The backbone of the U.S. economy has traditionally been composed of millions of small businesses that are owned and managed by entrepreneurs who savor being their own boss. As the economy inches its way to recovery, that same hard scrabble independence remains a driving force behind numbers that indicate some sectors of the financial world might be getting better all across the country. A significant measure is the increase in clients seen by the U.S. Small Business Administration (SBA) in Nevada. “There’s definite growth. We’re getting busier. We had 25 percent more volume in loans this year over last year,” said Bob Holguin, SBA district director for Nevada.
Statistics provided by the SBA paint an impressive picture of the role that small businesses play in the overall economic scene of the Silver State. Figures released this year show that 229,570 state-wide firms are operating as small businesses in Nevada (an increase from 225,542 in 2012) and that around two-fifths of the state’s private workforce is employed by these small enterprises. Minority-owned firms account for more than 30 percent of the total, according to 2012 U.S. Census QuickFacts. “Twenty to 25 percent of our clients are minorities and it’s growing. We’re seeing a lot more Hispanic clients,” said Sam Males, state director of the Nevada Small Business Development Center (NSBDC) located at the University of Nevada, Reno.
Despite the ups and downs of the economy over the years, the challenges of going into business for oneself have essentially remained the same. Although many people express the desire to be master of their own financial destiny, few are prepared for the hard work required to just get up and running. Whether you are a potential minority owner or not, the process is essentially the same. It can take months to wind your way through the maze of requirements which comes as a surprise to many people. “People aren’t ready. They haven’t done their research or their homework,” Holguin said.
When planning a business venture, it quickly becomes obvious that the “to do” list is headed by financial requirements. “The number one thing is lack of capital,” Males said. “Sometimes banks are apprehensive about doing smaller loans because it’s a lot of paperwork so it’s not worth their efforts” Potential small business owners need to find micro lenders, which are often not the big banks. The financing challenge is further complicated by the fact that many would-be owners are economically disadvantaged, struggling with low credit scores in addition to lacking the knowledge of how to get a loan.
Nailing down the financing has become more complex for everybody in recent years, but is especially onerous for minority owners, according to Vershaun Ragland, project director for the Minority Business Development Agency (MBDA).
“It’s harder now than 20 years ago. The recession caused revenue to disappear, so people used their personal resources to stay afloat, which caused credit problems,” said Ragland. She added that minorities have always found it difficult to get loans, but it’s even more challenging now with the high number who have foreclosures and short sales on their records.
In addition to being economically challenged, some minorities can also be culturally challenged, which can make the process of setting up a business more difficult. “Some aren’t mainstream America yet,” Holguin said. Language barriers and lack of knowledge regarding marketing, buying habits, insurance and regulations, to name a few, can make it even harder to move the proposed venture along the road to reality. However, many successful minority business owners and their families cut their teeth working as employees before taking the leap to entrepreneurship. “A lot of minority groups work in the hospitality and healthcare fields, and spouses end up starting small businesses,” Holguin said.
As frustrating as all this may seem, budding business owners can reach out to a variety of agencies and programs that have been set up specifically to help them navigate the rough waters of setting up and operating their own enterprises. Founded in 1953, the SBA assists small businesses through its three “C’s” which are capital, contracts and counseling. Probably the most visible element of its work is the variety of lending programs available. These include the 7(a) Loan Guarantee, the 504 Fixed Asset Financing, the MicroLoan and the Disaster Relief Loan programs. The SBA doesn’t provide grants or direct loans, except for the Disaster Relief Loans, but it guarantees against default certain portions of business loans made by lenders that conform to its guidelines.
In addition, the SBA provides counseling and mentoring services through its 900 small business development centers and through the Service Corps of Retired Executives (SCORE) and the Veteran Business Outreach Centers (VBOC). The 8(a) Business Development Program is specifically designed for economically and socially disadvantaged individuals which is of particular help to businesses who want a piece of the government contract pie. “A driving force is the big construction jobs,” Males says. Many government programs and contracts have set aside for minority business applicants who have been certified as eligible. The SBA can assist with that. Hundreds of millions of dollars are at stake in big jobs that include the Nevada Department of Transportation (NDOT) and the Department of Defense (DOD).
Similar help for minorities can be found at the MBDA operated by New Ventures Capital Development Company in Las Vegas. As part of a network of centers across the country, the MBDA center helps minority business owners to generate capital, to create and retain jobs and to obtain contract opportunities. Areas of expertise available to clients include accounting services, procurement and contracting, SBA program certification, organization and planning and real estate counseling.
According to Ragland, the center helps around 150 clients annually with about 15 percent of them being startup ventures and the remaining existing businesses that want to grow and change. With more than 20 years of experience in the field, Ragland said she gets inspiration from the slogan “Teamwork Makes the Dream Work.” Her passion is helping clients achieve their goals in spite of obstacles and challenges that may block the way. “When you see a client achieve their dreams I don’t even have words for it. We can finally give them hope,” she added.
Even under the best of circumstances, going into business can be risky. Before taking that giant leap, business planners offer sage advice to help improve the chances of success. “Sit down and really think about a business model that’s comprehensive. If it’s a product, test market it and do focus groups. Make sure that you talk to somebody professional like the SBA,” Holguin advised.
Males also emphasizes the importance of having a well-thought-out business plan on the front end. “We (the NSBDC) will help develop a plan. It’s so important and we need the vision of the owner,” he said.
He also suggested to prepare for the unknown, define your audience for marketing, plan for growth and hiring of employees and evaluate your physical location. Probably the best advice is to take advantage of the free expertise that’s available from these agencies in order to help lower the risk that’s inherent in any new venture.
Holguin added that new business owners also need to be aware of the changes that they will undoubtedly experience as they proceed with their new venture. “Being in business is a lifestyle. It’s not a 9 to 5 job. You live, eat and sleep it; you need to enjoy doing it,” he explained. “People don’t understand the commitment they have to make.”
Successful Minority Entrepreneurs
Shaundell Newsome, Founder of Sumnu Marketing
Growing up in a brownstone in Brooklyn, NY, at age 14 Shaundell Newsome was making $300 a week producing advertising materials on a printing machine in the family’s basement. “My father actually charged me $30 a week rent. It taught me how to manage overhead,” Newsome said. After high school he spent ten years in the military at Nellis Air Force Base where he worked on projects such as drones and stealth technology. “It gave me the attitude that anything is possible,” he said. Newsome was then recruited from his air force career by Stations Casinos who put him to work developing marketing strategies for local gamers.
He admits that he has loved every job he’s had, but that he decided the next step on his career path should be a business of his own where he could use all the skills he developed along the way to focus on helping small businesses.
In 2006, he started Sumnu Marketing in Las Vegas, which provides professional marketing to small enterprises that can’t afford the high fees of larger firms. The company employs four family members and five additional part-time and full-time workers, and was selected as the SBA Family-Owned Business of the Year in 2015. In addition, Newsome’s business offers online consulting services through Sumnu Solution Zone. “I’m still on my journey,” he added.
Zmon Holcomb, Owner and Manager of Top Ten Percent
As a child of a military family, Holcomb was born in Germany and moved around frequently before settling in Las Vegas with a scholarship to attend the University of Nevada, Las Vegas. After studying criminal justice and paralegal skills, he worked in law offices and then landed a position at the records division of the City of North Las Vegas where he has enjoyed a stable and successful career.
Like most entrepreneurs, however, he was eager to try his skills at something new. He began looking at businesses that would allow him to use the expertise he had developed on the job. Sometime during this research he was advised to consider franchising which can give a better chance of success and can also allow the potential business owner to go into business without having to give up their day job.
“I spent hours researching franchises that deal with records management,” Zmon says. He struck gold when he found Top Ten Percent online which is a franchise that evaluates and rates businesses that can then be included in the top ten percent in their area.
Holcomb wisely took advantage of the professional help made available through the SBA and the MBDA who have counseled him through the whole process of setting up his enterprise these past months. After playing the waiting game, he’s secured his loan and now is finally in training at corporate to learn how to actually make his dream come true.
“I’m going to hire an employee that will work 9 to 5 and I’ll work on my days off. I’m thoroughly excited and ready to use my skills to manage a business. I’m definitely business-oriented,” he says.
Jesus Gutierrez, Owner of Mari and Chuy’s Mexican Kitchen
A native of Michoacan, Mexico, Jesus Gutierrez has lived in Reno since he was 12 years old. He studied culinary arts at the University of Nevada, Reno and began his career as a dishwasher at the Eldorado and Silver Legacy resorts. A highly motivated worker, Gutierrez climbed his way up the food chain to the position of production chef. By 2004, however, he left secure employment to open a fresh Mex restaurant on Fifth and Keystone in Reno.
“I’ve always been motivated to do a lot of things like working my way up through many positions,” he said.
Ten years later, he closed his fresh Mex business to open Mari and Chuy’s Mexican Kitchen in Midtown where he and his wife, also owner and manager, work alongside their 12 employees. Although Chuy’s offers a wide variety of traditional Hispanic food choices, the restaurant also specializes in healthier vegan and vegetarian foods, reflecting the trend of the neighborhood.
Although he didn’t need a loan because he self-financed, Gutierrez reached out to professionals at the NSBDC to help design his business plan. Even with all that support in place, he described it as still scary at first. “We put all our savings into the place, but there are no regrets. We’re always open for new opportunities,” he explained.
Patricia Navarro-Issel, President of Issel Corporation
Although she was born in Guadalajara, Mexico, Patricia Navarro-Issel grew up in East LA and Fresno. Her first real job was as a dishwasher for McDonald’s, the company that provides her bread and butter continuously to this day. As a single mom raising her son, she couldn’t swing going to college. However, she took advantage of every promotion and training opportunity the company offered. By the time she was 26, she was responsible for training the managers of 800 stores, and later, the supervisor responsible for seven locations.
At age 40, she left the security of corporate McDonald’s to venture out on her own within the franchise opportunities the company provided. “My husband told me that 90 percent of small businesses fail and thought it would be a better idea to become a franchisee,” she said. Although McDonald’s provides a lot of support for potential franchisees, she said the process was the hardest thing she ever had to do.
Today, she and her husband, Michael, own five McDonald’s locations in Las Vegas with hopes of adding even more.
These business-owners illustrate the success of minority business owners throughout the state. Despite the hard-work involved with starting and operating a small business, minorities across the Silver State are finding success as their own bosses. Being plugged into the communities they serve and boosting Nevada’s economy, these minority owned businesses are proving what an asset they are to the state.