Crystal Kendrick is the president of The Voice of Your Customer, an Ohio-based marketing consulting firm specializing in market research, secret shopping and media campaigns. The company works with government agencies, non-profit organizations and corporations to help them better understand their clients.
Kendrick recently spoke with us about her growing business and the challenges she’s faced securing financing to fuel that growth.
Why did you start your business?
I was in corporate doing customer service management. Although I absolutely loved customer service and helping customers, I found that I was no longer doing what I loved. I had risen so high in the organization and I had so many tier-one employees that my whole day was spent in human resources, whether it was hiring, get-well plans, performance evaluations, FMLAs, transfers, terminations, resignations, unhappy people, you name it …
As a hobby, I was doing secret shopping for friends. I started receiving more requests to do the secret shopping. I decided I was at the right age and in the right financial situation to try this entrepreneur thing. I said, “I’m going to give it two years,” because that’s how much money I had saved. Two years into the game, we were named the National Minority Supplier of the Year. I figured at that point, I wasn’t going to turn back!
How did you get the funds to get going?
In most professional services firms, you need a computer and a telephone, which most people have already, and you need some software. To start, you need to call the state and get a license for $50. Other than a few other supplies, I didn’t really need a lot to start my business.
I am a single person with a professional services firm, and my business is my only source of income. Organizations are much more willing to lend for large equipment or real estate – something that can be repossessed and sold. Banks weren’t so eager to lend for non-tangible items like hiring someone or software or supplies or gap financing to get you over the hump until your invoices are paid. For me, my only choice was to use the personal lines of credit I had established when I was in corporate for those things.
Have you heard of business credit?
Of course. Television commercials and banks will tell you all day long that they are lending every day. But the lion’s share of my network has really struggled with bank financing to the point that we don’t even try. We’ve said to ourselves, “It would be easier to go out and get more sales and grow our business that way than it would to go to a bank and get a loan.”
Managing the Business
What’s most challenging about running your business?
Sometimes, it’s just about making the right choice. Most people start a business because they’re good at doing what the business does. I’m a really good marketer, just like restaurateurs are really good cooks. But there’s no book that tells you all the other decisions and choices you have to make, like hiring people, accounting, payroll and taxes.
The greatest challenge that most small businesses have is when they are trying to not just be the expert in their field, but the CEO of their company. Most small businesses fail not necessarily because they don’t have the business, but because they’re so busy working in their business, they don’t know how to work on their business.
How do you finance your business to manage cash flow or growth?
I’ve had to look for alternative ways to finance my business. For example, our county has a workforce development tax credit/reimbursable wage program. If you hire someone who is unemployed or meets other criteria, not only will they reimburse you for half of that person’s wages, but you could also be eligible for tax credits. That has enabled me to hire people.
There are also programs that offer free training for employees of small businesses. Once you hire someone, the biggest challenge is the cost and time it takes to train them. We have received grants and free training opportunities from workforce development agencies, chambers of commerce, universities and back-to-work initiatives. Now, I don’t have to borrow money to do that.
Also, we have worked with local universities to receive free or subsidized professional services that we needed to develop our business, like website development, electronic media, legal advice and accounting.
Do you use trade credit from your vendors or suppliers?
No. I’ve not necessarily needed that because the lion’s share of our expenses is employee wages, followed by software and computers.
What’s the biggest mistake you made early on?
When I first started out, I did not do my accounting and bookkeeping well. I had a home-based business. Because of that, I did not do a good job of separating my personal expenses from my business expenses.
My accountant told me after Year 1, he literally had to perform an autopsy on my work. That was my real eye-opener that I needed to learn to be a CEO. I was a really good marketer, but I had to get help and realize what I did not know. Today, my finances are straight and in a much better situation!
I also did not do a good job of planning for taxes, because I did not realize that as my business grew, my tax burden would grow. Having a good bookkeeper can ensure you don’t have a lot of financial troubles. It’s really helped my company.
What’s the smartest thing you did in your first year?
When I started my business, I was still employed. It’s very hard to make money when you are still identifying your company name and getting your arms around what you’re doing. I did all of that behind-the-scenes stuff before I left my employer.
What’s the most rewarding thing about owning a business?
When I started my business, my favorite part was doing good work and introducing our specialties to clients. After I did that, the second thing that brought me joy was to give back to my community in a way that I wanted to. It brought me joy to see other people in our community benefit from our philanthropy.
Today, I have several employees. My greatest joy now is to see my employees grow and develop and be promoted within the organization, to help them achieve their goals, and to know that the salaries I pay them are educating their children and developing dreams.
What does the future look like for your business
Growth is evident for our business. We are looking at expanding and diversifying our customer base. We also want to reach a point where we are considered in some of the larger segments so we qualify for a minority business accelerator or just certain roundtables or groups that are associated with the small business community for businesses that generate more than $1 million or $5 million in revenue. We are on target for that.
We have guidance from government agencies to help us grow and expand our government work. And we are doing quite a bit now to partner with or potentially acquire the customer base of a colleague who is looking to retire. And we’re doing some internal things to ensure we’re ready for that growth.
What advice do you have for someone starting a business?
My advice to people who are in corporate and who want to be entrepreneurs is to continue to work and run your business until you can physically no longer do it. Because, what people don’t realize is that just because you have a customer on Day 1 does not mean you are going to have a customer on Day 5. And just because you do work today does not mean the invoice is coming tomorrow. The bigger the client, the bigger the invoice, the longer it takes to be paid.
I would also tell people to ensure there is a viable market for their product or service. Just because you have a really good idea and you think that people need it, doesn’t mean they are going to adopt your product or service easily or that there’s not already a saturated market for it. I’ve seen so many people fail because they did not fully understand that there was not a market for them or that their market had not developed to need their services yet.
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