SMALL BUSINESS : Starting a Small Business Idea

In early 2002, Jim and Janeen Miller retired early from their jobs and was starting a small business selling quilting supplies and sewing machines.

Just a few months earlier, Glenn Tate and Gregory Hiser left their jobs as underwriters and brokers at insurance giant Aon Corp. to start a new business insuring airplanes.

Today, Sunflower Quilts and Air Capital Insurance are not only still in business, they are growing.

Both businesses were launched on the heels of the last national recession, which is typically the time when more people launch new businesses, experts said.

And both firms' owners share some characteristics that experts said are key to ensuring small business survival -- whether that start comes in good times or in bad.

Knowledge, passion
According to the Small Business Administration, the odds are against a small business surviving, much less thriving, in the early years: Two-thirds are still around in the first two years while 44 percent survive four years. Only 31 percent are still around after seven years.

Janeen Miller started a quilting business because it was her hobby nine years before she and Jim started Sunflower Quilts.

Knowledge and passion are two qualities that help determine whether you will have a successful business, said John Willoughby, a retired Southwestern College administrative dean and a counselor for the Service Corps of Retired Executives, or SCORE, which provides mentoring and counseling services to small businesses.

Passion, he said, helps entrepreneurs stay focused through the many hours they'll put in before and after start-up.

Air Capital's Hiser and Tate also brought passion and knowledge to their new business, which specializes in insuring airplanes owned by individuals, corporate flight departments, manufacturers and fixed-base operators.

Both men worked in that business for several decades before buying the small-client business of Aon, leasing a corner of the Hayford building downtown and employing two.

"Now we have the whole building and 16 (employees)," said Tate, Air Capital's chairman.

Careful preparation
But there was a hitch to the launch of Air Capital.

Not only were they starting the business during a recession, but they were also starting it shortly after terrorists had commandeered four commercial airplanes and crashed them into the Pentagon, the World Trade Center and a field in Pennsylvania.

"At that time it was really scary, jumping out" and starting an aviation-related business, Tate said. "I really think when we started, aviation was probably as low as it gets."

Tate credits having a successful business plan "based on $10 oil" for getting the firm successfully through its launch and "through that stagnant period of 2002."

That business plan included controlling the business's costs and focusing on providing client service that was better, in his opinion, than what Aon had provided to those same clients.

"By sticking to that plan we were able to jump forward when things started to happen," Tate said.

The Millers said they had spent a lot of time working on their business plan, including taking classes on writing one through WSU's Kansas Small Business Development Center, even though they had a good understanding of them through their jobs at Raytheon Aircraft.

When Janeen Miller brought in the final draft of her business plan for Sunflower Quilts to an KSBDC counselor, "They told me I was ready to open," she said.

No free money
Experts said recessions are typically the time when business start-up activity increases.

"When the economy gets worse, people tend to look for options," said Marcia Stevens, regional director of WSU's KSBDC. "And starting a new business is one of those."

Stevens said her office is seeing an increased interest in people wanting to start a business, logging twice as many phone calls now compared with the same time last year.

Pett said the rise in business start-ups is as much a function of layoffs and few available jobs during a downturn.

Willoughby said many people go into starting a business with "unreasonable expectations."

"They think people will flock to their beautiful idea, but they don't know what that market is or how they will market it," he said.

Stevens said a big misconception among inquiries to her office is that there is free grant money to be had for starting a business.

"They think the government is going to hand them money, no strings attached," she said. "They do need to invest in their own business. Lenders are going to be looking at what (entrepreneurs) are willing to put into their own business."

Willoughby said that while there may not be free money for start-ups, financing them is "a little bit easier" through the SBA.

Wayne Bell, district director for the SBA's Wichita District Office, said the American Recovery and Reinvestment Act has raised guarantee limits on 7(a) loans -- the most commonly used SBA loan -- to 90 percent, and loan fees on nearly all of the SBA loan programs have been waived from now until the end of the year.

by JERRY SIEBENMARK Apr. 16, 2009 - http://www.kansas.com/business/story/774941.html

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