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Being an entrepreneur is risky

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Ronald "Bud" Gayhart

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Jimmy Peltier

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Russ Kashian

JANESVILLE — The looming General Motors plant shutdown might have prompted some autoworkers to consider starting their own businesses.

It’s risky.

It requires research, planning and soul searching.

It takes a significant commitment of time and money and an immeasurable amount of patience.

The Janesville Gazette talked to three experts from UW-Whitewater about starting a business.

Q: Is now a good time to start your own business?

A: “This is scary time for launching a business,” said Ronald Gayhart, director of the Small Business Development Center at UW-Whitewater.

The economy is “unsettled,” he said, which means financing a business and then making a profit could be tough.

But challenge often breeds opportunity, said Jimmy Peltier, the Irvin L. Young professor of entrepreneurship at UW-Whitewater.

“Business opportunities often exist in markets where low-cost options and products or services are in demand,” he said.

Q: What do you have to think about before starting your own business?

A: Consider what you like to do.

“Passion is the most important thing for an entrepreneur,” Peltier said. “Starting and operating a business takes an immense amount of time, and it’s critical that you love what you’re doing.”

But turning your hobby into a business often isn’t enough, Gayhart said.

“You have to bring the knowledge to bear,” he said. “You can’t learn on the job when you’re the owner.”

Industry knowledge and experience are crucial for success.

-- Determine if there’s a market for your business.

Consult newspapers, magazines and the Internet. Talk with family, friends, neighbors, co-workers and businesspeople. Those sources should be able to tell you if your business idea makes sense and has the potential for success.

“If there are four secondhand stores in your area, this is either a bad opportunity because of market saturation or a good one because demand is high,” Peltier said.

-- Know your financial situation.

“Sit down and create a personal financial statement to help you better understand your net worth,” Gayhart said. “And then ask yourself, ‘Do I want to put that at risk if I’m launching a business? Am I willing to accept that risk?’”

Small businesses have a high failure rate, and those that make it often aren’t profitable in the first few years. Entrepreneurs should make sure they have the financial means to survive until their business is making money.

-- Figure out if you’re the right kind of person.

“Ask yourself if you have the temperament for owning and running your own business,” said Russ Kashian, an economics professor at UW-Whitewater. “Are you willing to work harder and longer than anyone else? Are you willing to forgo satisfaction for the long run?”

Q: How do I go about starting a business?

A: The first—and perhaps the most important—thing to do is to get in touch with experts who can help you muddle through the labor-intensive process.

-- The U.S. Small Business Administration has a number of resources, including a planning checklist. For more information, go to www.sba.gov or contact the local office at 740 Regent St., Suite 100, Madison, or (608) 441-5263.

-- The Small Business Development Center at UW-Whitewater also has a number of resources, including courses, counseling services and funding opportunities. For more information, go to www.uww.edu/sbdc or contact the local satellite office at 14 S. Jackson St., Janesville, or (608) 314-1641.

-- Inventors and entrepreneurs clubs, sponsored by the Wisconsin Entrepreneurs Network, provide a forum for inventors and entrepreneurs to learn, network and share ideas. To find a local club, go to www.wenportal.org/ieclub_grants.

Q: What kinds of businesses are “hot” right now?

A: “We used to see a lot of service-type businesses that were doing exceedingly well,” Gayhart said, “but that’s because people had more disposable income.”

Demand for pet care, home cleaning and personal shopping services is starting to wane as people tighten their belts in a troubled economy, he said.

Gayhart said entrepreneurs instead should consider what products and services might be needed as the Baby Boomer generation heads into retirement.

Businesses that provide health-care related services, including home health care and long-term care, are sure to grow, he said. The same is true of lawn care, snow removal and small home repair or improvement services, he said, because those are things people might have trouble doing as they get older.

Peltier said entrepreneurs also should examine trends in the marketplace, such as the burgeoning green movement. Opportunities include green cleaning and green landscaping services, energy efficiency auditing and organic produce and other foods, he said.

A final reminder from the experts: Weigh all of your options very carefully.

“Sometimes the best decision is not to go into business,” Gayhart said.

TO LEARN MORE

The Small Business Development Center satellite office is in the Jackson Square Building at 14 S. Jackson St., Janesville.

For more information, call (608) 314-1641, e-mail outreach1@uww.edu or go to www.uww.edu/sbdc.