Three Things for Small-Business Owners to Pay Attention to in 2015
When Leon Grodski de Barrera and his wife started planning for what is now Cocoa Cinnamon, they had $75 in the bank.
“This is not in any way an exaggeration,” said Grodski de Barrera, co-owner of the Durham coffee shop on Geer Street.
So the entrepreneurs set out on an alternative funding journey, cobbling together resources wherever they could find them. In 2011, they received a $5,000 loan from the father of a friend and eventually turned that into bikeCOFFEE and built community credibility by selling beverages from a bike. After a successful crowdfunding campaign and various layers of support and loans from friends and supporters, they opened Cocoa Cinnamon in January 2013.
Two years later, the couple has paid back most of the debt and has established financial credibility. They plan to use business savings along with exploring a variety of lending options, such as traditional and other loans, to open a second location.
While the company’s story is outstanding, it is but one of thousands of small-business journeys in which owners were tenacious in starting and sustaining their business during and following the recession. The economic flux and related layoffs and pay cuts revealed a generation of entrepreneurs who hustled to raise or sustain capital while consumers were holding on to their dollars.
Over the years, however, the economic environment has clearly shifted as small-business owners’ access to capital appears to be increasing along with government, private and nonprofit organizations and programs catering to small companies.
Small firms have been a big part of the state’s improving economy.
North Carolina has more than 800,000 small firms, which employ 1.5 million people, account for 45 percent of the private sector and contribute nearly half of the state’s gross product, according to the “State of Small Business and Entreprenuership” report recently released by the N.C. Small Business & Technology Development Center.
The report predicts the state economy will likely follow the national trend of “steady and modest” economic expansion, “but one that does not create enough jobs to put everyone back to work.”
The improving economy is creating more opportunities for small businesses to grow and access the capital that many need to make that happen, said Briles Johnson, director of Women’s Business Center of North Carolina in Durham, which provides counseling and resources to small businesses.
“I think 2015 is going to be a good year for small business,” Johnson said.
Here are three things that small-business owners need to watch in 2015.
As the economy improves, so should business. That means that small-business owners should explore increasing revenue, improving systems and profitability and creating sustainability by diversifying their revenue, local experts said.
Businesses should aim for at least 5 percent to 7 percent increase in sales, Johnson said.
Small-business owners should take the time for “some really concise strategic planning” and organization, establishing goals and procedures that include monitoring their progress. Those goals could range from meeting with seven new clients every month and obtaining a certification to targeting a market with a website and staying on top of the related analytics, Johnson said.
To establish or seek feedback on that strategy, small-business owners should consult with some of the many organizations serving the Triangle, such as small business centers at local community colleges, the Women’s Business Center, theSmall Business Administration, along with the SBTDC and SCORE chapters.
Before business owners start looking for more revenue, they should evaluate their profitability, said David Washington, managing partner with Washington & Co., a Raleigh consulting firm that provides services to the federal government, higher education institutions and corporate entities.
“Make sure that the revenue makes it to the bottom line,” he said.
Take the time to review spending on leases, insurance policies, interest rates and vendor agreements, and explore and cost check other potential options that could increase the company’s profitability by reducing expenses, he said.
To support revenue growth, owners may find more funding opportunities through SBA programs, non-bank lenders and other lending opportunities targeting small firms.
Nontraditional sources of capital are getting “more and more popular” said Fred Gebarowski, owner of Cary-based consultant firm Wildcat Business Ventures. More and more people with wealth are looking to invest in small companies, along with community development organizations, credit unions and vendors such as Square.
“My philosophy on funding: Keep turning over the rock until you find something that can help you out,” Gebarowski said.
Expansion plans should include a marketing strategy, he said.
“You are going to be competing for those newly released available consumer dollars, so you need to ramp up your marketing as part of your business expansion,’ he said.
That marketing strategy should include a plan to utilize digital platforms and technology to attract and interact with customers, said Jeremy Sisk, president of Xperience4Higher, a marketing and consulting firm in Durham that focuses on small businesses.
“The biggest thing is be visible where your customers are,” Sisk said.
Businesses should build out their websites, social media pages and profiles on mainstream review sites.
Owners should also take note of the social media transition from organic outreach to pay to play.
Over the last year, organic reach with platforms such as Facebook and Twitter, have gone from about 30 percent of followers to about 5 to 7 percent, Sisk said.
That means owners are actually going to have to buy advertising to reach followers and beyond. Small mom and pop shops should be spending from $100to $200 a month for social media advertising, he said.
In terms of digital technology, owners should establish sites that are not only mobile friendly, but interact with visitors, allowing them to find updates and to request information, products or reservations online, Sisk said.
Avoid security breaches
While the Internet offers affordable and ample opportunities to engage customers, it also creates risks, such as malware or hackers tapping into company data or emails.
Dave DeWalt, chief executive officer of international cybersecurity firm FireEye, said in an interview on news magazine television show “60 Minutes” earlier this year that 97 percent of all companies would get breached.
“They’re going to get in. But don’t let them access the information that’s really important. Don’t let them get back out with that information,” he said on the show. “Detect it sooner. Respond sooner. And ultimately that exposure is very small.”
To protect themselves from hackers and malware, owners should establish strong passwords and change them every 60 to 90 days, Sisk said.
Beyond the passwords, small-business owners should have a professional security firm review their systems.
“Preventative care,” Sisk said, likening the review to a standard health check up.
Category: Savings and Tools