Before an entrepreneur reaches the point where they feel comfortable calling themselves a small-business owner, there’s the daunting prospect of first starting a business.
In the case of someone like FlexScreen President Joe Altieri of Plum, he was able to put in place a group of investors to help launch his business.
For those who may need advice and a few connections, there are places like the Saint Vincent College Small Business Development Center.
“We work with ‘pre-venture’ folks as well as existing established businesses,” said Jim Kunkel, executive director of the college’s center, one of 18 in Pennsylvania.
“In the small-business world, the backbone of financing comes from commercial banks,” Kunkel said. “There are a lot of banks out there, and different banks have different cultures and approaches to small-business lending. But that’s generally the launch point.”
According to the U.S. Bureau of Labor Statistics, 20 percent of small businesses fail within their first year. That number that reaches 50 percent at five years.
With such a high failure rate for U.S. start-ups, banks can sometimes be hesitant to lend. Kunkel said the SBDC also works with alternative lenders: regional or county-based organizations with programs for incubating small business.
“They tend to be a little more flexible in their guidelines. They tend to take a little bit more risk with start-ups, and quite frankly, it’s not unusual to see start-ups have both commercial bank as well as alternative-lender participation,” Kunkel said.
Lenders also want to see a market analysis, he said.
“They want to see future projections, and they’ll send these entrepreneurs to the SBDCs, and we put on paper a vision for the business, and then we try and quantify it,” he said.
SBDC officials look at things like annual revenues within the industry an entrepreneur seeks to join, try to determine if there is a local market for such a business and a reasonable opportunity for a new business owner to borrow money and pay it back.
“Small businesses are not profitable right out of the gate,” Kunkel said. “So we try and find the appropriate firm for a start-up to get sufficient capital and have a higher probability of success.”
Kunkel pointed to the Progress Fund in Greensburg as one example of an alternative lender.
“They’re focused primarily on travel and tourism, but they’ve been around for 20 years or so, and they’ve lent money to start-ups like microbreweries and bed-and-breakfast places,” he said.
The Saint Vincent College SBDC covers Westmoreland and Fayette counties, serving as an outreach to local communities.
“We really are management consultants,” Kunkel said.
For more on the SBDC, visit the website StVincent.edu and search “Small Business Development Center.”
Patrick Varine is a Tribune-Review staff writer. You can contact Patrick at 724-850-2862, firstname.lastname@example.org or via Twitter.