In the May issue of Inc., the magazine honors the top 100 inner city businesses of 2001. We wanted to hear more about what these companies and their owners learned during their entrepreneurial adventures. So we contacted a number of the Inner City 100 founders, and asked them this question: Looking back on the years since you founded your company, what do you wish you' d known then that you know now?
The responses were as varied as the companies that the founders represent. Some spoke of business plans, others of financing. Some talked about work and balance, while others discussed the importance of networking. But all seemed to agree on one thing: the entrepreneurial trail is one full of unknowns and unexpecteds -- as well as opportunities and excitement. In that spirit, we offer you a sampling of what these CEOs said they wish they' d known from the start.
Julie Robbins, President & Owner, Caribbean Shipping & Cold Storage
Inner City 100 ranking: #2
Company founded: 1993
If only I' d known...: It' s not easy to find trustworthy backers.
Advice: Choose your financial partners carefully.
I wish we had known how hard it was to find a good and trustworthy financial backer. When we went into business back in 1993, it was only [ my husband] and me. We were practically unemployed. We had very little money in the bank, and there was no collateral to put up for loans.
We' d been in business for several months when the vendor that we did all of our business with decided that we had to have a $300,000 letter of credit in order to do business with them anymore. It didn' t matter that we' d paid all of our bills on time -- they decided they had to have that letter of credit. Needless to say, we didn' t have it. As a result, we were forced to look for a partner, since none of the banks would lend us money without some sort of collateral. In the end, the partner we wound up with almost cost us the entire business: they ended up with 80% of the stock, and no risk. They took close to $4 million from our business, and then never even paid the most important vendor we had. To make a long story short, we ultimately resigned, and reopened under another name. This time we didn' t need a backer because we had bought a warehouse, and thus had plenty of collateral, as well as money to operate.
From all of that, and after a lengthy court battle, we learned that it isn' t easy to trust many people. You always have to carefully check out who you' re doing business with, especially when it comes to finding a financial partner or backer. If we had to do it all over again, we would have tried to come up with our own capital to get a line or letter of credit. But if you do have to find a backer, and can' t get a bank to offer you a line of credit, try asking some bankers for assistance in finding someone who may be interested in investing in a business venture. It seems that after you' ve been in business for a while, financial backers just start coming out of the woodwork. But if you haven' t been in business very long, business relationships can mean everything -- whether it' s customers, vendors, or bankers -- and you have to very, very carefully check out any possible financial partners.
Frank Tucker, President and CEO, Tucker Technology
Inner City 100 ranking: #6
Company founded: 1993
If only I' d known...: The end game is just as important to plan for as the starting-game.
Advice: Plan your exit strategy.
If I knew then what I know now, I would have thought much more carefully about my exit strategy for the company. I just wasn' t prepared for possible sale or merger opportunities. I was actually surprised recently at how little I' d actually done in the way of preparing for such opportunities. I' d thought about exit strategy a little bit, but I guess I thought that all the pieces would just fall naturally into place when the time came. I was wrong.
It' s kind of like buying a house. When you buy a home, you always think about what will happen in the future: Is it a good investment? Will you be able to sell it for more than you bought it for? A business is very similar -- but I never thought about it that way. I never really thought much about selling or merging. I was too busy trying to build a successful company to think about how everything might end up.
There are three things that I would have done to better prepare for possible exit opportunities.
David Steffan, President, Precision Millwork
Inner City 100 ranking: #88
Company founded: 1993
If only I' d known...: Not all business is good business.
Advice: Learn to say "no" to work.
I wish I' d known that "No" is sometimes the right answer. In my business, we' re always looking for the next job. And far too often, we took work that we probably shouldn' t have. Sometimes it was priced too low, or the job was too difficult for our abilities. Sometimes we were already too busy with other jobs, or we took on a job that was with someone who we knew was a less-than-desirable customer. When those things happen, it overstresses the company, and each time it puts you and your company more out of balance, and brings you a little closer to that proverbial last straw.
It' s hard to turn down work -- especially in the early stages of a business. You' re always concerned about where the next job is coming from. But business should always be win-win -- for you and for your customer. At the beginning stages, it' s easy as an owner to be out of balance: you' re far more focused on your customer than on yourself. Slowly, though, you gain confidence. For us, it took several years to reach the point where we could turn down a job. Even now, it' s definitely not an easy task -- it' s never easy to turn down work, no matter what business you' re in. But I' ve found that it pays to remember that not all business is good business.
There' s no easy way to learn to be more comfortable saying "no" when that' s really the best thing for you and your company. Trust your instincts, though. Take the confidence and strength that it took to start your business to begin with, and use it. With time and experience, it gets easier to trust yourself more fully, and to apply a stricter discipline to what work you take on -- and what work you can turn down.
Gary Fails, President, City Theatrical Inc
Inner City 100 ranking: #52
Company founded: 1986
If only I' d known...: A lot of things!
Advice: Don' t underestimate the business know-how you' ll need.
I started my business without one bit of business knowledge or experience, and learned every lesson the hardest way possible. Now at age 49, I'm enrolled in Columbia University's Executive MBA program and I'm learning the skills to continue to grow and manage my company.
If I was starting over, or starting another business, there are quite a few things that I would do that I didn't do when first starting out:
1. Write a business plan. (I had no idea where my business was going for several years in the beginning.)
2. Use knowledgeable people as advisors. (I was too isolated.)
3. Acquire all the capital needed to get fully underway. (I tried to finance 40% per year growth out of cash flow.)
4. Understand the financials. (Learn the difference between cashflow and building wealth.)
5. Think big. (Think national and international as soon as possible.)
6. Hire the best people, using equity if necessary. (I tried to do too much myself.)
7. Don't be a tightrope walker. (Be careful of the level of risk you assume. My risk often was too large.)
8. Don't always rely on your gut instincts. (Get trained in business, or hire people who are.)
Of course, I violated every one of these principles and still grew my company at record speed through boldness and hard work. Someone with more business skills may well have done it faster -- and with much less risk.
Brenda Hill-Riggins, President, M.A.R.S. Plumbing
Inner City 100 ranking: #23
If only I' d known...: Networking is an art.
Advice: Learn how to take best advantage of networking opportunities.
I wish I' d known more about the art of networking. I wish I' d had someone who could teach me more about how to network, and what it takes to take advantage of networking situations. There' s a difference between passing business cards back and forth and having an agenda that helps you understand what you really want from people and what you can offer them in return. Networking is really all about salesmanship. Like a salesperson, you need to be properly prepared for opportunities where you can sell yourself or your business. There are lots of easy ways to improve your networking opportunities and skills:
Don' t join just your local Chamber of Commerce. Join industry associations as well. The people there will be more likely to provide easier and better networking opportunities because they' re familiar with your business and industry specifically.
Have an agenda when you go to conferences or gatherings -- know what you plan to get out of them ahead of time. Have an action plan and goal. Be specific when you approach people to meet them and talk with them -- tell them who you are and why you think you should know each other. Before you go to a conference, find out who' s going to be there, figure out if you can help them, and decide if you think any of them might be able to help you. Always have a brochure in your pocket -- not just a business card. Have your 30-second pitch prepared at all times. Step out of your comfort zone when you' re there and talk to people who you don' t already know. I' ve gone to so many meetings and conferences where people just stood around in groups with people they already know. That' s not how to network effectively. It' s not as easy or comfortable to go up to strangers, but that' s what networking is about.
Seek out larger companies who are willing to share some of their knowledge base with you -- who are willing to share information about their infrastructure with you. Often what small companies need is a larger company who will share information about how they set up their infrastructure.
Finding a Trustworthy Financial Partner
The Sting: Don't Get Conned Out of Cash
How can I be sure that a venture capital firm will be a good fit with my company and our goals?
Some Assembly Required