Castle Valley Summit Part II - Business Opportunities and Ideas
|Mike McCandless speaks on ideas for businesses.|
Mike McCandless, the economic development director for Emery County spoke in a session of the Castle Valley Economic Development Summit recently. His was the first in a three part session on starting your own business. McCandless first asked the audience, "Why do people start a business,?" Some answers included: to make money, be your own boss, give family a job, do something you enjoy, work the hours you want, increase status, etc.
One business owner in the audience spoke up and said, "You're not the boss, the customer is the boss."
McCandless said you can expect to work 50 percent more at things that do not generate income. Your customers will own you. They will dictate your hours. The customer drives the ship. You will need a strong marriage to survive starting a business. The decision must be a family decision, because the whole family will be involved.
McCandless said there is a mind set in Emery County where people will spend $200 to make sure you don't make a $100. This is something that needs to be changed because when one business succeeds then the whole area will benefit from that. But, people are jealous, it is a reality for county business owners.
One way to get around that is to get people involved in an organization that gets the naysayers involved. McCandless mentioned the BEAR program which helps start new businesses and works with businesses on retention and business expansion. He said economic development organizations are the fertilizer, not the seed.
You will need to be passionate about your idea for a business. You must love your idea. If you have this passion, you can be taught to be an entrepreneur and learn about business. "We need to grow the entrepreneurial spirit and get people excited," said McCandless, "You need to learn from others and steal good ideas. True entrepreneurs enjoy seeing others succeed. Jealousy will lead to failure. Starting a business is a risk, both financial and emotionally. True entrepreneurs accept risk. What is your tolerance for risk? financial, emotional and employment. You may have to risk all that to get over the hump. Some of the people who come into our office, don't want any of the risk."
Some of the top concerns of small business owners include: health insurance, liability insurance, workers comp, taxes, regulations, property taxes, state taxes, cost of utilities, cash flow, locating quality employees, etc. "Become aware of all the issues and then if you still want to start a business you must complete a comprehensive business plan. Do a complete financial statement with all items considered, taxes, credit, assets. Evaluate your financial resources. Usually you will need 15 to 25 percent down and some in-kind might be allowed. Get your financial items in line first and be honest. Be adequately capitalized to begin a project. Make forecasts for three-five years in the future. Make a realistic list of everything you will need to start that business. Identify competitive threats," said McCandless.
McCandless went over a sales leakage survey that is done for Carbon and Emery counties. Sales leakage is a comparison of actual sales versus anticipated sales. These numbers can help to identify potential opportunities or lack of opportunities. Numbers included: general merchandise-177 percent, groceries-129 percent, motor vehicles, 141 percent, auto repair-280 percent and hotel occupancy 169 percent. McCandless said when you are considering a business do not cut the pie again. Don't open a pizza parlor if there are already 10 pizza parlors on Main Street. Be cautious about simply copying a business in the community that is succeeding. Such a business is not generating new income, but cutting a limited pie. Such a business might result in both businesses failing.
Some percentages for other areas included: building and garden 57 percent, apparel 10 percent, furniture 37 percent, personal services, 76 percent, business services, 54 percent, appliances 160 percent. These percentages reflect that 90 percent of the clothing is purchased out of the counties, 63 percent of the furniture is purchased elsewhere.
When McCandless was asked why the percentage of furniture is bought elsewhere he said there is a perception that you can't get certain items here and that you pay more if you buy it locally. McCandless said this is a common misconception as most furniture stores in the area, can order anything you want and have it here second day. "You might pay a little more, but the convenience of staying home to shop counts for something," said McCandless. He also mentioned that local beauty shops are on overload and that is a business opportunity. He also said not to overlook the obvious in this natural resources based economy. Support businesses for repair and transportation. Mechanics are in demand. With the local motels being filled with workers in the energy industry, there has been a shortage of available rooms for tourists to the area. Entrepreneurs can step up and fill a need. Tourism can make a significant impact on the economy. When the tourists discover the ATV trails in our system, will the support businesses be here to support the influx. Eight hundred people will be here next year to do the overhaul at Hunter Plant and only 10 percent of those will be local. Where will the others stay?
Truck drivers, diesel mechanics and other mechanics are in short supply. Speciality services and internet businesses are also good opportunities. Health care businesses and consulting are other opportunities.
One internet business in Emery County is the Service Discount Store. He buys items from storage units and other places and sells the best items on ebay and the leftovers are sold on Fridays at the Castle Dale location. Other opportunities include: health care support businesses, replacement services, payroll, engineering, customer service, delivery service, advertising, graphic design, surveyors, etc. The San Rafael Research has gone from 0-76 employees in a few months.
Someone wondered why there aren't more eating establishments in the area. McCandless said one problem seen has been the lack of adequate capitalization. "The time is ripe for a motel in our area. It takes huge capital. A large hotel 90 rooms is $3-4 million and a 30 room runs about $1.8 million. The capital is challenging. You need to come up with 10-25 percent down and that's a large sum of money. That's where revolving loan funds and people with capital come in. The occupancy rate these last six months has been 90 percent for the motels in the western end of the county. The natural resources in the foreseeable future will still be stable and expanding. Carbon/Emery counties have had a high lease rate lately.
The opportunities exist if the entrepreneurs are willing to take the risk to capitalize on the opportunities.