Small Business

A Course Worth Following


By Karen E. Klein Phil Holland, a commercial real estate developer and the founder of a chain of California donut shops, is a great believer in the restorative power of entrepreneurship. In fact, Holland knows first-hand that small business can fuel both economic and personal renewal after tragedy strikes.

It was in 1992, after rioting devastated many Los Angeles neighborhoods in the wake of the Rodney King police brutality verdicts, that Holland first decided to take his vision for small business to the streets. He wrote up some notes about how he succeeded -- and failed -- as an entrepreneur, and started a free evening class for people in one hard-hit community who wanted to rebuild their small businesses. His course became so popular in Southern California that he put it on the Internet. Now his labor-of-love Web site, MyOwnBusiness.com, reaches entrepreneurs and would-be entrepreneurs around the world. Holland was interviewed by "Smart Answers" columnist Karen E. Klein. What follow are edited excerpts of their conversations.

Q: You had a lot of success in your own business career, yet your course focuses on what not to do when starting a business, rather than on what potential entrepreneurs should do. Why?

A: I was fortunate to be successful, both with the 138-store Yum-Yum Donut chain that I started in 1970, and in a number of other entrepreneurial ventures, including manufacturing bakery machinery and developing shopping centers. But I also tried to establish a franchise

chain of Mexican restaurants that failed in 1969, so I'm familiar with how small business can go wrong.

It seemed to me there were already so many courses giving entrepreneurs step-by-step, how-to instructions, that it would be more useful to let them know about all the common, but very serious, mistakes they could avoid. For many people, going into business for the first time is like walking into a minefield -- blindfolded. We wanted people to know where all the land mines were.

Q: How exactly did MyOwnBusiness get started?

A: I was the typical entrepreneur and kind of an iconoclast, I guess. I wanted to do something to help the areas hit hard by the riots but I didn't think much of the Rebuild L.A. concept. I didn't want to have to work around a lot of bureaucratic nonsense. So, in 1993, I went to Compton and got a vacant room in a job-training center and handed out flyers and started my own class. I had published a couple of books on entrepreneurship, so I used those as the basis of my 10-session curriculum.

Q: How did it go over?

A: It was very well-attended, even though most of the marketing was just word-of-mouth. Every class drew 20 to 80 students and I got a sense of great appreciation at the end of every course. The students would always throw me a surprise party. A Mexican immigrant who had a tiny restaurant attended the first class, and his wife and kids came to the second class and asked if they could put on the class in Spanish. I said sure, so he and a bunch of friends put it on in Spanish. They got a small ad in the local Spanish-language newspaper and pretty soon people were coming from all over town by the busload to attend.

Q: So it was obvious that you could reach more people if you had the time and opportunity?

A: Yes, I knew we could help a lot more people if we could proliferate it. I started a nonprofit organization to do that and put together a board of directors consisting of people who could enhance what I'd already done. So, I recruited a lawyer, a banker, and other professionals.

Q: How did you decide to take it online?

A: Well, originally I decided to push the course through Rotary Clubs and then, a couple years ago, it became obvious we had to take it directly to the Net. We repurposed everything and went live a year ago in August. The feedback has been wonderful. We're getting up to 10,000 visits a month and we've designed a certificate of completion that students can use to show their landlords and bankers and other people that they are serious about being entrepreneurs.

Q: What are the biggest mistakes that you flag for your students?

A: Well, the biggest one is that they don't pick the right business to start with. They pick something that they don't know much about, but they think they'll like it. Or they have a good idea but they haven't done the research to know what it takes to really pull it off. We tell people, "If you want to open a convenience store, for heaven's sakes, go work for 7-11. They've already made mistakes and know how to avoid them, so you can learn a lot in just a few months there!"

The second big mistake is getting into business without a good knowledge of accounting and cash flow and then running out of money early on. There is a very simple way to predict future liquidity, but most entrepreneurs are not even taught about it and when they run out

of cash, they crash and burn.

The third thing we tell people is not to make the mistake of trying to do and be everything at once. Specialists do better than nonspecialists, so we advise them to specialize, focus on a single product and be an expert at that one thing.

Q: Your course includes quizzes and a business plan format. Is this really all free?

A: That's the biggest question we get: What's the catch? How do you make your money?? I tell people over and over that there's no catch. We're a nonprofit and we're funded by donations.

Q: You've put your personal resources behind the project too, right?

A: Yes. I am still in the shopping-center business in Salt Lake City and I have a relationship with a developer there that's given me more free time to work on this. And, I've found that it's much more fun to give the money away than it is to make it. I'd hate to be a retired entrepreneur who's made money and doesn't know what to do with it, and doesn't know what to do next. I think that the whole idea in business is to get to a point where you can give something back. In free enterprise, encouraging new business is the engine that will

keep the free world really free. Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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