Weak Economy Increases Value of SCORE Services

July 13, 2008
| By Pete Daly |
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GRAND RAPIDS — The uncertain economy is generating a matching set of issues for the local SCORE volunteers to deal with. Not everyone who wants to start a small business these days is really ready for it — and  those already in business often are having a tough time hanging on to what they have.

SCORE, known as "Counselors to America's Small Business," is a nonprofit nationwide association of experienced business professionals who volunteer their time advising would-be entrepreneurs and existing small business owners. SCORE was founded in 1964 to provide free counseling, low-cost workshops and other resources, and is supported by the U.S. Small Business Administration. SCORE counselors provide free and confidential business advice to any entrepreneur or business owner in Kent County or the surrounding area — in person, by phone or via e-mail.

"The same challenges that every business has, small business is having in spades," said Rick Walker, vice chairman of the SCORE chapter in Grand Rapids. The SCORE volunteers here counsel about 700 clients each year in three counties around the Greater Grand Rapids region.

"We are actually seeing a couple sets of problems" related to the economy, said Walker.

One is "intense” competition. Small business owners are "finding that more and more of their competition are cutting prices, and they're having a tough time competing." So they come to SCORE, looking for any new ideas about ways to get more customers in the door and ways to be more efficient and competitive.

The second set of challenges for SCORE volunteers is an increasing number of people who come in to talk to them about starting a business — but are acting more on impulse than a sound business plan.

Many of those would-be entrepreneurs "are frustrated because they're tired of not having control of their own life," said Walker. They are typically individuals who have lost their job, or fear losing it because they see other employers in the community shrinking and merging. Some of those individuals are desperate and have arrived at the conclusion that they would have control over their own lives and security if they only had their own business.

"They go out and jump into a business, and they are not prepared to make it successful," said Walker.

"The statistics are pretty grim," he said, adding that due to that lack of thorough planning and preparation, about 80 percent of new businesses fail within the first two years.

"Our goal is to get more people into that 20 percent" who make it, he said.

Sometimes the SCORE advisors have to explain in detail to some individuals why it might be a good idea to drop an idea for a business venture.

"There are a lot of people who think starting a small business and running it successfully is easy, and it's not. It's very complicated," he said.

Walker retired from AT&T in 1999 and owns a management consulting practice. His business experience ranges from running small start-up businesses to directing very large and complex organizations at a senior executive level. Small business experience involved sales, customer service, computer operations, financial operations, and all facets of a growing entrepreneurial company. His counseling emphasis is on small to mid-size businesses, with a focus on executive coaching, strategic planning, team building and performance improvements.

Another experienced business professional who is part of the Grand Rapids chapter of SCORE is Judy Thome of Byron Center. She and a partner founded Cable Computerized Management Systems Inc. in 1983. In 1996, they sold the software development firm to Harris Corp. of Melbourne, Fla. Harris is an international communications and information technology company serving government and commercial markets in more than 150 countries.

Thome, who is now semi-retired, has been a SCORE volunteer for 10 years. In addition to being a volunteer counselor, she is now also the district director for all SCORE chapters in Michigan.

She noted the same trend mentioned by Walker: Small business is becoming more appealing to many entrepreneurs as larger companies downsize.

"People are looking to reinvent themselves and create something for themselves that perhaps they can feel more secure with," said Thome.

"When you're the captain of the ship, you can make your own decisions."

But she also noted that anyone thinking about starting a business needs to do their homework. That means doing a market analysis and creating a thorough business plan.

"The best advice I could give anyone is to create a business plan emphasizing the need out there" for the service or product in question.

"And be aware of what the competition might be in regard to your idea," she added. A product or service that has no significant difference from what is already being offered will have little chance of success.

Another way to compete is by offering excellent customer service.

"Customer service is what drives the success of most small businesses," said Thome.

She said she does not think a weak economy will necessarily determine whether a small business fails or succeeds — unless that product is more of a luxury than a necessity.

"If people are having difficulties making ends meet, they're not going to be purchasing a product or service that's more on the frivolous side," said Thome.

For more information on SCORE, go to www.scoregr.org

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