Small Business

A One-Stop Shop for Aspiring Tycoons


Early in September, 2002, at about the same time New York was preparing to mark the anniversary of the September 11 massacres at Ground Zero, former journalist and Internet entrepreneur Rosalind Resnick opened Axxess Business Center, a for-profit storefront counseling location in Lower Manhattan. The 2,200-square-foot office offers entrepreneurial guidance, startup strategies and planning advice, and a preferred network of professionals and financial institutions.

Resnick, 43, envisions Axxess opening locations across the country in the next few years. She spoke to Smart Answers columnist Karen E. Klein about what entrepreneurs need and why she thinks she can deliver it.

Q: You sold your opt-in e-mail marketing company, NetCreations, last December and walked away with $45 million. Why turn around and start a brand-new company in this economy, and why target entrepreneurs?

A: I guess because, in my heart of hearts, I'll always be a small-business owner. I started NetCreations in my home in Brooklyn in 1995, took it public in 1999, and sold it last December for $111 million. It was profitable from Day One, I funded it all myself, and eventually generated sales of $58 million. I got the brass ring. But what I love about business is really the startup phase, and working with small business people is so gratifying to me.

Q: What kinds of resources will you offer the entrepreneurs who come to the center?

A: We have experienced counselors who are entrepreneurs themselves, still actively running companies, working for us on a part-time basis. They'll be providing...consulting services, advice, and guidance on startup issues like business ideas, business plans, incorporation, and securing trademarks. They will also talk to established business owners who want to grow and need help taking their companies to the next level.

We have also developed a "preferred partner" network of professionals, like accountants and attorneys, so we can make referrals to specialists in certain areas. And we have "preferred lender" relationships with the city's top small-business lenders. That means we've done some of the homework on which banks are lending and to whom, so the counselors can point our clients in the direction of a bank that will be the most likely to approve their loan.

In addition, we plan to offer seminars and workshops on many topics -- things like how to start your own video-production company, how to write a business plan, how to do cold-calling. And we've developed an interactive online knowledge base on how to start a business. You can find out all about it on our Web site, abcbizhelp.

Q: Sounds great, but aren't all these services being offered for free or at low-cost by nonprofit groups and government agencies, like the U.S. Small Business Development Centers (SBDCs)? Why not work with them, rather than reinvent the wheel?

A: When I sold NetCreations last year, I knew I wanted to work with startup business people, so I went to volunteer with a nonprofit group called SCORE. After a couple of days there, I recognized that I could take what SCORE and the SBDCs are doing and ramp it up a level: Do it in a faster, friendlier, yet still affordable way.

I don't mean to denigrate or minimize what they're doing. In fact, I've met with all the SBDCs in New York City and I don't see them as competitors, but as agencies that will work with us to develop a lot of synergy. I do feel, however, that the private sector can provide things in terms of technology, training, experience, and accountability that the not-for-profit sector cannot. And I think there's a greater need than ever for a for-profit company to do this. If clients come to us and they can't pay our fees, we'll steer them to the SBDCs.

Q: You're charging $49.95 per hour for counseling services, but you're also providing a lot of technology resources in a very expensive location. How have you funded the company to date, and how do you plan to turn a profit?

A: So far, I've funded the company myself. It's cost about $250,000, and I've pledged $1 million to get it off the ground. We're charging $49.95 an hour for counseling and we're paying our counselors $15 an hour. But if we can't turn a profit, we'll close the center down. That's why we're calling it a beta-center -- we're going to run it for a year and if it doesn't start generating a profit at that point, we'll shut down.

Q: Where are you getting counselors who will work for $15/hour?

A: New York has been decimated over the past year by the downturn on Wall Street, the terror attacks, and the downturn of the dot-coms. The good news, for us, is that there are a lot of entrepreneurs out there who have got some spare time on their hands and are willing to work with us for $15 an hour for 15 or 20 hours a week, just to give something back.

Q: Getting the word out seems to be the biggest stumbling block that the non-profit business counseling services face. How will you market Axxess?

A: Well, one of the lessons we learned in Internet business was that you can't spend $500 in marketing to get one person to come in and buy a $5 item. So, we will be doing some marketing but also relying on word-of-mouth. We're doing some email marketing, we've sent out postcards and flyers, we're advertising in the local business press, and we've joined every chamber of commerce we can.

Actually, our best marketing strategy is our retail storefront: We're at 128 Chambers St., three blocks from Ground Zero, three blocks from City Hall, in a very busy block that is home to dozens of small businesses. There is a bus stop right in front, a subway stop on the corner, and several universities nearby. Just since we opened, we've had walk-in traffic from the Bronx, Brooklyn, and Staten Island.

One of the problems I saw with the nonprofit agencies was that you'd have no idea they existed unless you were referred. The SCORE office I worked at was on the 31st floor of the federal building, for instance. Most of the SBDCs are located at universities -- they're not visible. We want to use the H&R Block model -- be part of the community, right there on the street.

Q: If the beta-center proves itself, what are your plans for the future?

A: We'd like to open additional centers in nine other major markets by 2004, but we want to get all the bugs out of this one first. We need to make sure that our business model is viable and people are willing to pay, and we need to figure out the most cost-effective marketing strategy. If the major markets are successful, we could launch the concept nationally and franchise it. Then we'd truly be the H&R Block of the small-business counseling industry. 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, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. 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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