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SMALL EMPLOYERS CRUCIAL DURING HARD TIMES

By Eric Francis/SPECIAL TO THE COMMERCIAL
Saturday, January 3, 2009 11:29 PM CST

These are perilous economic times.

Ines Polonius (above) is the executive director of alt.Consulting and a recipient of the U.S. Small Business Administration’s Small Business Award. Commercial file photo/Ralph Fitzgerald

But while large corporations turn to the government for a bailout, or in some cases just shut their doors, there may be a measure of comfort to be found. In fact, that the entrepreneurial spirit is alive and well in America; the number of private employers in the country has risen steadily since 2000, adding nearly 5 million more employers by 2007, according to the federal Small Business Administration.

And small businesses are leading the way.

Call them what you like — entrepreneurs, mom-and-pops, local merchants, start-ups — but businesses that meet the SBA’s definition of “small” (500 or fewer employees) account for about half of the private sector workforce in the United States. And some 20.4 million firms have no employees — in other words, they are owner-operators.

SBA statistics paint a sobering picture about the viability of new ventures. For example: There were 644,122 businesses started in 2005; that same year, 565,745 businesses closed and another 39,201 filed for bankruptcy. So there was a net gain of 39,176, or just 6 percent, of new employers that year.

In Arkansas, the SBA reported a net gain of 18,700 non-farm jobs from 2003 to 2004, and the importance of small businesses in that arena cannot be overstated: 14,900 of those jobs were at businesses employing fewer than 20 people.

But most entrepreneurs don’t simply want to start a business; they want to make it last. And that can be difficult, according to the SBA. While fully two-thirds of new businesses survive at least two years, the number drops to slightly less than half by four years, and barely a third make it to at least seven years.

So, what makes one business survive where another failed to thrive? Mildred Holley has some ideas.

She’s the technology program manger for the Small Business and Technology Development Center at the University of Arkansas at Little Rock and her advice can be boiled down to a twist on an old real estate saw: Preparation, preparation, preparation.

“Some of the things I think are critical are for the new business owner to do some planning,” said Holley. “I think it’s important for them to have an idea in their mind of what success is going to look like, and that’s going to be different for different people.”

There is no end to the level of detail an entrepreneur can apply to the start-up process, she said. A good idea and a quality product or service are crucial, of course, but so is knowing who your customer is going to be — and how to communicate with them.

“It’s not enough to think everyone out there will want the product or service you are offering,” she advised. “The better you can describe your customer profile, the better you can identify where they are and how to reach them.”

A powerful tool

And once you’ve found them, work to keep them: A database that tracks customers is a powerful tool because, Holley emphasized, it’s a lot less expensive to keep a customer through repeat sales than it is to go out and attract a new one.

One of the most important steps in the process is also one that often gets overlooked, said Holley: Cold, hard cash — enough to cover your turn-key and operational costs until the business is actually producing revenue.

“We can all talk about the occasional story of some successful business that got started with the owner having a hundred bucks,” she said with a quick laugh, “but most businesses need to start with sounder money, at least covering the cost of the start-up.”

Of course, that’s what banks are for, right? Well ... as Holley put it, banks are “not in the business of buying ideas.” They are more likely to offer a loan to someone who’s putting their own money — or other investors’ money — where their mouth is.

“The free market allows you to succeed wildly or fail,” she said, “but some of that is based on your willingness to risk some of your own capital on the operation.”

Striking out on her own

One Pine Bluff entrepreneur who decided to strike out on her own in the last year is Carla Thomas, a registered nurse who started Arkansas Healthcare Staffing Associates Inc.

Thomas had already been a nurse on the move, quite literally. She took her 17 years of experience and traveled from state to state, working for agencies that addressed the needs of short-staffed facilities around the country.

Then came the day about a year ago she was on an assignment in Dallas.

“I thought about it,” she said. “Why am I making other agencies all this money? Let me go home and see about staring my own agency.”

And so, on March 1, 2008, she opened Arkansas Healthcare Staffing Associates.

Now she has about 15 private-pay clients — locally and as far off as Conway — and 50 to 60 nurses already on her list, with more than 100 applicants hoping to join her roster.

Starting from scratch

And all she had to do was learn how to run a business — starting from scratch.

“Already being a nurse, it was a big help,” said Thomas. “I’ve been a critical care nurse, hospice nurse, and worked pediatrics and end-of-life.

“The struggle I came up against was understanding the business concept, cash flow,” she said. “I figured out the hard way that overhead is your biggest expenditure.”

For example, she started out with an office and a secretary. But it quickly became apparent that those were luxuries she couldn’t afford and, more, didn’t really need. She soon discovered she could use the Arkansas Department of Workforce Education to find applicants, and her car became her true office, with her land line number linked to her cell phone.

And that phone may be her most valuable tool after her own experience. Having worked at many central Arkansas hospitals — Baptist, Children’s, UAMS — she knows just who to call if a client needs a particular medical specialty ... and those nurses know to call her, in turn. The pay rates for her nurses run from $27 to almost $40 per hour.

“I do a lot of networking,” said Thomas.

Because it only takes private-pay clients, she said Arkansas Healthcare Staffing is focused on people like retired teachers, professors, doctors, attorneys — those who don’t meet the federal Medicare guidelines.

‘I get calls every day’

“So far, that has been a huge success because I get calls every day,” she said. “There’s a big influx of Baby Boomers that worked all their lives that need this help.”

Thomas says she understands the importance of finding qualified medical help because a few years ago she and her sisters tried to do just that for their mother.

“We couldn’t find anyone trustworthy to bring to my mom’s house to help take care of her,” she recalled.

So everyone who wants to work for her gets a criminal background check and a drug screen. Thomas also checks references, consults the state’s adult and child maltreatment registries, and conducts a personal interview with an eye toward exactly which client the applicant would fit well with.

“I try to suit the individual with the family,” she said.

Although she’s now an entrepreneur, Thomas isn’t out of nursing entirely. She still does contract work with the children’s advocacy center in Pine Bluff as a sexual assault nurse examiner. But she hasn’t been denied the kind of gratification she always felt from helping patients and their families.

“I have that more abundantly now,” she said. “I get to know the kids, the families, the home environment, and see the transition from being very sick and having no one there, to me and other nurses coming in. I see a holistic part of the healing.”

Preference for home care

One trend she’s noticed with Baby Boomers is their preference for home care, and that’s an issue that still poses some practical problems, Thomas said.

“I tell my (client) families and colleagues they need to speak to and lobby legislators, because all the money basically goes for nursing home care and things like that,” she said. “There’s a huge population with Baby Boomers getting older, and they want to be with their loved ones.”

While Thomas was able to draw upon her extensive professional experience to clear the main hurdle identified by Mildred Holley of UALR’s Small Business and Technology Development Center — preparation — there will come a time when an established small business needs some help learning how to grow.

alt.Consulting

In Jefferson County and beyond, such businesses can turn to alt.Consulting Inc. of Pine Bluff, a nonprofit agency that provides assistance to young businesses around the state, and is focusing primarily on minority-owned, rural-based and women-owned companies.

“We move in and do a comprehensive assessment ... so we can meet them where they are and take them to the next level,” says Ines Polonius, executive director of alt.Consulting. “We understand what the problems and barriers are and become part of the problem-solving team. There are systems out there to help you manage certain issues or (help you) get capital for certain things.”

The agency’s clients range from “micro-businesses” to one with $27 million in sales and more than 60 employees, Polonius added.

Need for services

Originating as part of the North Carolina Institute for Minority Economic Development, alt.Consulting was established as a separate nonprofit because a need was seen for the services they were providing. It came to the attention of two Arkansas agencies — Southern Financial Partners and Enterprise Corporation of the Delta — which asked the group to reproduce it here. Today, 10 people work at alt.Consulting, and in addition to its Pine Bluff headquarters it has offices in Little Rock, Jonesboro and Kingsland. There is also an office in Memphis that serves western Tennessee and northern Mississippi.

Besides providing on-site guidance for business clients, alt.Consulting offers other services. They provide a capital strategy with an equity model that is “based on and around technical assistance as a way to manage risk,” Polonius says, and are developing a lending model.

Then there’s alt.Community, which recreates the alt.Consulting programs at a local level. Polonius says they’re already working with six Arkansas communities with the goal of making them “entrepreneur-friendly” by providing certain resources, and in four of those communities they’ve created locally run “microenterprise organizations,” she said.

To ensure there’s a next generation of entrepreneurs, the alt.Youth training program works with 17- and 18-year-olds who want to start their own businesses, “be they summer jobs or ones they take with them once they finish school,” she says. “They’re legitimate businesses that pay sales taxes and the whole nine yards.”

Polonius says alt.Consulting has nearly 50 clients it is currently working with. Last year those clients put $13.8 million into the state’s economy and added 62 new jobs, she said, not to mention the $200,000 paid in state sales tax - and local sales taxes on top of that.

“We’re very focused on results and impact,” she said.

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