closing thoughts: an interview with John Rainey of Clark University
John Rainey is a senior management counselor at the Small Business Development Center at Clark University, one of six such centers statewide and one of about 1,000 across the country. The centers are university-based, and receive a mix of state and federal funding offer free and confidential counseling to small business owners and prospective small business owners.
WBJ: Why do Small Business Development Centers partner with universities?
Rainey: Because we are counselors and educators. Our goal is to help a small business get started, to teach them how to get going. ... Some clients come to us for a while, go away, and come back a few years later with something else.
We deal with three groups. The pre-venture – someone thinking about going into business – is about half of what we do. We might help them with a feasibility study, or help them look at the product or service, market competition, manufacturing, distribution, economics, management capabilities.
WBJ: Do you ask the same set of questions to all businesses?
Rainey: We don’t do it off a template. We’re a very seasoned staff and we concentrate on the market side. You tell the customer, if you can’t sell it, nothing good happens.
WBJ: What if they think they know who their market is, but they’re wrong?
Rainey: That could be a major problem for them. If we see it, we’ll make them [run] some statistics, we’ll make them look at competitors ... . Very few businesses start that are unique. Someone’s done it somewhere before. If you can emulate the successful ones, that can go a long way, especially for [small business].
The second group we deal with are growing businesses. They may need financing because they need more space and they want to buy their real estate, [or they need] more machinery and equipment, computers and inventory, working capital. ... It could be they just have a new idea they want to bounce off someone independent from the business and get a little perspective.
Then we have a third group, financially challenged [businesses]. Approximately seven out of 10 businesses that start today will not be here in five years.
WBJ: Is that because they don’t seek the right information, because it’s tough out there, or both?
Rainey:There are two major reasons why businesses fail. First, they don’t understand the market, which is not having the right information. Second, they’re undercapitalized.
You’re always going to make a mistake in a small business. The goal is not to make a fatal mistake. [For example], if you’re in retail, you’re in the wrong location, [or] you don’t know your customers and you don’t know what their needs and wants are.
WBJ: Does the process of finding out your customers’ needs differ by industry?
Rainey: Yes. ... You talk to the customers, you look at competitors, markets, where they’re located, and web presence. One of the best ways of figuring out what’s going on in the market is looking at competitors.
WBJ: Do you get prospective business owners who, when they come in, have only sold to people who know them?
Rainey:A lot of food products we find people start that way, I had a [client] who wanted to [sell baked goods]. ... And we said, we don’t think this is that good. Try a couple of other people you don’t know that will give you an honest answer.
There are companies that run focus groups, where you can pay outsiders. Of course, one of the problems you get into is a lot of small businesses do not have a lot of capital [to pay for the service].
WBJ: There’s a difference between starting a business and running one. How much of that do you get into with people?
Rainey: There’s two ways of running a business. Either you can run the business, or the business can run you. If you’re going around in circles trying to do everything in your business and you’re not out there selling and developing your markets, you’re probably going to have a lot of problems, and you’re probably going to spin your wheels for a long time.
You have to know where your strengths and weaknesses are as an individual and make sure you’ve got it covered.
WBJ: I’d imagine that new businesspeople might be hesitant to delegate before they’re fully versed in the business.
Rainey: That’s an issue we run into. But if you’re really good at selling and if you’re taking away from that selling time by doing bookkeeping, ... the business is going to run you forever. You’ve got to be able to get beyond that.
A lot of people starting out just want to be a one-person operation. I see this with a lot of consulting and IT businesses. ... Maybe they worked for a company, and that company uses them for outsourcing... . They’re going to reach a point where they’re going to have to decide [whether to grow the business.]
Being a single individual entity [is] much simpler ... but that’s going to limit your growth level, too. Your business is not very valuable at the end.
This interview was conducted and edited for length by WBJ Editor Christina P. O’Neill.
WBJ Web Partners
Most Recent
Most Recent
0 Comments