Rouse & Associates in
trying to help market Pennsylvania’s Great Valley as a major
technological center. “Back then,” she recalls, “the term entrepreneur
was just becoming part of popular business language. Everyone was
filled with innovative thoughts and was discovering that they didn’t
have to join some big firm, but could market their idea on their own.”
Then as the layoffs increased, particularly in the higher tech parts
of industry, hordes of recently unemployed folks latched onto the hope
of starting their own software company. The tantalizing tales of some
little Cinderella, cellar-based firm’s sale to Bill Gates for $200
million hit the papers just often enough to fan the fantasies of a
thousand consultants.
Within 10 years the whole high tech world had cycled round. Dot-com
had become dot-bust. Money, not innovation, became the issue. Ballen
found herself crossing the river into the Garden State and finding a
new mentor, John Martinson of the Edison Venture Fund. With his
encouragement she founded the NJTC in l996. Her goal was to link the
most creative innovators with the best business managers and
interested investment sources, and for the past eight years, hundreds
of high tech firms can credited their success to NJTC.
The past 20 years have seen high tech mature from a rambunctious
childhood into a steadier, but still growing, young adult. “Technology
had really not mainstreamed into business back then,” says Ballen.
This was a new wave of ideas, and many entrepreneurs believed that old
business monitors, like price/earnings ratio and balanced expansion,
could be swept aside by increasing customer awe. The advice then was
to ground a young tech company in more traditional business practices.
Concentrate on fulfillment and product control, and avoid separating
into camps of techies and fiscal managers.
Alas, it all too often went unheeded.
“I think we have learned many lessons from the collapse of Dot Com,”
says Ballen. “Gone are the days when people invest solely in an idea,
and entrepreneurs seem to understand that.” As capital tightened,
investors began to look harder, and take a longer time in deciding.
Companies saw that they had to come to market with solid products, and
be able to ride through a longer startup process.
“Since l984 the funding pendulum has swung back and forth four
distinct times,” says Ballen. “This is natural, but currently funders
are somewhat too reticent. I feel that innovation is being held
hostage, and that we would all be better if the funding channels were
a bit freer.”
In 2004 a series of factors beyond tight funding make the high tech
entrepreneur’s lot more demanding. Most significant is the accelerated
rate at which products race to and through the market. Things may have
been wilder in l984, but they are faster now. Additionally, the amount
of competition has increased exponentially. Every product or service
dangled in front of investors and clients has to go up against scores
more companies from all over the earth offering something similar.
Little is new under our sun.
Ballen’s advice to entrepreneurs operating in this atmosphere mixes
the old with the new:
Surround yourself with good talent, whom you can understand. “Too many
people go off with the idea that their product will sell itself,” says
Ballen. “Not any longer. You had better have a good sales or marketing
director.” The good news is that now there are enough
technologically-informed selling specialists who can thoroughly
comprehend and explain your product. Along the same line, Ballen
suggests seeking out a seasoned financial advisor, both on staff and
on the board of directors.
Choose investors well. When it comes to funding, Ballen says, “go for
the smart money – connect with people who have expertise in your
product and can network you into further funding. The best hunters
have the greatest patience and rather than grabbing at any investor,
it behooves the business owner to measure exactly what links a funder
can provide. More and more, smaller technology firms are choosing to
partner up, rather than sell out to a large entity. Such link-ups are
more likely when an entrepreneur’s funder is the person who makes the
match.
Be a joiner. Finally, Ballen urges all companies to seek out and join
all possible trade associations. High tech firms are notoriously lone
wolf operations, but, as in any trade, the more people you meet, the
better your information. And – no change here – information is power.
Although the wild days of the gold rush are temporarily over, gold is
still there to be mined. Getting it out of the earth just takes a
sharper set of tools.
– Bart Jackson
Profit by Diversity: John Harmon
John E. Harmon, the president and CEO of the Metropolitan Trenton
African American Chamber of Commerce (www.MTAACC.org), has some good
advice for those who want to start their own business.
“What typically happens,” says Harmon, “is someone has an idea and
wants to start a business. However, without a plan, and without the
proper advisors around and the right foundation – it’s going to be a
short-lived business.”
Born in Trenton, in a family of five boys and two girls, Harmon lives
there still with his wife and three sons, John Jr., 21, Joshua, 16,
and Justin, 15. He attended Mercer County Community College and then
transferred to Fairleigh Dickinson College, graduating with a BS in
business management.
Harmon joined Bowery Savings Bank in New York in the residential
mortgage lending business. He then set up an office on Wall Street for
Chemical Bank. In 1989, he started Harmon Transfer Corporation, a
trucking company based in Trenton, which he has scaled back in recent
years.
When Harmon took over as president of MTAACC a little over five years
ago, it had around 20 members. Today that number is up to 165. Not
only has the number of businesses grown, but the diversity has as
well. Members include major universities, financial institutions,
construction, professional service firms, and supermarket chains.
Harmon’s advice to anyone who is considering starting a business is to
develop a plan. Secondly, you must believe in the plan and be able to
convince others of its significance and that it will work. “You have
to be very passionate about your business and pursue it as if your
life depended on it, every day,” stresses Harmon.
But you also have to be willing to adjust the plan. “There’s a saying:
the numbers don’t lie,” says Harmon. “If the numbers are telling you
that the plan won’t work the way you’re proposing it to work, you must
be willing to revise it.”
Thirdly, seek out those who have done it before. “There are others who
have traveled the path that you pursue,” says Harmon. “Persevere to
get access to them to talk about what you’re planning on doing.”
Another thing is to network. It’s important for small business people
to join an organization. You do business with people you know.
“Twenty years ago, many minorities experienced difficulty attracting
capital,” he says. “There was a reluctance to lend to African
Americans. My business was just coming into its own and I thought if I
could get the capital, we could execute and get to the next level.
Even though I had passion and a business plan, and a contract pending,
we were unsuccessful in getting the capital. As a result, my business
experienced a lot of bumps and bruises.”
Since then, Harmon says, “capital access options have increased for
African Americans. There are community loan funds and technical
assistance from small business development centers, which can assist
with business plans and then help someone move forward to getting a
loan. New Jersey has an entrepreneurial training institute. Trenton
has the regional business corporation, which is a community loan fund.
The technical support organizations are critical to helping secure the
capital.”
According to a 2000 study by the Small Business Administration, the
success rate for Asian businesses is 50 percent, white businesses 49
percent, Hispanic around 39 percent, and African Americans about 34
percent.
“Those are the real numbers of who’s making it in business and who’s
not,” says Harmon. “Those numbers are scary. If you don’t have good
banking relationships, you can’t grow, because the larger the
contract, the longer it takes to get paid. Businesses that are able to
grow have the wherewithal to be patient in collecting their
receivables. That’s a killer for a lot of start-up businesses. They
start out out-of-pocket, and they may start out pretty well. But when
they get into a volatile period and don’t have a banking relationship
to draw down a line of credit, you’re done.”
Harmon says it all goes back to relationships. If businesses are part
of an association, then they have a third-party lending support to
their credibility.
“Let me give you an example,” Harmon says. “I happened to see an
individual’s credit card statement recently and the interest rate was
ridiculous. I thought, what’s going on here? Although this person has
relatively good credit, he was just happy to even have a card. I
called the bank and asked what was going on. They called me back and,
after speaking with me, reduced the person’s credit card rate by 10 to
12 points. That’s why relationships make a difference.”
As Harmon sees it, as a whole, African American businesses still have
a huge challenge. “We need to network more,” he says. “We need to do
more business with each other. That is a historical hurdle for African
American businesses. And more importantly, African American corporate
executives and professionals need to find a way to get more involved
in supporting African American businesses and organizations. Find a
way because you realize what it means to us as a people. It speaks to
that 30 percent ratio. If more successful African American
professionals would make the commitment to support the plight of
African American communities, I think over time we could force a
paradigm shift and get some better numbers.”
– Fran Ianacone
More Tools, Less Time, More Anxiety
According to Katherine Kish, president of Market Entry Inc., a
Cranbury-based strategic marketing and business development firm, our
general sense of time has gotten very, very short. “People’s patience
has disappeared and their sense of urgency and sense of anxiety has
grown.”
Kish believes this is directly related to the time crunch we all face.
“The critical difference is time,” says Kish. “When I started this
business in 1982, people met face-to-face. Corporations were using
three-year planning cycles. The process took forever because those
plans were meant to be so forward thinking that they would carry a
company forward at least five years. Guess what? These days planning
takes place via a conference call. And the things that used to take
place on a conference call, now take place online. We’re lucky if a
strategic plan lasts for five months. The half-life of planning, the
half-life of products and marketing strategies has gotten very, very
short. And because circumstances are changing so quickly, time is
compressed enormously.”
Compressed timeframes leads people to tactical thinking, not strategic
thinking. People are wound tight nowadays. Corporations are
unforgiving. Nobody has time to make mistakes anymore. “It has to be
correct, right out of the box,” says Kish, “and it has to do something
for our bottom line NOW. The tolerance for failure, the tolerance for
mistakes has also disappeared. For the sake of efficiency and
productivity, we have really given away some of the creativity and the
involvement of people.”
Kish, who lives in Cranbury with her husband Bill Kraft, founder of a
business called VoteScan, also has an adult stepson who lives in the
area. “The whole world of online didn’t exist back when I started this
business,” says Kish. “We now have many more tools, but much less
time. Think about how you buy a product now. You may do your research
online. Then you walk into a local store that sells the product where
you’ll look at it, feel it, and touch it. But you might not like the
price, so you go somewhere else or try to get it cheaper online. What
we have today is a more educated customer, or client, who has less
tolerance and wants results faster. That sense of impatience goes
through everything.
“There are so many more choices today for my clients that it’s much
more difficult for them to decide how to allocate resources. Do you do
advertising, do you use direct mail, telemarketing, do you hire a
salesperson, do you use a manufacturer’s rep, do you sell online? I
try to help them understand the business, think strategically, and
then create an appropriate position and strategy and help them
implement it.”
Aware of the need for balance, many people are frustrated that they
haven’t achieved it. Kish feels this is directly related to the rise
in anxiety and loss of time. “People make less balanced and less
informed decisions oftentimes today because they are in such a hurry.
They don’t feel that they can stop and think.”
But, not only do individuals need balance, organizations need it as
well. “Many businesses do not see a balanced picture when they look at
their strategic marketing going forward,” says Kish. “They see the
short-term tactical stuff like running an ad on television, or putting
up a billboard. They aren’t as patient about the longer returns, and
maybe deeper returns that can come from things like philanthropic
efforts in the community, where you can demonstrate that you really
are a good corporate citizen.”
On top of time pressures, companies also face the obstacle of being a
faceless, nameless, global player. “Again,” says Kish, “it’s very
important to maintain a face in the community you work in, and in the
communities where your clients and customers live. If you have 500 or
5,000 employees living in an area, what are you doing to improve the
quality of your employee’s lives and their sense of participating in
the community? If the president of a company rolls up his sleeves to
help build a house for the homeless, or runs in a race for a cause,
those things really do pay off in the ong-run. I’m talking about
building long-term goodwill. Because it’s possible that people will
understand that it’s smarter to pay a dollar more for your product,
than the one manufactured in China, because you are making an
investment in the community.”
– Fran Ianacone
