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Spring, 2005
 Content: • Do's and don’ts of business starts Do's and don’ts of business starts PITTSFIELD There's no telling where, when -- or why -- a great idea for a business will strike. Those who've envisioned the proverbial "better mousetrap" love to talk about what they were doing when inspiration struck, whether it be showering, driving or dreaming. For some people -- darn few, experts say -- a get-rich-quick scheme pays off. For most others, making a decent living from a business takes years of hard work. Some find it a journey of disappointment and unmanageable debt. Too often, would-be entrepreneurs are so anxious to implement their ideas that they abandon common sense and skip some vitally important first steps. "Talk to somebody who's in the business you want to enter," advises Steve Fogel, program director at Berkshire Enterprises in Pittsfield. "... Don’t call a local competitor and ask how to put him out of business; talk with people in other parts of the country, get in touch with trade associations, use the Internet."
Avoid reliance on advice from people who entered a business and were not successful at it, Fogel said. It's not going to help much to "find out how to do it wrong from someone who has failed," he said. Thomas Edison may have learned more than anyone else about why light bulbs didn't work before he invented one that did, but Fogel notes that most of today’s entrepreneurs don’t have the time to engage in such lengthy experimentation. He quickly added, however, that running a business does involve a measure of trial and error. Fogel advises taking a long look in the mirror. "Look at yourself. You need to have the basic skills," he said. "We had a guy open a deli and spend six months learning how to slice lox. That's a skill. ... If you’re going to have employees and you can’t manage people, you either hire the best manager you can find or you go into some other business." Business plan A detailed business plan is an essential part of getting started, said Fogel. Such a plan includes financial projections and an assessment of the competition, identification of a customer base and other fundamental information. Sample business plans and outlines are available at Berkshire Enterprises, an affiliate of Berkshire Community College with offices at 1 Fenn St., Pittsfield. Berkshire Enterprises offers training programs, workshops and consulting to help people start and grow businesses. Its facilities include a business library that is open to the public and computers with high-speed Internet access. Outlines also can be found at many banks and on the Web. Fogel located several at www.clpgh.org, the Web site for the Carnegie Library of Pittsburgh. Most new businesses require bank financing, and loan officers agree on the importance of having a coherent business plan. Business loan applicants "want to have a clear goal in mind, to have an idea of how everything is going to come together," said Mark McKenna of Legacy Banks in Pittsfield. "Often, they'll come in with no clear picture of how to acquire inventory, for example." Applicants should be forthcoming with the bank officer, McKenna said. "Tell the banker everything about the business -- don't hold stuff back. There are ways we can help," he said. Sometimes, said McKenna, would-be entrepreneurs rely on loans from friends and/or family for part of their start-up costs. When they get to the bank, they may make the mistake of not "factoring in that they have to pay that back." Michael Ferry, senior vice president for commercial lending at Berkshire Bank, said that a bank is sometimes the first stop for eager would-be tycoons. "That's maybe not the first step you should be making," he said. "Surround yourself with good advice -- legal, accounting. If you’re buying an existing business, legal representation is especially important. Second, sit with an accountant and ask: 'Can I do this with these kinds of numbers?’ There’s a lot of information available on the Internet about particular industries [such as] what you can expect for margins. You can also get comparisons of businesses." There are too many factors involved to generalize on the proper level of capitalization for a start-up business, the bankers said. However, they agreed, it's important to understand that it will take time to generate income from a business. Since Berkshire Enterprises was founded in 1989, Fogel has said, graduates have launched more than 700 businesses that employ more than 1,000 people and have contributed some $500 million to the county's economy. Many of those who take Berkshire Enterprises courses already own and/or operate businesses and are looking for ways to make them grow, said Fogel. Sometimes, though, visions of expansion can lead to the same unhappy result as a poorly planned business startup. "The biggest problem I see with businesses is losing control of their finances -- keeping inadequate records of sales, inventories, etc.," he said. "It doesn't do any good to wait until the accountant does the taxes." Businesses should monitor their numbers on at least a monthly basis, he said. That way, trends can be detected and appropriate action taken before a situation gets out of hand. Getting turned down by investors probably has saved many people from making costly mistakes, Fogel said. "Nobody does anybody any favors by giving them money they can't pay back," he said. Nevertheless, said Fogel, with all of its potential pitfalls, starting a business can be a rewarding adventure if everything falls into place. "It's an exciting time to start businesses," he said. "There’s a lot of opportunity out there."  RETURN TO TOP |
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