Focus and Small Business & Startups

Michigan entrepreneurs are ‘energized’

There wasn’t as much encouragement a few years ago for people trying to start a business.

June 20, 2014
| By Pete Daly |
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More businesses are hanging out the “Open” sign with assistance from such organizations as the Michigan Small Business Development Center and Grand Rapids Opportunities for Women. Courtesy Thinkstock

The staffs at the Michigan Small Business Development Center and at Grand Rapids Opportunities for Women, another key supporter of small business start-ups in the region, use the same word — “energy” — in describing the environment today surrounding entrepreneurs eager to take the plunge.

“Right now in our community, there is a lot of energy going on around entrepreneurial development, particularly in start-ups and helping them grow,” said GROW CEO Bonnie Nawara.

“There’s way more energy now than five years ago … much, much more energy than a decade ago, in starting a small business,” said Carol Lopucki, state director of the Michigan Small Business Development Center, headquartered at the L. William Seidman Center on Grand Valley State University’s downtown campus

“It’s now very cool to start a business,” or at least attempt to, according to Dante Villareal, West Michigan regional director of the MSBDC.

Many new small businesses, and those people trying to start one, “are seen as innovators and entrepreneurs and they’re seen as job creators,” said Lopucki, which is much appreciated in Michigan, where unemployment is still relatively high even as the decade-long recession the state was in appears to be in the rearview mirror.

Entrepreneurs, especially those trying to launch their first small business, “used to feel all alone out there. Often the (local) chamber and a few entities were the only ones helping young companies, but there are so many additional entities starting now,” said Lopucki.

Those individuals trying to take the plunge into business “used to wander around and bump into each other,” she added.

The severity of the recession, especially in Michigan, apparently evaporated a lot of enthusiasm for new business start-ups, and certainly froze the banking industry’s ability and willingness to make loans for start-ups. But now there is increasing help and encouragement available, especially through online networking. A new key site is E-merge West Michigan (e-mergewestmichigan.org).

“All the service providers are now part of (E-merge) and connect with each other to make sure no one falls through the cracks,” said Villareal.

E-Merge West Michigan is a community-based initiative to create jobs by supporting entrepreneurs. More than two dozen organizations are members: chambers of commerce; colleges and universities; GROW; SBDC; the Grand Rapids and Muskegon inventor networks; economic development agencies including The Right Place and Muskegon Area First; and SCORE, a partner with the U.S. Small Business Administration with volunteers who provide free, individual business counseling.

E-merge is focused on, but not limited to, the West Michigan lakeshore region, with links to information and practical tools for people thinking about starting a business, people who are in the process of starting a business, or people who are trying to grow an existing small business.

GROW has been doing just that for 21 years — and not just for women. Two years ago, GROW upped the ante in its goal to help entrepreneurs by becoming the only organization in West Michigan to sponsor U.S. Small Business Administration microloans ranging from $1,000 to $50,000, available to both male and female entrepreneurs.

Nawara describes herself as an “in-the-trenches” business owner who started and ran a printing business for 20 years before becoming CEO at GROW three years ago. She said GROW holds four free one-hour classes each month for aspiring entrepreneurs, with a an average of 20 people in attendance. They get an introduction to GROW and what it has to offer, such as free counseling with business experts, plus lots of advice on other sources of help and education for entrepreneurs.

Nawara said in the last two years, GROW has deployed about $400,000 in SBA microloans and has an additional $700,000 to lend.

The microloans are available to any for-profit business meeting SBA requirements and typically are targeted to those individuals or small businesses that can’t get financing through traditional financial institutions, such as banks and credit unions.

GROW microloans are for people who live in Kent, Ottawa, Muskegon, Newaygo, Montcalm, Ionia, Barry, Allegan and Kalamazoo counties. The loans can be used as working capital and for purchase of materials, supplies, furniture and equipment, but may not be used to acquire property. Loans are typically due for repayment within six years.

According to GROW, this is the first SBA microloan program in Kent County since Kent Area MicroBusiness Loan Services ended in 2005.

Each year, GROW works with people who ultimately start an average of about 50 new businesses, according to Nawara.

“I think there has been an elevated interest level” among people wanting to start a small business lately, said Nawara. However, based on her experiences in “the trenches” of business, she is quick to point out that the increasing interest in starting a business “is a great thing, but — not to be a naysayer — that doesn’t necessarily mean every one of those equates to starting a new business.”

It takes a particular skill set and wherewithal to actually start a business, said Nawara.

She cites national statistics that indicate about 35 percent of small businesses don’t last more than five years, and 59 percent don’t last more than 10 years. She said major reasons for failure are “growing too fast,” plus failing to track finances, overspending, lack of reserve capital, poor location choice, an inadequate business plan, failing to change with the times, ineffective marketing and underestimating the competition.

On the positive side, an interesting change GROW is seeing is in the types of businesses being started, particularly those being started by women. In the past, many women seemed to be inclined to start services or lifestyle-related businesses, such as a hair salon or a daycare center. Recently, however, Nawara said GROW has been working with a couple of women who started businesses based on their own inventions. Another is an artist who created a product that is selling, and another produces a product sold at Trader Joe’s stores and exports to Japan.

GROW microloans have been made to a woman who started a limousine service, and another who has a car detailing business that works with major auto dealerships in the region.

One of those inventors GROW has worked with is Deb Tacoma, inventor of a personal hygiene device called the Freedom Wand. Her business was first reported in the Business Journal when it launched a few years ago and it is growing. Recently, Tacoma was part of a Pure Michigan group display at the International Medical and Health Care Trade Show in Dubai, where 350 vendors were on display.

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