Starting a business often begins with a dream. It’s also a roll of the dice. Without support, a business gamble can result in broken finances and personal lives.
But with support, a fledgling business can survive and even thrive. That notion of success is alive in St. Charles County, where the Economic Development Center [EDC] Business and Community Partners offers information and advice to entrepreneurs of all shapes, sizes and inclinations.
Since 1993, the EDC has been operating a 60,000-square-foot, state-of-the-art small business incubator at 5988 Mid Rivers Mall Drive in St. Peters near St. Charles Community College. For as little as a $450 month-to-month lease, the incubator provides not only office space but high-speed internet, conference rooms, notary services, docking and shipping space, a building receptionist, business counseling and training, networking opportunities with other business and more.
It’s a chance for a fledgling business to move out of a home and into a more professional business environment with fewer distractions or for an entrepreneur to utilize cheaper office space.
The EDC also provides free advice on getting a business off the ground or whether it’s worth the effort. That service is available to anyone who calls and makes an appointment, regardless of whether they’re interested in the incubator.
Craig Frahm, chief financial/operating officer for EDC Business and Community Partners, said small businesses “are where the majority of jobs come from in St. Charles County.”
“We’ve been lucky in St. Charles County, of course, because we’ve got a CitiMortgage, MasterCard; we’ve got a GM [General Motors],” he said. “Those things come along fairly rarely, where you get a big corporation moving into your community. To get a 5,000-job company to move in … incentives have to be rolled out. We’re not heavy on incentives in St. Charles County.”
More than 30 business now use EDC’s incubator space. Prospective tenants must fill out an application and meet with Frahm to discuss business and space requirements. They also have to prepare a business plan. Office clients can operate in the incubator for three years; manufacturing clients for five years. But Frahm said companies “graduate” from the incubator and move out fairly quickly.
Since the early 1990s, more than 200 businesses have used the incubator, with some moving as far away as San Francisco.
Interest in starting a business
Entrepreneurs today have some advantages. Business incubators can jump start some businesses.
“It’s less risky. You can bootstrap it a lot easier because of technology,” Frahm said.
Local entrepreneurs Bret and Jennifer Bonacorci agree.
“It’s easier in the sense that you can reach more people through social media and the internet,” said Bret, who along with Jennifer owns jBloom, a direct sales jewelry company that was housed in the incubator from 2006 to 2016.
But he said entrepreneurship also is harder today because of a lack of financing.
“We were fortunate we were able to do some of that stuff on our own but it got to a point where we couldn’t anymore because the funding is tough nowadays; that’s a different world,” he said. “It’s very different than it was 10 years ago [when] anyone could get a loan. Today, you can’t.”
The Bonacorcis were able to secure funding through the EDC’s Revolving Loan Fund for small businesses. But Frahm said the center’s financial assistance for small businesses is limited, though they do provide help in trying to find other loan sources. “We don’t give out money,” he said.
Bret said when it comes to money, planning is important.
“You lay out how much you think you are going to need and double it,” he said. “That’s what usually happens. Either that or take your sales and cut that in half because that could be the reality of it.”
Frahm said the EDC is seeing a lot of people looking to start businesses. “It used to be the opposite of that,” he said. But the trend may be national.
The Kauffman Foundation, one of the nation’s largest private foundations, publishes an annual Index of Entrepreneurship, which measures annual national, state and local entrepreneur and small business activity. The 2017 index suggests that business startups went up in 2016 for the third consecutive year.
In 2013, startup activity was the lowest in 20 years. The rate in 2016 was the highest since the onset of the recession in 2007. The St. Louis metropolitan area ranked 26 among major metropolitan areas in startups in 2016, jumping 10 places from 2015.
Beginning the journey
Incubator tenants offer a variety of products and services ranging from health care consulting to real estate services to hair products, holistic medicine, nannies, guitar lessons and more. Each has had a different journey.
jBloom is an emerging success story. Current incubator tenant, Metal Conditioner Squared is working in that direction. The company produces a synthetic fuel additive designed to be used with any moving metal parts to lower heat and save fuel costs.
jBloom’s roots are modest. Jennifer just wanted to learn how to make jewelry. “I actually thought it was just going to be my hobby,” she said.
A friend taught her how to make a bracelet and she taught herself how to make a necklace and earrings. In 2002, she began to wear the results to her daughter’s dance studio and to church. Women liked what they saw and bought what she made. “I came home with no jewelry,” she said.
By 2004, Jennifer and Bret launched U-Design Jewelry, a direct sales company where women hosted home parties to design and sell jewelry. But times and the business climate changed. The recession prompted hikes in sterling silver prices and women were less interested in beaded products and building their own jewelry. They were more interested in personalized pieces. The Bonacorcis were losing money.
In July 2016, they rebranded their company as jBloom. Now, the company’s representatives or “designers” host sale events in more than 40 states. The jewelry is made in St. Peters. The Bonacorsis bought their first laser to etch their jewelry in 2016; they now have four.
This year, they have been recognized by several publications as being among the fastest growing direct sales companies nationally and in the St. Louis area. They’ve added 3,000 square feet of new workspace to their 11,700-square-foot jewelry manufacturing facility in St. Peters and employ 33 full and part-time employees.
“Did we expect it? Everyone expects their business to grow but it’s been awesome to see the growth so far,” Bret said.
He said they are adding 120 to 150 new designers a month and expect to be over 1,500 by the end of October. They hope to grow to 10,000 new designers in four years. “We think that’s achievable,” he said.
How did it happen? “All of it was word of mouth and social media. It’s all from people at an event, at a home party, thinking ‘I love this stuff. I would love to do this, too,’” Bret said.
Their success also may not have happened if the Bonacorcis hadn’t moved into the incubator in 2006 after two years of doing business out of their home.
That’s also true for John P. Gusewelle, chief operating officer for Metal Conditioner Squared, who said having a small space that allows the company to sell, market and mix its metal conditioner saves it a lot of money. The company pays more than $450 a month and have the largest manufacturing space in the incubator. It still may be a bargain. “Absolutely, it’s way cheaper than somewhere else,” Gusewelle said.
Metal Conditioner Squared launched as a company in 2013 and is housed in the incubator office space of Actemm X, LLC engineering consulting services operated by Floyd Bell, Gusewelle’s father-in-law.
The conditioner uses nanotechnology to bond to metal. It’s not an oil additive, but it is used in a motor vehicle’s engine, transmission and power steering to lower wear-and-tear and heat, and reduce friction. With use of the product, there is less wear-and-tear on engines, a decrease in noise and vibration, and engines run smoother with better fuel economy, Gusewelle said. He said they worked with a formula developed by a chemical engineer with a long career in places like Sherwin Williams Co., where he helped to develop latex paint.
“We’re trying to get it off the ground, sell it and make it,” Gusewelle said. “We are making strides.”
The Missouri Department of Transportation, Bi-State and some trucking companies have shown interest. The company also was invited by Walmart to present its product in April.
“We’re pushing a snowball up one side of a mountain and eventually, it’s going to come down the other side,” Gusewelle said.
Walmart may represent a pot of gold on that other side. The chain’s acceptance would pose new challenges to solve, but they’re not bad problems to have. Plus, Gusewelle likes the idea of being to say, “You can get it on a shelf at Walmart.”
Why go into business
“My goal was always to have my own business,” Bret said. “I was in corporate America for 12 years before that and I wanted to do something on my own. I don’t think going into business was really daunting because we love it. If you’re doing something you love … it’s fun.”
Fun, yes. But starting a business requires research and a careful weighing of the odds of success. The Bonacorsis knew the direct sales business was something that jewelry would fit into. But finding a niche is just one step in the process.
Justin Schulz, director of the small business development center for the EDC, and Frahm said the first question to consider is the impact on a would-be entrepreneur’s personal life. “We always ask them, ‘If you’re going into business, have you talked to your family? Is your spouse on board?’” Frahm said.
Schulz, who works directly with people who come to the EDC office for advice, said starting a business can be all-consuming. He also tells them the level of research can’t be haphazard. He provides a list that asks some basic questions and offers suggestions: Is there a need for your product or service? Can you reach the market that wants your services or product? What are you risking financially or personally?
Schulz said technology does provide the EDC with the ability to develop suggestions for business locations based on demographic data, but there are other questions and details to consider.
He said entrepreneurs must choose a name for the company, figure out an organizational structure, work with an attorney and accountant, get insurance, develop marketing materials, apply for funding, understand tax issues, figure out a location with reasonable rent, reach their target audience, pay business license and occupancy fees and special permits, and plan a grand opening that involves inviting all the “right people.” He strongly suggests that his clients develop a business plan that incorporates these issues and develops goals.
But the work actually begins after the ribbon has been cut. The startup failure rate is high. The Kauffman Foundation’s index estimates a quarter of new businesses nationally fail in their first year, half in three years. They fail for many reasons, often because of a lack of planning.
“They haven’t done their homework, they are at step 50 when they should be at step two,” Frahm said.
Still Bret said dreams have to be acted on. “If you don’t, it’s just a dream,” he said. People have to be willing to take the risks, he added. “It’s just how it works.” Businesses have ups and down and you have to push through the times when the doors seem closed, he said.
Going back to the corporate world isn’t attractive. “I miss the people, I don’t miss the environment,” Brett said. “Yesterday, I was at my daughter’s volleyball game at 4 o’clock. I could not have done that in the corporate world.”