Urban Business-Owners Share Their Biggest Challenges

Photo: Executives from Energetic Energy at the ICCC National Matching Day

Earlier this month ICIC and Bank of America convened over 125 urban business-owners in New York City for the Inner City Capital Connections National Matching Day.  This day was dedicated to helping inner city entrepreneurs access capital which, according to ICIC research, has proven an obstacle for the vast majority.  While the business owners were practicing their pitch to investors through speed-dating sessions, BusinessNewsDaily caught up with some of the participants to get an idea of what some of their biggest challenges were. 

Below are the top 10 challenges the ICCC participants reported facing as urban small-business owners.  

1.   Access to capital

"Our primary challenge as a small business is having access to capital in order to facilitate our exposure," said Clarence McCollum, president and CEO of Exergetic Energy, an energy company specializing in renewable energy sources. "It is a dual challenge, but [obtaining] capital is a bit more important because with access to funds we can garner more exposure. With capital we can also get out and find business opportunities so we can provide our technological solutions to other companies. We also have some innovative technologies that we are bringing to the forefront.  Therein we need capital to help develop those prototypes and file patents."

2.   Finding ways to grow

"Growing the business with limited access to capital and resources presents a big challenge," said Shyam Gulati, CEO of Infopeople Corporation, an information-technology firm.  "To grow the company we are looking for an equity investment so that can facilitate the growth to the next stage, but it is hard to find."

3.   Competition for government contracts

"The biggest challenge that I have is with government contracts and increasing competition," said Ana Chertien, president of ABC Security Service. "They usually go for the lowest bid, which means the margins continue to shrink. Sometimes companies go out of business trying to compete. The margins are shrinking and it leaves you asking yourself, ' how do I compete?' Before, I used to compete with three companies and now there are 15 or more companies I compete with."

4.   Keeping up with demand

"Our biggest challenge thus far has been having enough space to handle all the kids that need childcare," said Harold McMillian, vice president of McMillian's First Steps Child Care Development Center in New Orleans. "After Hurricane Katrina, many day care centers left New Orleans, so we are overpopulated right now. Our present enrollment is200 and my facility can only hold 200 kids. I am trying to buy a new property now to allow us to have more space."

5.   Getting access to potential customers

“The biggest challenge has been trying to identify who the buyers are," said Kehinde Olajide, president and CEO of Hemisphere Beverages, an all-natural-beverage company. "It is very hard to crack that code.  Even when you do crack that code, it is always hard to get a return phone call or email.  These people are getting hundreds and thousands of emails and phone calls a day.”

6.   Transitioning from being self-funded

"Being, as we are, a technology company transferring technology from the inventors to our commercial company was our first challenge," said Chris Melancon, founder and CEO of Spyglass, a company specializing in portable water laboratories. "We did that through our manufacturing partner and a lot of time, energy and resources. Now that we have accomplished that, we want to scale the business and to do that we need money. Our current challenge is in raising capital for the company to go from having self-funding and bootstrapping to being able to hire people and sell more products.  It is a pretty classic problem, but we are in the middle of that."

7.   Getting paid on time

"Our biggest challenge right now is the marketplace," said Jennifer Brown, marketing and sales representative at coffee supplier Jamaican Gourmet Roasting Company. "Our challenge is that many of the companies that we do business with are unable to pay their bills as a result of the economy.  We [coffee products] are one of the first things that goes in that situation. Our customers still want the product, but they will often times delay the payment and that eats into our working capital.  With the economy the way it is, it becomes harder to borrow and many times they are taking away credit lines. It is hard to get that back once it is gone."

8.   Getting a fair price

"For our company, the biggest hurdle is getting over manufacturers' price sensitivity in the United States," said Cara Aley, president and COO of Mojo Socially Responsible Apparel, a U.S.-based apparel-manufacturing company that focuses on providing sustainable employment opportunities in apparel manufacturing for single moms who are living below the poverty line. "So much of apparel manufacturing has gone overseas. We have tried to find a niche in mass customization, where we customize hoodies and tees, but getting people to pay more for our clothing when competition produces it cheaper overseas is a great challenge."

9.   Finding the right people

"The biggest challenge is being under-resourced," said Jai Jai Greenfield, co-owner of Harlem Vintage and Nectar wine bar. "Not having enough talent and the right amount of capital to do what you really need to do is the challenge for us. We have gotten a lot of really great stable growth through our own organic bootstrapping, but when we think about growth and where we can take the business, we need capital to do that."

10.   Affording marketing

"The issue we have is finding more capital as you are growing," said Martin Ekechukwi, founder and CEO of Village Tea Company, an all-natural-tea company. "You find yourself having to spend money on inventory and that money gets tied up. That means you are not selling your product immediately. You therefore need more money for operations to help turn over the product to store level. It is hard to see a great product that is sitting on the shelf and it is not moving simply because you don’t have the resources to help move it."

If you’re a small business owner, share with us some of the challenges you face while running your business.  ICIC continuously tries to address these challenges with informational webinars, educational programming and written resource guides.  The most recent resources, including a guide on “Utilizing Capital Resources to Grow Urban Businesses,” are posted on the executive insights and business tools website page.

BY Mary Duggan on November 28th, 2011

TAGS: capital | small business | business | entrepreneur | jobs | iccc