Even a seasoned business owner can lose control of the reins when a company goes through rapid growth. The Sacramento district of the U.S. Small Business Administration introduced a program this year aimed at helping entrepreneurs effectively manage expansion.
Styled as “Streetwise MBA,” the SBA’s Emerging Leaders Initiative attracted established business owners such as Sig Lindley of Thai Basil and Veg Cafe, Lisa Peters of Randy Peters Catering and Jack Smith of Fortuna Business Management Consulting. In total, 17 business leaders graduated from the inaugural class.
“The program was a crash course in the acceleration of business,” Smith told me. “We spent a lot of time focusing on the numbers, which ironically is a place where business owners don’t spend a lot of time because we get caught up in the day-to-day execution of delivering whatever it is we do. … The Streetwise MBA really focused on better understanding financial statements, better leveraging capital, how to really give your company the fuel that it needs to grow effectively.”
Lindley noted: “It allows the business owner to step back and say, ‘What do you want to get out of your business? What’s your vision? Does this align with who you are as a business owner … in terms of the kinds of things you like to do?’ ”
Lindley, Peters and Smith noted that the case studies and homework were made more effective with the time they spent conferring with the other proven business leaders selected for the class. In addition, those leaders brought in venture capitalists, bankers, accountants and other professionals to act as mentors on marketing strategies, growth plans, financial results and human resource challenges.
“You’d go to these three-hour sessions every two to three weeks in a room with about 20 other business owners, and then they would break us into small groups of similar businesses,” said Lindley, who co-owns the midtown Sacramento Thai Basil with his wife, Suleka Sun-Lindley. “Oftentimes, the business owners don’t have a person to talk to about employees or a financial crunch or indecision about whether they want to grow any further or whether they’re happy with what they’re doing now. But now, you have a CEO-mentoring group that you can meet with outside of classes. That was the biggest benefit of it.”
Peters said she and her husband, Randy, were in the middle of restructuring and relocating their business when SBA officials asked her to apply for the inaugural class. With everything she had on her plate, she said, she was reluctant. But after she and her husband studied the course material, they realized the lessons would provide a framework for tackling many issues they faced.
“Actually, it helped me to keep focused,” said Peters. “They helped me to plan my three-year growth process in all areas. Maybe you want to grow your business, and maybe you want an exit plan, but you just don’t know how to do that. It was great meeting all the other CEOs, and what’s so funny is that we all came from different backgrounds, different occupations, yet we all had very similar issues.”
So far this year, the couple have expanded their full-time staff to 16 from 10, Peters said, and their revenue is up 17 percent over last year. In January, the Peterses acquired and are in the midst of renovating a 14,300-square-foot building at 105 Vernon St. on the edge of downtown Roseville for their catering business. They have leased a 4,000-square-foot building in Citrus Heights for eight years. The new facility will have event space for wedding receptions, corporate parties and celebrations, Peters said, and there will be a tasting room that doubles as a private dining room, which looks out into the kitchen. They will launch operations there on Jan. 2, and later in the year, they’ll open a small restaurant, 105 Bistro, in the space.
Smith expects 2017 to be a huge growth year for his Folsom-based IT consulting company. He told me: “To a person, the leaders in the (Emerging Leaders) class were all like, ‘Oh, man, I really feel like I now know how my business is growing, and I can make more effective decisions.’ That’s one of the things our firm really leveraged – better financial governance, making better investment decisions and really the ability to set ourselves up. … We’re forecasting 2017 profit to exceed revenue from 2015.
Lindley and Sun-Lindley renovated their building at 2431 J St. to open up Veg Cafe in April. They must pay for that expansion even as they try to figure out how to pay for increases in the state minimum wage and maintain a clientele in the face of increased parking costs in midtown Sacramento.
“Our No. 1 expense, which is payroll, will go up 50 percent in the next six years, between now and 2022. How does a business absorb that, and do we replace employees with technology?” Lindley said. “Do we cut back on the full-service, sit-down where a waiter will come serve you, or do you go to a kiosk at the front, place an order, get a card and then have food runners? Do we shrink down and do more with less? Those are challenges we will continue to wrestle with because I think there is a price point, particularly in midtown, where the hours for parking fees have been extended to 10 p.m.”
All it takes, Lindley said, is for customers to get one parking ticket, and that will give them an incentive to look for another Thai restaurant in a part of the city where there are fewer hassles. Every business owner has a choice, Lindley said, though it may not be an easy one: Either they can sell or close the business and let someone else take on the hurdles, or they can figure out ways to make it work. The Emerging Leaders Program was a great space to talk about the issues and weigh the benefits and drawbacks of potential solutions.
First, the class tackled case studies as part of the curriculum developed by Boston’s Interise economic development network. Then they went back to their businesses, collected data that would build a similar case study for their company and shared it with the other business owners and mentors. The nice part about having the mentors there, Lindley said, was that they were experts in their fields of accounting, investment or human resources, and could specify which ratios or assessments would be most effective for analyzing the financial health of their businesses.
“The takeaway from the finance segment was that you should pick the one or two indicators that allow you to keep the pulse of your business and watch those numbers closely, and make sure that they’re the right indicators,” Lindley said. “It’s not just about watching the money in the checking account, although that’s helpful.”
Emerging Leaders Program
The Sacramento district office of the U.S. Small Business Administration has begun taking applications for the next class of the Emerging Leaders Initiative, a seven-month program that allows participants to work with experienced mentors and to develop relationships with other proven business executives. Want to learn more? Contact Robbin Yasso at 916-735-1701 or firstname.lastname@example.org. You can also visit www.sba.gov/about-sba/sba-initiatives/sba-emerging-leaders-initiative.