In observance of Columbus Day, all Provident Bank branches will be closed on Monday, October 10, 2022. Online access to your account(s) will not be affected. Normal banking hours will resume the following business day.
Your secret recipe for marinara (but you've always called it gravy) has been in the family for generations. And it is, without a doubt, the best pasta sauce ever created. This is no Chef Boyardee we’re talking about, here. This is the blossoming-tang-on-the-tongue real deal, straight from the homeland. It has been a family institution for years, and now you want to share it with the world as “La Mia Mamma’s Marinara.”
But here’s the problem: You love your mamma and you’re deeply passionate about pasta sauce, but you don’t have a clue about running a business.
So before your hopes take flight like scattered birds and you find yourself applying for an SBA loan, check in with our resident SBA expert, Bruce Rossi, to see if you’re truly cut out for entrepreneurship or if you’ll be keeping that recipe all in the family.
Just like La Mia Mamma’s Marinara, Rossi, first vice president of SBA Lending, is authentic and credible, gifted with a long history. With more than 30 years’ experience, he has crafted loans of all sizes and purpose for nearly every single industry. He’s also well-versed in the SBA (7a), SBA 504 loans, SBA Express, and Patriot Express programs.
No stranger to making something from nothing (he built Provident’s SBA department from the ground up—and another well-known New Jersey financial institution’s prior to that) he is intimately familiar with what it takes to start your own business. Listen well; he’ll tell you that…
Every business needs a business plan. No doubt about it. Period. The End. It should act like a roadmap, plotting your course. You must know where you’ve started, where you’re going, and how you plan on getting there. Remember, your business plan plays a considerable role in determining your eligibility for a small business loan. The more intentional and detailed your plan is, the more likely you are to receive a loan.
Business plans are typically 10-12 pages and answer the most important question of all: who is your business? They discuss considerations like your mission statement, short and long term goals, your target audience and marketing plan, the competition, and finances. Include a projection of expenses and revenue and consider how you’ll fund your venture. How much do you need, how much can you realistically invest? Do you have savings accounts, an IRA, a secondary source of income, or even a gift from your parents or other donor? What do you own that can be used as collateral?
Would-be entrepreneurs often overlook the fact that initial start-up costs include working capital. You need a little room to wiggle. On the flip side of that coin, you can’t do things too cheaply, or you’ll never be able to compete.
If you need help organizing and writing your business plan, you can contact your local SCORE (Service Corps of Retired Executives) chapter or other small business development center.
Successful entrepreneurship begins, first and foremost, with an intimate understanding of your industry. Experience, Rossi says, is critical. You must know, unequivocally, who you are and how you stack up against the competition; you must grasp, like the back of your hand, what the industry demands.
Once there was the man who wanted to purchase a frozen yogurt franchise and insisted his business wasn’t seasonal. He projected a steady stream of revenue throughout the winter months. “If he offered cakes or novelty desserts, he may have done some business. But he would have never received the same summer walk-in traffic,” Rossi explains. “There’s a certain degree of seasonality to most businesses.” And you must prepare for the slow months. You have to realize that few people, cocooned in parkas and gloves, will stand outside in a New Jersey winter, eating frozen yogurt.
The only way you can start a business with little to no industry experience is to buy a franchise. “Good franchisors want their franchisees to be inexperienced so they come in with no preconceived notions. That way, they can be molded and trained,” Rossi says.
Today’s connection economy makes majority market share, oligopolies, and multi-billion dollar global juggernauts exceedingly rare. Instead, entrepreneurs know they should chase the long-tail, those smaller outlier groups who buy into the same weird world-view as they do. Like any species, the entrepreneur must reject the normative, finding and adapting to a niche, instead. Ask yourself these questions:
Moral of the story: if you’re a short-necked giraffe, don’t try to compete with your longer-necked brethren for the canopy leaves. However, you have to make sure your niche isn’t too narrowly focused and you become immutable. You must remain nimble, quick to adapt and yes, to evolve. Rossi likes to use an unusual example to illustrate the importance of adapting to meet your customers’ needs and “going where the money is.”
“About 25 years ago I had a customer who rented weather mats to grocery stores and other mom and pop shops. And at first, that was all he did. He sent a driver every morning to pick up dirty mats, drop off clean ones, and return the dirty mats to the facility for washing and drying. One day, a customer asked him if he supplied grocery baskets, so he got into the business of grocery baskets. Another day it was outside trashcans. Fluorescent light bulbs. Exit signs. And on and on. It was interesting how he started so small, and then branched out into all of these ancillary products.”
That’s not to say he “sold everything plus the kitchen sink.” He simply expanded his niche to meet the needs of his customers.
Starting a business requires loads of information, so Bruce Rossi is not quite done imparting his expert advice. Join us this Friday to find out once and for all if you’re destined for entrepreneurship. In the meantime, leave a comment for Bruce with your most burning questions!