Beating the odds: remembering the basics of business can help. (Management Advice).

It's a grim reality that nearly half of all small businesses crash and burn within the first few years. An even darker statistic is that many of those doomed businesses are African American owned. Exactly what can a small company do when faced with a bleak situation? Where should it turn? What are its priorities? How does a minority small business owner beat the odds and sustain a booming business?

Marsha Robinette, owner and president of Child Friendly Ltd., in Rockville, Maryland, found herself asking these and a multitude of other questions in 1994, the year she started her business. The company specializes in interactive and broad-based entrepreneurial CD-ROM's for children.

Robinette says her business has been struggling to survive since inception, mostly due to bad advice, miscommunication, broken promises, and weary investors. Her hopes of finding an angel investor to complete the funding of her project have constantly slammed into roadblocks. On a few occasions, Robinette says she has considered scrapping her entrepreneurial dream and settling for the 9-to-5 routine. "It's frustrating when you constantly face one obstacle after another and things continue to fall through," she says. "I followed the rules and my business is still struggling to survive."

Rafael I. Garcia, president of Rafael Architects Inc., the largest Hispanic-owned architectural firm in Kansas City, Missouri, is another entrepreneur who followed the "rules" and initially came up short.

Garcia opened his business in 1983 with little money or experience, but a lot of enthusiasm. His partner died shortly after the firm's inception and he was forced to go solo.

"It was a scary experience," says Garcia. "My partner and I had planned this venture for some time, then I was suddenly forced to carry the ball alone."

After some research and niche marketing, along with networking, Garcia began to develop a list of clients and projects. Now the highly successful company has multimillion-dollar contracts and a nationwide client base. "I didn't let negative comments, or being chided by some that I couldn't make the business work, affect me," he says. Garcia offers this advice:

* Surround yourself with experts in various fields (accountants, attorneys, bankers). If you don't know any personally, then ask for advice from friends, family members, neighbors, parishioners, etc. Be gutsy. Get as much information as you can.

* Be creative in your approach. Offer to take your new contacts to lunch in exchange for a half hour of advice. By offering to exchange lunch for advice, you're sending a clear message that you're eager to learn, you value their time and advice, and that you're serious.

Although Garcia faced his share of rough spots, his persistence, along with a carefully thought out business plan, helped to overcome the typical small business obstacles of getting financing, insurance, and bonding contracts.

The tacit "rules" that Robinette, Garcia, and other business owners refer to are a standard list of dos and don'ts for running a business. While some versions of the list may vary slightly, perhaps the most basic appears on www.allbusiness.com. The Website lists the top 10 reasons small businesses fail (nine of which are mentioned in this article), and what entrepreneurs can do to avoid putting an "out of business" sign on the door.

* Don't procrastinate. When you own a small business, you will find that tasks and paperwork pile up. Avoiding them is similar to piling up debt; eventually it can overwhelm even the most proficient business owner.

* Never ignore the competition. Customer loyalty has consistently dropped in recent years. Customers go where they can find the best products and services, even if that means terminating long-term business relationships. Monitor your competitors and don't be ashamed to duplicate their ideas.

* Avoid sloppy or ineffective marketing. Market your product or service effectively and diligently. Solid marketing keeps your products selling and keeps money flowing into your business.

* Never ignore customers' needs. Once a solid customer base is formed, savvy entrepreneurs must work hard to maintain it.

* Look for competence. Hire only the best and most skilled workers. Happy employees are good, productive workers.

* Be versatile. Successful business owners tend to be adept at a number of tasks and can offer diverse services and products to clients.

* Scout your location. When scouting for a location for your business, assess its convenience to potential customers.

* Watch your cash flow. Keep careful track of the money coming into and out of your business. Monitor spending and learn how to create cash flow.

* Keep an open mind. Read books and magazines about small businesses, visit business-related Websites, network with peers in the business community, and continually expand ideas.

The National Federation of Independent Business (NFIB), a Washington, D.C., advocacy group for small and independent business owners, surveys its members on a monthly basis to get their outlook on the future of small businesses. According to a special edition of its monthly report, Small Business Economic Trends, small business owners' optimism tumbled to its lowest point since 1993. The New York and Pentagon attacks on September 11 appear to have made owners more pessimistic about the economic future. "This event has truly shaken the system, and only time will tell if that shock does long-term damage," says NFIB Chief Economist Bill Dunkelberg.

While the suggestions of how to avoid the pitfalls that trap many entrepreneurs are cogent and plausible, the question remains: Why do businesses have such a high failure rate? African American applicants for small-business financing are denied credit twice as often as whites with similar creditworthiness, according to research by the Federal Reserve System. The gap is conspicuous in mortgage lending, where redlining practices have plagued minorities for years. A study by the National Bureau of Economic Research found loan-denial rates of about 27% for whites and about 66% for blacks.

Despite the bleak success rate, some future entrepreneurs are undaunted and still cling to the dream of becoming their own bosses. Charles McNear IV, an undergraduate business student at Temple University in Philadelphia, says that understanding business practices is the key to a booming business.

"I hope to own my own business one day," McNear says. "But first, I plan to learn everything I can about entrepreneurship, and what I need to make my business a success."