Entrepreneurship Quips, Quotes, and Gotcha's
Farm Business Management Update, October 2001
By David M. Kohl, Courtney Huber, Alicia Moyer, and Jason Roller
This year's Small Business and Entrepreneurship class in the College of Agriculture and Life Sciences had the opportunity to interview over 75 different businesses concerning their startup and practices. The authors had an opportunity to grade the papers and summarize some of the ideas and quotes that were expressed in the interviews. Hopefully, these perspectives, based upon many other businesses located in Virginia and throughout the world, can assist you in energizing your agricultural and small business.
Many of the ideas came in the area of marketing. An owner of a horticultural business said, "It's not what you sell, but how you sell it." Oftentimes understanding customers' needs and cultivating that relationship is just as important as the quality of the product.
Another person, selling accounting and financial services, had an interesting observation, "Clients are people, not a source of income." The basic idea is that building trust with people is imperative. If they are served well, the income will generally follow.
A retail and food shop owner indicated that the Holy Grail of a small business is building a customer base. He further related the importance of finding the trend before it gets to the area so that you can catch the wave on the way up.
Small business owners' biggest struggle appeared to be in the area of employee management. As one owner said, "Good employees with your vision in mind are difficult to find." In defense of the employees, sometimes the owners must take the time to explain the vision.
Another struggle was the conflict between the commitment of the owners and the employees. Students discovered in their interviews that many of the owners worked 80 to 90 hours per week. They are very passionate about their work. As their businesses grew, they were required to hire more employees. The same level of commitment is not sustained in the employees - often causing breakdowns in daily operations and, in some cases, customer service. "Never hire people you can't fire." One business owner stated that hiring a family member almost bankrupted his business not only through poor performance, but the theft of nearly $50,000. A good financial accounting and control system is critical in any business that hires employees.
Many of the small business owners were concerned about an economic recession. One was very upset at a large bank that he dealt with. He said, "Don't expect a bank to cooperate when you need them." The point is well taken. The cheapest rate is not always the number one attribute in selecting a lender. The banker's knowledge of your industry and the stability of the banking staff is very critical, particularly in uncertain times.
"You know you are making it in business when your credit line increases from $2,500 to $250,000." Historically, when working with small businesses, a key indicator of your success is when the bank expands your ability to obtain working capital through a short-term credit line. The next step in the ladder of credit is being able to secure this line of credit on a signature.
Many businesses were started without a business plan. However, those business people that developed and utilized plans found them not only to be a guide in operations but also to obtain financing from banks, other family members, and investment partners.
Approximately one-third of the owners of small businesses who were interviewed had failed in at least one other business venture. Some had failed because they did not thoroughly examine markets; others expanded too fast; while still others were in family businesses where discord in vision, goals, and objectives brought the small business house of cards down.
However, as one small business owner succinctly put it, "The fear of failure is a powerful motivator and form of initiative."
Another owner indicated that change is a valuable tool. Sometimes you have to cut your losses and move on to another market if you want to stay in business or you have a well thought-out exit plan.
Many of the small businesses were growing rapidly. To survive, one owner had a five-step process which can be applicable to any form of business:
The authors found the interviews to be energizing. Like a small business owner, who often runs on passion and adrenaline, maybe the preceding perspectives can pump new life into your business.
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