In honor of National Small Business Week May 12-16, 2014, we tapped into the expertise of our small business mentors throughout the state. We asked representatives from the Tennessee Small Business Development Centers (TSBDC) and the Service Corps of Retired Executes (SCORE) what is your best piece of advice for current or aspiring small business owners? Here are all the helpful tips we received.
“Follow your heart. Take your time. Do not make any commitments until you feel comfortable with your business plan.”
Dennis Schroeder, Chairman, Memphis SCORE Chapter
“Have a niche and market your business regularly.”
Charles Alexander, Director, TSBDC, Volunteer State Community College
“Before considering starting a new business, be sure that you have done the market research fully to give you the projected and justifiable costs/expenses/income for your business operation in order to complete a three year cash flow analysis to evaluate whether or not the proposed business will be profitable! Also a person should have some of their own funds/equity invested in the project if they will have to borrow money.”
Ron Acree, Director, TSBDC, Jackson State Community College
Taking time out for planning is a worthwhile investment for every current or aspiring entrepreneur. Business owners can sometimes devote all their time to the day-to-day operations, but it’s planning to take advantage of opportunities or to mitigate threats that will move the business to the next level.” Rory T. Thomas, Executive Director, TSBDC, Southwest Tennessee Community College
“Figure twice as much capital and twice as much time as you originally planned.”
Sharyn Moreland, Director, TSBDC, Chattanooga State Community College
“Don’t jump on the social media bandwagon just because everyone else is doing it, it is ‘free,’ or you have heard that ‘twittering’ was all the rage; effective social media campaigns take time – and time is money! Social media should integrate into your current marketing plan, so before you begin answer these questions: 1) Who is my target market? 2) What social media are they using? 3) How much time do I have to dedicate to this? 4) What is my marketing and content strategy going to be? Once those questions are answered you can begin utilizing social media for your business – the smart way!”
Jen Dangelo, Director, TSBDC, Tennessee Tech University
“Many start-ups are guilty of not supporting statements they make in their plan with corresponding due diligence which should be documented as an appendix item. This winds-up being problematic later when objectives are deemed to have been unrealistic…unattainable.”
Patrick Geho, State Executive Director, TSBDC, Middle Tennessee State University
“Follow Rule #1 or simply stated: Keep your customers happy. It takes four times as much money to find new customers than retaining the ones you currently have. Additionally, if a customer is satisfied he will tell maybe two or three other people great things about you. If he is dissatisfied, he will tell at least 20. Do the math!”
Imre Volgyi, Chapter Chair, SCORE Chattanooga
“‘Location, Location, Location.’ You often hear that as the three most important things in starting a business for the public. That’s not true for every company dealing with the public but it is for more than not. Restaurants and fast food, drug stores, national chains, all will pay extra for a great location. Here’s an example why. I owned a small Gourmet Homemade Ice Cream Factory and Café. I rented a 1,200 square foot space in a small strip center. That’s $14,400 a year. It was a block off the main road with limited parking and two other food places. I was considered the best ice cream in town by the people who knew about us and also sold wholesale to over 20 of the better restaurants in town. We did almost $200,000 a year and ended up with about $35,000 net profit before taxes. I had a chance to move after a few years to a much more visible location with more traffic that was close to the Largest Marble Slab Creamery in the State doing over $500,000 a year. My space would have been 1,200 square feet again but with a cost per foot of $25 per square foot for an annual cost of $30,000. Because I had some fixed costs and my people cost would have only been slightly higher, I would have netted close to $90,000 on $400,000 in business. Would that have been better than the old location even though it was double cost per foot? You bet it would have. The morale of the story is, IF you are not a destination business that people will drive past three or more other of the same type businesses to get to, then you may need to pay the price for the best location.”
Vern Lindsey, Greater Knoxville SCORE
“Don’t put all the money control in one person’s hands. You would be shocked to know how many businesses have had trusted employees embezzle from them who often worked as the bookkeeper. Have an outside accountant or bookkeeper to double check receipts and deposits to make sure there are not any discrepancies. Have a different person make deposits than who is doing accounts payable and writing checks. You may want to sign all checks yourself. No matter how much you trust an employee (even family), have a check and balance system so you never get a bad surprise.”
Vern Lindsey, Greater Knoxville SCORE
“‘Hey Mr. Restaurant. Do you know your Food Costs?’ Most restaurants should be running a Food Cost below 30%. Breakfast places can be even lower. Upscale steak places will be higher (up to 35%). You need to figure your food costs of the end product you are selling before you set your menu prices. You need to recheck them every 6 months (food providers often go up on their prices and don’t inform you). Figure the To Go extra pricing for the bag, plastic flatwear, containers, etc., so you know what your true average food cost is. Food cost and people cost are the two top reasons people go out of business although ‘bad tasting food’ will do you in just as fast.”
Vern Lindsey, Greater Knoxville SCORE
“When dealing with customers or employees, it is every manager’s duty to speak only the absolute truth, and at the appropriate time. This, although it may seem difficult, can help retain both valued customers and productive employees.”
Greater Knoxville SCORE
“Make sure you have a thorough business plan including a mission statement with core values. The plan will become your road-map as you make decisions.”
Greater Knoxville SCORE
“Mentally position yourself 2-5 years in the future. Imagine that your business has failed. List all the things that could have caused this (e.g. road construction in front of your business). Look at each and take steps NOW to mitigate each risk.”
Greater Knoxville SCORE
“Keep your strategic focus. There are a thousand things to do. Maintain priorities by determining the tasks that are the significant few rather than the trivial many. Work diligently on those significant few strategic tasks.”
Greater Knoxville SCORE
The Tennessee Small Business Development Centers are a network of certified professional business counselors located in communities throughout the state. They empower small business owners, entrepreneurs, and individuals with a business idea to innovate new products and services that compete in the global marketplace. Having assisted more than 80,000 businesses, the TSBDCs provide services including free confidential business counseling and training seminars. For more information please visit https://www.tsbdc.org/.
SCORE is a nonprofit association dedicated to helping small businesses get off the ground, grow, and achieve their goals through education and mentorship. Nationwide, SCORE has more than 11,000 working and retired business professionals committed to helping their communities thrive by providing local small business owners with valuable guidance and insights for success. For more information please visit http://www.score.org/.
