Dollars and Sense: Local Agencies Share Business Savvy (KTVA.com Exclusive)
ANCHORAGE – At the Alaska Small Business Development Center, local entrepreneurs are introduced to the hard realities of economics.
“If it’s a business that’s first starting out, they’re really not focusing on the financials most of the time,” said Debi Fowler, director of the statewide resource end education center. “They should be.”
The program, founded by the Small Business Administration more than 25 years ago, survives on government funding and other sponsors throughout Alaska. It provides free consultations and low-cost classes for budding entrepreneurs and seasoned small business owners alike, working with thousands of Alaskans every year.
Year after year, Fowler said the center taught business owners the same common themes.
Of the dozens of businesses founded through the center every year, Fowler said many of them started the same way: an enthusiastic entrepreneur excited about earning a paycheck doing what they love. Too often, she said they would focus on the latter, neglecting the former.
“They’re really leading with what they know, and what they know is their business, but they don’t know financials,” Fowler said.
Before delving into a new business venture, she encourages the center’s clients to carefully consider the economics of their endeavor. Many businesses don’t become profitable until at least five years into operation, a fact Fowler said turned many potential businessmen and women away at the door.
“I think it gives them more of a reality check,” she said. “How long until I get paid?”
The topic was covered in the center’s business development course, which Fowler said encourages participants to consider exactly how much of a product would need to be sold in order to generate a living wage.
But before they can start selling, she said there is another important step.
Remember to License
Entrepreneurs only make up one part of Alaska’s small business economy. Adam Harkness works with the other half daily.
The representative for the Better Business Bureau said licensing issues can be a major problem for both small businesses and their potential customers.
“We get calls every once in a while from people who say, I want to do business with x, y, z company and they don’t have a license, can I do business with them?” Harkness said. “Our answer is always no.”
It’s illegal to operate in the state of Alaska without one, and Harkness said lack of licensing led to expensive liability concerns capable of sinking a small business. Additionally, he said many types of business requires additional professional permits. When more than one is required, some often fall through the cracks.
Harkness said it is a time consuming blunder.
“That’s a big problem that we run into,” he said. “They want to start a business so they rent a location, they buy equipment, they hire employees and then when it comes down to opening day, they don’t have a license.”
It can take weeks to rectify, dependent on the type of license required, and Harkness said it comes down to conscientious planning. He said it leads to one of the bureaus most common pieces of advice.
“BBB recommends, when people approach us about starting a business, to thoroughly research all of your licenses,” he said. “It’s your responsibility.”