Wise counsel

New Mexico Business Journal, July-August, 1999 by Nancy Traver

The Small Business Development Centers offer vital help. And it's free.

Nine years ago, Tina Cordova had a master's degree in biology and not much else. Today, she owns a thriving, 22-worker roofing firm that completes more than $1 million annually in roofing work all over northern New Mexico.

And she says it was the Small Business Development Center (SBDC) at Albuquerque Technical Vocational Institute (TVI) that helped her get started.

"It's a reality check," says Cordova, who is president of Queston Construction Inc. "The counselors there think of everything and ask you really hard questions: 'Do you have a market? Who will you sell to? Do you have what it takes to stick with it? Do you know what long hours it takes to start up your own business?'"

Cordova explains that she went into business with a partner as a general contractor in 1990; the business was built around her partner's construction skills and her administrative background. Two years later, she was approached by a business owner who wanted to sell his roofing firm. "We took it over and it grew rapidly," she says. "Business has just never slowed down for us."

But in those early years, she relied on the SBDC at TVI for all kinds of help, including legal and accounting advice and the writing of a partnership agreement. "When you start a business from nothing, you have to take advantage of what's available to you at no charge," she says. "You can't possibly afford to hire an advertising person, an accountant, an attorney."

Now on the SBDC's advisory board, Cordova sends lots of entrepreneurs there for guidance. There are 19 centers in New Mexico, 16 of which are. affiliated with the state's community colleges.

Ray Garcia, director of the SBDC at TVI, the busiest in the state, calls his center "a hopping little SBDC." The facility helped its clients obtain nearly $7 million in loans last year. It helped create 29 new businesses, providing 58 full-time and 20 part-time new jobs. The SBDC also hosted 61 seminars, attended by 489 people.

"We hit them with the hard questions head on," says Garcia. "We tell them they need to think things through quite extensively. It doesn't work to think you can start up a business and then just expect to wing it."

"Most just want to cut to the chase and get started," says J. Roy Miller, the SBDC state director. At the SBDC at Santa Fe Community College, the two most common problems he encounters with start-ups are insufficient equity to deal with the financial risks and a lack of business planning. "They often need to see the value of planning."

If an entrepreneur comes to him with an idea he thinks won't work, he tells them so. "We can't keep anyone from going into business, but we make them take a good, hard look," he says.

Miller says there is an old saying in business: If you're going to advertise, make sure you have the goods. "A lot of people want to go into business based on the advice of a good friend or a relative, and often they want to offer a service they aren't even fully prepared to provide," he says.

There are also many details in business that people know nothing about, such as how to write and execute a lease or purchase agreement, or how to gain a full understanding of inventory control and accounts-receivable management. "These words can sound like a foreign language to some people. What we do is try to educate them," Miller says. "Often people come to us saying they want to start a business and there would be no competition. Well, there probably is."

Many of Garcia's clients approach him with start-up ideas, while others are owners of established businesses who want to expand and are in need of bank loans. Each client is paired up with one of his business counselors and is given one-on-one advice and training.

Garcia explained that his counselors seek a great deal of personal information while evaluating each entrepreneur's business proposal. "Most people don't realize they need to have a good credit history to start a business. We ask to see their income tax forms and we ask if they've ever declared bankruptcy," he says. "We get real involved with each person in a financial sense."

The SBDC also helps clients draft a business plan, which is usually a 10- to 20-page document. "Some viable businesses start without a plan, but a whole lot more fail without a plan," says Garcia.

Many leave his office after only one visit and never return, having realized that launching a business is much more work than they'd expected. "But a lot will just stick with it. They're very persistent and they're gonna make it," he says.

The state's Small Business Development Centers were established in 1989 as a federally chartered program to provide local assistance and training to small businesses and entrepreneurs. Miller says there's evidence that New Mexico's centers offer quality service, help the state's economy and provide a good return on the tax dollar. In fiscal year 1997, the SBDCs served 5,073 clients and launched 271 new businesses, creating 275 part-time and 798 full-time jobs. The centers assisted businesses in obtaining $34.4 million in loans. The counseling provided to start-ups and established businesses generated $2.36 in tax revenues for every $1 spent on the program, says Miller, who operates on an annual budget of $1.8 million.