Southeastern Minnesota has a wealth of resources available for entrepreneurs looking for COVID-19 relief and those wanting to start their own business or expand an existing one.
Small Business Development Centers, which operate under the Minnesota Department of Employment and Economic Development, assist in all three of these areas. Even before new business owners have a storefront, counselors through an SBDC, which has offices in both Faribault and Owatonna, can help them navigate new turf. These services are free, confidential and come with no obligation to open a business following appointments.
“What we do is provide confidential, no-cost, one-on-one consulting services to start up businesses and establish businesses,” said Mark Thein, director of the Southeast Minnesota regional SBDC office in Rochester. “And we focus on business plan development, financial analysis, loan packaging, marketing assistance, budgeting, and cyber security and data analytics in addition to other services.”
Faribault and Owatonna’s satellite SBDC programs have a team of professional consultants, along with those at the regional office. Small business entrepreneurs sign up for services and get matched with the proper consultants to help with their needs.
The Faribault Area Chamber of Commerce houses the Rice County SBDC office. Business owners can register from anywhere in the county, and oftentimes the counselors associated with SBDC find a convenient place to visit with clients, sometimes traveling to their location.
“We put in about 200 hours of business counseling every year through the SBDC,” said Nort Johnson Faribault Area Chamber of Commerce president and CEO, who oversees the Rice County SBDC. “We’re also always willing to lend our thoughts and expertise as chamber staffers as appropriate, and sometimes making that connection with a supplier or customer can make all the difference. It’s in our DNA to help business in any way.”
Helping find solutions
About a dozen counselors in Southeast Minnesota, including up to three in the Faribault office, make up the regional SBDC network.
Royal Ross, a counselor for the SBDC in Faribault, said he meets with clients anywhere from one to 100 times, and it doesn’t matter as long as they find it valuable. He estimates the average client meets with him 10 times.
“I always like to stress that our services are completely free to them, they’ll never have to pay for it,” Ross said. “And it’s completely confidential. I’m not going to share their plans with anyone else. It’s a really good program and I think it really does a lot to help businesses all across Minnesota.”
In Steele County, business entrepreneurs have an SBDC program to turn to for guidance at the Owatonna Area Business Development Center. There, Executive Director Bill Owens is the only consultant at the office, but if he isn’t an expert in a particular topic, he finds other consultants to assist the client.
The first time connecting with the SBDC, individuals identify their businesses’ most important needs at that time. They’re then connected to counselors who can help find solutions.
“Some of them just really need help with the bookkeeping and accounting side; that’s most common,” Johnson said. “Understanding how to do a marketable and competitive analysis for a business is also a common need.”
Said Owens: “A common question is, ‘How do I open an LLC?’ And the state of Minnesota actually makes it very easy to do, but first I want to determine if that’s what they really want.”
In talking to clients, Owens tries to ascertain if they’re running toward a dream or running away from working for someone else. The latter frame of mind often doesn’t serve as a strong driver as opposed to the former, he explained.
Sometimes the most important work through the SBDC is helping an individual decide against the plan they have in place, Johnson said.
“In the time I spent doing business counseling I found that as hard as that is, sending someone back to the drawing board and delaying them from opening up is the best thing that can happen,” he said. “They come back with a better plan, and they’re more suited for success.”
What determines the success of a new business depends on a few different factors. From Johnson’s perspective, it’s important to understand the meaning of cash flow and to have a business model that provides the right amount of money for the business every month. That means taking every cost and fee into consideration. For restaurants and other food industries, knowing and understanding the different permits, regulations and licensing is another key point Johnson mentioned.
“I think that one key component is good record keeping,” Owens said. “It sounds boring, but you want to do projections and you need to have a starting point, otherwise you’re just guessing.”
Business owners also need to understand the costs associated with occupying a space, hiring staff at an hourly rate, and doing payroll correctly. These are all needs the SBDC can help entrepreneurs meet, Johnson said.
“The most successful entrepreneurs I see find they can make money doing something they love, whether that’s the art business, making food or sometimes they just love helping people with financing and small business accounts,” Johnson said. “What seems like work to one person is perceived differently by others.”
A regional resource
Apart from Faribault and Owatonna offices, the Rochester office also serves satellite SBDC programs at the Development Center of Austin, Red Wing Ignite and Community Economic Development Associates (CEDA). Clients from Winona also utilize the Rochester office.
Mark Thein, director of the SBDC in Rochester, said SBDC offices in Southeastern Minnesota as a whole connected with 523 individuals, business startups and existing companies in 2020. In the same year, regional SBDC offices helped small business owners raise over $17 million in capital funding and provided approximately 2,600 consulting hours to individual businesses.
These numbers aren’t the norm, Thein said, but the pandemic created an unusual situation for businesses.
“We helped almost twice as many business owners due to the pandemic,” Thein said. “We trained our consultants to work with small business owners and COVID-19 resources, and that was different. Then there was much more interaction between small business owners and the SBA (Small Business Administration) because that’s where a lot of the programs came from.”
Thein credits lenders first like the Southern Minnesota Initiative Foundation (SMIF) and Rochester Area Economic Development, Inc. (RAEDI) for helping businesses survive COVID-19, along with the satellite SBDC offices, which he called “our number one partners.”
“It was a team effort and still is — it’s not over,” Thein said. “It’s still very critical for small business owners if they need COVID-19 assistance to contact us. Small business owners should know about the Paycheck Protection Program, the Economic Injury Disaster Loan Program, the Shuttered Venue Operation Grant program, and the Restaurant Revitalization Fund Program. Those are all SBA federally funded programs.”
After the pandemic passes, Owens is hopeful about the state of small businesses. His son pointed out the Renaissance in Europe wouldn’t have happened without the plague, so he expects a similar response after COVID-19: people bringing their dreams to fruition.
“We, meaning all of us consultants, are here to help, and the pandemic has put some people in difficult circumstances, and they shouldn’t be afraid to ask for help,” Owens said.