A great idea is only the first step in starting up a business. Money turns the idea into a reality, and a bank is not going to provide a loan based only on enthusiasm.
“A small business loan requires a business plan,” said Pam Stefik, vice president of commercial lending at Evergreen Bank in Evergreen Park.
A business plan is a blueprint for a company’s earning power and potential, providing information on a proposed company and on the niche it will fill within an industry. The plan includes market analyses, marketing strategies and detailed projections of income and expenses for a two-year period.
The financial aspect of an entrepreneurial project can frustrate even the most determined. “It was the most difficult part of the process,” said John Young, 25, of Lockport, who recently opened his own motorcycle repair and customizing shop.
Young, who possessed the ability to do the work but lacked the business background to make it happen, turned to the Small Business Development Center in Palos Hills for help. “They brought together all the figures that helped me get my first loan,” he said.
The Small Business Development Center has an office in Moraine Valley Community College’s Center for Contemporary Technology. Last year, the SBDC helped 35 southwest suburban clients, including Young, get approval for loans totaling $2.8 million.
Founded in 1985, the Small Business Development Center is part of a network developed by the U.S. Small Business Administration and the Illinois Department of Commerce and Community Affairs to provide management assistance and advice to businesses in the southwest suburban area. The SBDC, which receives $64,000 in annual funding from the government to run the office, also works in partnership with the college. Moraine Valley provides matching funds, offers access to faculty and programs and provides facilities, including a drop-in resource center and lab, according to SBDC director Hilary Gereg.
“We work with both pre-startup and existing businesses,” said Gereg, 44, of Orland Hills.
The major focus of the business center is helping individuals create a business plan, something Gereg believes every business–whether or not it is in need of a loan–should develop.
“Most new businesses (that fail do so) because of bad planning or a lack of planning,” she said.
A business plan considers every aspect of a commercial enterprise. It explains the need and potential of the company to fill that need and discusses customers and competition. Information about location, products and services, amenities and advertising goes into a business plan, and the document is augmented with cash flow reports, financial histories, balance sheets and projected income and expenditures.
“The benefit of a business plan is that you are clear about the assumptions you have made,” Gereg said.
The center will provide assistance and guidance in putting together a plan. “We are not going to write your business plan, but we will help put it into form,” Gereg said.
The center aids new or expanding businesses seeking loans, Gereg added. “We can help you turn the idea into `bank-speak.’ “
About 40 percent of the people who visit the center are not looking for loans, according to Carl Van Hecke, 57, a member of the Service Corps of Retired Executives, a group of volunteers who counsel clients at the center. “We talk to people who are thinking about getting into their own business,” he said. “They may have an idea or a concept, and they are not sure if the idea is feasible.”
Van Hecke of Orland Park is the retired national sales manager for Andrew Corp. and owner of a home-based financial software marketing company. He said the counselors try to paint a true picture of what it is like to run your own business.
“We provide encouragement and sometimes gentle discouragement,” he said. “Some people are not cut out for entrepreneurship.”
The counselors try to be both “relevant and sympathetic,” Gereg said. “They realize the time and effort involved. They know that being in business for yourself is a seven-day-a-week, 365-day-a-year job.”
In addition to confidential counseling and one-on-one assistance with business plans, the center has computers and financial software for use by clients in its drop-in center, along with a variety of reference and training materials and videos. Services also include seminars on accounting and bookkeeping basics, sales, marketing, franchising, legal issues and business taxation as well as individualized five-session self-employment training.
“We are very much client-directed,” Gereg said.
The center serves approximately 400 people each year, and service and retail industries make up the bulk of their client list. Among the types of businesses they have helped launch are auto body shops, bakeries, day-care centers for children and adults, home medical services, health food stores, coffee shops, toy stores, craft and hobby stores and a mushroom farm. Gereg said there is a growth in home-based businesses, especially those that are geared toward technology and communications, and about half of the entrepreneurs they see are women.
Of course, many of the services offered by the SBDC are available from outside sources, but the center can provide them at little or no cost. Fees for seminars range from $15 to $50, while meetings with counselors are free.
The center occasionally works with outside sources, including certified public accountants, specialists in turning around failing businesses and graphic designers, and Gereg maintains a good relationship with local banks.
“When someone comes in to see us, we will run through the basics to make sure (the plan) fits the parameters of a small business loan,” said Evergreen Bank’s Stefik. “But many times people have no clue where to start with a business plan, so we’ll direct them to the center.
“The people who aren’t serious or committed usually don’t follow through. But those who do come back to us a much more educated person.”
Chris Beardsley, 37, of Manhattan, owner of Illinois Valley Prosthetics in Tinley Park, took advantage of several of the center’s programs when he sought a loan last year to expand and relocate the company, which fabricates and assembles artificial limbs and orthopedic braces. “The figures and the spreadsheet have to be presented in a certain manner,” he said. “The center helped me arrange everything right the first time.”
After Beardsley received his loan, he was asked to join the Small Business Development Center’s Advisory Board. “Our job is to keep in touch with the small business community and to make sure we are addressing their needs,” he said.
Recognizing that each business is unique, the center attempts to base its services and advice “on the realities of a situation,” Gereg said. But it also uses the academic resources of Moraine Valley Community College to help prepare clients for business ownership; accounting, computer and math classes are especially pertinent to the center’s services.
Gereg recently received the Innovation of the Year award from the college for her creation of the drop-in center, and her goals for the future include customized training and helping local companies land government contracts.
“The idea is to analyze and be as objective as we can,” Gereg said, “and to provide a fresh perspective for small business owners.”
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For more information about the Small Business Development Center, call 708-974-5468.
