Starting a business in a tough market

Written by Linn Parish

When trying to open PRESS coffee shop and cocktail bar on Spokane’s lower South Hill, Marianne Guenther and Jeremy Tangen watched ominous forecasts of upcoming natural disasters and traversed patches of poor visibility and unsuspected slippery conditions.

And then the bad weather hit.

The business partners opened the establishment in mid-January, just days after historic snowfall and after months of deteriorating economic conditions.

“It took a long time, and there were a lot of obstacles that weren’t foreseen,” says Guenther, a real estate agent who started the restaurant as an investment—and to create a place for her and her friends to hang out. “Now, I feel like I’m Rocky at the top of the steps.”

Starting a business during a recession takes careful planning, a strong concept and, in all likelihood, your own money, say Tate White and Louise Fendrich, of BIZStreet, Greater Spokane Inc.’s small-business-assistance program.

“New businesses have to have a good focus on what they want to do,” White says. “If you’re focused and have a good value proposition, you have a good chance.”

Careful planning and a strong concept are important for young and old businesses alike, but making sure there is a market for a given product or service is especially important at a time when many potential customers are retrenching or scaling back.

At PRESS, Guenther says she feels that location and concept are some of the reasons their new business is succeeding. She feels there was demand for an establishment like PRESS on the lower South Hill.

“The best compliment I received was one woman who said, ‘I wish I would have thought of this,’” she says.

Longtime Spokane television journalist and public-relations consultant Tobby Hatley started his own consulting firm, Tobby Hatley and Associates, in early 2008. With some clients in hand when he started, Hatley says the state of the economy wasn’t a factor in his decision to start the company.

While the economy has worsened through his first year in business, Hatley’s revenue has remained consistent. Moving forward, the one-man firm is on course to equal its first-year revenue during its sophomore year. He says, however, the down economy has changed the competitive landscape during the past year.

Larger public-relations firms have begun to look at smaller projects than they did a year ago.

“I’ll hit singles and doubles all day; I don’t need to hit home runs,” Hatley says. “The bigger firms need to hit home runs because they have (more overhead). Now, they’re looking at singles and doubles.”

Also, he says, more people in his profession have lost jobs and struck out on their own, essentially trying to start the same sorts of companies that Hatley has started. He says he sees that as a positive development for two reasons. The first benefit is a plus for the community as a whole: Talented people are staying in Spokane and creating their own jobs here. The other benefit is more specific to his company: He says more people are approaching businesses with the same sorts of sales pitches that he makes, which raises visibility for the services he provides.

For those starting businesses, finding outside capital might be difficult, White says. There never has been a lot of venture capital and angel investment funds available in the Inland Northwest, and there is less of that sort of money available now than there was when the economy was healthy, according to White.

Also, lenders are requiring more from borrowers.

“The institutions are lending, but they are requiring more from the person who is borrowing,” White says.

Guenther says PRESS secured financing because the owners have excellent credit. If their credit had been worse, they might not have been so fortunate.

“Because of the credit crunch, I know of three restaurants that tried to open and couldn’t get financing because they had average credit,” she says.