We all know the economy is suffering. The true challenge if you want to get started as an entrepreneur nowadays – as always, really – is securing access to capital. While it might be your job to finesse your business idea and tee it up, it might also be a tall order to hustle for capital however might be humanly possible. You might not even know where to start.
Well, that's where people like Donna Rockin, the director of the Duman Entrepreneurship Center come into play. They are both focused on helping entrepreneurs get started or expand their existing businesses. The center offers classes, facilitates hiring and connects job-seekers with employers. But financing is really their pièce de résistance. So, that in mind, I gave Rockin a call to find out how entrepreneurs can secure a steadier footing as they try to gain access to capital.
What sort of mistakes do you find entrepreneurs make when they're looking for funding?
Donna Rockin: You know, I even have an article that I just wrote: The 10 biggest mistakes people make in cashflow projections. One is flatlining: They don't adjust for seasonality for anything, but there will be seasonality in sales and other expenses. Sometimes you have to bill your inventory three months before the seasons ends. So, that's a big mistake that they don’t' include bank fees and credit-card fees. That's a big mistake. They don't realize that for every check you deposit they charge the bank merchant fees. That's a big mistake that they make. I forget what the other eight are, but it's very common.
So, if you covered the top 10, what's the 11th mistake people make? Maybe one you didn't mention?
Donna Rockin: I think maybe the 11th one is that new entrepreneurs are way too optimistic and they should have a reality check. If they took the amount of sales and divided by the average sale and the amount of hours they want to be open or doing business in any given work week, they would realize they really need to scale back down. We try to give them that reality check.
I will not ask what the 12th one is.
Donna Rockin: [Laughs.] They're enthusiastic and we want them to be enthusiastic but I want them to be able to grow as quickly as possible. But, frankly, I would rather see cashflow where it shows a handful a month than a negative cashflow, then they're making so much money that it's like, "Why do you even need the loan? It makes no sense at all."
What steps should people take before they come to someone like you that will help them look?
Donna Rockin: They need a good business plan and they need good cashflow projections and the Duman Center is in the proofed and sanctioned Illinois Small Business Development Center. We have one of the few that is not in a university or a college. Our services are provided at no cost, and it's a really good place to start. For classes, you can charge for the price of the physical class. You can charge a nominal fee for training. Almost all of our classes are at no cost. We charge for ones where there is a real manual. Because we're a non-profit I can't lose money on the deal. [Laughs.] We have a place for any entrepreneur can start. They can have a real business coach who's well-trained and well-vetted.
Does it every come that because people are overly optimistic that they think they don't need to enlist someone like you to help them out? Are there any reasons people should not do this on their own?
Donna Rockin: I would say it takes a village to launch and maintain a successful business. So, the more people they have in their corners – because the other things we really try to do is make introductions. It's a great way to meet other small businesses in the community that you can form partnerships and alliances with. I can't think of one reason why you shouldn't go to a small-business development center between the free services and the technical assistance and the access to capital. They can help you go to a community lender that they know is favorable. You're not walking in blind. They will send you down a path where you're more likely than not to find the funding you need.
Are there scams people should be aware of in this area?
Donna Rockin: I think it's a scam. It could be very viable, but if they deal with angel investors or venture capitalists, they should read the fine print closely and have a good attorney. Just because if they are sitting on the next Google, Microsoft, whatever, you don't want to give away the baby with the bathwater.
I feel like angel investors have been getting a pretty bad rap lately. Do you have that sense, too?
Donna Rockin: We try to discourage it because usually you have to give away the better portion of your business. They're hard to find, they want to start calling all the shots and they're giving you the dollars. So, if you can avoid it, it's probably a good thing. I mean, you can borrow from family and friends. It's a good way to lose friends and have your family hate you, but they're probably a little more forgiving.
It's probably better to have your family hate you than the bank hate you.
Donna Rockin: Yeah. Your family isn't reporting to the credit bureaus, and the bank is.
Donna Rockin: I think if you look at a legitimate small-business development center, or SCORE's a good place, too, if you're closer to a SCORE office. They will help you with avoidable errors. Because you need a plan that's not if it's happens, it's when it happens. Something will happen that you didn't predict. Like I said, the city will tear up the sidewalk in front of your building. Stuff happens. Or the weather will be so hot… the best laid plans of mice and men.
I mean, I went to Due on a Saturday night at 8 o'clock. My husband and I had just decided, "You know what? We're not cooking. We'll wait the hour. We'll wait the hour." We got in within 10 minutes because it was so hot people weren't going to restaurants. This was just two weeks ago. Saturday night. So if Due is slow, do you think the neighborhood cantina is gonna predict better? I'm just saying, things happen. At least if you're working and have a collection of people who are supporting you emotionally and financially, you're more likely to withstand the knocks and bumps of early entrepreneurship and be successful.
David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.