Commission Impossible

I have been wanting to start a small biz for a few years now, but I have been put off by how quickly they seem to come and go in chico. Even for the niche that I wanted to hop into, the businesses dissapear, and most of the time a new one doesn't take it's place. I am afraid of Chico's small business market.

The CI Challenge looks like something from PeeWee's playhouse, although it's probably not.

Hey Trevor,

Starting any business is difficult, and early on you have to give it all of your time, because that's about the only thing you have that's free to pour into it. I made $8000 my first year in business, and $20,000 my second year. Those were tough years, and that's when I took a paper route to put food on the table. Many business owners have failed once or twice before they succeed, luckily I haven't faced that result yet.

I would never start a business that was directed or constrained by the local market. It's too small. The difference would be a business-to-business effort, and I would only start one of those if I had the inside track on some needed service as well as personal contacts that were already willing to pay.

My company sells products worldwide and services nationally. Therefore any sales tax or property tax we pay that ends up back in Chico comes from pocketbooks that are not local. While we're a small business I would think that companies that draw income externally would be very desirable to economic development. The company you work for is an example of the pinnacle of that philosophy. So is Sierra Nevada brewery.

Lon

See, your business is a little different from what I have in mind. Computer Tech work is slightly different from what you guys do. Although apparently there is a bit of demand for it in chico right now, I just have to know what I'm doing first, and how to sell myself to get people to come to me. I've had people try to get me to do work for them for money, but one time I was on lunch break and didn't have time, etc...
I imagine I could probably start my biz from home, if I was willing to go to people first, and not them to me.

Trevor Trump,

Write a business plan. Most business development people will suggest that you do this. But the key elements are economic needs.

What are your expenses? Most employed people don't have a grasp on overhead costs when they become self-employed.

How much do you need to make each year to pay for expenses AND make a living?

How many hours can you work each week that can be billed for?

How much do you have to charge per hour to meet expenses and profit requirements?

Who are your customers?

Who is your competition?

These are a few of the questions that most small business owners never bother to ask. That's one reason why they fail so frequently. Then there is the belief that business is easy. Many businesses require specialty services that cost money and convert income into expenses. Examples are web development, accounting-book keeping, network setup and maintenance. My business partners and I taught ourselves how to do all of these things, which early on allowed us to be more sophisticated with lower expenses. We still do all of these things in-house.

One last thing... selling services can constrain growth. You are limited by the number of hours you can work. If you grow substantially you have to grow human resources, which is the most expensive and tempermental commodity. You'll notice that few large companies are service based, and if they are they are typically business-to-business (major accounting firms). Sellings products is where the money is. My opinion.

Lon

typical $/hour cost in computer repair is around $60. But, that tends to turn into more of a flat rate than a per hour cost, due to the price of computers vs. price for repair of said computer, if your working on a machine for 3+ hours, the customer isn't going to want a $200+ repair bill, as they can goto dell and get a new machine for $100 more. Also, most of the time you're working on more than one machine, so the time tends to be spread out... etc.

Customer's are anyone that has a machine that requires repair. Depending on if you have a Dell certification or HP, etc, you can do warranty repairs for them, and just bill the company. I know we have guys like that that come out to our company to do the more sensitive computer repair that Dell refuses to trust me with. Like replacing a Laptop Motherboard. Although I can do it, I am not covered by Dell in case I fry the board or break it on accident.

Money is the hard part for me to figure out...

Competition is dying here in chico, as companies like Geeks to go, Best Buy's Geek Squad, Circuit Cities Firedog, etc, start choking out the small biz computer repair places. I know the one on the corner of 8th and uhh... not wall, but the one inbetween wall and Main.. anyway they died recently. There used to be PC-Install it on Nord, but they died around the time Best Buy came around...

Computer's Plus however is doing well. I used to work for them before I came here to ID.

Anyway I'm rambling. Another thing that I could do with a home/small biz like that is to do custom built machines and warranty them through part warranties myself.

Thats the helping hand from hamburger helper.....

Oh it is! Blast! Well, I am sure in some alternate dimension the helping hand was on PeeWee's Playhouse.

Lon:

I’d give the City’s new economic resolution (policy) 3 hearty cheers and big yawn….

There is no question that Martha Wescoat-Andes and the City Staff have done a great job of going out and gathering the relevant information, and putting the points together in a clear and concise manner:
http://www.chico.ca.us/Economic_Development_Strategy_Update.pdf

It is all great information….But, the vast majority of the information is the same that you receive during those one or two times a year when you hear an economist talk about our region.
http://www.northstateprofile.org/events/upcoming_events.php

And that information, while nuanced by the most recent national and regional trends, has not changed materially in the past decade, or more.

In short, we have a lot of great paying public sector jobs, some good health care jobs, but not much else.
http://www.labormarketinfo.edd.ca.gov/article.asp?articleId=642

This is why we’re in a county with average household income of about $39,000 per year, among the lowest in the state, and why we have the dubious distinction of having among the worst housing affordability.

CEPCO Quote: Quality of life begins with a good job.
www.cepco.com

That is not to discount the great employers who have come to town or those who have successfully grown up here, but they are in short supply relative to our population. I believe that much of our area’s adverse economic realities are the product of very deliberate actions to stifle job creation simply because it has a nasty (to some) habit of drawing more people to the area (growth inducing)

Even such things as having decent roads within our town and interconnecting us to other communities are often opposed because they are similarly “growth inducing”.
http://www.becnet.org/nodes/issues/transportation/200601_hwy149.htm

The City’s economic policy itself is laudable, deserving of all three cheers. It is as wholesome as mom, apple pie and an episode of Andy Griffith. There is nothing there not to like.
http://www.ci.chico.ca.us/City_Clerk/Agenda_Documents/12-4-07/12-4-07%204.1.pdf

But, it has no teeth. It does not even have a decent set of dentures.

There is no plan of action. Shoot, there aren’t ANY actions, let alone a plan of actions (plural).

No actions, no time deadlines, no stated goals, no mile stones, no measures of success, no substance.

Hold ‘em accountable to what? There is no accounting of anything.

It is an OK start, albeit late, but now let’s see some substance.

Mark B.

You are CIC victor. That's tha happy helping hand from hamburger helper. Hamburger helper makes a great meal. I know that because the package tells me so.

Lon

Mark S.

I'm at a loss as to what the city could do to help economic development in any meaningful way. They need to provide a climate where businesses flourish. That would be low taxes and ample customers. Retail is limited through competition and the market size, and B2B is limited by the lack of successful businesses around town. Attracting successful businesses will be hard due to a lack of cheap land, and a lack of low cost of living.

Maybe they'll pull a rabbit out of their hat. I hope they do. Like most business people I won't be counting on any help.

Lon

Lon,

First time contributor— and disappointed with the myopic idea that "big box" stores, chains, etc. are the only potent business opportunities around here.

Entrepreneurship is a cornerstone of not only job growth, but of CAREER growth. Small businesses typically pay better per capita, have happier, more satisfied employees, and keep dollars circulating in local/region economies. Small business owners, of which I represent quite a number on the Downtown Chico Business Association BOD, are generally predisposed to patronizing fellow mom 'n pops, regional farmers, artists, and entrepreneurs.

What the CIC can do to foster a better business climate is to continue, or even bolster its support of entrepreneurship, education, and training in this area.

The work of local business, Golden Capital Network (a downtown business) is extraordinarily interesting (and might even give hope). GCN is not only entrepreneurial in their their own business model, but have the goal of creating and supporting an entrepreneurship network of ideas, talent, and investment capital. While mayor, Gruendl and his Mayor's Council worked with Golden Capital Network's Jon Gregory and Jim Mikles to sponsor entrepreneurship and investing events in the region -- essentially dating sessions between entrepreneurs and capital.

These have historically been very successful in encouraging deal flow.

One of the most difficult problems to overcome in our region— which is a little surprising, considering our university and high quality of life -- is that experienced, competent management and technical talent is scarce in our region. Companies like Auctiva (www.auctiva.com - also a Downtown Chico jewel), who are aggressive, successful, growing -- and frankly OUTgrowing Chico! They can't recruit enough experienced programmers in OR to this market. Unfortunately, Chico could potentially lose millions of dollars of locally spent, globally drawn capital if our region doesn't institutionally support these burgeoning businesses through programs to attract and cultivate talent, educate, train and retrain, and develop support networks for our entrepreneurs that include access to investment capital and startup funds.

• Golden Capital Network
• What Economic Slowdown? Small Businesses Grow Stronger

Some thoughts from a strong supporter of local business, small business, and entrepreneurship

-Earl

Earl,

Thanks for posting. I hope you're not under the impression that I think big box stores are the only business opportunities here.

My experience, with my small business, has been that working with HP and GE produced income that changed my business. Those are "household name" companies, but the companies that really did wonders for my bottom line are not names you would recognize. None of them are local.

Networking between business and investors is a good thing to do. But investors do not provide continuous streams of income. B2B networking and long term relationships are what create growth. Imagine if you were Lulu's, who does a good business downtown, and the local Target started selling your T-shirts? What if McDonalds sold Upper Crust Cookies?

I haven't been helped by local or other government, nor has Golden Capital Networks contacted me to do some networking. I have taken a paper route to pay for food and worked long hours for no pay to create a functional business. People can talk all they want about economic development, but somebody has to do the work.

From a retail standpoint I think there is an obvious dislike of big box stores coming from some people in Chico. Those people should go stand in front of Walmart, Costco, or Target this weekend. Big boxes generate huge amounts of sales tax income that fuels local government and public saftey spending.

Ignoring or downplaying the importance of the successful retail sector in town is probably not a good idea.

Lon

I certainly wasn't attributing Gruendl's mention of people telling him that Big Box was the only viable business in Chico, to be a shared opinion of yours. I have heard people mention this to me, as well, in my promotion efforts for local, smaller-retail business in our downtown.

I completely agree that big business clients, as you describe, are a boon to smaller businesses. Networking -- even in our region -- has far-reaching result. For instance, through local networking, a local Internet Service Provider with whom my company (we too are a bootstrap business, still tuggin' on those loops) is partnered is now hosting and managing all of Intel's internal corporate blogs -- a significant contract, won, in part, in the annuls of the Naked Lounge Coffeehouse.

Regarding sales tax, believe me, I know -- and all should be aware -- of the incredible revenues that a healthy retail sector (on the large, 20th street scale). I certainly don't disparage the economic and civic benefit -- it's the cultural homogenization that scares me.

What I hope people will begin to be more conscientious about, is the vote cast at the cash register every time we make a purchase. Supporting the up-and-coming, smaller businesses increases diversity of product, service, and selection, ultimately. Beyond that, customers, clients, and visitors (CCV's) generally experience better, more knowledgeable service. Not exclusively, no -- but a visit to Bird in Hand or The Wise Owl is a significantly richer cultural experience than a trip to WalMart or Toys 'R' Us.

Supporting a local, smaller business doesn't necessarily have to cost more , either (though often it does, a little). Rakes are cheaper at Collier Hardware than at Home Depot (surprised me, as well). But none-the-less, what we are trying to communicate to our local businesses, especially but not limited to Downtown Chico, is that we cannot compete with discount retailers on price -- we'll never survive. We compete with them on experience, service, and culture -- something that large retailers try to fabricate, but cannot.

More ramblings for your blog, Happy Holidays.

-e-

Earl,

I like to shop in the downtown area, and really do value Bird In Hand. Oddly enough I also value Powell's, which is a franchise. But the old looking candy is fun.

Maybe I'll start a new CI section where I find something you can buy in Chico and post a photo on my blog. It would take a few weeks to get through all of the pastries at Upper Crust. And then I'd have to move on to the cakes.

Lon

Don't think I'm such a purist that I WON'T shop inside the proverbial box or franchise -- it's just not personally my first choice. I'm not out there picketing Wal*Mart, I like the Target just fine (except the fluorescent lights, but that's a silly pet peeve).

Hey -- I'm all for a pro-downtown section of Commission Impossible, but Dog's Breakfast sorta has the realm covered, I think. It is a good excuse to get outside and see some great local businesses. Upper Crust is great -- I'm there daily, and I'm sure Lori Powers appreciates a little PR -- but Mim's shouldn't be forgotten! You have to admit, their cakes are better than the Safeway and Costco ones?!

Sensible recommendation, though: Don't start with the sweets. You'll ruin your appetite for and may not survive the holidays!

Cheers,

-e-

p.s. How do you have time for this back and forth with all the random Do-Do's like me? Self employment, it must be for most of us... choose which 18 hours a day you want to work?

Earl,

I have unpaid interns that do all of my work on the blog. I rarely do more than check in once a week to make sure things are going okay. In fact this response is being written by a 21 year-old named Jimmy who is studying civil engineering and drank way too much last night at Riley's.

Lon

Lon,

My reference to "Big Box Retail" concerns that one must have significant resources to get a project through the city approval process. I most recently heard it from a business owner that started with just a tool box and grew to employ three dozen employees and a high ranking tax generator who still has difficulty with facility expansion projects.

The City of Chico can do many things to improve the business climate by accommodating applications that are subjected to an approval process, assuring business ready land, developing conduits for private investment and business networking, partnering with local business to address issues, and so on.

The City of Chico directly affects your business by maintaining the physical environment in which your business is located, infrastructure that supports your communications, and in conjunction with others, helps provide the creative place in which your business operates, to name a few.

I owned, with two partners, a private business in downtown Chico for a decade (I used to walk to work - which ultimately meant that I worked seven days a week). I had thirteen employees with dozens of clients across the north state. It took me years in the public sector to come close to my income in the final years of private business. My first year of owning a business produced so little revenue that I qualified for a rebate from the city's utility users tax. I have sold personal belongings to meet payroll. One year I let my secretary go because she made more than me (I hired her back soon thereafter). I was even registered as a Republican.

I was raised by self-employed parents, helping run my father's contracting business for a dozen years. Every member of my family (except me) remains self-employed today.

I say all this only to help you recognize that I have been there. While I no longer am today, I offer up my extensive public sector experience through the lense of a person who at least personally understands some of your reality. I also undertand that regardless of what happens with the budget situation, the city's success will always directly be tied to the local economy.

Scott,

Thanks for posting.

I try to keep in mind that quotes from the paper are size constrained and by nature always out of context ( I guess I should clarify this, reporters can't print an entire conversation, so important supporting statements are often left out, which is not exactly "out of context"). But quotes from you councilors always make excellent topics for my lonologues.

I'm glad you've got that business experience. And I appreciate all of the effort City officials are making to address some of our issues. However, I think they are postponing addressing the big issues.

I wish one of you councilors would get up, go over to the giant elephant in the room, and give it a big hug. Someone needs to tell the unions that we love them as public servants, but can't afford to spend $200,000 or more on Fire Captains. That's the poster child for our budget problem.

Lon

PS. It's funny you mention your past party affiliation. My dad was a democrat when he worked for the government. After retiring and starting a small business he registered republican. Somewhere in all this is a parable.