Grant Gelhar doesn’t want to squelch the dream of an entrepreneur, but he also wants to reduce the chances of failure.
So after a career in credit management, the last 20 years with Temperature Systems Inc., Gelhar is giving back as a volunteer counselor for the Madison area chapter of SCORE, a national nonprofit association dedicated to helping small businesses get off the ground.
The organization, founded in 1964, is supported by the U.S. Small Business Administration and has more than 11,000 volunteers in more than 360 chapters around the country.
The Madison chapter has 40 counselors, who provide free services to more than 650 entrepreneurs a year in 11 counties in south central Wisconsin. The chapter also hosts seminars on the first and third Wednesdays of each month on what it takes to go into business. The sessions are $15 and are held at the SCORE office, 505 S. Rosa Road, in University Research Park.
QUESTION: When you meet with an entrepreneur, you really focus in on business basics. Do they often overlook these tenets?
ANSWER: One of my favorites is “who, what, where, when, why and how.” It forces them to think about all parts of their business and then, when they’re done with the business plan, they’ll know if it’s something they should move forward on or not.
Q: How unprepared are many of your clients when they come in for advice?
A: They’re just so eager to take the step. We’ve had clients who have come in that have already signed a lease for the business, but haven’t done a business plan and haven’t done their homework. They’re in such a hurry, but 85 percent of new businesses fail. Here they can go to the class, they can ask questions. Our counselors who conduct the classes have been doing this for years. This two and a half hours is the best time they can spend, along with writing a business plan for opening their new business.
Q: What type of questions do you ask a budding entrepreneur?
A: How are you going to sell it? Where are you going to sell it? Another important item is startup expenses. People don’t think about that. Marketing is a big one in the first year and accounting could be an issue. Where is your startup money going to come from and are you prepared to not take a salary from your business for the next six to 12 months?
Q: We live in a fast-paced world consumed with technology, but the basic questions needed to start a business haven’t really changed and likely won’t change for years to come, correct?
A: It’s all about managing your business. The same principals still apply. A balance sheet is still a balance sheet. A profit-loss statement is still the same and those are never going to change and it’s important for business people to understand those. The only change is how your messages are delivered with social media. That’s a whole new way of marketing your business. It’s a hot topic right now and we’re going to have seminars next year on website and (search engine optimization) presentations and blogging. It’s just a whole new world. It’s the same message, but we’re doing it in a different way. We’re not using the Yellow Pages anymore.
Q: What is the biggest challenge for a small business?
A: It’s probably the financial side. Looking at cash flow, what are revenue projections, incoming expenses over the next year and what’s the market for the product? That’s probably the biggest item. OK, I have this idea but who is going to buy it, who’s the competition and is somebody already selling it on eBay? And when you look at eBay, there are millions of sellers there.
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Q: What type of businesses are using your services?
A: It’s from soup to nuts. We do a lot with new businesses, but we also counsel existing businesses. Part of our challenge is marketing and letting our potential clients know that this is a free resource.
Q: Who are the counselors?
A: They’re retired business people. There are a few that are working, but most are retired. They’re people like myself who retired from the business world but still would like to give back and help others and keep active in business. The best part of SCORE is helping others and helping those that have dreams.
Q: Is this a good time to start a small business?
A: I think anytime is a good time to start if you do enough preparation. That’s the key. After you’ve done your business plan, then you’ll have an idea if your idea makes sense.
Q: How are startups financing their businesses?
A: Many different ways. Probably the easiest one is via credit cards. They’ll use a $5,000 or $10,000 advance on a credit card and pay 22 or 26 percent.
Q: Is that advisable?
A: Not for the long-term. A business plan includes financial so if you talk to your bank or your credit union, there’s probably a good chance that they’ll work with you. Sometimes businesses are in such a hurry and they don’t think about the cost of this high-priced money. So besides credit cards, it comes from family, investors and the banks. A few have their own capital to start with, but they would be in the minority.
Q: How do you not kill the excitement for an idea but still give a would-be entrepreneur sound advice?
A: Just showing them the numbers on paper and having them answer the basic questions and just forcing them to think about the whole spectrum. One thing that we like to impress on a business owner is to take time to work on your business not just in your business. Look at the big picture. What do you have for receivables, for payables, what do you have for sales for the last week, what are the big challenges for the next week and what are my marketing plans for the next six months? It’s always helpful to have a plan in place because, especially with a new business, you have to continue to market your business.
Q: What are you learning from being a counselor?
A: I’ve learned that the challenge of being an entrepreneur is very much alive, which is good. I don’t own my own business because I like to sleep at night, but it’s good that we have individuals who have new ideas. It’s always interesting.