Resources for Small Business Financing

The Federal Reserve Bank of Richmond (FRB) recently posted an issue of Marketwise Community, a web publication which highlights community development best practices  and emerging issues that impact communities in the southeastern United States.  The current issue, New Alternatives in Small Business Financing, addresses small business lending in the wake of the recession.  The message – banks started to loosen some lending standards in mid-2010, a year after the recession ended, but loans remain hard to get by historic standards.  The good news is that there are some loan products available to businesses in need of working capital.

The Small Business Administration (SBA), a federal agency mandated to increase small business access to credit, refers to three types of nontraditional lending partners along with the examples of the credit products they offer to small businesses.  Loans range from $5,000 to $35,000 and can be used to pay short-term debt obligations, free up cash flow to purchase inventory, or provide capital for start-ups. 

Small businesses need to be the ones to determine what alternative business sources best match their financial state and funding needs, but Main Street programs can play a critical role to help direct the business owners to the available resources by highlighting them through an e-blast, blog, or an office binder.  Consider including the information from this SBA article: Five Critical Steps to Securing Small Business Capital.  

As effective partners, both the FRB and SBA provide support systems and tools. You can play a big part in connecting your businesses to these available resources to ensure  that your district is performing to its full economic potential.

 

New Year’s Resolution Poll

While the typical New Year’s resolution is abandoned somewhere around the long Martin Luther King, Jr. holiday weekend, there is a certain feeling of “anything’s possible” in the air during these first few weeks of January.  Now really can be a good time to set some goals.  Go ahead, think big.  If you don’t stretch yourself to do more, why bother?

Take a few pointers from weight-loss experts and put these strategies to work in your downtown to make your resolutions a reality:

Write it down – Make sure your goals are clear and quantitative.  Write them down so you can track your success.  It also makes it more real when you can see it on paper, or better yet, chart it on a graph.

Tell a friend – Make sure people know what you are going to do.  They can hold you accountable and keep you on track. They may even offer to help!

Make it reasonable – As it didn’t take two weeks to pack on an extra 25 lbs, the historic facades in your district weren’t all covered over in a matter of a few months.  Go ahead and challenge yourself, but don’t expect to have a completely rehabbed, fully occupied downtown by June, either. 

Pace yourself – As we age, it seems the years fly by, but in reality a year is a long time.  Break out your big goals into some chunks so you can have incremental success along the way.

Now, take the first VMS poll of the new year.

Designing a Marketplace

Is your economic restructuring committee effective?  Challenges like recruiting businesses and interpreting expensive and technical market studies discourage eager volunteers. There’s no immediate result after hours of meetings and planning.  Pressure to see results from business owners, local government and the community compounds the frustration. It’s easy for this committee, in particular, to go inactive.

Main Street organizations all over America have faced this challenge, and many are beating it–by creating compelling and specific visions for their downtown marketplace.  To illustrate the best strategies Todd Barman, Program Officer for the National Trust Main Street Center (NTMSC), features Altavista, a Virginia Main Street designated community, in a recent issue of Main Street Now. 

Barman says “It will take a concrete and compelling vision of a fully functioning future marketplace to attract the entrepreneurs and investors who will eventually realize [their] vision.”   What works for Main Street communities is similar to the strategy of successful commercial developers that are good at communicating their development vision using verbal descriptions, architectural renderings, and diagrams/schematics.  Along with this are specific steps for filling vacancies in historic commercial districts.

“The NTMSC is working to empower Main Street programs to use similar tools to attain similar results.”

Check out the details in the Main Street at Work column of the July/August 2010 issue of Main Street Now, The Journal of The National Trust Main Street Center.

Downtown leaders cover Main Street Essentials at Abingdon training

On Sep. 22 and 23, Advance Abingdon hosted 70 downtown revitalization professionals and volunteers from across Virginia for a training and knowledge share of best practices in the organization and promotion of downtown revitalization efforts.

National Trust Main Street Center Senior Program Officer Kathy LaPlante, a nationally recognized expert on community based downtown revitalization, presented specific strategies for organizing local efforts and promoting local businesses in downtown districts. “Communities across the country are working toward creating vibrant, one-of-a-kind downtown districts,” said LaPlante. “We develop and share best practices, such as how to effectively recruit and use volunteers, and how to fund revitalization efforts.”

Other more specific strategies discussed at the session promote the assets unique to each place. For instance a festival that draws people to a downtown in Virginia will be different from one in Wisconsin. “The overall guide to promoting your district,” said LaPlante, “is to be true in character to who you are as a community. No one size fits all.”

In addition to hearing from LaPlante, representatives of local governments, nonprofit organizations, and businesses shared the latest efforts of their home communities with others from around the commonwealth.

Sponsors for the event helped provide a warm welcome and included Michael’s Pharmacy, Mac’s Medical Equipment, Home Nursing Service of Southwest Virginia, Highlands Union Bank, The Office Place, and the Town of Abingdon. Participants took trolley tours, ate a dinner at the Farmer’s Market, attended a reception at A Tailor’s Lodging, and enjoyed lunch on the town.

Virginia Main Street trainings are open to anyone interested in downtown revitalization, and all PowerPoint presentations and notes from the group discussions are available at the Virginia Main Street training archive.

The unexpected entrepreneur

If you were asked to describe an entrepreneur, what words would you use?  Maybe terms like “bright, energetic, or magnetic.”  This 2004 article in the aptly named magazine Entrepreneur, gives a whole host of other terms, not all of them complimentary. 

Two descriptions of an entrepreneur that most people would not use are “ex-felon,” and “non-English speaking.”  However, it may just be these often overlooked sectors of your community could be an integral piece of your community’s economic restructuring.  In the classic Republic, Plato said, “Necessity is the mother of invention.”  If this is true, then those least able to obtain traditional employment should be those with the most entrepreneurial spirit.

Upholsterer and entrepreneur Troy Graves. Photo by Tara Bozick, Danville News.

Take Troy Graves.  This Danville resident spent a few years in prison, where he apprenticed as an upholsterer, eventually redoing a chair for the Governor’s office.  When he completed his incarceration, he had trouble finding steady work but was determined not to go back to his former ways.  With the help of a partnership with Virginia Enterprise Initiative, New Visions New Ventures and the Small Business Development Center, Troy was able to get business skills training, write a business plan, and obtain a microloan that allowed him to set up shop.   When this newspaper article hit the street, his phone rang off the hook and he has business lined up for the foreseeable future.  Troy is still building his credit, and hopes to own his building one day soon. 

And consider this positive story from National Public Radio from a place where positive stories have been few and far between.  It seems the one part of Detroit that is flourishing is the predominantly Latino neighborhood known as “Mexican Town.”  Many less developed economies have a strong entrepreneurial tradition; again, harkening back to Plato’s words about necessity.  The most entrepreneurial members of these societies often find a way to come to the United States and bring that spirit with them. 

Make sure you consider all aspects of your local business environment when planning your community’s future.  You just might find success in the most unexpected places.

Quality v. quantity

Last Thursday, at the Virginia Main Street 25th Anniversary Milestone Achievement Awards, keynote speaker Chuck D’Aprix spoke about the importance of making your downtown attractive to entrepreneurs.  One way to do this is to focus on the quality of the experience rather than the quantity of products you sell.

In short, it is difficult to compete with big box store prices and the accompanying scale that makes those small margins possible.  So why not try delving into high quality products that carry a much higher margin and offer a much richer experience? 

If you focus on giving your downtown customers a quality, authentic and unique experience, you will become an attraction for those with quality in mind who don’t mind paying a little (or a lot) extra for that quality.  To quote an article on Kansas’ Prairie Marshes in Legacy Magazine,

Happy and satisfied visitors stay longer, return often, and “spread the word” both about the joys of visiting our region and the importance and significance of the resources found here. This has raised the visibility of the tourism industry at the local, state, and national levels.

From $10,000 boots to stagecoaches to ballgloves to guitars, watch this short slideshow on successful “craftpreneurs.”  And yes, I just made up that word.

Bob Mills, owner of Angle Hardware in Rocky Mount, VA, once told me that Wal-Mart didn’t bother him.  Their product knowledge and quality was poor.  Lowe’s has a much wider selection and is more specialized than Wal-Mart, but do you think you can get someone at Lowe’s to tell you whether a machine screw or a hex bolt will hold better?  Angle Hardware is the real deal.  You don’t wander for hours past spa tubs to find your drill bits.  You walk in and you get greeted by name and with a handshake and a sincere, “What can I help you with?”  If you need one screw, you get one screw, not a box of 25. 

Quality customer service is a rare commodity; but one you can find readily on Virginia’s Main Streets.

Who needs all that negativity?

It turns out you do.  At least if you are trying to gain traction and trust in the online world.

It may seem purely intuitive that bad press or reviews are not good for sales, but this short article from Fortune magazine says otherwise.  This article is geared toward online sales, but the idea can be expanded to include any online presence.

The idea is that a negative comment helps build trust in your site, making it less likely that a potential customer will look for information about your product elsewhere.

“If they leave your site to look for reviews, they most likely won’t come back,” says Larry Freed, CEO of ForeSee Results, which provides customer satisfaction surveys for Web sites

The other item you’ll notice is that negative feedback can help you address problems that your end users may be having.  Rather than deleting the negative comment, make a follow up post that helps correct the problem.  This shows you care and are listening.  Beware, however, of ever coming across as defensive; it can be hard to listen to people criticize your hard work, but in the end knowing exactly what people think about your work or product is important to your future planning.

Sample Comment Page From Zappos.com

As you can see here, most comments are good; in fact, excellent.  The two “negative comments” are very constructive and describe the fit and fabric.  The positive reviews are more about function.  This leaves the decision up to the consumer as to whether the fabric is what they are looking for or not.

If the comments were almost all negative and the complaints were more along the lines of “This jacket is made from poor material and the sizing is wrong,” then Zappos might discontinue the item and work out a refund deal with dissatisfied customers, hopefully maintaing trust in their brand.  Without the comments, they might not know why they were losing the customers forever.

Entrepreneurial stories

We have been promoting the idea that recessions and layoffs, while very difficult to navigate, provide the impetus for an entrepreneurial boom.  Now, the Kauffman Foundation has issued its report supporting our claims. In economic gardening terms, this is the equivilant of burning last years crops to make way for the new “green shoots.”

 

Entrepreneur magazine has an article called “Bringing Wall Street to Main Street” that describes several laid off bankers/financial services professionals that started their dream businesses after losing their jobs.

Richmond Biz Sense describes how three former S&K Clothing employees are translating the knowledge they learned from their now defunct former employer into their own online clothing store.

Virginia’s Main Street communities are well suited to attract some of these newly minted business enterprises for several reasons.  Virginia, as a whole, is a business friendly state.  Many communities have low property tax rates (especially gauged nationally) and underused or empty warehouses that can be purchased or leased at a good rate. 

More importantly, though, as these entrepreneurs leave the world of high pressure finance and begin focussing on enjoying their lives – the scenery, friendliness and plethora of activites in and around Virginia’s Main Streets proves very attractive. 

Making sure that your community is welcoming and has an entrepreneurial spirit can go a long way to attracting new businesses.

How to attract Gen “Y”

Those of you who made it to the “Livable Downtowns” training held in Harrisonburg a couple of weeks ago know that just building upper story housing or rehabbing an old warehouse into loft apartments is not quite enough to get people living downtown.  It is important to have the amenities people need (dry cleaning, corner market, etc.), as well as the attractions they want.

Yahoo has a listing of the 20 best places to live for young people (ages 20-29).  To sum it up, these communities either have a lot educational opportunities, entertainment options, a reputation for progressive thinking and tolerance, or a combination of all three.  While these communities are mostly larger than your downtown, the principles are the same – feed the mind, stomach and soul of your residents and your downtowns will be attractive to the creative, educated and entrepreneurial among us.

Many of you have heard me refer to Arlington and many of the things they have done to become one of Washington D.C.’s hippest placest to live.  By focusing on excellence in the school system (three of the four county high schools are ranked in the top 75 in the U.S.), having a high density of public transportation and being extremely pedestrian and bicycle friendly, as well as offering great public amenities such as parks and libraries and having a extensive array of dining and entertainment options, Arlington attracts new professionals and keeps them as they raise a family.  While this funny video pokes fun at Arlington’s “yuppieness” and has lots of inside jokes, it could only have been produced by a group of extremely energetic and creative people.

Bright ideas for business

What is a good business proposition?  That is a tough question to answer. 

I am sure that many people thought that two old hippies were crazy when they started an ice cream company in Vermont, where summers last only a few months and the temperature can drop to near freezing in August.  But those that saw promise in a high-quality, extra-creamy, frozen-fun idea have been well rewarded for their investment in Ben & Jerry’s.

InteliTap is a young Virginia company that looks to have strong growth solving the eternal bar owner’s dilemma; where are all the profits going?  If the beer is too warm, the profits are literally going down the drain in the form of extra suds in the mug.  A common culprit is the bartender who pours a few extra for him or herself and his or her friends.  According to Dave Adams, the founder of InteliTap, it is not uncommon for a bar to have a loss rate of 20 percent on draft beer. 

In a keg that holds 125 beers, that’s 25 pints at $4 a pop for recaptured revenue of $100 a keg.

This company saw a problem, and through some technological innovation is providing a solution that can show immediate results on a bar and restaurant owner’s bottom line.

We bring up this company for two reasons.  Most immediately, you can share this information with your local beer slinger and hopefully help them become more profitable.  At the very least, the owner may have a few more dollars to spend locally, but this could be a way for the owner to become profitable or even increase payroll.

In a more long term sense, this company illustrates that we never really know who will have the next big idea or what it will be.  This is why it is important to have a system in place to foster these micro businesses in the start-up phase and have policies in place to encourage the businesses to stay local as they grow.