At least 12,000 small businesses failed last year, 50 percent more than in 1981.
Small business owners who sink their life savings into new ventures--and thus often have only one try at success--are looking more closely for answers.
The solution for an increasing number is networking, the easiest and least expensive means of communication with experienced entrepreneurs who can help predict risks and demands.
By networking, small business people (defined here as those whose annual volume is below $100,000) share:
* How-to information and knowledge.
* Creative ideas and insight.
"Most small businesses fail because they don't identify and learn in time what it is they don't know," says Small Business Administration communication assistant Joe Zellner.
In addition to offering numerous workshops, the SBA now uses networking as a means for getting the potential new business owner together with a successful counterpart. Experienced SBA staff people and volunteers from such organizations as the Service Corps of Retired Executives share experience in planning and developing a specific business, outline necessary skills and take the neophyte through the financing maze.
"Most entrepreneurs believe their business idea will make them a million dollars," says Ronald Gordon, director of information for the Ibero-American Chamber of Commerce. That agency, before offering financial support, gives the mainly minority clients it serves a list of 10 names of successful people in their targeted business to talk with first.
"People," says Gordon, "don't understand how difficult it is to run a business."
Says Karen Kraemer, 37, who owned a tableware shop in Alexandria for six years until selling it recently: "I worked 10 times harder than I imagined, 10 to 12 hours a day, seven days a week. Although the business succeeded I was burned out."
Networking, say its proponents, can prevent failure by advising one not to begin in the first place. One newcomer to Washington found out the hard way there was no market for her interior design services. But since she had committed her life savings, she had to see it through to the bitter end.
"If she had asked a few old-timers, she could have discovered her idea wouldn't work here," says Diane Bender, director of E-Net (Entrepreneur's Network).
She also tells the story of a restaurateur who saved his business by listening to a network member's advice against a decorator "whose artistry superceded a budget."
In contrast, by not finding out more about the bookkeeper she hired, a Washington consultant had to close her business. She discovered too late the difference between a bookkeeper who merely does books and one who offers counsel on what those books indicate. By the time she realized the sluggish cash flow was not a "seasonal trend," but the result of overspending, she was out of money.
Networking has resulted in solutions like these: A caterer, unable to locate an affordable kitchen, was offered the use of a restaurant at night; a direct-mail specialist, who needs a computer on weekends, rents that of an accountant.
For Carolyn Brookes, 35, who opened a Washington limousine service earlier this year, networking brought both an affordable office to share and client referrals from her tour-operator office mate.
"Those selling products or services who don't seek customers from their networks ignore a responsive market," claims E-Net's Bender, who is also an advertising consultant. "Contacts produce more sales than ads."
Observes former shop-owner Kraemer: "I ignored a potentially large group of customers when I failed to let people in my networks know I would like their business."
"Networking is result-oriented conversation that can occur whenever we meet someone," says Robbie Motter, GSA supervisor and co-director of "Conversations," a new business/social network.
"It's a concept that now makes it okay for us to ask for what we want."
The perhaps least tangible benefit of networking--the sharing of creative ideas and inspiration--comes into play monthly for five entrepreneurs who meet in Silver Spring. All graduates of a program offered by Partners On Purpose (POP), a Virginia counseling firm, the group continues to get together to ask and answer two of POP's pivotal questions: What is the condition of your business right now? What is needed in your organization right now?
"By hearing our answers we understand what we need to do to reach organizational goals," says member Harvey Austin, 47, a McLean cosmetic surgeon. "In this way, we not only get insight that frees creativity to solve problems, but we also become mirrors, inspiring one another to do likewise."
As an illustration, Austin points to a recent group meeting where he heard himself say he could use his time more productively if he released some control over his practice. By giving more responsibility to his staff, he is now able to serve more patients, he says, and give each more time.
Austin's insight inspired L'Enfant Plaza optometrist Robert Ehudin, 44, also to give away some of his authority. "When I began to hold meetings and let my staff tell me how the practice should be run, I tapped their commitment, which had always been there. Now they think of new ways to promote our business; the result was a 25 percent increase in revenues in 1982 as compared to 1981."
Another member, George Boizelle, 34, owner of Boizelle Insurance Associates, Gaithersburg, believes his participation in the group is largely responsible for the tripling of his business volume in 1982 over 1980.
"Unless we get together I lose perspective of my larger goals, get bogged down in detail, feel alone," he says. For him the group plays the role "of a board of directors."
"They listen to me talk, cut through my story and zero in on the real source of my problems, which is often some way I'm limiting myself."
Silver Spring dentist Marielou Arcilla, 42, also credits her success to inspiration from other members.
Seeing other dentists fail and her own small business decline in 1981--"because people didn't have money to fix their teeth"--she considered selling her practice and going back to school to get a degree in children's dentistry.
"But then I heard Boizelle talk about how tough times simply motivate him to give more and better service. In an instant, I realized I needed to add a new dimension to my practice, not change my speciality."
The result is that Arcilla now spends more time with patients, providing holistic and nutritional information, among other services, and business is booming.
A sense of connection is what every business owner needs, maintains Washington lawyer Ralph Temple, 50, also of the Silver Spring group.
"Businesses fail because people have setbacks and then worry and struggle, thereby cutting off creative thinking."
Networking for many offers insights, resources and information. It also suggests something we want to believe: The more we share our knowledge and support, the more we get back.