Start-Ups: Advice from the Trenches
Brent Tiller was struggling to get his IT start-up off the ground when he was contacted by angel investors from Greensboro, North Carolina. The investors had kept an eye on the small IT company Tiller managed prior to going out on his own, and when Tiller decided to leave the company, the investors offered to back him.
Ten years later, Pinnacle Network Solutions in Florence is providing computer products, support, and services to a wide range of clients including school districts in Florence, Darlington, Georgetown and Marion, as well as area universities and businesses.
Tiller says one of the biggest keys to Pinnacle's success has been his relationship with his angel investors, who not only invested capital into the company, but became partners and mentors in the venture.
"We knew what to sell and how to sell it," says Tiller, "but we did not know how to manage our cash flow." As he found out, one of the best things a business can do, is "find out what it costs to break even each month and work hard on that being your first goal. So many businesses never reach that point and their doors close right before their eyes."
John Denise is the founder of several companies, including South Eastern Brewing, AAC Utility Partners, Advanced Aviation Consulting and Advanced Automation Consulting, Inc in Irmo, which has had a $40 million impact on the Midlands economy.
"One of the pitfalls so many businesses fall into is trying to be all things to all people and chasing revenue at all costs. It is better to understand your strengths and focus on your niche. And when there isn't a huge need for investment in hard assets, startups should avoid seeking venture capital and boot strap the start up whenever possible," Denise advises.
"Because of our participation in the SC Launch Program, we were able to establish a great banking relationship with Wachovia / Wells Fargo which has allowed us to meet our financing needs without accepting outside investment," he says. The South Carolina Launch Program helps early-stage companies to commercialize innovations through funding, mentorship, networking opportunities, and training.
Joel Stevenson, Executive Director at USC Columbia Technology Incubator, was a wealth of advice as Denise grew his business. "He had experience with start-ups, mergers, acquisitions, taking a company public, so Joel was able to help make AAC more scalable. He and the Incubator have been a valuable resource to us," says Denise.
Stevenson has used his past business experience as founder, co-owner, and president of four waste management companies to help nurture start-ups for the past eleven years.
"When people come out of our center, we know if they are going to be successful because we can see it in their eyes," he says. "You can teach entrepreneurship, but you can't teach passion," he says.
There are a lot of resources out there for the determined, he says. USC Columbia Technology Incubator, SCORE, SC Launch, NEXT Innovation Center and Spiro Institute in Greenville, Francis Marion Center for Entrepreneurship, South Carolina Business Initiative (SCBI) / Women's Business Center in Columbia, and Small Business Development Centers across the state provide a wealth of knowledge and services for start-ups, including connecting entrepreneurs with investors and grant funding.
Stevenson cautions against depending on high investment venture capitalists. "I would advise companies not to look for venture capital when they are looking for funding," he says. These investors will write a bigger check, but "they won't be coming to the office Christmas Party." Instead, he advises, turn to angel investors.
David Meyers, CEO of Greenville's Sensor Tech Corporation, says, "Angel investors bridge the gap between friends, family and venture capitalists." They are local people who want to invest in the local economy, and they want to see your business succeed. Angel investors are more hands on, says Meyers. There are angel capital associations in Greenville, Spartanburg, Columbia, and Charleston who can match start-ups up with investors.
Small Business Innovation Research (SBIR) Loans are another option for start-up funding. These are research grants that come from different areas of government such as the Department of Defense and the Institute of Health. "They do not have to be paid back," says Meyers, "and they are a great way to get started." Something to keep in mind, though, says Meyers, is that grants and investors are looking for companies who will be good stewards of their investment.
"One of the things I see classically is that companies overspend. They spend too much on their rent or over hire early on. Things take longer and cost more than you think they will," says Meyers.
Stevenson says it is incredibly important for a start-up to build a good team of smart people. Get involved with groups such as Next, the Chamber of Commerce, or the technology council in your area to develop connections, says Meyers.
"Find yourself a good accountant, good lawyer, good banker and good insurance agent. Take them your plan as soon as you start the business and nurture that relationship and they will help you succeed," advises Stevenson.
Then once you start your business, he says, "go after your customers with a vengeance." He tells entrepreneurs to "act with an outrageous sense of urgency and eternal paranoia. Vigilance is not enough. Then, get ready for the wildest ride of your life and get ready to work hard!"