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Recy L. Dunn

Send your questions about growing your own minority business enterprise to me by and I'll do my best to answer them!

Recy Dunn

 

AskRecy has modified his column to offer a small piece of advice regarding certain business subjects before answering readersí questions.


BACK TO THE BASICS

ASKRECY

Back to the Basics

Have you ever watched a really entertaining commercial, the kind that cost six figures to produce, and when the commercial ended, you forgot what the product was, only that it was a funny commercial? Some business people put such an effort into making their business promotions slick and professional that they forget who the intended audience was. In advertising, you have to consider the target market. Who is your prospective customer? What kind of magazines or papers does he/she read? The aim is not to get an immediate order but to build name recognition and a reputation for your company.

Do not waste advertising dollars, advertise smart. Remember Jim Mackingvale, owner of Gallery Furniture. People laughed at his first commercials, but he knew the message he wanted convey to his targeted market - sticking to that point made him a wealthy man.

Minorities now own nearly 15 percent of American businesses and surprising, Minorities in Business, 2001, issued by the Small Business Administration stated that women were full or part owners of 9 million businesses and the primary owners in 5.4 million.

Most entrepreneurs never expect to fail, but thousands closed their doors each year and the rate among blacks is extremely high. What can be done about this? Letís review three contributing causes of failure.

The No. 1 factor is lack of planning and a lack of focus. Learn from the mistakes of others. Plan for success. Donít make assumptions about what you want to sell when the customer is not prepared to buy the product or service at your price. Focus on the customer; they are your first source to potential problems. Develop and write a business plan, but update it regularly and follow it. A well-written business plan will focus your efforts and resources on the business in a smart way. It will identify potential pitfalls that stand in the way of success. Like a road map, a good plan will identify where you are, where you wish to go and the best routes to travel.

The SBA has a program called The Business Plan - Road Map to Success - a tutorial and self-paced activity that can be download or viewed as a text version. Go to www.sbaonline.sba.gov/starting/businessplan.html

The No. 2 most common reason that small businesses fail is access to capital, most are under-financed. Most banks are reluctant to loan money to businesses that are under-capitalized. Determine your cash flow needs in advance. Working capital problems and borrowing after the fact is much more difficult. Donít leave all of the financial decisions to an accountant. Lack of interest in the "accounting numbersí is one of the single biggest causes of business failure.

The No. 3 failure factor is lack of information. New business owners do not generate adequate information for good decision-making and are operating blindly to the success of their business. Keep track of revenues, expenses, receivables, inventory, and how each relates to each other. Many entrepreneurs underestimate the tasks of managing a small business.

The Small Business Association (SBA) 8(a) Minority Enterprise Development Program (MED), assist in the development of traditionally disadvantaged individuals and is the federal government's largest procurement program. It has two primary components, Business Development and Management and Technical Assistance.

If you need advice about your business, please go to www.askrecy.com

 

 

COLUMNS

Subj: Need your advice 

From: Sanaez

I have obtained an enormous amount of information by reading your correspondence to emails from potential minority business owners.  Consequently, I have worked up the nerve to post a question of my own.  I am a single African American female.  I am also a single parent.  After years of contemplating a business idea, I have finally come across an interesting business idea, vending machines. I want to set up vending machines that contain only water and machines that make change.   The only problem is that I have no idea of how to get this new business idea off the ground.  Would you please provide me with information regarding business loans and grants, rather I should lease or purchase the equipment ( I would prefer to have someone else service the machines), also, how would I pursue clientele?  I have heard that some companies will provide you with potential clients if you purchase their equipment.  Is this true? Any information that you provide would be of great benefit.  

AskRecy Response:

The vending business is a risky business, regardless of what anyone will tell you.
It's a real business, just like any other legitimate business; however, it takes some knowledge, time and work to get the true rewards.

Can you makes money in the vending machine business? Yes, you can. You can start with as one or two machines. Financial success depends on several factors; buying right machines, at the right price, locating a trusting a professional vending machine company.

Can you lose money? Yes. Unfortunately, most people do not make money in this business.

Should that stop you from pursuing your desire? No! However, letís discuss some pitfalls.

In the majority of cases, people get started in the vending business by purchasing a "business opportunity." Most vending equipment manufacturers and distributors are ethical and honest. However, many people have been victimized by one of the unscrupulous business opportunity "promoters" and paid too much money for poor quality, flawed and used machines. Much has been written about people several times the value for vending machines through special financing schemes. A vending machine promoter may offers financing terms that look extremely attractive with low interest terms and a low down payment. Analyze and evaluate the financing terms, in relationship the type of equipment, i.e., used, old technology or reconditioned.

Do not risk more than you can afford to lose. Start relatively small to limit your risk and then as grow fast the market supply and demand dictates. An established vending business will take a minimum several months to a year before you should consider it profitable and well established. The real cost value of the business is adding equipment value, transportation costs, freight paid, inventory and maintenance. (Which is a common way for some vending machines promoters that charge you several times, what the equipment is actually worth.)

Beware of lease back deals. Some promoters offer to lease you the equipment for a fixed or variable monthly payment, and then they contract to service the machines for you. There is nothing wrong with a lease, but analyze the true cost and terms of the lease and the service contract.

Also, beware of a protected territory and franchise fees. This is a common technique to entice you to buy now before your territory is gone. If a good territory exists today, it will most likely be there tomorrow. Paying extra for a protected territory or franchise deal should be carefully evaluated. Check out the company stability, references and complaints with the Better Business Bureau. Although, you should not rely solely on the BBB report, itís important to find out whether the complaints were settled or simply ignored.

Knowledge is a vital and important criteria in this business. I suggest that you read Vending Success Secrets: How Anyone Can Grow Rich in America's Best Cash Business! Bill Way.

You can also go to your local library and find additional reading material.

Good Luck!

AskRecy

 

Subject: Want to own hair salon

Lashonda - Springfield 

 

I am a 25 year old wanting to open up my own hair salon in the Nashville, TN area. I moved here in the summer of 2000. I just cant seem to find a good salon to build my clientele, probably because I donít know anyone, In this type of business here you have to know someone especially with all the competition. I've worked in about 3 salons since I've been here. With me not having any clientele I have to do commission. A lot of owners and managers shy away from that because you get stylist who come in when they want to and you know the rest of the story. My father has a business back home in Jackson, Tn. He make furniture, pictures, floral arrangement for funerals and weddings anything you name it .I told him that I was thinking about expanding his business here in Nashville. His reply was Lashonda you just canít start a business and not be serious. I replied that's right you canít just start and one day say you donít want to do this any more. I really want to open a hair salon. I've been researching information on this subject. I just need someone to provide guidance of how to go about this. I'm really serious and want to make my vision reality. Can you please help?

ASKRECY Response:

This is one of the easiest businesses to get into and develop, especially if you have the talent to do hair professionally. It also requires keeping up with the latest styles and working a lot of hours. The hair salon business can be started without much money, so you really do not need a loan and since you mentioned that you do not have a good credit rating, the best thing for you to do, is to start a clientele list. Develop a loyal base of customers and they will most likely follow you when the right opportune time arises for you to open your own business.

I happen to know personally three professional business owners in the hair salon business and each has been quite successful for the last 10 plus years.

I asked them for advice on how they started and what worked for them. All three basically said the same thing Ė network, advertise, build a strong client base Ė take your time and do the customer's hair right the first time regardless of how many people are waiting on your services Ė word of mouth was the key for their success Ė make sure that your customer is satisfied with your services.

Neither did any flyers, but one later did when she went from a one-person shop to a five person shop. One person found a bargain location on a very busy street and was concerned that the area businesses catered mostly to non-minorities. However, she had a unique sign install that basically had a black person picture and wording to the effect that we do weaves, perms, and braids.

As for equipment Ė they both said that they purchased used equipment initially from other hair salons going out of business. One said she found all of her equipment for a three person shop by going to businesses selling hair salon supplies and merely asking the owners if they knew of anyone wishing to sell their equipment.

For reading material there are some books available - Fun, Creative, and Profitable Salon Marketing; 67 Ways to Grow Your Salon Business by Allen R. D'Angelo - The Transition: How to Become a Salon Professional by Louise Cotter, Frances London Dubose (Contributor) - Beauty Is My Business; The ABC's of Successful Salon Management by Joseph J. Vizzini and Start and Run a Profitable Beauty Salon: A Complete Step-By-Step Business Plan by Paul Pogue

 

Good Luck!

 

 

 

 

 

Subject: Certified business

From Virginia - Lafayette


Can you tell me the process to become a certified minority owned business, besides?

being the obvious of the minority races.

 

Askrecy Response:

I could not find any information in Lafayette, regarding certification for minority businesses, so I contacted A Mr. Dale Beard, Assistant Director, CPPB, at the Louisiana State Purchasing Office. Below is his reply:

"Louisiana Department of Economic Development at one time issued certification of minority status, but I don't think that program is still active.  They now have a Small & Emerging Business program.  Details and application forms are available at  http://www.lded.state.la.us/businessretention/overview.asp.

The link above Providing Small Business Assistance to the small and emerging Business Development Program (SEBD) is established to help small and emerging businesses become competitive in this economy. SEBD is now helping existing small businesses help themselves in communities all over Louisiana. SEBD is a managerial, technical and indirect financial assistance resource provider for certified small and emerging businesses. The program aspires to fulfill this vision by developing and implementing policies and programs created to uplift Small and Emerging Businesses (SEBs) and encourage them to help themselves.

I hope this helps.

AskRecy

 

 

 

 

Subject: Certification

From Shirley West

My name is Shirley West and I work for a company who utilizes many Women and
Minority owned enterprises.  Most of these MWBEs are one-person companies
and most are not currently certified.  As part of our MWBE initiative I
would like to help them become certified.  I know that there are many ways
to become certified.   I'm looking for the easiest way to help these people
who are located in multiple states by giving them instructions and the
proper paper work to fill out.  Our company is a business service provider
with customers in all 50 states and all U.S. Territories.   Do you have any
ideas on how I can accomplish this?

---------------------------------------------------------------
ASKRECY RESPONSE

 

There is possible one avenue that may help and it requires becoming part of an organization. Minority-owned businesses are the primary objective of the National Minority Supplier Development Council, one of the country's leading business membership organizations. It was chartered in 1972 to provide increased procurement and business opportunities for minority businesses of all sizes. 

The National Minority Supplier Development Council has standardized procedures to assure consistent and identical review and certification of minority-owned businesses. These businesses are certified by NMSDC's affiliate nearest to the company's headquarters. 

The NMSDC Network includes a National Office in New York and 39 regional councils across the country. There are 3,500 corporate members throughout the network, including most of America's largest publicly owned, privately owned and foreign-owned companies, as well as universities, hospitals and other buying institutions. The regional councils certify and match more than 15,000 minority owned businesses with member corporations which want to purchase goods and services. 

 The NMSDC's Minority Business Information Center provides the only national centralized source of information about minority business development and trends.  The Center's resources include access to online databases; a vast collection of magazines, newspapers and journals with articles pertinent to minority business development; statistical data from the U.S. Bureau of the Census; books containing corporate facts and figures; and current information on legislation affecting minority business development. 

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