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Monday, March 29, 1999
Starting a small business isn't easy, but the payoffs can be plentiful

by Jake Batsell
Seattle Times staff reporter

The impulse can strike at any time during the course of a day at the office. It may spring from a disagreement with your boss, having to grovel for vacation time or just feeling downright restless inside your cubicle.

"If only I could call my own shots," you say. "If only I could go into business for myself."

For many ensnared in the 9-to-5 grind, starting a business is the ultimate panacea, an antidote to the Dilbertesque trappings of corporate life. Follow your muse and be your own boss. What a life.

But it's not quite that easy. Ask any small-business owner about how he or she got started, and you're likely to hear a less-than-glamorous narrative. You'll hear stories about setting up shop in a basement for the first two years, or eating Top Ramen for dinner to make ends meet, or plunging $80,000 into debt.

"I think not knowing how much responsibility it takes is what makes people decide to go into business for themselves," said Maria Ruano, owner of Bedrock Industries, a Seattle glass-recycling business. "If they knew, they wouldn't do it."

And that's coming from someone who has been in business for seven years and won the Seattle Mayor's Small Business Award. Just think about what you might hear from the 80,000-plus businesses that fail each year in the United States. Starting your own business is likely to disrupt your life in ways that you never imagined, chipping away at your personal finances and consuming your time well beyond the predictable eight-hour workday.

But the payoffs can be plentiful. You'll have more autonomy over your schedule. If your business is a success, you decide how to distribute the profits. And all your hard work is geared toward a personal quest that becomes an extension of your identity.

"You live, eat and breathe your business - it's a part of you," said Carol Wilber, district sales manager for KeyBank. "That's why when you go into business, it's really got to be something that you love to do."

Experts and business owners say these steps are essential in building a successful small business:

  • Do your homework. You can't start a business merely upon a blind whim. Lenders, advisers and owners alike extol the virtues of the business plan - a comprehensive document that serves as a road map for your business.

    "The essence of it is the business plan," says Jerry Zyskowski, a counselor for the U.S. Small Business Administration. "Do you really understand what you're getting into? Do you understand your business? Do you understand your competition?"

    Even with thorough preparation, anticipate surprises. Ruano said she had to absorb all sorts of unexpected costs during her first few years in business - bank charges, tax penalties, late fees and the like.

    "All those things, they eat away at profits," she said.

    In some cases, the planning process can take years.

    Rebecca Kaufman and Susan Davis, co-owners of Kaufman-Davis Studio, spent more than two years laying the groundwork for their costume-designing business. Kaufman and Davis gradually bought equipment and stashed it in Davis' basement. They went to Small Business Administration workshops in their spare time while keeping their jobs as costume designers for the Seattle Opera.

    At one point, they nearly abandoned their small-business aspirations - or, as they now put it, "financially chickened out." But they recovered their gumption and decided to take the plunge.

    "I decided that risk was less important than my mental well-being," Davis said.

  • Be flexible. When Kaufman and Davis first started in 1996 in the basement of Davis' Phinney Ridge home, the film industry in Seattle had been robust for several years. They figured much of their business would cater to productions that needed costumes.

    But then the industry slowed, with production companies choosing locations such as Portland, Vancouver, B.C., and Los Angeles. Costumes for films, which represented 30 percent of the studio's first-year business, shrank to just 1 percent during the second year.

    "We had to really rethink who our clients were," Davis said.

    The studio now makes costumes mostly for plays and other live productions, with the occasional order from corporate customers. Their clients have included the drama department at the University of California, Los Angeles, the New York City Opera and Riven, the popular CD-ROM game.

  • Prepare to sacrifice. Starting your own business means saying goodbye to the security of health-insurance plans, 401(k) programs and other benefits offered by many companies.

    "The concept of vacation time essentially goes out the door," said Michael Verchot, director of the Business and Economic Development Program at the University of Washington. "Saving for retirement, sick leave - a lot of those perks go away."

    In addition, your own finances become more expendable, and you may have to get used to living differently until your business is up and running. Ruano, whose Bedrock Industries is profitable and growing, doesn't draw a set annual salary. She says she took home only about $8,000 last year. At one point, she and her husband were nearly $80,000 in debt.

    Verchot said such stories are common. William Woodruff of Seattle, a client of Verchot, says he cooks mostly Top Ramen and spaghetti for dinner as a way to make ends meet as he tries to get his wine-importing business, Chloe, off the ground.

    During his first year of business in 1997, Woodruff worked full-time as a loan officer at Cornish College of the Arts on Capitol Hill and had several part-time jobs, including janitorial work, cutting grass and translating between English and Italian.

    Woodruff still has his loan-officer job, but has cut out the part-time work to devote more time to his business. He sold $13,000 worth of wine last year - but he spent $16,000 on his business. He hopes to make it profitable within a year.

    "It is losing a lot of money, but that's the way it works," Woodruff said. "There's no shortcut for the hard work you have to do."

    Art Harris, owner of the Martin Luther King BP Station in South Seattle, said that when he first started out seven years ago, an average workday was 14 or 15 hours. Even now, a 12-hour shift isn't out of the question, taking away from the time he has with his wife and three children.

    "As a business owner, you're never really 'off,' " Harris said. "But if you want to make things work, you've got to be committed."

  • Be realistic. Don't expect your business to take off instantaneously. And if things aren't going well, be prepared to cut your losses.

    "I don't believe that everyone should start a business," Verchot said. "It's for a certain type of person - someone driven internally. If I had to say one thing, it would be: 'Am I willing to do everything it takes?' "


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