Expert: Entrepreneurs have partners at SBDCs
In the current economic times, businesses large and small have seen profits plummet. Some to the point of no return.
And while it might not be the ideal time to launch a new enterprise, there are ways for a new business owner to get a strong start.
Recently, Marcus McKay, the director of the Small Business Development Center at New Mexico State University-Alamogordo, was the keynote speaker for the 11th Annual Tri-Chamber Luncheon Economic Development Seminar held at the University of New Mexico-Valencia Campus.
McKay specializes in areas of credit, finance and management, and is a certified profit-mastery facilitator. The NMSU-A website says McKay can show clients how reviewing monthly financial statements can be something to look forward to, rather than something to avoid — how cash flow planning and profit projections can become the rule rather than the exception.
Small business development centers are all about building the New Mexico economy one business at a time, McKay said, by providing dedicated, personal services to each client and helping them move from an idea to a business plan.
"A well developed plan is something you can pursue. It's where thoughts and ideas can be tested," he said, addressing nearly two dozen local small business owners and bankers. "All business ventures begin with an idea. The business plan organizes business concepts. We (SBDC) can provide the good, bad and the ugly."
Noting some of the bad and the ugly, McKay said statistics show that 50 percent of new businesses fail in the first two years, and 80 percent fail in the first five years. The primary cause of the failure of those new and emerging businesses is insufficient cash flow to retire current debts, he said.
But there was some good, too.
"New and emerging businesses with a well developed business plan performed 50 percent higher than those that didn't," he said. "The planning process is to develop ideas and transform them into business concepts, get them organized.
"Entrepreneurs, lenders and investors are looking for that one in five small businesses that can provide a plan for success and provide a return."
Before he worked for the Alamogordo SBDC, McKay was the vice president for Bell Credit Union and knows full well the opinion on lenders.
"They are looked at as pure evil, but they know the statistics," he said. "They know in five years, four out of five of those businesses will fail and they know that loan is for more than five years. You may have lots of ideas, but you need to settle on the one that is most likely to succeed."
He also said it is worth noting that only about one in 50 business ideas is viable.
"Entrepreneurs get an idea almost every day," McKay. "Look at the Alamogordo Scuba Diving School. That's a place with a lot of sand and no water. They didn't even have a pool."
By seeking out the free advice of the experts at their local SBDC, McKay said those trying to start a business can first see if the idea they have is even viable.
"Early on in the process, we will help you determine if your idea is viable by helping you identify your potential market and start-up costs," he said. "If there is no market, or you can't afford to start, there is no point in going any further."
Once a client has a viable idea, they are given a to-do list, McKay said. They write up a description of the product, identify who their target customer is, estimate start-up costs including capital expenses, and develop projected revenues and expenses for three years.
And the SBDC counselors will be there, helping gather information such as professional marketing research, industry trends, customer expectations, competitor lists and demographics.
McKay pointed out that the Los Lunas SBDC, located on the UNM-VC campus, can draw from any of the 20 centers around the state.
"The ideas are the original, undefined concept. With a business plan you can then test those ideas," he said. "The plan is a document that shows your marketing strategy, projected returns and revenue flow. It's what you can take to a lender.
"We love our clients, and we love to see them succeed. We produce a very professional product that will make you a much wiser entrepreneur and help you move from an idea to a plan."
Bruce Prater, owner and operator of the Graphic Arts Station in Belen and president of the Valencia County Chamber of Commerce, asked if only new or emerging businesses could make use of the SBDC's services. McKay said new as well as established businesses could take advantage of the center's assistance.
The Los Lunas SBDC serves all of Valencia and Socorro counties and the Mountainair area. Their offices are located on the UNM-VC campus at 280 La Entrada.
The center can be reached at 925-8980, Monday through Friday, 8 a.m. to 5 p.m.
The center has an upcoming workshop for small business owners in the area from 9:30 to 11:30 a.m. on Sept. 29. The New Mexico Taxation and Revenue Department will be on hand to present information on topics such as sales tax vs. gross receipts tax, CR-1s and withholding.
The registration deadline for the workshop is 48 hours prior. If there are not enough registrants for a workshop, it will be canceled. Register by calling the Los Lunas SBDC at 925-8980.
Contact Julia M. Dendinger