Wayne L. Wilfand, James Hahn
and William Jackson, Ph.D.
You’ve got the idea. What’s next? How do you turn that idea into a successful
business and secure the financing necessary to make it happen?
According to a panel of experts assembled by the Providence Business News the
most viable pathway is a team approach — one that capitalizes on the expertise
of accountants, lawyers, and perhaps, others who have already tasted business
success.
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The panel was part of “Rhode Island Summit: Financing Your Company,” hosted by the Providence Business News and broadcast live last Thursday night (March 29) on WSBE Channel 36. Bank Rhode Island sponsored the event.
The panel was composed of Dr. Edward Mazze, dean of the College of Business Administration at the University of Rhode Island; William Jackson, Ph.D., a scientist, entrepreneur and the founder and chairman of Brown Venture Forum; Wayne L. Wilfand, a certified public accountant and founding partner of Sinel, Wilfand & Vinci CPAs, Inc.; James Hahn, a lawyer specializing in mergers, acquisitions and public offerings and a partner in the Providence firm of Partridge Snow & Hahn; and Donald McQueen, executive vice president and chief lending officer at Bank Rhode Island.
The premise of the discussion was to explore the best ways for entrepreneurs and existing small business owners to find the financing necessary to get a business off the ground or to grow an existing one. It also addressed the issue of venture capital – the existence of which appears to be growing substantially in Rhode Island – and whether women and minority business owners have the same access to capital as traditional borrowers.
All of the panel members agreed that going at it alone simply doesn’t work.
Only through a team approach, is one likely to find success. And success does not come easily. It certainly doesn’t come quickly, Mazze reminded both a studio audience and those watching at home.
“You may hear ‘no’ five times,” said Mazze. “But learn from every ‘no’ – and get as much help as you can, whether you pay for it or get it for free. Keep moving forward.”
And be prepared to explain your idea in detail. Be convincing, said Jackson.
“Every entrepreneur needs to become a good storyteller,” he said. “They have to be able to tell their story so that the bank will believe it is getting its money back.”
Mazze said all companies must start with “a great idea.” And it is essential, he said, to gain the moral support of family and friends. And once that is accomplished?
“It is critical to get professional help as you go through the process,” said Mazze.
That professional help comes from people like Wilfand and Hahn.
Wilfand suggested that an entrepreneur do his or her homework.
“You should come in with your dream — and with your business plan,” said Wilfand.
And that plan, he said, should include details regarding where the fledgling company’s initial financing is to be found.
“You have to talk about where you are going to get money,” he said. “There are several sources. Hopefully you have some savings. The second source is relatives. The third is the bank – and the Small Business Administration. Then, along with a lawyer, we would look at a team approach — setting up an appointment and making a presentation to the bank.”
Hahn said there is much for a lawyer to do, particularly as a business gets off the ground.
“We would work with the accountant to determine what is the proper entity – whether that be a corporation, a limited liability company, or maybe a partnership,” he said. “We would help identify what may be ideas that are the foundation of the business that may require protection under intellectual property laws.”
Mazze reiterated the importance of obtaining professional help.
He said that while all the talk of financing is going on, the prospective business owner must answer several other questions, such as the number and kinds of employees needed to run the business, what kinds of customers are in the marketplace, what suppliers are available
“Even though we are talking about financing, you really need to know something about the business,” said Mazze. And perhaps most importantly, those banks from which you may be counting on for money will expect you to know your business inside and out.
“No matter what kind of business, you’ve got to come in well prepared,” said Mazze. “When I was in banking, it was always about credit, character and capacity. No matter where you go, no one is going to throw money at you.”
A critical factor in any discussion on business financing is the strength of the economy and the impact it has on lending practices.
Franklin S. Prosnitz, editor of Providence Business News and the moderator of last week’s discussion, broached that topic with the panel.
“We’re in a different climate than we were a year ago,” said Prosnitz. “We have some poor earnings reports coming out – a volatile stock market. We have interest rates that are coming down and we have banks that may be tightening their lending procedures a bit.”
Bank Rhode Island’s McQueen said the economy’s volatility was more a reason for optimism than concern for prospective or existing small business owners.
“I’m very optimistic about the prospects for the economy,” he said. Rates are quite low right now and that’s an opportunity for borrowers who are looking to grow a business.”
McQueen added, for example, that mergers and acquisitions are not necessarily bad news for entrepreneurs.
“I think mergers have created opportunities,” said McQueen.
In Rhode Island, said McQueen, the old economy hasn’t quite moved into the digital economy.
“So we are a little bit insulated from some of the unknowns,” he said.
Prosnitz asked whether the Rhode Island economy had suffered at all because so many of the area’s big banks had merged in recent years, or if such developments represented a positive step for the small business community.
“We probably have one of the strongest markets right now in terms of dealing with the banks,” said Wilfand. “Smaller banks are playing off larger ones. There is tremendous competition. Loan officers are coming into businesses on a regular basis to see how their clients are doing.”
What is new to the Rhode Island economy is the very existence of venture capital dollars.
“There is more venture capital available today in Rhode Island and in the United States than at any other time,” said Jackson. “That money is looking for a good home. It is looking for places to grow and high growth potential.”
Jackson said Rhode Island’s business community sometimes feels inadequate when compared “to the buzz of activity on Route 128.” But he points out that only two locations in the world — 128 in Boston and California’s Silicon Valley — enjoy a unique critical mass of high technology infrastructure.
“That’s a pretty tough comparison — it’s unique in the whole world,” he said.
Compared to the rest of the country, he said, Rhode Island is doing quite well.
Jackson acknowledged that venture capital investments can be complicated. And there is no question that a venture capitalist is likely to want a significant piece of a start-up company and will expect a healthy return.
“Right now, venture capital firms are being a little tougher with their negotiations because the climate is perceived to be tougher. But there is money available.”
The summit concluded with a look at whether women and minorities had access to the same financing avenues as traditional borrowers.
Wilfand said the workforce has changed — for the better — in terms of diversity.
“When you go to a bank now, the chances you will meet with an all-male group of individuals is very slim,” he said. “At banksfrequently you are dealing with a female loan officer.”
Carol Malysz, executive director of the Center for Women & Enterprise in Providence, who attended the summit, suggested that women continue to face difficult hurdles in their efforts to find financing.
“I’m looking at an all-male panel,” she said. “I’m hearing what you are saying about there not being a difference for a women-owned business approaching professionals like you, but the reality may be quite different.”
Mazze suggested entrepreneurs of either gender and from all walks of life arm themselves with information.
“At the end of the day, information is power. Whether you are a man or a woman — black or white,” he said.
Last Thursday’s discussion was the first in a series of three Providence Business News “Summits” scheduled for this year — all of which will be televised by WSBE Channel 36.
The second is scheduled for Thursday, May 24, when a panel of experts will discuss “The Business Vision for Rhode Island.”
(Photo, Brian McDonald)
