Agencies help minority entrepreneurs flourish in S.J.
September 26, 2006
Agencies help minority entrepreneurs flourish in S.J.. Check it out:(Record, The (Stockton, CA) (KRT) Via Thomson Dialog NewsEdge) Sep. 25--STOCKTON -- Minority entrepreneurs may be able to thrive by targeting niche markets, serving populations ignored or underserved by larger companies. However, they often must work through language and cultural barriers to reach a larger customer base.
And they face problems common to all small-business owners: difficulty obtaining capital, satisfying government restrictions and fees and honing their business operations.
Access to financing was a hurdle for Jessie Garza-Roderick, co-owner of a small string of pharmacies and associate dean for San Joaquin Delta College's Tracy Learning Center.
Many commercial lenders won't consider lending to a business unless they can demonstrate a net worth of $500,000 or so.
"A lot of minority businesses don't have that kind of capital," Garza-Roderick said.
"They have to find a niche, stay at it a long, long time to build some equity, to build a portfolio and maybe then they can open a second restaurant or second location."
Minority entrepreneurs don't have to do it all by themselves, however.
Before launching his Indian Grocery Outlet in Weston Ranch, M. Jalil Hay got help at the Small Business Development Center in developing and evaluating his business plan.
The center also helped him secure a Small Business Administration-backed loan to help get his store off the ground.
Hay does have previous retail experience, having worked in management at major computer store chains and in sales.
"I actually grew up in retail. My father used to own a little grocery story in the Fiji Islands," he said.
There are a number of loan programs available to small businesses, said Gillian Murphy, director of the San Joaquin Delta College Small Business Development Center in Stockton. Most are open to everybody regardless of ethnic background.
Traditional bank-based lending programs, with minimum loans beginning around $50,000, may not be suitable for startup or mom-and-pop operations. The SBDC also has information about three microloan programs.
San Joaquin County operates a revolving loan fund that lends up to $25,000 at a time. There is an SBA-guarantee program that makes loans from $5,000 to $20,000. And the Downtown Stockton Enterprise Loan Fund, a new nonprofit facilitated by the Downtown Stockton Alliance, operates a new fund exclusively for downtown Stockton businesses, offering loans from $5,000 to $50,000.
"Not everyone is going to be able to get them," Murphy cautioned. "Having pretty good credit is a major factor."
That may rule out people who have had a recent bankruptcy or other credit problems, including people with low incomes who may have little collateral to secure a loan or have no credit history.
"One problem I found in Los Angeles is that immigrant entrepreneurs tended to not fully report income to the government. On paper, businesses can look like they are broke, even when they are doing well," said Tom Larson, economics professor at California State University, Los Angeles, who has studied minority and women-owned businesses in the state.
"While this can reduce taxes, it also makes getting regular bank loans very difficult. This was a big problem for businesses that were damaged in the 1992 civil unrest."
Cut off from commercial funding sources, minorities and immigrants often turn to community-based groups instead.
"Both the Chinese and Koreans are very good at setting up associations that help members accumulate money to start businesses," Larson said.
"This is an approach used elsewhere as well. My grandfather came here from Sweden using money raised by his village. After he was working here, he repaid the money and helped bring others to the U.S."
SBDC services also include a variety of business startup workshops and classes, as well as free one-on-one counseling.
Murphy estimates 1,300 people attend the center's workshops annually and about 700 become regular clients.
Courses may cover the basics of financing, licensing, insurance and drafting a business plan. The last is a key for many budding entrepreneurs to obtain financing and make their dream a reality.
"They do the work and we just help them through the process," Murphy said.
A well-made business plan can help an entrepreneur identify possible problems and needs. It can help win financing from a lender and also may serve up a warning against especially risky ventures.
"We count it as successful when somebody puts together a business plan and looks at it and says, 'This is not going to work,' " Murphy said.
Business plans are not for startups alone, she added. Established concerns may use them to evaluate what's working and what's not, as well as to set new goals.
"Let's look at where your business has been since Day 1," Murphy said. "Has it done what you want it to do? What do you want it to do in the next five years and how do you go about it?"
Officials of the San Joaquin County Hispanic Chamber of Commerce, which works closely with the SBDC, agreed that a business plan is a vital business tool.
"When you have your business plan together and you have a relationship with your banking source, it really helps the business to weather the storms," said Mark Martinez, chamber chief executive officer.
And while such a plan doesn't guarantee business success, he said, "It does enhance the chance that it will succeed."
It also can help secure bank financing.
"It's almost like an attorney having to build a winning case," Martinez said. "...You have to build a very solid business plan so the bank understands there's a minimal risk for the loan."
Another way business owners can help themselves is to look to outside groups for information and education, said Mark Stebbins, a south Stockton building contractor and real estate agent.
As current president of the South Stockton Merchants Association and a former president of the African American Chamber of Commerce, he believes in the value of such organizations.
"You improve the community by the knowledge there are things going on and people possibly have an opportunity to do something about it," Stebbins said.
"That knowledge may be as direct as knowing there are city grants available for improvement of the front of your business," he said. "And even if it doesn't connect, then there's the possibility to change how a program will work, because you get the information that what is there isn't connecting."
And there's an additional benefit to small-business owners who may be toiling long hours, seven days per week, in their shops.
"Sometimes it's important just because it's stress-relieving just to get away for a moment from that daily grind of business or to look at something from another focus," Stebbins said.
Groups such as the merchants association, as well as SBDC, Hispanic chamber, Central Valley Asian-American Chamber of Commerce and African American Chamber of Commerce provide such educational opportunities to area business owners. And sometimes they work collaboratively to do so.
"We really do strive and we work with the minority chambers to do training together and to reach out to the broad community." Murphy said. "You see, the chambers coming together. We're working with them and we're all working together."
Contact reporter Reed Fujii at (209) 546-8253 or [email protected]
Copyright (c) 2006, The Record, Stockton, Calif.
Distributed by McClatchy-Tribune Business News.
For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
Related Tags: minority entrepreneurs, business owners, chamber commerce, downtown stockton, american chamber, business
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