Jacob Schpok

Kevin Jones – There’s an old song whose lyrics are “Make new friends, but keep the old. One is silver and the other gold.” Sound advice for our personal lives to be certain. But it’s also a good strategy for small businesses. Many small business marketing strategies focus on increasing sales by adding new customers (new friends). But there are plenty of good reasons why small businesses should be paying more attention to existing customers (old friends).

According to a report by Frederick Reichheld of Bain & Company, “acquiring a new customer can cost 6 to 7 times more than retaining an existing customer.” This is because creating a new customer often involves getting someone to change their buying habits and behaviors – to try something new or to switch from a current supplier. Changing behaviors is not easy and it often takes more effort.

The Reichheld report cited above goes on to state that over a five-year period, customer attrition rates could reach as high as 50 percent, if customer databases are left dormant. In other words, if they’re ignored, your “old friends” will go away. Finally, Reichheld’s findings say that businesses that boosted customer retention rates by as little as five percent saw increases in their profits ranging from five to an astounding 95 percent.

So, what can you do to keep your “old friends”? Here are some suggestions for building a customer retention program:

Know your existing customers – Remember the 80/20 rule? It says that 80 percent of your sales (or profits) are generated by just 20 percent of you customers. Put another way – a relatively small portion of your customer base is responsible for a relatively large portion of your overall business. But do you know who these customers are? The first step to an effective customer retention program is to establish a customer database (not just a customer list). A database tells you how much each customer has spent in the last year/quarter, what they spent it on, number of purchases, frequency of purchase and much more.

Maintain communications – Find a reason to reach out to your existing customers and follow-through. Whether it’s to say “thank you,” to share news or to transfer some useful information, this is a service that customers value. Talking directly with your best customers (by phone or in person) is always the best way to go. But depending on how many customers you have to communicate with, as well as the subject matter, you may use direct mail, e-mail or social media, such as Linked-In and Twitter.

Develop appropriate loyalty programs – Find ways to reward your customers for doing business with you. For retailers, good old punch cards that give customers a discount or free product after a set amount of purchases may work well. In B2B channels, cumulative quantity discounts may be more appropriate for building loyalty. Decide what you want to reward – e.g., repeat business, referrals, buying certain items or paying invoices on time – and design a program around those behaviors. But remember the KISS principle – don’t make it too complicated.

Don’t ignore dormant customers – Your customer database should reveal past customers who haven’t bought for a while. You may feel it’s better just to let them go and focus on getting new accounts, but it’s important that you find out why they stopped buying. This could be informative and may reveal problems that you weren’t aware of. Resist price-cutting, though.  Simply lowering prices may not get former customers to come back. It may be better to suggest other products or services that are more affordable.

Every business needs a customer retention program as part of its overall marketing plan. The time, effort and resources required to keep “old friends” is usually well worth the investment.

Kevin Jones is a Business Advisor for the Central Indiana Small Business Development Center, an organization with the mission to create a positive and measurable impact on the formation, growth, and sustainability of Indiana’s small businesses by providing entrepreneurs expert guidance and a comprehensive network of resources. Kevin can be reached at kjones@isbdc.org.

*Photo via iStockphoto.com

Michael J. Hays – Entity formation is one of the key tasks of a business lawyer. Clients large and small seek our assistance in forming a corporation, limited liability company, or other business entity that will protect them from personal liability for the new entity’s obligations. But those clients often leave the lawyer’s office when it comes time to plan for the new entity’s finances: how much capital it needs, how to raise it, budgeting for the entity’s operations, and so forth.

In many respects, leaving financial matters to other advisors is the right choice. Entrepreneurs beginning a new start-up will need to work closely with accountants and bankers. These professionals are best-suited to provide much of the advice the new organization needs. But the lawyer has a role to play in the financial discussions, too. We must remind our clients about the risks of undercapitalization. As one judge explained, “If the shareholders do not invest enough equity, such that the corporation is undercapitalized, there is no basis for rewarding them by limiting their liability, and, in fact, doing so would only encourage risky behavior.”[1]

The entrepreneur does not want to hear this. He or she wants to focus on the tales of successful enterprises born in a garage with nothing more than $500 and a dream. But a new venture could be considered a legal sham if it “has so little money that it cannot operate its business on its own”[2] Should the business fail—another thing no client wants to discuss—the hope is to simply fold up shop and close this chapter without exposing personal assets. To achieve that, the client must respect corporate formalities, follow the bylaws and other governing documents that control the organization, and keep the entity’s affairs separate from personal affairs. All of this is no surprise. But the legal formalities need some financial substance to go with them: the entrepreneur also must put adequate capital at risk.

So how much is adequate? Will $1,000 be enough? What about $25,000? It won’t really take $1 million will it? When I tell the client, “The legal test . . . provides little in the way of specifics,”[3] she starts to wonder why she’s paying me. The best I can do is describe what Indiana courts have held:

• A real estate development company with “between $250,000 and $300,000” of paid-in capital was undercapitalized in light of evidence that bank requirements and market analysis showed it needed at least $400,000 in start-up capital.[4]
• An airplane repair business was not adequately capitalized because “it did not have sufficient financial resources . . . to pay its ordinary, ongoing corporate expenses.”[5]
• A real estate holding company with only $25,000 in capital was adequately capitalized, even though it held a long term rental obligation of more than $2 million because it had a stream of sublease income to meet that obligation.[6]
• An agricultural business was not undercapitalized at the time it expanded operations to include raising hogs because it was issued state licenses that required a thorough review of its financial condition.[7]

Every case is different, and judges view matters differently, too. In one leading case, the trial court pierced the corporate veil and held two owners personally responsible for the corporation’s debt, but the Indiana Court of Appeals sent the case back to be decided with more evidence regarding adequate capitalization—even though the entity had $1 million of paid-in capital and a facility worth more than that.[8]

Every business is different, too. The entrepreneur’s financial advisors will have to help the client come to some understanding of what it will take to “operate its business on its own.” Once that number is known, do not suppose it can all be in the form of loans. Outside of certain holding company arrangements, a court will normally consider a venture undercapitalized if its primary funding is debt instead of equity. In fact, when courts evaluate whether to hold investors personally liable, they normally determine adequate capitalization by looking only to the equity investments. Businesses may have many valid reasons for taking on debt, but “the need for a shareholder loan at the outset of a new business signals that the initial equity investment was insufficient” and is “another sign of undercapitalization.”[9]

If you are looking for a rule of thumb, all the equity contributed at the time a business is formed (whether in cash, property, or some other form) should be more than any loans to the business at the time of formation. And the law is well-established that formation is the relevant time for assessing “adequate capitalization.” A business that is adequately capitalized at the start and loses money over time is not “undercapitalized” in the legal sense. Even so, there is nothing wrong with starting small. Corporate growth from modest beginnings is an enduring part of the American dream. But entrepreneurs must understand they should not start so small the business lacks the funds to “operate its business on its own.” And in most circumstances, they should not plan to make up the bulk of needed funds by lending to the company. Business owners who do not invest enough or have “assured themselves the preferred status of creditors if [the business] fails”[10] will lose the very protections they sought in forming their entity in the first place.

Michael J. Hays is an attorney with Tuesley Hall Konopa, LLP, a South Bend, Indiana law firm that provides business counsel, civil litigation, and estate planning services for business owners and individuals throughout northern Indiana and southwestern Lower Michigan. Michael practices in the areas of civil litigation, employment law, business transactions, and real estate, to view his complete bio visit his company’s website, thklawfirm.com. Michael can be reached at mhays@thklawfirm.com.

Michael Koploy – So far this month, Best Buy has been in the headlines for all the wrong reasons. A disappointing Q4, a CEO resignation and an internal probe on his inappropriate employee relations.

I’m personally not all that surprised. Best Buy’s prices are too high, their stores difficult to navigate. Most frustrating, however, have been my experiences with the sales associates at the electronics retailer–whom often seem more interested in gossiping with themselves, selling me a warranty I didn’t ask for (and don’t really need), and being generally uneducated on how to assist customers looking for electronics.

I don’t blame them. For many, retail has become simply a stepping stone or transition role to jobs in other industries. Associates have little incentive to become retail experts, and many retailers don’t seem to be interested in helping them become them.

But could empowered associates improve retail? According to Zeynep Ton, visiting professor at the MIT Sloan School of Management, good jobs could benefit retailers. In her case study in the Harvard Business Review, Ton analyzes the associates of Costco, Trader Joe’s, QuikTrip, and Mercadona, and argues that the investment these retailers have put into their associates have led to excellent customer service and segment-leading earnings numbers.

Retailers may be hesitant to invest in associates as this is a long-term strategy. Retailers like Best Buy have to take drastic action to save their businesses. However, I feel that forward-thinking retail leadership can possibly avoid such calamities by empowering associates in investing in these four strategies:

1. Hire the right people. Molding the wrong individuals will take up valuable resources–and in many cases, a lost cause. Hiring managers should look for individuals that are truly interested in the merchandise that the store sells. To be effective associates, individuals have to be “domain experts”–or have the capability of becoming them.

2. Provide improved training of entry-level employees. A store’s customer experience is often a direct reflection of the attitudes, action and effectiveness of its associates. For example, you can provide associates scenario-based training so they learn how to react to real situations and solve customers’ problems.

3. Provide guidance during onboarding–and beyond. Using automated-training and exams is a great way to expedite the process, but often doesn’t develop the skills necessary for success in these roles. Allow new associates to shadow veterans and learn through their own experiences. Additionally, check-in throughout the associates’ career to go over where they’ve excelled and where they can still improve.

4. Offer careers that associates want. One of the NRF’s biggest marketing campaigns right now is “Retail Means Jobs.” If brick-and-mortar retailers are to be victorious against online retailers like Amazon.com, they must provide careers. This will be a way for retailers to create a powerful customer experience that can help them differentiate against e-tailers. Leadership needs to create an obvious path to advanced positions, and reward associates that are passionate about their jobs and the store.

Have you witnessed any retail businesses empowering associates and this leading to store success? How else can retailers improve their associates’ expertise and skills? Please leave a note in the comments with your thoughts!

Michael Koploy is an ERP Analyst at Software Advice–an online firm that provides reviews and comparisons of retail pos systems. You can read more about this discussion on the Software Advice blog at: Empowering Associates to Assist the Educated Consumer.

*Plant Growth Image via iStockphoto.com

Kate Caufield – There it was, for everyone to see.

When she saw it on her company’s facebook wall, the owner of ACME Event Center was horrified. With a quick click of her index finger on the X, it was gone. No one would see it again. She breathed a sigh of relief, and went on about her day.

Only, that wasn’t it. The post didn’t go away.

It reappeared on the facebook wall of the local Chamber of Commerce, the local Main Street Organization, and the local Independent Business Alliance. It popped up on facebook pages for several local magazines and non-profit walls.  Each of these pages had more than 500 ‘likes’- so now, potentially thousands of people had seen the negative post. Not only that, something new had been added:  “ACME Event Center didn’t reply to me, and also had the nerve to delete my complaint!”

So what actually happened?

A customer attended an event at the venue on a large and notoriously raucous holiday. The venue simply hosted the event, and had nothing to do with the actual presentation and flow of the evening. According to the customer, things were crowded, loud, and the bathrooms an absolute mess. When they approached what they thought was a staff member of the venue, the staff member was rude and unhelpful. Enraged, the customer did what many do these days:  He turned to social media and explained his frustration with his experience.

At that point, ACME Event Center had three choices: 1. address the issue directly on their own facebook wall, 2. Ignore the issue and/or delete the post, or 3. Write a private response back to the customer either via facebook or email. Obviously, they chose number two, and from there the situation snowballed and multiplied on every page where the customer re-posted the story.

While that could have been a disaster, ACME Event Center’s CEO realized fairly quickly that she was going to have to address this customer directly, on all seven facebook pages that he’d posted on. She carefully and professionally explained that she was very sorry that he’d had such a bad experience, and that the event he had attended was actually put on by a third party. She also offered him a refund, and free attendance to a future event, at her expense. It took a good portion of her afternoon to track down everywhere he’d posted, and to answer each with her response.

So what should small businesses take away from this story?

First- whether you’re on social media or not, your customers are, and they’re talking about you. Most of the time it’s good stuff, but know that they’ll not hesitate to share the negative as well.

Second- When a customer DOES post a negative experience they’ve had with your business, do not EVER ignore it or delete it (assuming no inappropriate language has been used). No matter the complaint, leave it up on your wall, and use it as an opportunity to showcase your customer service skills. People are watching to see how you handle this, and they will judge your company by your response- or lack of response.

Third- Don’t just respond when your customers post negative experiences. Express appreciation and gratitude when they take the time to post their good experiences, too! We are all customers somewhere, and let’s face it, we like to be heard and acknowledged!

Everything turned out fairly well for ACME Event Company, and they avoided the fallout that would have happened had they continued to ignore the issue. No small business is immune from the open forums that social media provide, and neither is yours.  Whatever you do, make the time to keep up with what your customers are saying, and address it as it happens. You’ll keep your customers and make new fans!

Kate Caufield is a Business Advisor for the Southeast Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. Kate can be reached at kcaufield@isbdc.org.

*Image via facebook.com

Congratulations to the  EDGE Awards Class of 2012.

The ISBDC EDGE Awards celebrate Economic Development & Growth through Entrepreneurship. EDGE Award recipients fall into one of two categories: Emerging or Established businesses. Eligibility is limited to clients of the ISBDC who in the past year have received one-on-one confidential counseling with a trained ISBDC Business Advisor, participated in ISBDC programs, or used ISBDC tools and business resources. EDGE Award recipients have been selected locally by the regional ISBDC staff who work directly with the business.

Emerging Businesses – Click Here to Learn More

• Btown Delivers
• CPR – Cell Phone Repair
• Echo Karaoke
• Fish Face Photo Booths
• Northern Indiana Aqua Products, LLC
• Respiratory Medical Solutions
• Second Steps, LLC
• SWAT – Severe Weather Alert Team
• Voice To Print Captioning, LLC

Established Businesses - Click Here to Learn More

• Goat Milk Stuff, LLC
• HMS Midwest, LLC
• Magrane Pet Medical Center
• Numerix, Inc.
• Rhum Academy of Music
• Scout and Zoe’s
• Solid Surfaces of Indiana, LLC
• Team Service, USA
• Terre Haute Helicopters

The ISBDC EDGE Awards celebrate Economic Development & Growth through Entrepreneurship. EDGE Award recipients fall into one of two categories: Emerging or Established businesses. Eligibility is limited to clients of the ISBDC who in the past year have received one-on-one confidential counseling with a trained ISBDC Business Advisor, participated in ISBDC programs, or used ISBDC tools and business resources. EDGE Award recipients have been selected locally by the regional ISBDC staff who work directly with the business. Congratulations to the 2012 Class of Established Business EDGE Awards Winners.

Goat Milk Stuff, LLC

Charlestown, IN

What started as a way for the family of 10 to connect by milking goats and making soap, became a full-time business in 2008. Two years after opening, the business had become profitable and more than doubled in sales. They came to the Southeast ISBDC to get strategic planning advice and started working on a strategically focused version of the business plan. After several meetings with the ISBDC, the Jonas family decided to expand the business.

The Southeast ISBDC provided market research, business planning guidance, financial analysis, loan assistance and even assisted the clients through some planning and zoning problems they had in mid-2011. Now, Goat Milk Stuff has been featured on the Today Show on NBC and in the January O Magazine for the Oprah network and is expanding into a new facility in Southern Indiana. With a new building expansion, they will move into a wholesale sales relationship with some existing customers worldwide. They also moved to exporting (less than 1% of sales) in 2011 to 10 different companies.

HMS Midwest, LLC

Portage, IN

Tracy Freeze came to the Northwest ISBDC in August 2009 for strategic assistance with her 14 year old medical practice management consulting business. The NW ISBDC effectively led HMS Midwest through the process of achieving two major goals. The first was the successful integration of Tracy’s husband, Jeff, into the business. The second was the process of directing their first ever strategic planning process and, as an outcome of that, the reorganization of their business model. HMS Midwest has been able to make the leap from working out of a 650 sq ft home office to a 2500 sq ft commercial office filled with technological tools that will enable further development of service lines for their clients as well as the addition of two employees. Their focus now is on helping the providers to navigate the choppy waters that lay ahead for the healthcare industry and with their recent growth they have the space and staff to make this happen.

Magrane Pet Medical Center

Mishawaka, IN

Dr. Neuhoff engaged the North Central ISBDC in December 2010 after hearing a presentation to a local association of women business owners. She explained the challenges her veterinary practice faced in growing revenues in a crowded market during a time that expenditures on veterinary services had contracted. The NC ISBDC completed a review of the business’ web site and requested an ESRI study to provide better insight into the local market. The practice was then referred to a local branding specialist that completed additional research and recommended a variety of positioning statements and tag lines. With a differentiation strategy in place, additional counseling focused upon evaluation of promotional options and assistance in developing the script of a television advertisement.

During the course of ISBDC engagement Dr. Neuhoff received an opportunity to acquire another practice that operated in a different geographic area of the regional market. Data from the ESRI study helped assess the potential for additional growth through that second location, which is expected to increase annual revenues by $300,000.

Numerix, Inc.

Columbia City, IN

Jeff Johnson was introduced to the NE ISBDC through Alan Tio and the Whitley County Economic Development Corporation in 2009. At the time, Mr. Johnson was interested in establishing a formal plan to take his CNC machine shop business to the next level. Mr. Johnson requested SBDC support in developing a structured marketing plan, establishing a training program for his employees, and coaching in how to improve cash flow within the business.

As a result of ongoing counseling/coaching, the business has completed and begun implementation of a strategic plan that provides a source of direction and focus for the owner. The owners have continued to work on strategies and tactics to continuously improve their business performance, Consequently, the business has increased production capacity, increased revenues 43% in a challenging economy, developed a formal training program for employees, hired 11 new employees, and is in the process of obtaining its QS 13485/ISO 9001 certification. Ongoing SBDC coaching will be provided to the client to continue refinement and implementation of the strategic plan.

Rhum Academy of Music

Kokomo, IN

Gary Rhum was teaching music lessons from his home, but felt like he could do much more. Gary’s dream was to have a music school with a holistic approach to teaching music; offering not only private and group lessons, but also a performance hall and music store dedicated to helping in the success of local musicians. With the encouragement of some of his student’s parents and the mayor of Kokomo, he rented a large historic space in downtown Kokomo’s beautiful “Old City Building.” Gary was an artist, not a businessman, and he needed some guidance in how to develop his business, write a business plan, and to obtain funding.  He first met with the Hoosier Heartland ISBDC in January of 2009.

The HH ISBDC provided Gary with some fundamental business practices and tips to help him organize and prioritize and helped him enroll in the HH ISBDC Collegiate Management program (available via a partnership between HHISBDC and IUK). Through this, IU Kokomo master’s students assisted Gary in the development of his business plan which helped the Rhum Academy of Music to obtain the necessary funding through Community First Bank in Kokomo to develop his business in the large new location. The academy now has 17 employees and hundreds of students of all ages. A line of musical instruments has been added to provide retail sales revenue and current 2011 sales are already 2.25 times higher than the 2009 annual sales. Gary is not yet done growing, and he has again turned the HH ISBDC (and their partner, the Greater Kokomo Economic Development Alliance) to help him consider a number of options to expand the Rhum Academy of Music.

Scout and Zoe’s

Anderson, IN

Cindy Dunston Quirk’s dogs, Scout and Zoe, were allergic to any bovine product. Cindy set out on a ten year quest for non-bovine items for them to chew on to exercise their chew drive and help with cleaning their teeth. She finally discovered antlers which are rugged, hard, solid and won’t splinter like bones.

Cindy came to the East Central ISBDC in August 2010 for assistance in business planning, bookkeeping practices and marketing. The EC ISBDC helped Cindy focus on her market using marketing research tools such as ESRI and Hillsearch. This led Cindy to focus on internet sales and exporting.

When Cindy started exporting to China, the ISBDC export advisors helped her make sure she was following the right procedures as well as help Cindy look into different foreign markets such as Brazil.

Cindy currently has three retail outlets in China, has just recently gotten her product into a major US chain store, delivering her product to 40 of the chain’s market area stores, and is projecting 2011 sales to be $86,000 over prior year sales.

Solid Surfaces of Indiana, LLC

Indianapolis, IN

Joe Papp contacted the Central Indiana SBDC in August 2005 to review his business plan which outlined the proposed launch of a solid surface fabrication and installation company. The Central Indiana SBDC provided guidance in working through the details of the plan and used ProfitCents to analyze the financials. Joe located and leased a facility and started operating in July 2006, self-financing the purchase of the initial CNC equipment and supplies/material using an operational activity checklist provided by the CISBDC. The CISBDC later introduced him to National City Bank in Indianapolis, who reviewed their plan and approved an initial $20,000 line of credit.

Solid Surfaces of Indiana has steadily grown their business over the last 5 years, providing solid surface countertops and vanity tops to a number of local Lowe’s stores and area kitchen/bath dealers. In addition, they have completed commercial work for several major Indiana companies, such as Eli Lilly, Sallie Mae and the Indiana State Teachers Association (ISTA). Throughout the business expansion, the CISBDC assisted with the update of the business plan, and introduced Joe to Huntington National Bank, who approved a $90,000 SBA business loan for the purchase of new CNC equipment for the granite and quartz production line, as well as an expanded $50,000 line of credit.  In October 2011, they moved to a new larger facility to accommodate this growth.

Faced with a temporary decline in sales in 2010 due to the recession,  the Solid Surfaces team maintained their full commitment in providing top quality products and great customer service to their customers, which directly led to the opportunity of a significant increase in business with Lowe’s, and the strategic addition of the granite and quartz product lines in 2011. This expansion is based on a major purchasing commitment from Lowe’s, and will double Solid Surfaces’ total sales in 2012 as well as add two employees.

Team Service, USA

Evansville, IN

Mike came to the Southwest ISBDC in the fall of 2009 when a banker asked about the company’s profitability and his breakeven point. The company’s accountant lacked the technical experience to provide accurate accounting records and a meaningful set of financial statements. The SW ISBDC worked with his bookkeeper/accountant in improving his QuickBooks records so that meaningful financials could be produced. They also provided guidance in the area of internal controls needed in a small business with a one person accounting staff. The company eventually received the financing needed to maintain an adequate working capital level.

Mike provides his full-time employees, professional staff and unskilled production workers, benefits not typical in the industries he services. Employees earn two weeks vacation, company 401K contributions, and the company pays the majority of their medical and dental insurance coverage. With this great service and motivated employees, in less than five years he has gone from zero to 75 employees.

Terre Haute Helicopters

West Terre Haute, IN

Robert Garzolini came to the West Central ISBDC in 2008 to request assistance in developing a business proposal for submission to Riddell National Bank as well as implementation assistance. The proposal was to gain funding to purchase equipment to outfit his helicopter so that he would be able to crop dust and provide agricultural services using his helicopter. In addition, he also discussed various marketing strategies with the WC office.

Today, Terre Haute Helicopters employs not only Mr. Garzolini, but provides employment to two others during peak planting and growing times.  During the off season  the company provides flight services at festivals, such as the Covered Bridge Festival. Through his updated business plan, the company received approximately $2 million in financing from Riddell National Bank and 2011 sales were around $500,000. Terre Haute Helicopters ended 2011 and began 2012 by expanding its services in the Republic of the Marshall Islands, which is just north of the Equator.

The ISBDC EDGE Awards celebrate Economic Development & Growth through Entrepreneurship. EDGE Award recipients fall into one of two categories: Emerging or Established businesses. Eligibility is limited to clients of the ISBDC who in the past year have received one-on-one confidential counseling with a trained ISBDC Business Advisor, participated in ISBDC programs, or used ISBDC tools and business resources. EDGE Award recipients have been selected locally by the regional ISBDC staff who work directly with the business. Congratulations to the 2012 Class of Emerging Business EDGE Awards Winners.

Btown Delivers

Bloomington, IN

Franc Perrelle first came to the ISBDC in November of 2010 seeking help with starting up a food delivery business in Bloomington. The WC ISBDC initially assisted Franc with a business feasibility analysis and help with the legal and governmental aspects of starting up. After the first meeting, Franc decided to use the Business Plan Pro software package to write his business plan. In four counseling sessions over the next three months, Franc completed his plan and received assistance and feedback on topics ranging from market analysis to financial projections. During this time, the ISBDC provided First Research reports, ESRI demographic reports and ProfitCents reports in conjunction with counseling to strengthen Franc’s plan.

He utilized his own assets to fund the startup of Btown Delivers which opened in February 2011. Btown Delivers provides delivery services for restaurants that typically do not have their own delivery service via online orders at www.btowndelivers.com and phone orders. Since the company’s startup, the WC ISBDC has assisted in operations, marketing and future strategic growth planning. Btown Delivers has steadily grown from the initial startup one-person operation to five drivers as of November 2011. The company utilized its own resources and strengths to expand into a new market niche providing delivery and logistics services for medical offices in several cities in Southern Indiana in the second half of 2011. They are currently planning on expanding both their restaurant and medical delivery business to other cities in Indiana in 2012.

CPR – Cell Phone Repair

Evansville, IN

Scott Hutslar came to the Southwest ISBDC for assistance in reviewing his business plan which included his financial projections and to discuss financing options for the purchase of a franchise, Cell Phone Repair. The SW ISBDC helped review the financials of the business plan, provided him with some answers on local licenses and passed on some names for his facility remodeling. Scott was able to open the business on January 2011 with three full time employees and is looking to expand into Jasper.

Echo Karaoke

West Lafayette, IN

Jim and Brian first came to the Hoosier Heartland ISBDC through the Entrepreneur Certificate Program at Purdue in May of 2009.  They were primarily looking for assistance with their business plan.

Their business idea was Echo Karaoke, Purdue’s Premier Karaoke & Lounge, with the target market being Asian Purdue students. Their advantage is the karaoke machines that have been imported from Hong Kong that provide family-style entertainment with over 70,000 songs.

The HH ISBDC provided assistance in developing a business plan, financials, legal structure, obtaining proper licensing and general operations of the business.

Jim and Brian held a “soft opening” for Echo Karaoke in June 2011 which had a great turnout. They never expected a such a huge crowd that evening, or the abrupt end to the night when the power went out! Over the past five months Echo Karaoke added 10 staff, secured around $300,000 in financing and has had over 700 singers pass through their doors.

Fish Face Photo Booths

Indianapolis, IN

Fish Face Photo Booths started November 2010 and makes/markets photo booths for clients wanting to rent them for events and for vending applications. Fish Face was started by Beth Johnson, who wanted to create higher quality and more reliable photo booths than what were currently on the market. Fish Face was recently featured in the international trade magazine “Fun World Magazine,” highlighting Fish Face’s social media capabilities.

Fish Face has sold photo booths to clients all over the United States and the world, including Spain, Poland, Mexico, Saudi Arabia, Australia, and Morocco. The SBDC assisted Beth on her business plan and encouraged her to enter the Entrepreneurship Advancement Center’s business plan competition which they won and received a prize package valued at $25,000 in January, 2011. As production and sales ramped up in 2011, and with the addition of three employees, the SBDC has provided on-going counseling on business strategy and technical assistance on exporting regulations and procedures.

Northern Indiana Aqua Products, LLC

Goshen, IN

Kevin Boyer and John Metz are the founders of Northern Indiana Aquaproducts, a start-up venture located in Goshen. Kevin and John developed the idea of aquaculture, or fish farming in mid 2009 and began researching the concept. They first engaged the NC ISBDC on November 25, 2009 to seek assistance with market research and business plan development.

The pair purchased SmallBizNavigator and started on the business plan, supported by additional ISBDC research and financial projection assistance, including determination of start-up costs and initial working capital needs. With a finished plan, John and Kevin began to pursue funding, securing a grant from the Department of Vocational Rehabilitation but failing in attempts to obtain bank loans. That prompted a scaling back of the initial vision and pursuit of private investment, which came in the form of an individual who provided a building to house the business. With start-up imminent, Kevin and John completed QuickBooks training and received additional counseling to initiate their use of the software.

The business opened on January 8, 2011 with the arrival of more than 4,000 Tilapia and a staff of three.  Continued ISBDC engagement will focus upon marketing and on scaling up to higher levels of production.

Respiratory Medical Solutions

Lawrenceburg, IN

Josh Veid and Lou Grove first visited the Southeast ISBDC in October of 2010 for assistance in developing a business plan after reading about the ISBDC in the local paper. The primary focus of the business is offering durable medical equipment to be used in the home.

During the start-up phase, Josh and Lou received guidance in the areas of business planning, financial projections, assessing market potential and determining appropriate levels of start-up inventory and industry assessments. With their personal investment of $17,000 as well as $10,000 from silent investors, Respiratory Medical Solutions opened in Lawrenceburg in November of 2011. RMS, Inc. carries an inventory of medical supplies including sleep disorder therapy products, mobility products, diabetic shoes, aids to daily living and scrubs and medical accessories.

Throughout the last year, the SBDC has offered additional assistance in financial decision-making, resulting in a $10,000 line of credit, assisted RMS with updating their business plan to secure grant funding and has offered ongoing support for both branding and marketing opportunities as well as sales staff training.

Although it took nearly a year to complete, RMS has recently been accepted by two prominent insurance companies.  The first several months of operations were challenging, but RMS has expanded their product offerings in the second quarter of 2011, resulting in a substantial revenue increase.

Second Steps, LLC

New Haven, IN

Lisa Compton, the owner and founder of Second Steps, LLC, first worked with the SBDC while developing a plan for another business, SensoryCritters.com that she and her husband Bob Compton opened in 2005. This business retails products to aid in development and therapy for children with sensory processing disorders. It became apparent to the company’s owners that there were unmet needs in the market to provide clinical therapy and support for affected families. As a result, Ms. Compton started Second Steps, LLC to meet these identified needs for Applied Behavior Analysis services and social skills classes.

The NE ISBDC worked with Lisa Compton and Second Steps to complete pre-opening sales projections and cash flow strategies as well as providing legal structure direction. Additionally, the SBDC worked with the client in creating graphic designs and logo prototypes, marketing strategies and press releases relating to the Grand Opening and new service offerings for the new business, and has continued to provide market strategy implementation coaching.

Opening this business in August 2010 has allowed for new therapy services to be offered to the greater Fort Wayne market, consolidated existing offerings into one location, and the addition of six full time and five contracted employees.

SWAT – Severe Weather Alert Team

Muncie, IN

In the summer of 2011, Brad Maushart, Brandon Redmond, Chris Bergin & Joe Krupa approached the EC ISBDC for help with multiple aspects of running their business. The four are “storm chasers” and wanted to turn their fascination with weather into a tourism business.

After an initial assessment, the business advisor determined that the clients needed to produce a business plan, understand how their corporate structure needed to operate, and understand proper handling of the finances and marketing. Since their goal was to enable the principals to leave their current occupations and concentrate fully on their new business, the counselor set up a program to cover all of their concerns.

SWAT (Severe Weather Alert Team) chases storms for a deeper understanding of what is going on in the skies above. They chase storms in thirteen different states. SWAT not only chases severe and inclement weather, but provides real time updates to media outlets, the National Weather Service and to the general public. SWAT recently signed a partnership with WXIN Fox 59.

Voice To Print Captioning, LLC

Crown Point, IN

When her daughter developed some hearing loss, Kathy Cortopassi decided that she wanted to expand her court reporting business to include services for the disabled. Kathy came to the Northwest ISBDC in early 2009 for this expansion assistance. Because she was looking for peer advice on running a business, the NW ISBDC introduced her to the local BPW-Business & Professional Women. Kathy received strategic planning assistance which resulted in her opening her first office at the Entech Innovation Center in Valparaiso. She has recently moved to a new office at the Purdue Technology Center in Crown Point.

Kathy plans to grow her business significantly in 2012 by adding four new products. As a result, she will need additional capital and the NW ISBDC is now working with Kathy to help her revise and update a business plan in order to secure the financing she will need.  Kathy has rewritten the marketing strategy part of her plan using market research provided by the ISBDC. She hopes to reach a new market with the provided information on hearing loss among veterans returning from Iraq and Afghanistan. She estimates an increase of sales of over 100% and adding at least one employee a quarter.

by Jacob Schpok – State Director

Every day we help entrepreneurs explain their business strategies to potential investors by helping them eliminate assumptions in their business plans. We owe it to these entrepreneurs and our own investors to practice what we preach. Below is proof that the ISBDC not only helps businesses in Indiana but does so with a positive return on investment. Entrepreneurs, give us a piece of your mind. Comment below and tell us if we are pointed in the right direction.

Can the ISBDC prove the impact they report?

White papers and complex statistical analysis is not needed to defend our results. The ISBDC has a two step process in collecting the data we report. First, we ask our client for change in sales, capital, jobs, and business status (if they launched, purchased, or sold a business) 30 and 90 days after we start working with them and again at the end of the year. Second, clients reporting changes are asked if the ISBDC helped in creating the change. We require a hard or digital signature from clients confirming that the ISBDC assistance helped them in creating the change before we count that impact. In other words, behind every impact number we report there are business owners validating our effect.

How much does it cost to run the ISBDC and is it worth the money?

In 2011, the ISBDC ran on a $3.3 million budget. If all we measured was how much capital we helped clients raise, every dollar spent on the ISBDC would count towards $16 of new investments. In reality, we stretch our $3.3 million further. Take a look at how else we directly impacted Indiana businesses.

 The ISBDC Impact in 2011

Are we doing all we can to provide stakeholders with straight forward, factual, and impactful numbers? Tell us what you think. We look forward to reading your thoughts.

Learn Disney’s world-class approach to sustained success through five core topics:  leadership excellence, people management, quality service, brand loyalty and inspiring creativity.  Bring your business challenges, and the experienced leaders at Disney Institute will show you a clear, simplified way of looking at the problems and seeing what’s probably already right in front of you – easy, effective solutions that can be incorporated into your own organization and help improve business results.

Thursday, May 17

Marion Ivy Tech Conference Center, 261 S. Commerce Drive, Marion, IN 46953

Image via http://disneyinstitute.com/

Nominations for the 2012 class of Indiana Companies to Watch will close March 30. Hurry and nominate a company or apply online at http://indiana.companiestowatch.org.

Be the first to nominate a winning company and receive a free ticket to the awards ceremony! 

An awards ceremony will be held at the Indiana Roof Ballroom in Indianapolis in late August 2012. Winners will be profiled in the awards ceremony program as well as in the September 2012 Companies to Watch edition of BizVoice, a magazine of the Indiana Chamber of Commerce. Also, throughout the year, Companies to Watch winners are invited to exclusive professional development and networking events.

Business Criteria Includes:

Complete eligibility requirements, the online nomination form, and additional information can be found here.

View the press release.

Follow Indiana Companies To Watch on Twitter: #inctw