Whether buying into the entrepreneurial life or starting a business from the ground up, it's important to tap into helpful resources at an early, formative point in a company's growth track.
That was the case with Tom Olsen, who worked for 25 years in seafood merchandising, mostly at Wakefern Food Corp., the Keasbey-based parent of ShopRite supermarkets. About four years ago, Olsen went the entrepreneurial route, buying Lobster Life Systems in Lodi with guidance from New Jersey Small Business Development Center, one of a number of resources available to budding entrepreneurs.
Lobster Life manufacturers lobster tanks and other equipment for ShopRites, restaurants and others. Former owner Richard Tokosh was working with the NJSBDC on an exit strategy when he pitched his company to Olsen, who had been buying Tokosh’s equipment on behalf of Wakefern.
“Richard told me he could sell his business to an investor who had a pile of cash with no knowledge of the business, but he preferred selling it to a guy like me, who knew the industry but had no cash,” Olsen said. “My wife and I cashed out our savings, including a 401(k), and we took out a home equity loan to buy the business. I had heard about the NJSBDC prior to that but wasn’t aware of the wide range of services the agency offers.”
Jim Palumbo, who works with the SBDCs at Ramapo College and at William Paterson University, helped Olsen use Google Analytics and other tools.
“With Jim’s help, we were able to find out information about the level of seafood consumption by region and identified areas where people were buying lobster online,” Olsen recalled. “With that data in hand, we approached local supermarkets and suggested that they had an under-served market for lobster that could enhance their revenue stream.”
The approach worked.
“Lobster Life was grossing about $850,000 a year when we took it over,” Olsen said. “This year we’ve got business clients from Maine to Maryland, and New Hampshire to Niagara Falls. We’ve recently added Ohio, western Pennsylvania and West Virginia, and we expect to reach sales of about $2.6 million.”
He added: “NJSBDC also helped me to understand financial statements, cash flow and other concepts. And an NJSBDC intern is helping us to set up a computerized inventory system.”
The company outgrew its leased 6,500-square-foot Lodi facility, and NJSBDC is helping it search for a larger building to buy. “When we do, we’ll probably look for investors and will also invest in more automation,” Olsen noted.
Also, in a kind of full-circle relationship, the NJSBDC is helping Olsen with his own succession plan.
“I’d like to make a phased, seamless transition in about 10 years or so,” he said. “I’m looking to involve key personnel and others in the plan.”
Formalizing the knowledge base of successful businesspeople and making it available to others was one of the reasons that the Rutgers University’s Center for Urban Entrepreneurship and Economic Development in Newark recently launched the Council of Urban Entrepreneurs.
“We have started to write case studies about Council members that will be taught in the classrooms of the Rutgers MBA program,” CUEED Executive Director Lyneir Richardson said.
Those include the business narratives of folks such as Marc Berson, a developer and founding board member of NJPAC; Randal Pinkett, co-founder and CEO of BCT Partners, a multimillion dollar management, technology and policy consulting firm in Newark; and Marjorie Perry, CEO of Newark-based MZM Cos.
CUEED was launched about 10 years ago, with the goal of researching and creating “capacity-building programs to catalyze and accelerate the revitalization” of the one-mile radius around Rutgers University-Newark.
“Seventy percent of the participants in our programs are people of color,” Richardson said. “The unique challenge that they have faced is gaining access to the first $100,000 of early stage equity and then the first million dollars of growth capital.”
CUEED programs include Entrepreneurship Pioneers Initiative, which has assisted more than 220 small-business owners to create business growth plans, increase revenues and profits, and expand payrolls.