Any small business owner who was launching a startup a decade ago, right before the financial crisis hit, had to face up to an unfortunate fact: There was never a worse time to have a good idea.
Whether it was the virtual shutdown of lending activity or the losses sustained by tanking markets, business was bad.
That’s slowly changing.
In fact, local entrepreneurs who are hitting their stride today, rounding the final corner on the last lap on a decadelong race to grow their ventures out of the small business category, are celebrating their ability to overcome the skyscraper of a hurdle they faced.
All Cherry Hill-based B Positive National Blood Services needed was about $50,000 to get the blood plasma manufacturing company started, but founder Ben Ruder had trouble securing even that.
“At such a low point, getting a startup financed was not the easiest thing in the world to do,” he said. “At that time, banks were not lending money at all unless you were collateralizing it with a dollar-for-dollar deposit.”
Even a niche like being the only company doing blood plasma manufacturing in the whole state — not to mention the value of selling blood plasma to organizations for research and the manufacturing of life-saving therapies — didn’t entice the capital he needed.
The company, which today is expanding its three blood plasma manufacturing centers, eventually made a connection with the Cooperative Business Assistance Corp. in Camden, the U.S. Small Business Administration’s most active microlender, and found the financing it needed through that tie.
It is since found success.
And success, any small business owner will tell you, is about profit, not publicity.
Just ask Paulo Heyman, who launched Ocean Township-based Renova Environmental Services in 2006. He is most proud about his ability to meet his payroll.
“I read that Uber lost $2.8 million last year … yet its CEO is hailed as a disciple of business,” he said. “That doesn’t fly in the small business community. If you’re not making a profit as a small business here, you and your family may not eat.”
When Heyman’s site remediation business took a massive hit from the aftermath of the recession, as funding dried up for a state program to help residents offset remediation costs, he was making comparable profit to (or even less than) his first entrepreneurial venture — selling hot dogs out of a small stand on the beaches of Hawaii.
“It put me in touch with the kiss of death — what it takes to shut a company down,” he said. “That level of intimacy with being so close to going out of business, that’s where I came to an appreciation of just staying in business as the primary goal.”
Renova Environmental Services has since added construction and project management services alongside its residential business. The company has made massive adjustments to its revenue stream and distributed it in such a way as to not have too many eggs in one basket.
“Thankfully, we have a good cushion now, and I don’t wake up every day saying, ‘It will be an accomplishment just to stay open today,’ ” Heyman said.
Renova Environmental Services also tapped SBA resources to open up avenues to government contracting work to further diversify the business.
The SBA’s offerings took on special value during the big economic downturn. Incidentally, SBA New Jersey District Director Al Titone said that the organization also generally can tell when recessionary periods are close at hand (and don’t worry, he didn’t mention that another was).
“We’re like the canary in the coalmine; we tend to see it first,” Titone said.
Even those who were there to see the financial sector’s tumble firsthand weren’t immune to its effect.
Leonard Moon, founder and CEO of Passaic-based U.S. Organic Group Corp., left the financial sector behind after years of experience managing hedge and mutual funds. He took the (not so) natural step of starting an organic anti-itch balm company a few years after the crash.
“I worked with large and well-established companies at that time, and I thought it would be easy to get financing once I have a good item to sell,” he said. “But I was wrong.”
Moon and his partner had spent a year developing the product, and doing the research and paperwork for it.
“When we had the prototype in our hands, we already spent our seed money and credit card balance was reached near to maximum limit,” he said. “Reality was totally different from the books. We needed capital to manufacture (it).”
He went on to visit every bank in New Jersey. But his answers to three key questions — do you have sales? Collateral? Experience in the industry? — were all met with a negative response.
So, it failed.
He, like the others, did eventually seek the help of the SBA microloan provider, which proved to be enough to rev up the business. After expanding its product line to include organic repellents, body oils and baby oils, the company has emerged as extremely fast growing, with sales jumping from 200 percent up to 1,000 percent each year, Moon said.
New Jersey business owners that weathered the recession — aside from sharing in the chip-on-the-shoulder attitude — share a palpable appreciation for business going well.
And, at the least, these entrepreneurs came out of it with some important lessons.
“What we learned was to not bet the barn in places we don’t need to,” Heyman said. “We want to be resilient. So we’re against unneeded risk where it presents itself and sometimes even saying no to opportunities that have an out-of-balance risk-reward.”