Bankers not only lend money, they serve as counselors to entrepreneurs, says Gary Cady of Torrey Pines Bank. (photo/alandeckerphoto.com)

San Diegans with a great idea for a business or a baby business that is ready to come out of the garage often feel overwhelmed as they start to look for the money and support they need to boom. Most know how to do what they do really, really well, say the people who guide them through those first baby steps toward growth. But prospective entrepreneurs often don’t know much about dealing with the world outside for financing, marketing and just running a business.

“We see the same mistakes over and over again,” says Gary Cady, president of Torrey Pines Bank. “We see insufficient planning, people being overly optimistic about growth and earnings, and we see that they haven’t thought about the things that may happen along the way.”

The devil is in the details, and entrepreneurs are often bedeviled by not thinking about those details.

Running a business is rarely the strong suit of entrepreneurs, says Debbie Trujillo. As the regional director of the San Diego and Imperial counties office of the Small Business Development Network, she works with thousands of small businesses every year. “Being an entrepreneur is a complex job, and most people get into it because they have an idea, not because they’re seeking endless profit,” Trujillo says. “They’re not trained in developing a business — most people who have MBAs aren’t entrepreneurs.”

Starting a business is a gamble, in every sense of the word. The potential for loss is high, often greater than the potential for profit. But the region’s economy is built on small business — with more than 80 percent of the people here working at companies with 50 employees or less.

Oddly enough, no one keeps numbers on who starts small businesses each year, on whether or not they survive and thrive or on what different kinds of businesses San Diego area entrepreneurs launch each year. But the Small Business Administration says it worked with 13,000 businesses in the San Diego region in the last fiscal year, and it expects to work with more this year.

“We know that small businesses need the most help,” Trujillo says. Her agency is funded by the SBA and has two offices in San Diego County, a third in the Imperial Valley.

Entrepreneurs with e-commerce ideas, Web design ideas and growing import-export businesses are among the development network’s most frequent callers. And business service entrepreneurs are on the rise, she says. Many of the development network’s clients have already launched their business and need some help running it.

“About 30 percent of our clients come for marketing questions, about 25 percent for help seeking financing,” she says. “We see auto repair shops, veterinary clinics, boutiques, too.”

Needs Of The Techies

Connect’s Duane Roth stresses a good business plan for new ventures. “We refine the ideas,” he says. (photo/alandeckerphoto.com)

Technology and life science entrepreneurs have amazing resources in Southern California because of the concentration of university and industry here, starting with UCSD Connect, a 20-year-old organization dedicated to growing companies from ideas.

“People who ask us for help range from a faculty member at major research schools to a guy in his garage,” says Duane Roth, Connect’s chief executive. “Connect is about helping inventors with good ideas become entrepreneurs.”

The group, made up of entrepreneurs and executives, sends people to its Springboard program where the inventor works with a mentor to shape the idea into a viable product and a viable business. Although most of those who approach Connect are highly trained and experienced, and often brilliant, there’s a lot they don’t know about growing a business.

“Ninety percent of the time the problem isn’t the technology or the idea, the science is good,” Roth says. “Ninety percent fall apart in the business plan, how to get to where they can take their idea, make a product and make money. Most people we see don’t know much about distribution, marketing and administering a business. We refine the ideas and help them find people to work on those things.”

Sometimes, the ideas don’t translate to a business, Roth says. Some ideas aren’t good for business, he says, “because it would cost more to produce and distribute than you could ever recover in the marketplace. But the idea might be perfect for licensing or partnering, and we’ll tell you that.”

The lessons learned from finding funds in the technology and life science arena seem to apply to most businesses.

“We ask: is there really a business there? Is it more than a science project? Is it commercializable?” says Jack J. Florio of the San Diego chapter of Tech Coast Angels. “The red flags are when we see they have no concept of the market they’re going to and they expect they’ll get far larger investment than they will.”

But funding is available, and looking for money is usually what first draws fledgling entrepreneurs into planning.

“Because our mission is to serve the underserved neighborhoods of San Diego, when someone comes to us for a loan, we really try to work with them and give them the loan,” says Bob Adkins, president of Neighborhood National Bank. “We loan to churches and not-for-profits, to Arco stations and grocery stores and even for condo conversions.”

That means that Adkins often oversees the first loan and has to work with clients to chart the business’s course — something many haven’t done before they walk into the bank.

“We help them figure out where their money is going, sometimes create their first financial statement,” he says. “Their revenues should support the business and their lifestyle, and repay the loan, and we often have to figure out what’s coming in to do that.”

As a community development bank, Neighborhood National has more freedom to be flexible on loans — and can partner with bigger banks to spread the riskier or larger loans. And that means more planning and more paperwork that the businesses often don’t have.

“Financial management is a huge issue for new businesses — starting with just keeping track of costs and profits,” Trujillo says. “Entrepreneurs often don’t include themselves in the costs, for example. “We train people to use QuickBooks, a program that lets you keep day-to-day books and analyze the numbers, as well as do your taxes. It gives them a financial picture of the business that bankers can understand too.”

The Small Business Development Network can provide free, expert advice from many industries and on different aspects of the businesses — at no cost, Trujillo says. “We have a gentleman who specializes in restaurants, people who have accounting and marketing skills,” she says. “We use the Service Corps of Retired Executives as a resource for people setting up businesses. We can refer people to lenders, lawyers, accountants.”

Marketing is another devilish detail for entrepreneurs. “A lot of times they do broad-based marketing and don’t recognize their special arena, which means they’re wasting their marketing dollars,” says Trujillo. “We have a lot of requests for help targeting and reaching the right market.”

Customer service skills and tools are often lacking, too. “We always see that people with the special expertise and drive to start businesses rarely learned to manage people, whether it’s their staff or customers,” Trujillo says. “So we provide a lot of help with human resources practices and labor law, and training in customer service.”

People who work with emerging businesses, including Torrey Pines Bank’s Cady, say that businesses that seek counsel and resources are more likely to survive the throes of growing. But the best approach is to start learning how to run a business before everything is at stake.

“Even before you seek money, you need the guidance and advice of experienced people — someone in your industry to mentor you, an accountant, a banker, a lawyer, the excellent programs the SBA runs,” Cady says. “And you need to find bankers and coaches and partners you are compatible with.”