By Jim Offner Waterloo-Cedar Falls Courier, Iowa.
Patience and angst go hand in hand with starting a business, according to owners of numerous new ventures in the Waterloo-Cedar Falls area.
But for area businesses launched in the last two years, the work and worry has paid off so far.
They have survived the crucial early stages -- the "valley of death" is the way Dan Beenken describes it. He is the director of the Small Business Development Center and Innovation Incubator at the University of Northern Iowa.
"Navigating that first couple of years is extremely tough because there's many different issues at play," Beenken said. "It's not just one thing. It's adjusting to the marketplace, maybe adding to your product lineup, trying to respond to changes in the market, all while you're dealing with day-to-day challenges all entrepreneurs face. The sharks are always circling."
Beenken said small businesses typically fail for four reasons.
"They have no idea what the customer really wants, even if they have made sales. They don't take the time to ask and have an in depth conversation with clients and prospective clients."
Another is they are undercapitalized, often from a fear of taking on too much debt, he said.
Some fail because they can't figure out a way to stand out from rivals, other than on price.
And finally, they don't figure out a profitable revenue model. Consequently, they constantly spin their wheels, Beenken said.
The chances something could sink a new business could be as much as 80 percent in the first two years, Beenken said.
Bucking the odds There are numerous nascent companies that are bucking those odds in the Waterloo-Cedar Falls area, however.
"I've heard a new restaurant can take anything from 18 months to two years to reach profitability," said Greg Steelsmith, owner of Albion-based Steelsmith Properties, who opened Greg's Place, a restaurant and bar at 926 La Porte Road in Waterloo one year ago.
Experts say small businesses often have to tweak their business models in order to find their niches. Steelsmith said his venture was no exception.
"We tried to expand our food lines," he said. "We bought a new smoker in the summertime and offered baby back ribs, barbecued chicken, things like that. We bought a catering van and tried to push that as well. We still need more customers, but I enjoy it very much."
Steelsmith said the restaurant tried breakfast hours seven days a week for a time but scaled back the 6 a.m. openings to Thursdays through Sundays. The owner started bringing in live bands on Saturday nights.
As expected, things were tough for the business as it got established, but they got easier.
"The first few months, of course, I was feeding it, as far as putting capital into it, and still am to this point, but the amount has decreased a great amount," he said.
The restaurant part of the business brought some surprising success, Steelsmith said.
"The restaurant took off a lot more than we anticipated," he said. "Our chef had a lot of ideas and a fair amount of experience. At first, I had thoughts of having a casual place of regular bar food -- whatever that means. Our chef came on board and he came up with special dishes and knows how to dress them up and use quality food. So, as far as gross dollars, our restaurant has really taken off."
The bar probably has been more profitable, Steelsmith said.
"But in the restaurant, when we started barbecue baby back ribs, we expanded it," he said.
The business has been growing -- now with 28 employees -- after it hit a plateau in its first few months, Steelsmith said.
"I've heard that in the restaurant-bar business, January and February are kinda slow months, but January was our best month ever," he said.
Darin Beck, CEO of Barmuda, is no stranger to the restaurant business, having established numerous banners in Waterloo, Cedar Falls and elsewhere in Iowa.
Then, in November 2013, Beck tried something new: He became a local franchisee for Hurricane Grill & Wings, opening the restaurant at 2027 Crossroads Blvd.
"It's been very well-received," Beck said, noting he recently opened a Hurricane in Cedar Rapids and is in talks to launch another in West Des Moines. "We did very well the first year."
Being a first-time franchisee has its own learning curve, just as starting a business fresh does, Beck said.
"I've been wanting to do a franchise to see what they do that the independents don't and learned some pretty valuable lessons," Beck said.
Brokerage firm Benjamin F. Edwards & Co., at 116 E. Fourth St. in downtown Waterloo, also had the advantage of being part of a larger firm. The local brokerage is part of a St. Louis-based company that has 50 offices in 24 states. The Waterloo office is the company's only presence in Iowa.
"We're doing awesome, phenomenal," said Dawn Pilipchuk-Kurth, vice president of investments and co-owner with her brother, Nickolas Pilipchuk.
Being part of an established firm was helpful in starting a local office, Pilipchuk-Kurth said.
"I believe people know the mission statement of the Edwards family of 'Clients first' and, in my opinion, most people, it sets us apart," she said.
Finding their niche Other new ventures have found their own tools for success. Pawsha's Pet Salon, a pet-grooming business that opened in October 2013 at 2309 Main St. in Cedar Falls, has benefited from customer recommendations, said Ashley Barnholtz, the shop's owner.
"We're doing good," Barnholtz said. "We're definitely staying steady and trying to bring in new products and services and stuff.
Her key to success has been word-of-mouth recommendations.
"I definitely hear that a lot," she said. "I try to make my customers very happy so they do tell people about me."
Barnholtz said she averages about 30-35 appointments per day, which is about as much as she and a bather she employs can handle.
"I've been looking to hire a groomer. I just haven't had much luck finding one," Barnholtz said.
Alexandra Eibey opened an exotic jewelry boutique, Santa Cruz by Alexandra, in September 2013 at 410 Main St. in Cedar Falls.
The store offers necklaces, bracelets, earrings and scarves and specializes in hand-crafted statement pieces, Eibey said, noting she ran the business in her home's basement for seven or eight months before opening the shop in downtown Cedar Falls.
"We got so much support from family and friends from all over, and I woke up one day and decided, 'I can do this,'" Eibey said. "I moved in here overnight. My husband didn't even know about it."
Business has been great, Eibey said, noting her business has an altruistic component.
"The inspiration for my designs come from animals," she said. She sends a cut of her profits to support South American rain forests and an orphanage in Santa Cruz, Bolivia.
Sales in 2014 were so good, in fact, she was able to close down the store for three weeks in January to do volunteer work at the orphanage.
"To do that after being open a year, it was so worth it," she said. "The orphanage we're working with in Santa Cruz is run by a priest from Wisconsin, and that was amazing. For me, it was reassurance I was doing the right thing. God was sending me a sign."
Eibey said she is building a client base across the U.S.
"We did a TV commercial that brought us people from Cedar Rapids -- we have a lot from Cedar Rapids now -- and then people came from Des Moines and Dubuque," she said. "They come in and for them it's just a steal. They're people who just know their jewelry. It has grown rapidly."
Expecting a slow start Eibey said she expected her business to start slowly and was bracing for the worst.