Start Me Up: Is Small Business Entrepreneurship in Your Future?


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Start Me Up: Is Small Business Entrepreneurship in Your Future?
Nan Knight

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Ask college students majoring in the sciences about "mainstream" employment for scientists in the United States and they're likely to point to the large corporations that set up recruiting booths on campus. "This is a widely held misconception," says Sharon V. Vercellotti, President and Founder, V-LABS, INC., of Covington, Louisiana, and Chair-Elect of the American Chemical Society (ACS) Division of Small Chemical Businesses. "In chemistry, almost half of all recent graduates go to work for small businesses. Not only are small businesses a part of the great American scientific entrepreneurial tradition, but they provide a surprising preponderance of the jobs that are available." In 1999, the federal government listed 13,534 chemical employers. Only 2.3% were classified as big businesses, and 42% had less than 20 employees. Today, more than 99% of employees in chemical businesses work for companies with fewer than 500 employees.

Even in an economic downturn, most analysts agree that business prospects can be bright for small chemical enterprises. If you have an original idea, a unique or in-demand set of skills, or an innovative approach, starting your own business may offer new horizons of freedom and rewarding challenges. Making the leap to small business ownership requires a careful analysis of tangible and not-so-tangible assets and a realistic assessment of your capabilities and prospects. A number of small chemical business owners spoke with JobSpectrum.org and offered advice about the rewards and pitfalls of going out on your own.

Sidebar: How Big Is Small?

The Best-Looking Boss is the One in the Mirror

"The first advantage to owning a small business is that you're the boss-you decide where the company goes and what it does," says Donald Lorenz, PhD, founder of Ridge Scientific Enterprises, Basking Ridge, NJ. Lorenz left his job at a large scientific corporation in 1991. "In a large-scale industry, you can find yourself buttonholed into one narrow area of focus. If the company is yours, you can decide to take on new challenges and new areas of investigation." Vercellotti agrees that being able to choose new horizons makes small business ownership especially attractive: "Not only are you in charge of the company's areas of focus and direction, but this flexibility means that you are better equipped to adapt to satisfy the specific needs of individual customers, something that the structure of large corporations often makes very difficult."

The advantages of this freedom extend to work environment and culture. As the boss, you're free to choose your co-workers and decide how you'd like your workplace to look and function. If you've always wanted an office with a pinball machine or cappuccino maker, this is your chance. If you want to locate the workplace in a scenic rural area, that's your call, too. None of these decisions can be made without considering the consequences, but if you're the boss, they're your decisions to make.

Whether you start your business alone or with partners, the most obvious advantage is that success can bring you direct financial gain. If the company prospers, you prosper. For many entrepreneurs the return on hard work has been exponential and increasing financial rewards far beyond any income they might have made in traditional salaried positions. In addition to earnings and profits, a successful company is a valuable asset. Managed well, the sale of such a company may provide lifelong income.

Sidebar: The Shape of Small Business

Is the Risk Right for You?

Risk taking and entrepreneurship are closely connected: if you aren't comfortable with the first you probably won't succeed with the second. "Even after you've done substantial research and have a solid strategic plan in place, you still have to be a risk taker to make this leap," says David Armbruster, PhD, of Armbruster Associates, Inc., of Summit, NJ. Armbruster is past president of the Association of Consulting Chemists and Chemical Engineers (ACC&CE) and Chairman of the Board of the New Jersey Group of Small Chemical Businesses.

The Small Business Administration (SBA), which provides an umbrella of financial, informational, and other support services for entrepreneurs, emphasizes that not everyone is cut out for starting a new business. The SBA Web site offers a checklist of questions to rate your own entrepreneurial spirit, recommending that you look carefully to decide if you are:

A self-starter? You'll need to make decisions, strategize effectively, organize, and then make sure everything is carried through according to the plan. Moreover, if you're planning a very small business, such as a one-person consultancy, you need to think about whether you're comfortable working alone most of the time.
Able to get along with different people and in different capacities? As a small business owner, you're not just the boss. You're a client to those from whom you buy supplies and services, a vendor, a renter, a public relations specialist, a mediator, and a human relations specialist. To wear all those hats you'll need to call on a special set of social skills.
A good decision maker? Every day brings new decisions large and small, and you'll need to be able to trust your own judgment in making decisions quickly and well.
A motivated worker? Being your own boss may sound like easy work, but you will probably find yourself working harder and longer than you ever dreamed you could. Especially in the early days, you may be on the job from dawn to dusk and past and for six or seven days a week. Make a realistic assessment about whether you (and your family and friends) are up to this challenge.

Advice from the Experts: Be Prepared

Experience: Even if you've really invented that better mousetrap, making the world beat a path to your door can be a challenge, especially if you're a new graduate and have little experience in your industry. People who have previous work experience run the most successful startups in chemistry. "Most of our members became consultants and small business owners after having been employed in chemical and pertinent areas for a number of years," says Linda Townsend, Executive Secretary of ACC&CE. Armbruster agrees: "It's hard to do this right out of school. You need experience. The biggest obstacles to starting a successful small business revolve around the responsibilities that become yours and yours alone as the owner and operator."

Donna Cole, President and CEO of Cole Chemical & Distributing, Inc., Houston, Texas, recommends a minimum of 5 to 10 years work experience before starting out on your own. During this time, future entrepreneurs learn "policies and procedures to implement in their own organizations, develop relationships, learn about products (test methods, R&D, sampling, statistics, what works and what doesn't) and how to determine exactly what kind of small business they'd like to have," she says.

Previous work experience is also likely to impart a broader view of the field you are about to enter, an asset that's especially valuable in today's fast-paced scientific environment. "You need a broad background," says Lorenz. "The more narrowly you define your area of expertise, the more likely that your opportunities may be limited. Sometimes a business is started because there's an initial large demand, but this can then wear out." Armbruster, whose business has expanded from a consultancy to include international seminars, emphasizes that a wide perspective on the field can help with future flexibility: "Sometimes the business you started may not be the business you end up with."

Networking: If you're leaving one company to found your own, the experts advise that you don't burn any bridges. One of the most important elements in your success will be your ability to network-to leverage the contacts you have into new contacts that will expand your business. In many cases, your old company may be a customer of your new enterprise. Sometimes companies choose to spin off entire divisions, awarding the business to ex-employees or making current employees into consultants.

Both Vercellotti and Armbruster recommend membership and attendance in professional organizations as an excellent method for keeping up a strong network of contacts and support. "The American Chemical Society offers an array of services and programs through the Division of Small Chemical Businesses and through programming and other divisions that help out those going into business for themselves," says Vercellotti. "And attendance at local and national meetings helps in meeting people who can direct you to new business or advise you based on their own expertise."

ACC&CE extends the networking concept to an active mentoring program. "Each of our new members is assigned a mentor," says Armbruster, who was instrumental in starting this initiative. "Every new member of our organization gets a mentor who is available for advice on a whole range of topics, from finance and taxes to strategic planning." Armbruster notes that networking extends to ALL your contacts as a small business owner. Good relations with customers, suppliers, colleagues, and consultants are important in keeping the lines open for new and continued business.

Strategic Planning: Even with the best idea or product and a stable network of support, you need a solid, long-range plan in place before you make the move to start your own business. Without such a plan, you won't be ready to meet unexpected contingencies and you almost certainly won't have the necessary documentation needed to secure financing. SBA offers an excellent start-up kit that includes guides for strategic planning. Available in abbreviated form online, the kit provides a complete how-to document, including downloadable forms, glossaries, FAQs and self-assessments, and an essential list of resources and contacts. Of special interest to every small business owner is the description of financial and advisory services SBA provides on an ongoing basis.

"Everyone has questions when starting out a business," says Lorenz. "How much to charge? How to find customers? Although mentors and others can help identify the answers to these questions, strategic planning is important in laying solid groundwork for future development."

Be careful of hidden agendas when getting advice on starting up a new company. A number of businesses market start-up kits, financial advice, business plans, and other tools, some at costs that can become major investments. Consider first whether you can get these same kinds of materials free from SBA or by doing a little research yourself. And consult your lawyer before making any long-term or substantial financial commitment to a business advisor.

Financing: Whether you're about to start a one-person consultancy or a 300-person manufacturing company, you'll need to have your financing in order before you begin. Vercellotti and others advise at least a one- or two-year personal financial cushion, because you can't count on your new business returning a profit that matches your previous income. Money for start-ups can come directly from a bank, from your own savings, through loans directly from or guaranteed by SBA, or through investment by other individuals or companies. The services of a financial expert who has worked previously with companies of the size and type you are starting are essential in this process. He or she can advise you on the restrictions and obligations that come with some types of funding and point out how your company should be organized to best protect your investments. Careful financial planning and support can see you over the initial rough spots in business ownership and put you in a position for future expansion.

Experts advise that start-up finance plans should also cover initial insurance needs. If you are a manufacturer, you'll need product liability insurance, which requires substantial research and airtight legal advice. If your services involve consulting, you'll need professional liability insurance, which ACS offers to its members. In addition, if you have employees, you'll need to provide health insurance and other coverage according to federal, state, and local requirements.

Small Business Success: The Up Side to the Economic Downturn

If your stock portfolio has taken a recent drubbing, you may think that this is not the best time to start up a new company. Paradoxically, as the economic indicators edge downward, the opportunities for startups may be expanding. "Many larger companies are closing some of their research and development areas," says Vercellotti. "Their R&D needs won't disappear. They're looking to outsource their problem solving needs, and, increasingly, smaller companies are being tapped for these tasks." Part of the impetus for this move to outsourcing comes from the fast-paced research environment, in which many large companies cannot afford to maintain groups of narrowly focused specialists for what are sometimes only temporary requirements. "The smaller, more specialized company becomes the ideal resource for this kind of work," says Vercellotti. "Such outsourcing often helps the large companies increase speed to market, and ends up increasing the financial performances of both large and small businesses."

The hottest areas for current outsourcing in chemistry, not surprisingly, are the same areas in which the demand is greatest for new employees: biotechnology (especially in areas related to genetics) and new materials. The key for small business owners is to stay on top of the new technologies and identify coming needs. Again, flexibility, networking, and planning are essential in staying ahead of the economic curve.

A Job Well Done

There's always satisfaction in a job well done, but that satisfaction increases markedly when you're doing it for your own company. "I've really enjoyed having the vision to see the big picture, quickly analyzing situations, making decisions and conceptualizing processes and then implementing projects to completion," says Cole of her experiences as a business owner. "I have numerous choices to make and, even though many things happen outside my control, I know that there are many things that I can do to prepare for change and meet change head on." The challenges of charting an individual course in business may not be for everyone. But for those who've asked themselves the right questions, made detailed plans, and secured the right financial and contact support, the rewards can include a stimulating workplace, new scientific and intellectual horizons, and substantial financial compensation.

Nan Knight is a freelance science writer and editor whose credits include Smithsonian exhibits, Discovery Channel Web sites, and a wide range of publications on radiation in medicine.