Willing to risk it? Small businesses take leap of faith in uncertain times
Risk has always been a big part of the equation in small business — and it weighs on the minds of entrepreneurs in today’s economic environment.
Eric Sanabia of Signature Woodworks in Goleta took a big risk when he started his business three years ago, and now he is contemplating another sizable one.
David R. Fowble Sr., a veteran businessman and owner of Trophies, Etc., in Camarillo, says taking business risks is part of his mindset. “If you are not willing to go all the way when you take over a business, you are starting with a handicap.”
Carol Reniger, president of Baskets n’ Bows, based in Simi Valley, says her biggest business risk is the size of her inventory. She is managing it extra carefully during this recession.
These three owners of small businesses in the Tri-Counties shared with the Business Times their experience with risk and how they are dealing with it in today’s economy. It comes down to being more vigilant and efficient and looking for ways to diversify.
Sanabia was new to the woodworking business when he bought Signature Woodworks in April of 2006. He took out a loan against his house for the startup capital. Sanabia said he had quite a bit of experience in managing apartments and people in various capacities, but this was his first business venture on his own.
Going into it, he felt uncertain and scared and did a lot of praying. “There is a certain amount of fear, absolutely, associated with it,” he said. “Fear mixed with excitement and a challenge and optimism.”
Sanabia said his best move, after being in business for a few months, was bringing in Paul Hollingsworth, who had 20 years of experience in the industry, to help the business grow.
Now he is considering another financial risk: moving the business from the outskirts of Goleta to the heart of Santa Barbara’s light industrial area near Milpas and Gutierrez streets. He says he would stand a much better chance of building up the business there, but his lease expenses would go up, and the cost of moving would be significant.
As for coping with risks in this recession, he said, “I see this time right now as an opportunity to really run efficiently, to cut back where you need to do that and to really streamline your business.”
He also plans to diversify by offering software products to the woodworking industry. He will debut his creations in July at a convention of the Association of Woodworking & Furnishings Suppliers in Las Vegas.
Asked for his ideas on dealing with risk, Sanabia said, “It is certainly not for everybody. You get beat up on a daily basis. You must be constantly willing to get back up and take the blows again. It is relentless.”
Fowble has owned Trophies, Etc. for 19 years. He, too, used his house as collateral for startup capital.
“Once you step into it, you are pretty well committed. You have got to make it work,” he said.
Over the years he has expanded his lineup, adding a sign shop and then an array of promotional products for businesses.
In reaction to the current slowdown, he is again looking to diversify. His staff made fliers and delivered them to manufacturers in the area. Lately, his business has been making tags for controls in manufacturing plants. The firm is engraving identifiers on every switch plate and control panel at the Procter & Gamble plant in Oxnard.
Fowble’s advice on coping with business risk in hard times is, don’t hesitate to ask for help. “I think it’s a guy thing: You don’t want to ask for directions,” he said. “But I strongly recommend taking advantage of the Small Business Administration’s free classes … These are experts who have been around the block and offer free help.”
Fowble also recommends the Economic Development Collaborative-Ventura County, based in Camarillo, which also offers free assistance to small businesses in areas such as marketing ideas, managing cash flow and a 911 program for firms in crisis.
Reniger has been in business in Simi Valley for 17 years with Baskets n’ Bows. She had a retail store until 2001, when she moved to a mostly Web-based business model.
She said that in the current environment, her biggest risk is losing money on the food products that go into her baskets. She is now ordering a minimum of 50 percent less in food items than she did in the past.
“If I don’t sell it, I have to throw it out, and it’s lost money,” she said.
Her advice on managing risk is to not overbuy. “You have high hopes and want this to work and think you have to have everything,” she said. “Go slow and build up your inventory gradually.”
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