“Does pitching a business plan and raising toddlers mix? One funder says it does not."
It is the summer of 2002 and my dad, Greg, has agreed to be my business partner. We are still in the midst of our business planning - seeking funding, finding a location, and gathering information for our business plan. The first place we thought to ask for money was a bank but we soon came to understand how risk averse banks are. After a few bank meetings we realized they were only willing to loan money to us if we had assets to back them up. Because we were estimating future sales with no past history of success in that line of business, our business plan was irrelevant. The only way a traditional bank would loan us money is if we would use our homes as collateral and take out a personal loan, which we were unwilling to do. They advised us to talk to the US Small Business Administration (SBA), an agency of the federal government. The SBA will back up a small business loan if it fits their criteria. Thankfully, Lima, Ohio has a local SBA office.
Greg and I polished up our business plan and went to the meeting. I dressed professionally in order to give the best impression I could. I was proud of our business plan. As an undergrad, I had written a business plan for a coffee shop in Anderson, Indiana with my friend, Heather. We designed a nonprofit social entrepreneurship business model that combined a coffee shop with a workforce development program. Our goal was to provide employment training for low income women with little or no work history through their employment at our coffee shop. We were really excited about the idea and shopped it around town to community and university leaders. The lukewarm reception we received, plus our distraction with major life changes such as marriage and finding a home after graduation, caused us to eventually drop the idea. Now, seven years later, I was using what I had learned through that experience and applying it to this new entrepreneurial endeavor.
I had confidence in our business plan. During college, I worked in three different coffee shops, starting in Anderson, Indiana, then in Dayton, Ohio, and then in Indianapolis. I observed their operations and talked strategy with the owners. I had a business management degree and felt that I had the education I needed to make the business plan a success. My plan included figures based on downtown employment numbers and census information, using that information to show a plan of success based on a conservative estimate of walk-in traffic. The advisor we met with at the SBA reviewed our plan and asked us to fill out the financial templates he provided with our cash flow projections and at least two years of sales forecasts and pro forma income statements.
We took his advice and left to work on our numbers. My dad and I returned a few weeks later to present him with our updated financials and explain our vision some more. He listened to our presentation and I felt like our idea was supported by the facts. Business experience - check. Good credit - check. Willing to invest own funds - check. Viable business plan - check. That’s why I was completely shocked when he told us he didn’t think our business would succeed in downtown Lima. He looked at me and recommended that I was busy enough with my job as a software developer and my two toddlers, he said.
I sat and stared and my vision went black. I looked over at my dad, folded up my portfolio, and we left. I don’t remember if we said anything to him or tried to change his mind. I was fuming inside. I was angry. How dare he tell me that I had enough going on! How dare he say that we could not survive in downtown Lima? Isn’t it our mandate to care about our community? If he had wanted to motivate me to keep going, he couldn’t have done any better than to generate the amount of outrage I felt at that time. My stubbornness was now dedicated to proving him wrong.
I hesitated to share this story here because I seem to be making out the advisor to be a villain. That is definitely not my intention. This was twenty years ago in the small midwestern city of Lima, Ohio. Hardly anyone even knew what a gourmet coffee shop was, and I was young and inexperienced. Plus, he was kind of right, as I would find out. While our sales projections would be more than achieved, our profitability goals have never been achieved.
Was he right about his recommendation to “focus on my young children?” No, that statement crossed a line. He knew nothing about my support system nor about my husband’s role in childcare. Would he have said that to a man? I highly doubt it. Why he said that when he knew I had at least one business partner also was confusing. The statement he made completely blocked out any business or financial advice he could have given to me.
I brushed the dust off my feet and walked away. After we opened, a representative from the SBA tried to give us a plaque celebrating our partnership. I told them no.*
While the SBA denied us, Downtown Lima, Inc., a non-profit organization founded to improve the downtown business district, said yes. They approved a startup loan from their downtown development fund. But we still didn’t have enough funding. We turned to friends and family, inviting them to invest. We learned a lot about what not to do in the process.
*Now, twenty years later, I have had a couple loans approved by the SBA and support the essential work they do in the community.
My toddlers, Rachel and Greg, in 2002.