Technical Innovation Center
Washington County’s Business Incubator
at Hagerstown Community College
11400 Robinwood Drive TIC Suite 321
Hagerstown, MD 21742 (301)790-2800 Ext. 399
You can start a business in any type of economy – good or bad. Obviously in a good economy when people are spending money obtaining customers is relatively easy. However, lots of others will see profitable opportunities and also start businesses that could be similar to yours which will means that original lack of competition may quickly appear. In a down economy, effective differentiation with a dead on focus on the customer’s problems can propel you to success. Furthermore, your ability to compete in a down economy indicates an ability to be efficient with products that meet the customer’s most important needs. The most critical element needed in starting a business at anytime is family support as you will need to devote a majority of your time to the effort. Secondarily, you need financial staying power. If the creation of an enterprise causes you to be unable to pay for your basic needs – housing food and transportation – then you will lose family support very quickly and damage your future opportunities with financing sources. If needed start your business part-time and work up to it becoming a full0-time venture.
Q: How much money will I need to start a business?
That depends on the business. Because it may take several months before cash begins to flow, you should have at least six months of reserves to pay your basic living costs. I recommend developing a budget for the enterprise and have an additional cash reserve of three months to cover business expenses. By maintaining a solid cash reserve you can take advantage of profitable opportunities that may arise at any time. This cash reserve could be obtained using your own funds or through an SBA backed commercial loan*. (* applicant must meet lender and SBA criteria).
The federal government does NOT give grants to start or expand a business. They do provide for- profit with funding to develop new technologies that will have broad commercial appeal. These include the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) grant programs. These are highly competitive grant programs designed to develop solutions to problems that the federal government helps to solve.
There are state programs and non-profit organizations that provide seed money for starting an enterprise. However these programs come with numerous strings attached and very narrowly defined eligibility criteria. Usually, these programs are designed to incentivize firms to locate in depressed areas, hire hard to employ neighborhood people or help solve some other social issue. In short, local jurisdictions develop rules and regulations for these programs to advance a broader public policy initiative. With that said there are a lot of local revolving loan funds (RLF’s), community development grants for site specific development and publicly financed business incubators that can help you reduce your total funding needs. The bottom line is, those interested in starting a business must have some personal capital at risk. There are no funding sources that will provide grants, invest their funds, or lend you money if you are unwilling to assume any risk. Successful entrepreneurs can obtain government assistance through research of available opportunities, careful planning, and creating a capitalization plan that “cherry- picks” specific resources from wide variety of financial resources that are available for specific elements of the plan and then incorporates these resources into a cohesive financial strategy.
Q: I have a great new product idea and I want market it. What should I do first?
First, have you validated the “greatness” of your idea? Does this product solve a problem faced by potential buyers? If the product does not provide a solution for a problem faced by a large pool of prospective buyers then it probably won’t sell. Simply because you think it’s a great idea does not mean that others will. Many would be entrepreneurs invest a lot of time and effort in developing an idea but are then hesitant to test the idea on others. The usual excuse is that they do not want someone to steal the idea. New products, especially consumer products must have some market validation before the entrepreneur commits significant personal resources toward the actual development of the product. This does not mean that you tell everyone about your idea but at a minimum, you should assemble a group of trusted persons and share the concept with them. Their feedback can be the basis of a go-no go decision on your part. This group can also help you redefine the product to make it more useful to consumers and learn how much people may be willing to pay for your solution to their problem. Once validated, then you can begin to develop a marketing/business plan.
Visit the Getting Started section for a step-by-step guide to starting a business.
Q: If I run into problems to whom can I turn for help?
Don’t wait until you run into problems. As you develop your business take full advantage of the tremendous talent that exists in your community that is free. Contact your local Small Business Development Center, SCORE chapter or business incubator to create an ongoing relationship of advice and counsel. I also recommend that you create an advisory board for your enterprise. Find three to five people with business experience that would be willing to meet as a group to offer objective advice as you move your operations forward. You should join in various networking groups to make yourself known and to identify and recruit people to act in an advisory capacity. If needed, make your meetings dinner meetings and pick up the tab for everyone as a reward for their service. This is a low cost way of getting valuable objective advice to help you find solutions for issues that could become problems. You goal is to prevent small issues from turning into big problems.
