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June/July 2009

by Tracey Lamphere

When You’re the Boss

Even in tough times, small business ownership

Desperate for work, Josh Edinger learned to pour espresso. While working for 18 months at a coffee shop near Dallas, he got the itch to go from barista to business owner.

“I knew someday, somehow that I would do this,” he says.

Before serving coffee, Edinger worked at McDonald’s for five years, where he became an assistant manager. After he and his wife moved from Dallas to Longview, he managed a local deli for another four years. But about two years ago, friends agreed to invest in Edinger’s business idea. With help from the Kilgore Economic Development Center, he navigated his way through the paperwork and planning that opening a business entails.

In September 2008, Edinger opened the Mugshot Coffee House in Longview.

Small Business, Big Dream

In 2006, Texas was home to 2.1 million small businesses – those with fewer than 500 employees – that produced $136.9 billion in income. Edinger’s coffee shop, with its 10 employees, is among those small businesses that represented 98.7 percent of the state’s employers in 2006, according to Small Business Administration (SBA) statistics. The number of owner-operated businesses exceeded 1.7 million, 36.6 percent more than in 2000.

A decline in manufacturing jobs could be prompting Tyler residents to investigate business ownership, says Don Proudfoot, director for the Tyler Small Business Development Center (SBDC).

Proudfoot is concerned with diminishing manufacturing jobs and having to rely solely on the service industry. The city’s unemployment rate was 7.1 percent in May, up from 3.4 percent a year ago.

Kilgore SBDC officials say they initially saw a decline in clients in 2009, but from February to April, class attendance rose by 30 to 35 percent.

“A lot of it has to do with the downsizing of the larger corporations,” says Brad Bunt, director of the Kilgore SBDC.

Despite an uncertain economy, Edinger encourages more people to start their own business, even if it takes years of planning, paperwork and a lot of trial and error.

“Just do it,” he says.

Sweet Idea

When marketing account manager Stephanie Vandegrift brought cookies to her presentations, attendance increased. With help from a baker friend, she later added company logos to her cookies. The idea sparked her Dallas-based Stephanie’s Premium Bakery, where for the past 10 years, Vandegrift has created cookie billboards and other edible corporate marketing treats.

Stephanie Vandegrift, Marketing Account Manager, Stephanie’s Premium Bakery

“I just thought it would work, so it wasn’t a risk,” she says.

Confident in her marketing skills from her 20-year career at companies including Coca-Cola, the Nielsen Company and PricewaterhouseCoopers, she cashed in her retirement fund to finance her from-scratch business. Today she employs 10 people who produce up to 5,000 cookies a day.

Vandegrift is part of the fastest-growing demographic among business owners. In 2006, there were an estimated 10.6 million privately held, woman-owned businesses nationwide. Between 1997 and 2006, the number of majority woman-owned firms grew by 42.3 percent.

And while the economic downturn has caused Vandegrift’s corporate clients to cut their cookie orders, she says staying flexible is key to business longevity.

“It’s a fly-by-the-seat-of-your-pants kind of thing,” she says.

Overcoming Financial Hurdles

Perhaps the biggest stumbling block to business ownership is financing. But a down economy doesn’t mean loans can’t be found, says Graham Painter, executive vice president for Houston-based Sterling Bank.

“There are great opportunities out there for people who can clearly demonstrate that they understand the economy they are in,” he says. This means showing lenders a plan on how to cope with slow-moving inventory and strategies to keep business expenses down.

The American Recovery and Reinvestment Act of 2009 has given the SBA an estimated $730 million that will allow its local offices to waive fees on SBA-backed loans and guarantee some loans up to 90 percent through the end of 2009.

But whether it’s a coffeehouse, cookie business or consignment shop, SBDC officials say there’s one prerequisite that all small business owners have to meet.

Come In. We're Open for business

Texas gained 114,707 new businesses in calendar 2008, about 8,000 fewer than in 2007, according to business filings with the Secretary of State.

Foreign Limited Partnership02
Domestic Nonprofit Corporation9,5689,963
Domestic For-Profit Corporation28,13632,064
Domestic Limited Partnership (LP)7,91210,718
Domestic Professional Corporation1,0551,113
Domestic Limited Liability Company (LLC)68,03669,055

Source: Texas Secretary of State

“You’ve got to have fire in your belly to be able to start a business,” says Proudfoot. “You’ve got to know what you want to do.” FN

To learn more about starting your own small business, visit the Small Business Administration.

Visit the Texas Comptroller’s program for historically underutilized businesses (HUBs) and explore how it can help you develop your business idea.

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