September 13, 2004
Part 1 of 2 Incubator Without Walls: Hatching a plan | One man tries his hand at starting a business, through Incubator Without Walls
By Mike Woelflein
Another blank computer screen was staring at me. It's a common sight when you're a writer, just before fingers start tapping keys. There's potential and hope in the glow of the white page, but for me it's always mixed with anxiety. As the deadline looms closer, the fear grows. I've always got my notes, I've got my outline, but I'm never sure I'm ready to write. I try not to wait for the fear, but I usually find my best work comes only when it strikes.
This moment, in mid-August, was a lot like the others. But this time was different. The blank screen was to become my Business Planˆ capital letters intended. A week before, I'd started the Incubator Without Walls program, a free, nine-week class for would-be entrepreneurs in the basics of starting or growing a micro-business. The top objective is to complete a business plan, in the process figuring out whether you can really build a business. I was hoping IWW could help me bring one or two of my own ideas to life, or at least decide whether they deserve a chance to live.
The program is mostly for the benefit of Maine residents who are lower-income or recently unemployed. I'm the latter. Were it not for my wife, I'd be the former, too. I was senior editor at Maine Times magazine until it shut down in January, a victim of lack of advertising despite its 18,000 subscribers. Maine Times had a talented editorial team, one I was lucky to be a part of. A few days after the sudden (though not wholly unexpected) end, reality hit hard.
I filed for unemployment, started freelancing and tried to figure out what would come next. There weren't a lot of jobs out there, unless I wanted to move. My wife has an excellent job, and we like living in Hampden, just down the Penobscot River from Bangor. We're traffic-free, hours from the nearest outbreak of suburbia and an hour or so from the coast or the mountains. We're also hours from imaginative, non-pizza takeout. (Okay, there is good Thai downtown. Plus, these days I've got more time to cook and less money to spend.) We're staying, if we can.
Freelance work is helping with the bills, but not necessarily the soul. I spend too much time staring at the computer, talking on the phone and writing for out-of-state publications, largely because they pay better.
There was talk, beginning right after the meeting that sealed the fate of Maine Times, about starting a small business. Eventually, that talk led me to this class, and to this particular blank screen.
Getting into the system
After the magazine folded, former Maine Times Managing Editor Brian Fiske, now a fellow under-employed freelancer, and I had often talked about starting a business, providing content and publications to area businesses and organizations. But deadlines (paying deadlines, that is) kept popping up, and we never got much past the talking stage. I suspect it happens to a lot of self-employed and small-business folks: You just keep pushing ahead on the next task, without taking time to plan where you're going. I also suspect that's one reason the IWW program could benefit a lot of micro-business owners, however long they've been in business.
Because I had revenues to declare almost from day one of unemployment ˆ thank you, Mainebiz ˆ most weeks I didn't receive an unemployment check. I eventually learned about the Maine Enterprise Option, which the Maine Department of Labor offers to those, according to its literature, "profiled" as "likely to exhaust" their benefits. Even they knew I probably wouldn't find a job here. MEO allows eligible Maine residents to receive their benefit checks while they pursue self-employment, provided they spend at least 40 hours per week working or developing their business.
I was accepted for MEO in March, and quickly fulfilled the requirements: documenting my work weeks, meeting with a business counselor and taking a one-day business plan class at Eastern Maine Development Corporation. At the time, I also inquired about IWW, but the spring class at Penquis Community Action Program was full. I kept seeking and working on freelance projects, but I wasn't finding, or making, time to work on expanding the business beyond writing and editing as an independent contractor. I needed a push.
One particularly frustrating July day, just after I finished a well-paying but tedious piece, the push arrived via e-mail. Tara Murphy, the instructor of the Bangor IWW classes, wrote asking if I was still interested in a session beginning in August. Just over a month later, I was sitting in her class.
A motley crew
The IWW is offered by various agencies in Piscataquis, Penobscot, Waldo, Washington and Hancock counties. My class, held at Penquis CAP headquarters in downtown Bangor, is the fifth Penquis CAP has held this year, including sessions in Lincoln, Millinocket and Dover-Foxcroft. The class has been offered by Penquis CAP since 1999, helping to put 112 entrepreneurs into business. More than 200 students participated in 2003.
Funding sources vary by agency, location and year. The Penquis classes this year are funded by Project GATE (Growing America Through Entrepreneurship), a joint project of the U.S. Department of Labor's Employment and Training Administration and the Small Business Administration. Next year, Penquis' IWW will be funded by the state Department of Economic and Community Development, thanks to a joint grant to Penquis CAP and the Maine Highlands Guild.
The class follows the NxLevel curriculum, "Business Plan Basics," produced by a Colorado-based collection of entrepreneurial training groups. It's a three-ring binder with about two solid inches of step-by-step lessons and worksheets designed to help a novice complete a business plan that's suitable for testing a business idea, implementing it and, of course, seeking financing.
My class of 27 people is larger than usual, according to Murphy. It includes several owners of existing businesses (two hair salons, a restaurant, a fabric shop) and would-be craftspeople, plumbers, HVAC pros and contractors. One man plans to sell merchandise with a flag of Aroostook County on it. A couple wants to open a full-service sewing machine shop offering sales, repairs and classes. A woman wants to open a paint-ball facility. Another wants to bring her cure for shingles to market. There's also a dog-treat manufacturer, a dog trainer, a car restorer and two gentlemen who say they're still trying to pin down an idea. The ideas range from ingenious to questionable.
None of them sound like companies with the potential to become major employers ˆ and, in fact, microbusinesses are what the IWW sets out to support. The ideas have come from hobbies or from necessity, and most are lifestyle businesses, designed ˆ as mine is ˆ to produce enough money for the principals and an employee to survive, to live here and pursue something they want to do. No one is required to be in the class, but it's clear that a lot of my classmates are here because they lost a job and are struggling to find another.
Maine Media, our tentatively named company, will offer "editorial content solutions," a phrase coined by Mr. Fiske that slides nicely into business-plan jargon. We'll write, design and produce everything a small business could need to reach and attract customers, from copywriting or editing existing sales and marketing materials right on up to custom publications. We'd like to grow to serve bigger clients. We hope to finance the startup ourselves despite our limited resources. Or maybe because of our limited resources. One of the first things a lot of people seemed to realize through the class is how difficult it is to get financing: The old line, "If you can get a loan, you don't need it," keeps popping up.
Knowing laughs and wide-eyed looks of shock
Early in the very first class, Murphy noted that IWW doesn't measure its success rate solely by the businesses its instructors have helped. Finding out whether or not an idea has a chance, or whether a person is cut out to run a small business, is also important. "If you take this class and realize that this isn't for you right now, that's a success, too," she said.
Through the first four classes, no one dropped out. But people were clearly adjusting their thinking as they realized how difficult starting or expanding their business would be. Each class consisted mainly of presentations by guest speakers, experts volunteering their time ˆ one in marketing, one in negotiating the red tape of state government, one in patents and copyrighting, and one on business law and company formation.
They present a realistic picture. And their talks are often peppered by the sights and sounds of realization from the class. The figurative light bulb is continually popping on above peoples' heads. There's the knowing laugh when someone recognizes the government isn't going to make any of this easy. There's the more nervous laugh when a flaw in a student's idea is revealed. I've heard resigned sighs, seen the open-mouthed, wide-eyed looks of shock and sensed the disappointment in slumped shoulders.
I've experienced the frustrations and epiphanies, too. Mark Phillips, a sales and marketing consultant, told us to ask ourselves, "Who is your best customer?" That helped me focus the business and the marketing plan.
But he also suggested the "So what?" test for ideas: List the six most important features of your product or service. Then imagine you're in a sales presentation, running down the list, and after each one your potential customer responds with, "So what?" How would you respond? It's a tough exam, one that gets you thinking about the competition, with a bigger staff, more money and more experience. That makes you worry, and it makes you think about tweaking the idea to make sure you have good answers.
My worries are minimal, however, compared to many of my classmates. As I said, my wife's income keeps us comfortable. My partner and I are already making money. And we're not going to have to deal with too much red tape or high startup costs. We don't need employees, or a building, or liability insurance, or even lawyers and accountants. Someday, maybe.
For now, though, I spend a lot of my time in class thankful that many of the issues that concern my classmates don't affect me. Licensing, permits, labor posters, workers' comp, even highly complicated tax forms won't be part of the equation. Some of that stuff makes me wonder why anyone would try to run a small business in Maine.
When the guest speakers hit a nerve on one of those topics, I sense the others' anxiety. Dora Dostie, a business information specialist with the state Department of Economic and Community Development, spoke about all sorts of government requirements and regulations. She runs DECD's Business Answers program, a hotline and web portal (www.maine.gov/ businessanswers) offering assistance in navigating state regulatory waters. She was asked, over and over, about two new tax laws that sparked concern from the retailers.
One says companies with annual sales of less than $10,000 are no longer exempt from paying sales tax on inventory and materials. They'll have to pay taxes up front, and receive credit later. That's tough for a low-income entrepreneur who's watching every penny. The other, the Service Provider Tax, will require a classmate, the owner of a small fabric shop who also makes quilts, to charge her customers two different taxes ˆ a bookkeeping nightmare.
On the run
Networking is supposed to be a big part of the class, but the opportunities are rare. Sessions last just two-and-a-half hours with one short break, and most people get out of there quickly when it's done, presumably, as is usually the case for me, to get back to work and catch up. I have talked with a few people about working together, and I've got a couple of good leads.
I think the networking potential is limited because the class material is a lot to cover in nine weeks. We all feel rushed at times, whether in class or in trying to complete fairly large reading and worksheet sections each week. Currently, there are year-long IWW programs underway in Lubec, Eastport and Bucksport. I imagine a year is a long time to commit to such a program, but I'd bet participants will get a lot out of it.
Still, there's plenty to learn from my classmates. I'm ready for my "business showcase," a class presentation that I'm hoping functions as a focus group for Maine Media. After all, these people could be clients. I'm hoping they'll offer some praise, some criticism and some suggestions, and that they'll ask tough questions. That's been the case so far. One woman, who's hoping to open a restaurant in the area, got a lot of helpful suggestions. She also was asked tough questions about her site selection, her limited menu and some of her ideas about the ambience and the clientele. It was clear that the others' perspectives gave her plenty of food for thought.
Penquis CAP's business plan outline consists of seven topics. I've done the Cover Sheet, the Business Description and the Organization section. I'm just finishing up the Marketing Plan and the Competition section, both of which are difficult but illuminating.
The cover sheet was nice, because it got me going, but only momentarily. As soon as I filled it out, I had to scroll down to page two and start again. Besides, the last two speakers threw even that simple page into question. The first entry was business name ˆ simple, right? Just fill in Maine Media Inc. But I learned how to do a trademark search from one speaker, and found out the name was trademarked in 1982, though the state now says the company is "dissolved." That's going to require further research. The second cover-page requirement was to classify the company as a sole proprietorship, partnership or corporation. I was thinking partnership, but I'll be re-evaluating after hearing the attorney explain the tax consequences of that move.
That certainly won't be the last time I face a challenge or make a change. But I already feel a sense of accomplishment. I've learned a lot that should help me, both in starting a small company and in reporting on business. The Plan has become, just as people say it should, a "living document." It's been drafted, re-drafted, printed and marked up with red ink ˆ by myself and by the IWW instructor ˆ and I daresay it's coming along. We'll see. At least the screen isn't blank anymore.
Mike Woelflein is currently completing the IWW program. Part 2 of "Hatching a plan," on the second half of the program, will appear in the Oct. 11 issue of Mainebiz. Woelflein, a writer in Hampden, can be reached at editorial@mainebiz.biz.
This moment, in mid-August, was a lot like the others. But this time was different. The blank screen was to become my Business Planˆ capital letters intended. A week before, I'd started the Incubator Without Walls program, a free, nine-week class for would-be entrepreneurs in the basics of starting or growing a micro-business. The top objective is to complete a business plan, in the process figuring out whether you can really build a business. I was hoping IWW could help me bring one or two of my own ideas to life, or at least decide whether they deserve a chance to live.
The program is mostly for the benefit of Maine residents who are lower-income or recently unemployed. I'm the latter. Were it not for my wife, I'd be the former, too. I was senior editor at Maine Times magazine until it shut down in January, a victim of lack of advertising despite its 18,000 subscribers. Maine Times had a talented editorial team, one I was lucky to be a part of. A few days after the sudden (though not wholly unexpected) end, reality hit hard.
I filed for unemployment, started freelancing and tried to figure out what would come next. There weren't a lot of jobs out there, unless I wanted to move. My wife has an excellent job, and we like living in Hampden, just down the Penobscot River from Bangor. We're traffic-free, hours from the nearest outbreak of suburbia and an hour or so from the coast or the mountains. We're also hours from imaginative, non-pizza takeout. (Okay, there is good Thai downtown. Plus, these days I've got more time to cook and less money to spend.) We're staying, if we can.
Freelance work is helping with the bills, but not necessarily the soul. I spend too much time staring at the computer, talking on the phone and writing for out-of-state publications, largely because they pay better.
There was talk, beginning right after the meeting that sealed the fate of Maine Times, about starting a small business. Eventually, that talk led me to this class, and to this particular blank screen.
Getting into the system
After the magazine folded, former Maine Times Managing Editor Brian Fiske, now a fellow under-employed freelancer, and I had often talked about starting a business, providing content and publications to area businesses and organizations. But deadlines (paying deadlines, that is) kept popping up, and we never got much past the talking stage. I suspect it happens to a lot of self-employed and small-business folks: You just keep pushing ahead on the next task, without taking time to plan where you're going. I also suspect that's one reason the IWW program could benefit a lot of micro-business owners, however long they've been in business.
Because I had revenues to declare almost from day one of unemployment ˆ thank you, Mainebiz ˆ most weeks I didn't receive an unemployment check. I eventually learned about the Maine Enterprise Option, which the Maine Department of Labor offers to those, according to its literature, "profiled" as "likely to exhaust" their benefits. Even they knew I probably wouldn't find a job here. MEO allows eligible Maine residents to receive their benefit checks while they pursue self-employment, provided they spend at least 40 hours per week working or developing their business.
I was accepted for MEO in March, and quickly fulfilled the requirements: documenting my work weeks, meeting with a business counselor and taking a one-day business plan class at Eastern Maine Development Corporation. At the time, I also inquired about IWW, but the spring class at Penquis Community Action Program was full. I kept seeking and working on freelance projects, but I wasn't finding, or making, time to work on expanding the business beyond writing and editing as an independent contractor. I needed a push.
One particularly frustrating July day, just after I finished a well-paying but tedious piece, the push arrived via e-mail. Tara Murphy, the instructor of the Bangor IWW classes, wrote asking if I was still interested in a session beginning in August. Just over a month later, I was sitting in her class.
A motley crew
The IWW is offered by various agencies in Piscataquis, Penobscot, Waldo, Washington and Hancock counties. My class, held at Penquis CAP headquarters in downtown Bangor, is the fifth Penquis CAP has held this year, including sessions in Lincoln, Millinocket and Dover-Foxcroft. The class has been offered by Penquis CAP since 1999, helping to put 112 entrepreneurs into business. More than 200 students participated in 2003.
Funding sources vary by agency, location and year. The Penquis classes this year are funded by Project GATE (Growing America Through Entrepreneurship), a joint project of the U.S. Department of Labor's Employment and Training Administration and the Small Business Administration. Next year, Penquis' IWW will be funded by the state Department of Economic and Community Development, thanks to a joint grant to Penquis CAP and the Maine Highlands Guild.
The class follows the NxLevel curriculum, "Business Plan Basics," produced by a Colorado-based collection of entrepreneurial training groups. It's a three-ring binder with about two solid inches of step-by-step lessons and worksheets designed to help a novice complete a business plan that's suitable for testing a business idea, implementing it and, of course, seeking financing.
My class of 27 people is larger than usual, according to Murphy. It includes several owners of existing businesses (two hair salons, a restaurant, a fabric shop) and would-be craftspeople, plumbers, HVAC pros and contractors. One man plans to sell merchandise with a flag of Aroostook County on it. A couple wants to open a full-service sewing machine shop offering sales, repairs and classes. A woman wants to open a paint-ball facility. Another wants to bring her cure for shingles to market. There's also a dog-treat manufacturer, a dog trainer, a car restorer and two gentlemen who say they're still trying to pin down an idea. The ideas range from ingenious to questionable.
None of them sound like companies with the potential to become major employers ˆ and, in fact, microbusinesses are what the IWW sets out to support. The ideas have come from hobbies or from necessity, and most are lifestyle businesses, designed ˆ as mine is ˆ to produce enough money for the principals and an employee to survive, to live here and pursue something they want to do. No one is required to be in the class, but it's clear that a lot of my classmates are here because they lost a job and are struggling to find another.
Maine Media, our tentatively named company, will offer "editorial content solutions," a phrase coined by Mr. Fiske that slides nicely into business-plan jargon. We'll write, design and produce everything a small business could need to reach and attract customers, from copywriting or editing existing sales and marketing materials right on up to custom publications. We'd like to grow to serve bigger clients. We hope to finance the startup ourselves despite our limited resources. Or maybe because of our limited resources. One of the first things a lot of people seemed to realize through the class is how difficult it is to get financing: The old line, "If you can get a loan, you don't need it," keeps popping up.
Knowing laughs and wide-eyed looks of shock
Early in the very first class, Murphy noted that IWW doesn't measure its success rate solely by the businesses its instructors have helped. Finding out whether or not an idea has a chance, or whether a person is cut out to run a small business, is also important. "If you take this class and realize that this isn't for you right now, that's a success, too," she said.
Through the first four classes, no one dropped out. But people were clearly adjusting their thinking as they realized how difficult starting or expanding their business would be. Each class consisted mainly of presentations by guest speakers, experts volunteering their time ˆ one in marketing, one in negotiating the red tape of state government, one in patents and copyrighting, and one on business law and company formation.
They present a realistic picture. And their talks are often peppered by the sights and sounds of realization from the class. The figurative light bulb is continually popping on above peoples' heads. There's the knowing laugh when someone recognizes the government isn't going to make any of this easy. There's the more nervous laugh when a flaw in a student's idea is revealed. I've heard resigned sighs, seen the open-mouthed, wide-eyed looks of shock and sensed the disappointment in slumped shoulders.
I've experienced the frustrations and epiphanies, too. Mark Phillips, a sales and marketing consultant, told us to ask ourselves, "Who is your best customer?" That helped me focus the business and the marketing plan.
But he also suggested the "So what?" test for ideas: List the six most important features of your product or service. Then imagine you're in a sales presentation, running down the list, and after each one your potential customer responds with, "So what?" How would you respond? It's a tough exam, one that gets you thinking about the competition, with a bigger staff, more money and more experience. That makes you worry, and it makes you think about tweaking the idea to make sure you have good answers.
My worries are minimal, however, compared to many of my classmates. As I said, my wife's income keeps us comfortable. My partner and I are already making money. And we're not going to have to deal with too much red tape or high startup costs. We don't need employees, or a building, or liability insurance, or even lawyers and accountants. Someday, maybe.
For now, though, I spend a lot of my time in class thankful that many of the issues that concern my classmates don't affect me. Licensing, permits, labor posters, workers' comp, even highly complicated tax forms won't be part of the equation. Some of that stuff makes me wonder why anyone would try to run a small business in Maine.
When the guest speakers hit a nerve on one of those topics, I sense the others' anxiety. Dora Dostie, a business information specialist with the state Department of Economic and Community Development, spoke about all sorts of government requirements and regulations. She runs DECD's Business Answers program, a hotline and web portal (www.maine.gov/ businessanswers) offering assistance in navigating state regulatory waters. She was asked, over and over, about two new tax laws that sparked concern from the retailers.
One says companies with annual sales of less than $10,000 are no longer exempt from paying sales tax on inventory and materials. They'll have to pay taxes up front, and receive credit later. That's tough for a low-income entrepreneur who's watching every penny. The other, the Service Provider Tax, will require a classmate, the owner of a small fabric shop who also makes quilts, to charge her customers two different taxes ˆ a bookkeeping nightmare.
On the run
Networking is supposed to be a big part of the class, but the opportunities are rare. Sessions last just two-and-a-half hours with one short break, and most people get out of there quickly when it's done, presumably, as is usually the case for me, to get back to work and catch up. I have talked with a few people about working together, and I've got a couple of good leads.
I think the networking potential is limited because the class material is a lot to cover in nine weeks. We all feel rushed at times, whether in class or in trying to complete fairly large reading and worksheet sections each week. Currently, there are year-long IWW programs underway in Lubec, Eastport and Bucksport. I imagine a year is a long time to commit to such a program, but I'd bet participants will get a lot out of it.
Still, there's plenty to learn from my classmates. I'm ready for my "business showcase," a class presentation that I'm hoping functions as a focus group for Maine Media. After all, these people could be clients. I'm hoping they'll offer some praise, some criticism and some suggestions, and that they'll ask tough questions. That's been the case so far. One woman, who's hoping to open a restaurant in the area, got a lot of helpful suggestions. She also was asked tough questions about her site selection, her limited menu and some of her ideas about the ambience and the clientele. It was clear that the others' perspectives gave her plenty of food for thought.
Penquis CAP's business plan outline consists of seven topics. I've done the Cover Sheet, the Business Description and the Organization section. I'm just finishing up the Marketing Plan and the Competition section, both of which are difficult but illuminating.
The cover sheet was nice, because it got me going, but only momentarily. As soon as I filled it out, I had to scroll down to page two and start again. Besides, the last two speakers threw even that simple page into question. The first entry was business name ˆ simple, right? Just fill in Maine Media Inc. But I learned how to do a trademark search from one speaker, and found out the name was trademarked in 1982, though the state now says the company is "dissolved." That's going to require further research. The second cover-page requirement was to classify the company as a sole proprietorship, partnership or corporation. I was thinking partnership, but I'll be re-evaluating after hearing the attorney explain the tax consequences of that move.
That certainly won't be the last time I face a challenge or make a change. But I already feel a sense of accomplishment. I've learned a lot that should help me, both in starting a small company and in reporting on business. The Plan has become, just as people say it should, a "living document." It's been drafted, re-drafted, printed and marked up with red ink ˆ by myself and by the IWW instructor ˆ and I daresay it's coming along. We'll see. At least the screen isn't blank anymore.
Mike Woelflein is currently completing the IWW program. Part 2 of "Hatching a plan," on the second half of the program, will appear in the Oct. 11 issue of Mainebiz. Woelflein, a writer in Hampden, can be reached at editorial@mainebiz.biz.
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