Finding your place in West Michigan can be a tough task for a new small business. All of the work that goes into getting set up, trying to differentiate yourself from the competition, figuring out cash flow, and so much more can be overwhelming. With all of that coming at you, how are you supposed to get support of the local community?
Local First is a Grand Rapids based non-profit that promotes local West Michigan businesses. Recently it was announced that Local First has partnered with the Michigan Economic Development Corporation. Local First will receive $450,000 from the State of Michigan over the next 2 years to expand its operations. The MEDC will follow the program and measure its success in order to determine if it’s worth further expansion of Local First.
Whether you are a Grand Rapids entrepreneur that is developing the next big thing or you are at a point where you want to be self-employed, you need to think about forming a business entity. Whatever your business plan is forming a company or corporation is important. So West Michigan, how do you start a small business?
Forming a new business is simple and complex at the same time. It is simple in that if you know the right steps to take and are experienced with the process it is pretty straightforward. If you are unfamiliar with the formation process you can probably stumble your way through it but that does not mean it will be done correctly or go smoothly.
We have often talked on here about the importance of the team you put around you and your idea. These individuals can either add to your success of failure. I remember hearing Scott Case, founder of Priceline, speak at an event. Case gave credit to the team he had around him in starting Priceline for the success of the company that reach a billion dollars in annual sales in less than 24 months.
Your “team” though is more than the people you work with on a daily basis. Your team includes everyone from investors and advisers to legal and accounting support to even those connections in your network.
Every day from even before your Michigan small business is formed, you as a small business owner are making decisions. These decisions are big and small but they all have an impact on your business. So if you make a few bad choices you are stuck and your business is doomed, right? A few bad decisions will not kill your small business but failing to take the steps to correct these choices will doom your business.
It was announced that West Michigan based business, Schuler Books & Music will be closing its downtown Grand Rapids location. Schuler’s owner Bill Fehsenfeld said that the location was not hurting the chain but it was not experiencing the growth that he expected. With Schuler’s lease terminating soon, Fehsenfeld has decided not to renew it.
You want funding? You get funding. And you get some too. And all those quiet requests in the back too. Well maybe Michigan Venture Capitalists or VCs were not quite that generous with funding but 2012 saw not only more VC deals but saw a huge influx of capital into Michigan Businesses.
In 2011, investors did 36 deals totaling $84.75 million in investments in Michigan startups. But in 2012 those numbers were dwarfed by the 47 deals totaling $232.31 million done by VCs. Those figures were the third highest since 1995 ($356.44 million in 2000; and $253.47 million in 1999). This was also in the face of a 10% decline in the total investments made in the US.
Ideas are everywhere. There are so many people out there that have an idea for a new tech company or a new product. At the same time there are a lot of people out there that don’t have ideas (or at least nothing that is worth pursuing) but they have skills and experience that those with ideas need. The true issue is connecting those with ideas to those with the skills.
Grand Rapids will be hosting its 4th annual Startup Weekend beginning this Friday. Startup is a 54 hour marathon of development of ideas in which teams of local CEOs, designers, lawyers and other professionals come together with local entrepreneurs to go from a pitch competition where ideas are selected to as market ready as humanly possible by the end of the weekend.
Small businesses need to evolve. The market place is always evolving and the economy is forever changing. Trying to have the same business model, the same problem solving system, and the approach to your small business will not fit all of these changing situations. West Michigan small businesses have to think outside the box in order to ensure their survival.
Tom Borg, a small business and mid-size business consultant believes, “the old saying “if you keep on doing what you have always done, you will keep on getting what you always got” has been changed to ‘if you keep on doing what you have always done, you will get a lot less of what you always got; you might even go broke’”. So what are some ways to change?
There is a term that is burning through the entrepreneur community: social enterprise. These new businesses are focused more on doing social good than turning profits. There is a significant influx in these businesses springing up. Grand Rapids has even recently seen the opening of HUB Grand Rapids, a club dedicated to social enterprise. One term that seems to be accompanying these social enterprises is the low-profit limited liability company or L3C. So what is an L3C and what does it do?
With the tough economic times that the United States has experienced a generation of entrepreneurs that want to develop a business but they also want to improve the world around them has been created. This has led to the increase in social enterprise. The L3C allows these social enterprises the protection and tax benefits of a limited liability company but at the same time these businesses can receive grants and investments from certain foundations to satisfy their 5% payout obligation—the program-related investment (PRI). Also, unlike a non-profit, L3C’s can derive income without fear of losing its status.
Ideas: everyone has them. You are in the midst of a home repair project or making a meal for your family and it hits you: “This would be so much easier if I had something that could…” The difference between you and an entrepreneur is an entrepreneur turns that idea into a business. So you don’t think that you can make the transition from ordinary citizen to entrepreneur. You don’t have an MBA. You don’t have the connections. You don’t even know where to start with transitioning your idea from ethers of the universe into something tangible. There is help out there for you.
Tyler Essenberg has been coming up with ideas for a long time now and he hasn’t even graduated from college yet. He along with his business partner, Calvin Beeke, are the owners of G-Raps, a Grand Rapids startup company that makes eyewear accessories. Essenberg and Beeke were selected for the $5,000 funding from Start Garden and were able to utilize Start Garden’s networking and advising to develop ways to package the product, and gave them tips to help their business grow.
Funding for your West Michigan startup or small business should be avoided. Taking on debt or giving up equity in your business early on when there is so much fluidity in where your business will go, can easily lead to problems. If you take on debt in order to develop your startup idea, what happens when you learn there is no market for your product or service? You are left with debt and in need of time to pivot your startup. With that said, there is a definite need for funding at times. West Michigan is about to be infused with another option to receive this needed funding.
Grand Rapids Opportunities for Women, more commonly known as GROW, offers business owners (and not just women) various resources including business education classes, networking opportunities, connections to other business owners and other business counseling services. Last year GROW started offering another service. After receiving $200,000 from the US Small Business Administration, GROW began offering microloans to startups and small businesses in Kent, Ottawa, Muskegon, Newaygo, Montcalm, Ionia, Barry, Allegan and Kalamazoo counties. So far, GROW has loaned 15 loans totaling $153,121 to 10 small businesses.