Self-support successes: Entrepreneurial spirit blooms during recession
| Friday, Jul 24 2009 07:11 PM
Last Updated Friday, Jul 24 2009 07:11 PM
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Jenn Ireland / The Californian Fitzgerald Graves, Matthew Sam, Zaleone Kadossiyi, Jennifer Eguao, Donna Sam and Natasha Sam stand on barber shop side in the Sam family's new downtown business Life-U-Up that is a full service salon, make-up studio and barber shop all-in-one.
Felix Adamo / The Californian Thirteen year old Cameryn Beaman,left, gets help with her math from tutor Natalie Bernardin.
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The tough economy didn’t make Natalie Bernardin an entrepreneur. It simply left her few alternatives.
Prospects for landing her dream job — teaching special education — were slim when she graduated from Cal State Bakersfield with a bachelor’s degree in business administration. After dutifully placing her name on waiting lists, she took matters into her own hands.
Bernardin launched a private tutoring business in March, and supplemented that with a side gig selling Avon.
“There’s nothing else to do,” the 26-year-old said, “and the best person to rely on is myself.”
She is among a new class of pioneers defiantly launching a new enterprise amid the most difficult conditions in recent memory.
The challenges are many. Consumers aren’t spending. Banks are hesitant to finance startups. And resources for aspiring entrepreneurs have been cut back.
“This is probably one of the worst times you can imagine to start a business,” said Bob Hawkes, interim director of the business assistance center at Kern Community College District, which earlier this year switched its focus from helping startups to assisting existing businesses.
Tell that to Donna Sam and her family. They spent the last two years — and their entire savings — turning an empty warehouse in downtown Bakersfield into a combination barber shop/beauty salon/makeup studio specializing in hair loss patients.
Sam wasn’t about to let the economy stop her.
“We just went out on faith,” she said.
No clear trend
The U.S. Census Bureau reported in June that in 2007 there was a record number (21.7 million) of “nonemployer” businesses — that is, people in business for themselves with no employees. California led the nation with 2.8 million owners in that classification.
New business licenses issued in Bakersfield were off 35 percent in the 2008-09 fiscal year, down from 4,888 the year before. That decline is not necessarily indicative of new business activity, however, because the data includes new businesses, expansions and outside companies moving into the Bakersfield market.
But in general, an uptick in new business launches is to be expected in a slow economy, U.S. Small Business Administration economist Brian Headd wrote in a July SBA newsletter. He noted that the number of nonemployer businesses grew by only about 3 percent in the boom days of the late 1990s — then increased by more than 8 percent between 2007 and 2008.
If this holds true in Kern, local unemployment would seem to provide its own entrepreneurial spark: The county’s jobless rate was 14.8 percent In May, up from 9 percent a year before.
Starting out
“We are seeing people that have had to seek additional sources of income and so they are going back to what passion they have,” said Diane Howerton, regional director for the University of California, Merced’s Small Business Development Center network, which now extends to Kern County.
The path to self-employment could also include buying an existing business.
And, indeed, Bakersfield business broker Richard Rios said, more people are doing that these days as older business owners look to retire.
The biggest challenge
Buying a business is not necessarily easier. Virtually all commercial loans are harder to come by. Bankers say that’s not because of the credit crunch but because lower consumer confidence increases business risks.
“The criteria for borrowing money for small business really has not changed,” said Bart Hill, president and CEO of San Joaquin Bank, in Bakersfield.
The best way to get a new business loan is to contribute a sizeable chunk of equity, he said.
Even that sounds hopeful when compared with the outlook presented by Dan Doyle, chairman of the California Bankers Association and president and CEO for Fresno’s Central Valley Community Bank. He said banks “generally are not” funding startups — though they grow more willing once the business demonstrates success.
Nevertheless, financing still exists for some, judging by the recent experience of Manuel and Gloria Cebreros, new owners of Country Club Hand Car Wash on Panorama Drive.
After 14 years in the car wash business in Los Angeles, Manuel Cebreros decided to go it alone.
Armed with half the capital needed to buy the business, he and Gloria went out in search of a loan. They were turned down twice before finally landing a loan with Bank of America.
Not all bad
Finding a place to run a startup is much easier as office and retail property owners have shown new willingness to work out favorable terms with potential tenants, according to Anthony Olivieri, president of Bakersfield’s Olivieri Commercial Group.
Rent prices, lease terms and tenant improvements are all on the table now.
Return to basics
No matter the economic climate, success still boils down to having a solid business plan, industry experience, adequate financing to cover operational expenses for a year or more and, above all, a passion for the work involved.
And confidence is an absolute requirement for the self-employed, said Morgan Clayton, founder of Tel-Tec Security Systems Inc., who often fields calls from budding entrepreneurs in need of advice. “You’ve got to look in the mirror and say, ‘Do I trust myself?’” he said.
That’s one test Bernardin, the tutoring business owner, can pass.
“If you don’t believe in yourself,” she said, “you can’t start a business.”
