Adventures in Dance Studio Ownership
Artist rendering of Asbury Park Dance and Yoga Inc.
I cannot believe it, after 3 months of space hunting, a ninety-page business plan and decades of ignoring my parent's advice....I am finally opening a studio of my own. During my time in the dance publishing field, I've toured my share of magnificent facilities and shared inspirational conversations with some of the nation's most accomplished current and past studio owners/directors. Most say I am crazy, they're prob right, but here I go......
I started this undertaking a little over 4 months ago by attending a couple of workshops hosted by the SBA (Small Business Administration) and the SBDC (Small Business Development Center) at a local community college. My intention was to get the base knowledge I needed to prepare myself to apply for an SBA backed loan. The first workshop was all about getting set up. Where and how to register your business, exploring the pros and cons about choosing your business structure, where to find research and the like.....though this part of the series was helpful in some ways, most of the information provided was easily accessed elsewhere and if you've worked in business in the past, some of it should be common sense. The real perk of attending all of the series is the fact that the SBDC offers free counseling to its students as they establish and enter into operating their businesses (this varies from region to region, but be aware, there are some great public services available to you in your area, I will provide links to some national service orgs at the bottom of this piece).
The second part of the series was all about financing. Honestly, I had a hard time with this one; thank goodness my husband is on his way back to school for his MBA in accounting, my brain just does not do numbers. The last workshop in the "basic" series was the business plan workshop. This one was great and really hammered home why it is so important for entrepreneurs and small business owners to develop and work hard to stay within the means of a well thought out business plan. While I somehow always manage to keep my head afloat with my personal finances, and within the structure of an established company, I could not have imagined the perils of doing business without an in depth examination of the business via a well-written business plan. I cannot stress this enough, do not cheat yourself, whether you are doing it for outside financing or not, whether you are just starting or have been in business forever.......a business plan is such a great tool.....this will help you maintain your sanity......there are too many things to consider to keep it all in your head, (at least there definitely are for me).
So, after I completed the classes I began work on my business plan. 90+ pages later it was complete and I was ready to shop around for the perfect bank to loan me the money I needed to start my business. LOL. Ok, so first business plan goes to the SBDC, they review it, get back to me and seem surprised that it was so thorough. I am so spoiled working in this industry, I expect that people in the professional world at large know how meticulous dancers and dance people are, how my class's valedictorian at my PAHS was a dance major, how my high school was only second to the gifted school in SAT scores county wide, that I have an advanced degree, a business background and I assume that everyone is aware that I am one of thousands of people who make a decent living AND love what they do within this very niche industry. Not so. People see "Dance Studio" and think...."possible fruit loop"....maybe it is true lol, but I do have to say that I was really disappointed in the general reaction I received in initially presenting this plan to the lenders and counselors. Once they were a few pages in or a few fast and furious "on the spot" questions down the road in a conversation, they began to see that this like many others was a legitimate business endeavor. If you are opening a dollar store...you prob wont have a problem. It is kind of messed up. Stings every time, but something I am quickly learning to get over.
Back to the "Perfect Bank Loan". Wow, that is possibly the funniest thing you have read today right? Well, bad news for me (shocking considering the banking industry right now), there was no "perfect bank loan" out there for me as a newer homeowner, startup (if you have been in biz 2 years or more.....you can def find a great loan through the SBA, if you jump through all of the hoops. Had I been willing to jump through more hoops, I may have fared better). When my husband and I purchased our home 2 years ago, we thought wow we are really making an investment in our future (which we know despite these troubled times we did make a good investment), unfortunately the current housing market combined with the fact that we so recently purchased our home means that we have just about no equity (yet). Well, while the government really wants banks to lend you money, so much so that some SBA loans are backed by the federal government up to 90%, banks are being more conservative than EVER (so I hear) when approving these loans for fear of losing their preferred lender status with the feds. The way I understand it is this (and please do correct me if I am wrong), If a borrower defaults on the loan and the bank cannot prove to the SBA that they did their due diligence by thoroughly assessing the risk before the loan was approved, the bank can lose its "status" with the SBA (and that is a bad thing). Basically every bank I talked to, wanted to make sure I had the money I was looking to borrow. As I mentioned, my brain does not work in numbers, but if one has the money, why would one need to borrow it? It got to the point for me (Miss no collateral) that my capital investment (my own money that I was putting into the business), was around 60% and they were talking about freezing the other 40% of my savings to cover the collateral on the loan. At which point I said to myself "enough......why would I pay money to borrow money I already have?" I am sure a more experienced business owner might have a reasonable answer to that question.......but for me at this point in my business I decided to ask myself this question: What do I really need to start this business and ensure enough working capital to get me through the first year or so?
I was able to look back at my business plan and personal finances (rather than heading for the hills flailing and freaking out) and I found a great solution that will work well for my business and my financial situation. I sign my lease on Thursday and the studio website should be up by the 15th! I will keep you guys updated every step along the way (I will shoot for weekly updates and trials) and if you have any advice or feedback for me, I more than welcome it, lets burn this blog up........I can take basic questions too, but remember I am not an expert (by any means;-), I can tell you what my experience has been, and that is about it for now. Most importantly, I would love to hear about your start up experiences!!!!!
Kisses,
Katie
PS here are some great public resources, most of them link to state and local programs.......there is really so much out there to be gained from these programs!:
www.sba.gov
www.score.org
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