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New ideas new solutions: in today's business environment, entrepreneurs must develop a flexible business model to gain financing, contracts, and market share. (B.E. Small Business Report).

THE STREAMLINING HAS BEEN DONE. EXPENDITURES AND CASH FLOW ARE CLOSELY MONITORED. Virtually all excess has been trimmed down to the bone. Today, small businesses are running lean and mean--or not at all. Challenges--from access to capital to increased competition from larger businesses to healthcare costs--are confronting today's entrepreneur at every turn. Unfortunately, when small business catches a cold, it's pneumonia for African American-owned enterprises. Too often, black-owned businesses are left out of lucrative contracting, part nerships, networking, and financing opportunities.

And with roughly 22 million small businesses (over 820,000 of which are black-owned according to the latest Census count) in the U.S. employing some 51% of the private sector workforce that generate revenues accounting for half the nation's gross domestic product, what happens to the success of small business has a profound effect on the economy. "The biggest problem by far facing entrepreneurs today is the uncertain business environment, particularly in the wake of the slowing economy, post-Sept. 11 terrorist attacks, and the accounting scandals that have rocked corporate America," says Todd McCracken, president of National Small Business United, a Washington, D.C.-based advocacy group representing 65,000 small business owners.

Today's entrepreneur needs to be even more flexible in the face of the current business environment, which also mandates that entrepreneurs pool resources, leverage businesses, and forge alliances. "It's so valuable to have partners and form alliances so [businesses] can not only absorb changes in the economy, but take advantage of changes in the economy," says Ronald N. Langston, national director of the U.S. Dept. of Commerce's Minority Business Development Agency in Washington, D.C. "Those businesses that think they can do it alone today are going to fail."

Despite these difficulties, many of today's black entrepreneurs are meeting the challenge. Realizing the need to be proactive while rolling with the punches, these entrepreneurs are learning that to survive, one has to think outside of the box. They're forming partnerships, taking advantage of networking opportunities, and finding ways to finance their ventures. In short, they're doing whatever it takes to maintain a thriving business. Here are a few of them.


When Genma Holmes, 35, attended the Black Enterprise/Microsoft Entrepreneurs Conference in Nashville, Tennessee, she carried with her a list of prospective clients and partners in a book bag. By the time she left, Holmes had landed contracts and made contacts with clients that she expects will more than double her company's revenues by the end of 2003.

Holmes' company, Holmes Pest Control, generated some $90,000 in 2001 and she expects that as a result of attending the Entrepreneurs Conference, the firm will not only double its revenues by the end of next year but also generate almost $300,000 in annual revenues by 2004, and possibly reach half a million by 2005.

At the Entrepreneurs Conference, Holmes worked with contacts from the state of Tennessee to get a feel for the companies that were going to be there. She also used the Conference's schedule of events as a guide to help find companies and make contacts with sources she wanted to network with. As a result, she was able to sign several deals, including one to provide services to Ewing Moving Co., a $20 million, Memphis, Tennessee-based moving company. More importantly, Holmes said by making connections with businesses that Ewing Moving dealt with, Holmes Pest Control signed deals with six other companies, each worth about $5,000 to $6,000 a year. The two-year contracts go into effect next January. She also landed three out of four entities that she wanted to service, including one deal that resulted in seven new contracts worth about $35,000 annually. "That's not bad for about two hours of networking," Holmes says.

Moreover, Holmes established "primary vendor" status with the state of Tennessee Dept. of General Services, laying the groundwork to serve hundreds of agencies tied to that group. Since May, Holmes' firm has done work for the Tennessee Highway Patrol Dept. and Tennessee Dept. of Human Services, garnering $1,200 to $1,500 in extra monthly revenue.

Holmes also met with an executive from American Airlines and is in talks for a deal to service American Airlines' planes at its hub at the Nashville Metro Airport, as well as to secure a contract with the regional airport itself. She hopes to provide pest-control services to other airlines--including Southwest Airlines, Northwest Airlines, and Delta Airlines--that also use the hub. Holmes estimates that the American Airlines deal could bring a two-year contract worth $40,000 and eventually swell to a $1 million project over time. "That's the power of networking," she points out. "Having an agenda and aggressively going after new business."


Raymond P. Lewis, 40, was doing well in 2001. The owner of RPL Consulting, a New York City-based event marketing and public relations finn, had several events in the works and was on track to generate $50,000 in revenues for the fourth quarter alone. One of those events was a dinner party for the president of Ghana to take place at Windows on the World, an upscale restaurant at the top of the World Trade Center.

"I told the banquet director at the restaurant that I'd be there first thing in the morning," recalls Lewis, 40. "I was literally out my door when the first plane hit [on Sept. 11]." As the fires continued to burn amid the rubble of Ground Zero, Lewis knew he was in trouble. "By the next day I was literally out of business," Lewis laments. As the cancellations mounted, Lewis knew he couldn't make a go of it strictly as a public relations business. He had to explore alternatives.

Lewis still had some events planned for early 2002, but he needed to weather the storm and generate income until then. "I went back to catering," says Lewis, who had opened a catering business back in 1993 and later abandoned that venture to focus on event planning. "I figured people still have to eat and I had to continue to live."

The strategy worked. The catering business kept the bills paid until the beginning of the year. All told, Lewis estimates he lost about $30,000 to $50,000 in business as a result of Sept. 11. Of that, $15,000 to $20,000 was recouped through the catering business.

These days, RPL Consulting is back on track. With a client list that includes PepsiCola Inc. and AT&T, Lewis expects that while revenues will be down slightly for 2002, RPL Consulting has enough business in the works to substantially increase revenues for 2003. "Revenues are down for this year because it's been tough," he says. "By next year, I'm being positioned to double my revenues. We have a lot of major prospects."


When Tracy Hester opened Before and After Hair & Nail Salon in Durham, North Carolina, in February 2002, she wanted a shop that would have an established clientele and a highly visible location yet be affordable.

But the 21-year-old entrepreneur did not have the $10,000 needed to buy, lease, or fix up a free-standing building and was reluctant to apply for a bank loan that could have put her in the red before trimming her first tress or manicuring her first nail. Undeterred, she decided that rather than depleting her resources on a storefront location, she'd find another business to partner with: the Durham Athletic Club. With 1,500 members between the ages of 18 to 55, partnering with the gym seemed like a perfect fit.

She met the gym's owner through a friend. Another woman had planned to lease space at the gym to open a salon and when those plans fell through, it opened the door for Hester. "Before you knew it, I had signed a contract," she says. By signing the lease with Durham Athletic Club, Hester estimates that she has cut operating expenses by some 93%, without sacrificing her original plans. The location has a consistent flow of high-volume traffic and her rent includes utilities such as electricity, water, and sewage. She gets about 50% to 65% of her customers (on average 65 to 80 weekly) from gym-goers. "It does set me apart because I'm pretty certain I'm the only one with this type of location in North Carolina, at least in Durham," Hester says.

Hester estimates that she would have had to pay $950 in rent and another $1,800 monthly to cover utilities, supplies, and equipment. In contrast, she pays about $400 a month for rent, and her other expenses include supplies and advertising. Equipment for her nail salon, which cost about $300, was purchased on-the-cheap from the would-be entrepreneur who opted against opening the salon before Hester.

The partnership also benefits the Durham Athletic Club as it gives the business an extra marketing tool to keep existing clients and attract new ones. That may be why the gym provides Hester with free towel services for men and women, an expense she figures would cost about $1,500 a month as a stand-alone business.

Hester is looking to continue her trend of partnerships and is in talks with a friend about opening another nail salon at a car wash, about one half-mile from her current site, where customers can get their nails done while waiting for their car to be washed. She hopes to launch the second business by January.

All in all, she has no regrets about her decision. "I guess I could have put my name on the sign outside and on the front door and been in the limelight," she says. "But with all the expenses it would have taken to do [it], I could have been out of business within a year."


Marvin R. Dickerson needed capital and needed it badly. When he branched out to start his own company in April 2002, he figured it would cost a minimum of $30,000 to $40,000 a month just to pay for the staff. This meant that the 36-year-old president and CEO of Dickerson Technologies Inc. would have had to come up with $360,000 to $480,000 to cover operating expenses for the year.

But Dickerson knew raising that kind of money would be a hurdle for his enterprise, a Germantown, Maryland-based information technology management and consulting firm that provides network security to government agencies and financial and healthcare firms. Without an established customer base, consistent revenue stream, and no real corporate assets to secure the capital, he was unsure if he could land financing from venture capitalists. Then there's the control factor. "This was my dream and I wanted to maintain control and have the total equity position in the company," he says. So Dickerson got creative. "I did not want to take the bank route because once you take out the loan, it becomes due," Dickerson said. "I didn't want that type of pressure because it forces you out the door to immediately have customer acquisition." Instead, Dickerson created a model where, as projects came up, he'd issue jobs to a pool of about 15 consultants he had worked with in the past. That allowed him to cut monthly expenses to about $2,000 as the need for a full-time staff was erased.

As a result, he was able to launch Dickerson Technologies with an initial investment of $30,000, mainly to cover the cost of marketing, developing a Website, and building the infrastructure to open the business from his home. He then exercised stock options and sold about $220,000 worth of shares of Network Associates Inc., a publicly traded network security and software firm based in Santa Clara, California, where he worked as director of product management.

With those funds he paid off "tens of thousands" of dollars of personal debt, including vehicles, credit cards, and home projects, and cut living expenses by 60% to have operating capital for his business. Dickerson expects to generate about $1.2 million in revenues and make $70,000 within the next 18 months to recoup his $30,000 initial investment by year-end.

Dickerson has no regrets about taking the entrepreneurial plunge. He's building financial wealth and independence for himself and his family. "I'm putting myself in a position of creating jobs vs. having a job."
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Author:McKinney, Jeffrey
Publication:Black Enterprise
Date:Nov 1, 2002
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