An economy on the rebound promises to keep North Bay small business advisers busy.
As the North Bay continues to recover from the Great Recession, one thing is certain: Small business is big business.
Laid off from oft-times lofty corporate positions and unable to find new jobs with adequate compensation, many talented victims of the recession have decided to go into business for themselves. And understanding how important these new small businesses are to their tax base, Napa, Sonoma and Marin counties, as well as individual municipalities, are working feverishly to help them succeed.
It’s well known that small businesses have always been a major economic driver. According to the Small Business Association (SBA), more than 60 percent of all private sector, non-farm jobs in the United States come from small business. But starting a small business, even if one’s product or service is totally unique, can be a daunting process.
Enter the small business experts, ready to lend a helping hand and more than willing to guide fledgling businesses through the startup labyrinth—often at little or no charge.
So you want to start a business
Napa, Sonoma and Marin counties all offer small business assistance at the county level. In Napa and Sonoma, small business development efforts are combined through a program operated by Napa Valley College that has offices on the Napa main campus and colocated with SAFE-BIDCO on Corporate Center Parkway in Santa Rosa. In Marin, the Small Business Development Center (SBDC) shares quarters with another entrepreneur outreach program, Renaissance Center Marin, located in downtown San Rafael. Some municipalities throughout the three counties also provide separate small business assistance programs, with the most notable being Petaluma and the town of Windsor, both in Sonoma County.
Beth Pratt is dean of economic and workforce development (EWD) and district auxiliary services at Napa Valley College. As such, she works directly with a wide variety of small businesses in Napa County, while in Sonoma, Mary Cervantes, coordinator of Napa-Sonoma SBDC, focuses on assisting startups and other small businesses in Sonoma County. Until 2012, the programs were separate, with Santa Rosa Junior College handling SBDC outreach on the Sonoma side.
“During the last recession, community colleges were hit hard with funding cuts and had to restructure to take a more regional approach,” Pratt says, noting that it simply made more economic sense to combine the two programs.
Pratt says business growth “has definitely turned the corner” in the last year. “We’re taking on more clients,” she says. “From 2007 through 2009, our primary focus was almost totally on business retention. Small businesses just couldn’t get the necessary capital to keep them going and they had to use their own home equity, if they had it, just to keep going. Those were tough times with a lot of shakeout. Businesses hung on and got lean and mean; many had to cut employees.”
Over the past year, Pratt says, the SBDC has seen “an increase in the number of loans going through, which is letting small businesses rely more on debt financing than equity, which is a good sign. It means things are more robust, and we’re excited about that,” she explains. “And we think 2014 should be even better.”
Both Napa and Sonoma SBDC programs exist “to help small businesses flourish,” Pratt says. They serve everyone from independent contractors/consultants to companies with 50 to 60 employees or more. Like the other programs in the North Bay, entrepreneurs can sign up for a variety of resources, ranging from training to one-on-one confidential counseling with business advisers who are specialists in various industries. Pratt says the Napa and Sonoma programs currently employ about 20 business advisers, most part-time.
Because the wine industry plays a dominant role in the Napa/Sonoma economy, many of the startups and small businesses served by the Napa/Sonoma SBDC are in the hospitality and specialty food industries. But, according to Cervantes, there’s also been an upswing in the number of calls to the Sonoma SBDC from people interested in getting back into the construction trade. “We’re definitely seeing growth in construction again,” she says. And there are also requests from many people who’ve decided to become consultants in their various areas of expertise.
“Since the recession, there’s been a rise in the number of independent consultants,” Cervantes says. “They have special skills and expertise so have decided to start their own consulting business. Some had been laid off and can’t find jobs at the level they were employed before. More companies are contracting with consultants, because it helps keep costs down to contract out for their internal services.”
Cervantes also sees increasing interest in micro-breweries and, with the growing focus on food, she notes that the SBDC is reaching out to the farming community to help recruit potential entrepreneurs in farm-to-table businesses (to capture the growing demand from consumers to eat local) and the slow food movement. “The SBDC wants to help these type of businesses be realized,” she says.
Miracle in Marin
In Marin, Renaissance Center Marin, which opened in June 2012, holds the contract to serve as the county’s small business development center. It’s part of the Renaissance Entrepreneurship Center, which got its start in 1985 as a San Francisco-based nonprofit to train low- and moderate-income men and women in computer technology; in 1989, the organization added entrepreneurship training. Renaissance Marin is its fourth center. The organization has other centers in East Palo Alto, Bayview/Hunters Point and its original location in downtown San Francisco.
Fermin Alvarez is Renaissance Marin’s program manager and its biggest champion. An entrepreneur in his own right (he and his wife own Our Cuban Kitchen, a catering company headquartered in Oakland), Alvarez’ enthusiasm about its programs is boundless.
“Marin isn’t really the friendliest county when it comes to doing business,” he accedes—an opinion shared by many respondents to a study conducted by the Marin Economic Forum. “It’s one of the reasons the economic projection isn’t so bright for this county. More and more people [who live in Marin] start businesses outside the county or get jobs in other counties. They usually don’t see potential in Marin.”
All this is why Alvarez is excited that, in Renaissance Marin’s first year, it served 2,400 clients: “Our projection was 800,” he says. The organization serves the entire county from its offices at 1115 Third Street in downtown San Rafael (formerly a youth center).
The first floor has an open workspace where entrepreneurs can “set up shop” and network. There’s also a commercial kitchen and café (where nine food businesses are currently located as part of the center’s food business incubator) and two classrooms. In the first quarter of 2014, Renaissance Marin will offer 23 classes and workshops, ranging from three-hour presentations to 84-hour comprehensive courses. Topics range from public speaking, crowdfunding, QuickBooks, visual business planning, website development and employment law to music and fashion businesses. Renaissance Marin also offers no cost, one-on-one business advising, through its SBDC program, for qualified established small businesses and startups with the potential to make economic impact in the community, such as job creation and retention.There are also three meeting rooms that entrepreneurs can reserve if they need space to meet with a client privately. The second floor has offices it rents at low cost (beginning at $250 per month) to startups that need office space.
“This saves them from working in isolation at home and in local Starbucks. This way, they can meet other entrepreneurs and share ideas,” Alvarez says. There are nine offices and seven support staff, including Alvarez, a receptionist, the SBDC administrative assistant and manager, a marketing associate, a training manager and the center director. Office space comes with consulting services, office reception services, utilities and janitorial service.
Renaissance Marin gets a large part of its funding from Marin Community Foundation (MCF) but is required to generate its own earned income as well as seek funding through other foundations and public agencies, such as the SBDC. “The intent of the MCF funding is to ‘alleviate poverty,’ as designated by the foundation,” explains Alvarez. “Entrepreneurship is one arm of the foundation’s overall strategy to fight a growing level of poverty, which includes older professionals living in suburban locations, who are becoming the new face of unemployment and poverty. One of Renaissance Marin’s main goals this year is to use entrepreneurship as a tool to alleviate poverty in both the canal district and Marin City.
“[MCF] is our landlord and the one who expressed interest in having us come to Marin,” Alvarez says.
In addition to housing the Marin SBDC offices, Renaissance Marin also hosts the office of Working Solutions, a nonprofit organization that provides microlending ($5,000 to $50,000) to small businesses. It’s a good fit, Alvarez says, because “Working Solutions is more inclined to give you a loan than a bank is. In fact, you typically have to have been rejected by a bank before you can be considered by Working Solutions.”
Now that the wheels are starting to turn in Marin, Alvarez expects Renaissance Marin to serve more than 3,000 clients in 2014. That includes people who attend classes and workshops, as well as those who receive business consulting or become part of the incubator spaces.
Alvarez says it’s good news for Marin. “The U.S. Bureau of Statistics projects the level of self-employed to reach 40 percent of the working population by 2020. However, according to a private group in New York, economic projections are that 60 percent of the working population in the United States will be self-employed by the end of this decade,” he says. “This is a trend we thought was advisable to help create, not follow. Our goal is to help these people employ not only their expertise, but their passion. It’s the entrepreneurial way of leading.”
Progress in Petaluma
One of the biggest obstacles a new business encounters is navigating the sea of permits and processes. Recognizing that many entrepreneurs were discouraged because of the sometimes overwhelming paperwork, the city of Petaluma, in early 2011, established a business-friendly, streamlined development review process that makes it much easier for “bricks and mortar” businesses to get going in the municipality.
“Any time a business wants to open, there are permits and processes, both at the city level and at other levels [county, state and sometimes federal],” says Ingrid Alverde, redevelopment and economic development manager for the city of Petaluma.
Once a week, eight to nine people representing various Petaluma city departments get together and meet with business applicants. “We talk about location, improvements, sewer, fire code, you name it. Conversation is back-and-forth between each discipline about all things that apply. We suggest things [business applicants] might want to discuss with their landlord, use permits, conditional use permits and building permits,” Alverde says. “When the applicant leaves the meeting, they have everything in front of them. They’ve met everyone face-to-face, and all this happens before any fees are paid. Then I follow up to make sure they have all the information they need. It’s been very successful, not only for the business applicants, but also for the city staff, who’ve come to understand how they play a role in the business’ outcome.”
Alverde’s office also provides one-on-one business consulting. “Whether it’s a true startup or an existing business thinking of expanding, I consult with them through the process. We don’t offer courses or training, but I keep myself abreast of what’s happening and act as a screener to point them in the right direction. This isn’t cookie cutter work; it’s very targeted. If they’re expanding and need financing, I help. If they need a location, I look. If they’re looking outside Petaluma, I steer them to my counterpart in that town,” Alverde explains.
Another thing Petaluma did to make itself more attractive—particularly for small-scale housing developers—was reduce its development impact fees, which it assesses for sewers, roads, parks and other related infrastructure. “We realized our fees were on the high side, so we reduced them to make the cost of entry more affordable and reflect the fact that our costs had actually gone down,” says Alverde. “This has been very important for the housing industry,” she notes, as housing is one of the single most important sectors in any economic recovery.
These days, Alverde says, Petaluma is seeing a surge in craft beverage production—breweries, distilleries and the like. The city is also seeing more interest in restaurants, tap rooms and winery tasting rooms. Smaller housing developments are also on the rise.
Destination Windsor
A decade ago, the town of Windsor, with its new Windsor Town Green commercial/housing mix, was the darling of urban planning, earning accolades from such diverse bedfellows as the Sierra Club, the New York Times and the Wall Street Journal.
Built to attract small, mom-and-pop businesses and restaurants, the Town Green and its condos (the waiting list to buy a condo was once more than 250) were where everyone wanted to be. But the small businesses that initially took root were victims of poor—and, often, unrealistic—business plans. Parking was limited and rents were high. Businesses dropped like flies and the vacancy rate soared just as the economy tanked; many condo buyers were forced into foreclosure. Even the developer of the project, one of the most successful real estate developers in Sonoma County over three decades, went bankrupt. About the only success story was Powell’s Sweet Shoppe, which went on to become a franchise.
Today, things are very different. The Town Green is thriving and, since last fall, the “No Vacancy” sign has been hung as far as commercial establishments are concerned. In fact, many existing tenants were able to buy the spaces they were operating in and are now paying less in mortgages than they were in rent.
“It took a while to figure out what types of business work there and for the rent price point to find its place,” says Kevin Thompson, Windsor’s economic development manager/senior planner. “We’re excited it’s filled up, and we actually have lots of other businesses looking to move in.”
There are currently just two chain stores, a Starbucks and a Baskin-Robbins. There’s a nice mix of restaurants that are doing quite well, Thompson says. The rest of the project “has a boutique feel, with small dress shops, a hair salon, food-related stores, jewelry stores and a nice mix of retail and service-oriented businesses,” he says.
The town sponsors events at Halloween and Christmas, plus every Thursday night in the summer. The Farmers Market is a draw on Sundays. “It all brings in people who normally wouldn’t come downtown,” says Thompson.
And soon, those who live and own businesses on the west side of town will have something they’ve been asking for since the first phase of Windsor Town Green was completed in 2002: a locally owned gourmet grocery store. Oliver’s Market has announced plans to break ground on a new store there in spring.
Thompson gives a lot of credit to Windsor’s rise from the ashes to its Business Concierge Service, a new program the town authorized last year, to better support local business. “The whole idea is to help small business owners get into Windsor to open up or expand,” says Thompson, the concierge in residence.
Thompson has worked for the town of Windsor for 12 years as a planner and affordable housing expert. In February of last year, as a student in the Sonoma State University executive MBA program, he took a trip to Singapore. It was there he had an epiphany. “Singapore is the most business-friendly city in the world,” he says. “And what it does is assign one person to each business to help them get through all the processes and make it easier.”
When Thompson returned home, he convinced the Windsor Town Council and Windsor’s new town manager, Linda Kelly, a small business champion, to let him set up a similar program.
“I do it personally,” he says. “A lot of it is location analysis and helping them with permits. I’m basically an internal advocate for small business, working with a committee of staffers to examine the process and make it better, easier and faster.”
And, like Petaluma lowered its impact fees, the Windsor town council recently lowered its sewer capacity fees by 20 percent, putting it more in line with the county, “and attracting more businesses in the process,” Thompson says.
Thompson works with the Napa and Sonoma SBDC and SCORE, a nonprofit association of retired business executives who mentor small businesses. “They’re awesome,” Thompson says. “They have someone who knows something about just about everything.”
Thompson also credits the Old Downtown Windsor Merchants Association for its active role in promoting the Windsor Town Green recovery and Windsor’s Chamber of Commerce, which “is very helpful, even though its focus is town-wide.”
Windsor’s trends mirror the North Bay in general. “We’ve had a lot of interest from restaurants. The other day, I heard from a couple interested in opening a bakery in town, but the problem has been finding a suitable location. There was a woman who wanted to open a barbershop. Most of the people who contact me are already in business [elsewhere] but they’re looking at Windsor to get the most bang for their buck. New construction definitely has slowed down as a function of the economy, but even it seems to be coming back,” Thompson explains. “I’ve seen some ‘tire kicking’ by developers, and we’re optimistic for growth in that sector.”
Rev your engines!
An economy on the rebound promises to keep all of the North Bay small business advisers busy over the next several months, if not years. But after the Great Recession, no one is complaining.
“I came to Sonoma County three years ago from the Central Valley,” Cervantes says. “I worked in the economic development department for Merced County. The Central Valley is facing many challenges to recover from the recession, but the North Bay is recovering more quickly due to tourism. In Sonoma County, the unemployment rate is 6 percent, while the Central Valley’s unemployment rate is still between 12 percent and 13 percent.”
“It’s very exciting,” concludes Thompson. “And it’s fun to help people. You see their money, parents’ money, family’s money—and all that’s tied up in their hopes and dreams. Sometimes we lose sight of how much heart and soul goes into creating a new business. But that’s what I work with every day. Yes, it’s busy, but I’m lucky.”
