Home / Business Spotlight / Starting small

Starting small

Minority business owners often face disproportionate difficulties in bringing their concepts to life. These Missouri entrepreneurs share the lessons they’ve learned on their way to successful launches — and beyond.

Few entrepreneurs find it easy to get a new business off the ground, much less to flourish. But U.S. minority entrepreneurs are more likely to encounter difficulties in launching their startups or small businesses, due to disparities in access to locations, loans or venture capital funding, among other factors.

While minorities make up more than 35 percent of the U.S. population, they own less than 20 percent of employer businesses and only 17.4 percent of businesses earning $1 million or more in revenue, according to the Kansas City-based Ewing Marion Kauffman Foundation, which supports entrepreneurship and education and is one of the nation’s largest private foundations.

As the U.S. population grows older and more racially diverse, nearly 40 percent of its newest, first-month entrepreneurs come from racially diverse backgrounds — up from 23 percent in 1996, according to the Kauffman Foundation’s 2017 State of Entrepreneurship report. Yet the U.S. entrepreneurial population remains 80.2 percent white and 64.5 percent male.

The foundation also notes that 16 percent of minority-owned businesses say their profits have been negatively affected by lack of access to or cost of capital — compared to only about 10 percent of non-minority-owned businesses.

African American entrepreneurs are particularly affected, being almost three times more likely than whites to have profits negatively impacted by access to capital and nearly twice as likely to turn to credit cards to fund or buy a company, according to calculations from the foundation’s 2014 survey of entrepreneurs.

Despite such obstacles, minority entrepreneurship continues to grow in Missouri, where more than 61,000 minority-owned businesses operate today, and thousands of other would-be owners flock to incubators and resource programs to draft new-business plans and build networks.

Meet just a few of these Missouri entrepreneurs, as they share the lessons they’ve learned while bringing their concepts to life.

josue-montes21 Dapper Latino

Kansas City

For Josue Montes, becoming an interior designer was not part of the blueprint when he moved in 2008 from Texas to Missouri.

Montes had a massage-therapy business in Austin before he relocated to be with his partner, who worked in real estate in Kansas City. He says he wasn’t getting many massage-therapy clients, so instead he focused on redesigning his partner’s condo.

“We sold all of his stuff in the condo and redesigned it and turned it into a beautiful home,” says Montes, 43.

When neighbors in the building came over for dinner, they often told him they loved the result. “[They’d] say, ‘I’d love for you to do mine,’” Montes says.

That informal assistance eventually grew into a business, and today he is 1 Dapper Latino, an interior decorator who also blogs about fashion and food.

“I wanted to show that Latinos are just as cultured or upstanding as everybody else because [of what] you see in the news — the wall, rapists, murderers — and that just is not true. It’s a horrible misconception,” says Montes, a Los Angeles native and son of Mexican immigrants.

For years, Montes worked only for friends or friends once removed. As he approached age 40, he decided that he wanted to “make it a legitimate business, but I didn’t know how to do it.”

Montes had dropped out of college and had no formal training in design or business.

His partner, Kyle Scott, president of Nolan Real Estate, advised him to find an attorney and an accountant, which he did with relative ease. He says he went through two web designers, though, before finding one who “understood what I wanted in a website. I am very OCD, so I am kind of a perfectionist.”

Scott also advised him to start requiring contracts with clients, rather than his former practice of relying on verbal agreements with them.

Meanwhile, he pursued his two other passions: fashion and food.

In addition to building the 1 Dapper Latino site, the web designer also set up an Instagram account for Montes. In 2016, Salvador Campan, the owner of Lordag & Sondag, a bag maker in Mexico City, found the Instagram page and asked Montes if he could sell his bags through the 1 Dapper Latino site. (Never mind that the site had not yet launched.) But the web designer added a commerce portion to the site, and Montes now receives a commission from the sale of the bags

“That for me was amazing because my web designer had told me, ‘Josh, don’t be too disappointed if you don’t get traction on your website for the next three to four years,’” he says. “And here I am getting something before even launching.”

Montes says he sees food, fashion and interior design as “cousins [in that] they all bring some kind of joy to everyone.”

As he memorialized meals he’d savored at Kansas City restaurants by posting photos of the food on Instagram, he started receiving emails from marketing companies and restaurant owners, inviting him to restaurants’ soft openings and events.

“It’s been a great ride. I enjoy meeting all these chefs behind all the delicious restaurants,” he says.

His number of followers on Instagram grew — he now has more than 9,500 — and he gained credibility as an influencer. Businesses, too, sent free merchandise for him to consider showcasing. While he has embraced that role in part, Montes says when someone introduces him as a “‘Kansas City influencer,’ I always correct them and say, ‘I’m an interior designer first.’”

Montes says he believes he’s been able to grow his business because he tries to dispel the notion that hiring an interior designer is prohibitively expensive.

“I like to say that I’m an approachable interior designer when it comes to expense. I’m not sure what everyone’s rates are, but I’m one of those designers who loves the hunt — whether that be at a garage sale or thrift store or T.J. Maxx — versus always buying everything that’s ultra luxe or high-end,” he says.

He also has learned a number of lessons from launching his business. While he insisted on including the 1 in 1 Dapper Latino, he says there have been times when he has overextended himself — between the design, fashion and food — and could have used a No. 2. (He now plans to hire an assistant.)

He also wishes he had taken a course on starting a small business — “especially for tax purposes,” he adds.

To others considering starting a business, Montes advises, “If you’re passionate about your idea, just go for it. There never is going to be a right time for anything.”

Despite the fact that Montes has been “winging it,” the entrepreneur says he feels successful — and not just financially. He recently was shopping at a department store in Florida when he noticed a staff member following him. Montes initially feared he might be experiencing racial profiling by an employee who suspected him of shoplifting.

When Montes went to the register, the employee — who was also Latino — apologized for staring and pulled out his phone. He showed Montes the 1 Dapper Latino Instagram page and asked, “Is this you?”

Montes recalls him saying, “I think it’s wonderful how you are representing us Latinos.”

“That just made me feel really good about what I’m doing and want to continue doing it,” Montes says. “That positivity really resonates with me.”

010918-blue-skillet_2709The Blue Skillet

Jefferson City

When chef Fefe Rome opened The Blue Skillet in 2015 in Jefferson City, it was not her first try at a restaurant.

Back in 2005, at a location in a tough neighborhood in her hometown of Columbus, Georgia, she already had installed bars on the windows and bought hood vents for the kitchen when a city building inspector told her that she would not be allowed to open the restaurant unless she created a back door. Reluctant to cut a door into the cinderblock walls of a building she was only renting, she walked away from the project.

Rome tried a different building in Columbus and again invested significant money in the rental property. As she was preparing to open, she learned that the city had purchased the property and planned to demolish the building to make way for a new high school.

“That was the last straw,” she says. Shortly thereafter, Rome lost a cousin, two grandparents and her father within a short time.

“I was just in Columbus, sad,” says Rome, 54, the oldest of five children in what she describes as a tight-knit family.

Then she received a call from her brother in Jefferson City, asking if she still was interested in opening a restaurant. She was. Rome rented a U-Haul, packed the supplies she had accumulated from the would-be restaurants and drove northwest.

Despite the misfires, her inability to secure loans and her lack of business experience, she opened The Blue Skillet at 710 Monroe St., serving Georgia-style soul food.

“Every year, it gets a little better,” she says, referring to both numbers of customers and the business revenue they bring in.

Rome attributes her restaurant’s continued growth to support she’s received from family and friends in Jefferson City, as well as tweaks she’s made while promoting the cuisine she prepares and serves.

The brother who contacted her, Kevin Rome, had been president of Lincoln University, a historically black college in Jefferson City. He agreed to partner with her on the restaurant. A sister in Atlanta offered constant encouragement and bought kitchen equipment for her. Her two sons also moved to Jefferson City to work at The Blue Skillet. Rome had planned to call her Georgia restaurant The Skillet, but she and her brother had disagreements about the name. A nephew who was tired of hearing them argue suggested they use the room’s blue walls in the name, and the siblings agreed, Rome says.

For the first year, the restaurant received business from customers who wanted to “be with the president,” of Lincoln, Rome says. When her brother left to become president of Fisk University in Nashville, however, things slowed down.

Rome, whose full first name is Phillippia, realized that part of the problem was people didn’t know what “soul food” was. So in talking with people around the city, she started referring to her fried chicken and fish, mac and cheese, and candied yams as “comfort food.” In a radio commercial, she said she served “delicious country flavors that dance on your tongue.”

“I explained to them how it tastes to me, and that started to make a difference,” Rome says.

She also received support from local groups whose members liked her and her food, and wanted to see her succeed. Leaders of the local Salvation Army chapter were frequent customers, and around the end of 2016, they noticed her anxiety. They asked what was wrong, and she told them: “I don’t know how much longer I can do this. I can’t afford to pay the bills.”

The nonprofit organization hired her to cater five events, and “that was enough to pay my rent for two months, pay my light bill, gas bill, everything,” she recalls.

The Missouri Legislative Black Caucus also has asked her three times to cater its events on Martin Luther King Jr. Day.

Despite the family and community support, Rome says things might have gone differently had she been able to receive a bank loan to finance her business and not been forced to use her own savings to open in less-than-ideal buildings. She admits that her credit “wasn’t the greatest,” but she believes that with her score at the time — 630 — she should have been able to receive a decent loan. (FICO and VantageScore list 630 as “fair” and “poor,” respectively.) One lender offered a loan at 28 percent interest, she says.

“I never would have been able to pay that back,” she says, adding that she believes race played a role in her inability to secure financing at a decent rate.

Indeed, a 2014 study by business school professors at Utah State University, Brigham Young University and Rutgers University found that in comparison to Caucasians, African Americans were given less information on loan terms, asked more questions about their personal finances and offered less application help by loan officers.

Still, Rome is optimistic about her future.

“Every day is a brand-new day,” she says. “I do the best that I can, and so far, every time it feels like I’m getting ready to shut down, the good Lord sends an angel down to help me stay afloat.”

011519-justinharris-ryangriffin3Saint Louis Hop Shop

St. Louis

Say you’re visiting St. Louis. You’re a certified beer nerd, or just curious about the Gateway City’s craft beer scene. But you have precious little time to explore. What’s your move?

Saint Louis Hop Shop. It’s the only beer-centric space in town that lets you sample flavors from a variety of local breweries and then cobble together your own six-pack. Choosing may be your biggest challenge: There are more than 600 beers on offer — produced everywhere from a block away to the Czech Republic and Jordan — not to mention handmade ciders and small-batch spirits.

The origin story of Hop Shop can be summed up this way: Co-owner and St. Louis native Justin Harris, 31, created a business that he himself wanted to frequent but that didn’t exist.

Years ago, when Harris left town as a teenager to attend college, he didn’t have a deep interest in craft beer, the dominant local vendor of which was Schlafly. After college, though, he spent about four years in Memphis, where he worked in a well-stocked grocery store. That’s where he got bitten by the craft-beer bug.

Upon returning to St. Louis in 2013, he was blown away by the burgeoning scene, which included Urban Chestnut, Four Hands, Civil Life and many others. Yet he couldn’t find the kind of locale he wanted: a hybrid of a tasting room and a bottle shop.

So Harris and his younger brother, Ryan Griffin, now 29, decided to open the Hop Shop. They chose the Cherokee neighborhood of South St. Louis for their location. Harris says it “hit every check mark.”

“It was a growing neighborhood. It was a diverse neighborhood. It was in the city, which was huge for us. It was readily accessible. And aside from all of that, it just had this underlying energy to it. You feel it when you’re over here.”

For startup capital, they dipped into personal savings and also launched a “founders club.” For $100, a founder would get one beer a month for a year, plus a T-shirt, pint glass, exclusive emails about new inventory and discounts to ticketed events. About 65 people paid to become founders, Harris says, which was crucial to buying that first inventory shipment.

“People in the industry did it as a means of support,” Harris recalls, “but our goal was to be able to give them something of value. That also really made people feel like they were a part of the store. All of our founders, they were supportive of Hop Shop before there was a physical Hop Shop. You have a certain connection to those people.”

Since opening their doors in May 2015, they have expanded in multiple ways. They do special events, such as the annual shrimp boil with Four Hands and the nearby restaurant Byrd & Barrel. They do multifaceted collaborations, such as the “I’m the Captain Now” stout: It was aged in rum barrels by 2nd Shift Brewing and labeled with a design by Cherokee artist Cameron Williams, a.k.a. Art Culture King.

Yet Harris says it’s important, even during an expansionary phase, to always keep in mind the basics of customer service.

“You can get so caught up in other stuff,” Harris says, “but doing stuff the right way will get you far. Talking to someone, greeting someone when they walk in the door. Things like that are fundamental.”

In the summer and fall of 2017, Harris and Griffin moved their operation three doors down and into the neighborhood’s beating heart: the southwest corner of Cherokee and Jefferson Avenue.

The new Hop Shop is much larger than the previous iteration. The brothers predicted they would grow into it during the next two or three years. The move was also a welcome change of pace from the grind of retail, Harris says; deciding on the layout and doing the physical work, even though it was practically next door, took more than a month.

Now, they’re getting five or six new brews each week. Harris says he must fight to stay informed on all of the new inventory, but knowing the small details pays off.

“You can never know too much about your craft, your industry or your business,” he says, “so never stop learning.”

Harris’ other piece of advice for would-be entrepreneurs: “Do it.”

“There will never be a perfect time,” he continues. “When you really believe in something, you gotta see it through.”

divyesh-panchal-keybotKeybot

St. Louis

How many copies of your house key are floating around in the world? Two? Three? A dozen?

And, if you are a property manager, how many keys must you keep track of? How many people have access to your properties?

Divyesh Panchal, 41, and his wife Yasmin Ansari, 37, were managing hundreds of properties around St. Louis. Between showings for prospective tenants, move-outs and appointments to accommodate plumbers and handymen, she was spending half of her days driving around, primarily to do key exchanges. His Saturday nights were sometimes lost to letting in the errant locked-out tenant. It was a hassle.

“So the problem that I’m facing in my business — imagine the same problem across 8 million people in the U.S. who manage 24 million properties,” he says. “And this is a massive problem. This is actually a global problem.”

Panchal, who also is an engineer and second-generation manufacturing entrepreneur, wanted a solution. He came up with Keybot.

Keybot is a smart rental-access solution that does not require Wi-Fi or internet to grant access to a property via a keypad or smartphone app. It enables a landlord to grant temporary access to a specific person remotely, without being on-site.

In 2016 Panchal left his position as the Director of Global IT Strategy & Information at Monsanto to work on Keybot. He was joined at the new business by Adam Lorentzen, 35, who serves as Keybot’s product developer, and T.J Tavares, 42, its chief revenue officer. In its first six months, the company didn’t seek funding, but Panchal kept experimenting with the product with the intention of solving access issues for landlords across the world who lacked internet connections.

The team designed the circuit for the product in St. Louis, then ordered hardware from China and placed their own board inside it. After testing, they sold the product to landlords with small operations in St. Louis, as well as to one in California. This testing process provided the Keybot team with invaluable feedback, Panchal says, and it enabled them to develop a prototype and head into preproduction.

To manufacture the hardware, Keybot needed to establish a global supply chain, with a focus on China and Taiwan. The company spent eight months of the past year in product development. After completing that pre-production phase, Panchal and his team got their first few small batches of devices out to customers for testing immediately.

Panchal’s first round of funding came in the form of about $15,000 raised from family and friends in the real estate sector.

For its second round of funding, Keybot went the incubator route. The company was accepted by TechStars Barclays in London, Sprint Accelerator and the Missouri Technology Corporation. Keybot also was the beneficiary of angel investors, enabling it to raise a total of $500,000.

Panchal recommends that other entrepreneurs also go through an incubator to secure funding. Doing so gave Keybot the advantage of essentially being pre-vetted before presenting its product to investors, he says. This process may be especially helpful for minority-owned businesses and other companies whose owners have not been well-connected to existing investment networks, he adds.

“It’s going to help you move faster than what you typically would be able to do,” he says.

As Panchal worked to raise capital for the company, he says he encountered pushback from those who questioned how his small company from St. Louis could solve a global problem. Echoing other entrepreneurs in the region, he also points to difficulties in developing an angel-investor ecosystem in Missouri.

Still, he says there were benefits to locating in St. Louis. Panchal’s entire founding team was based in the city, and he says the multiple universities in the area made it relatively easy to find readily available tech talent.

The other benefit, he says, is the low cost of infrastructure in comparison to that of other cities. As Keybot plans to scale up, Panchal is searching for a location that can handle assembly, firmware testing, quality testing and customer management..

“I do find St. Louis is a great place to build a company,” Panchal says.

 

010918-blue-skillet_2709What’s Poppin’! Gourmet Popcorn

Columbia

A university entrepreneurship competition helped to launch Mikal Slatton and Naomi Collier’s gourmet popcorn company, What’s Poppin’! in Columbia in 2018.

Slatton says he and Collier developed the brand in early 2017. He says he’d already had a bit of an entrepreneurial spirit — he’d previously started a logistics company in 2014.

“I really saw the opportunity for the popcorn business to really thrive here. There’s a fairly open market,” he says.

They took the idea and entered the Missouri Student Unions Entrepreneurial Program at the University of Missouri, where they were both students.

Through the competition, they developed a business plan and pitched it to a panel of student union leaders, university administrators and representatives of U.S. Bank, who then decided which companies would be best suited for a spot in MU’s Student Center.

In spring 2018, the panel selected What’s Poppin’! to open in the student center. The company officially opened in April 2018 in a space where it is not required to pay rent or utilities. It also received $2,000 in startup capital from U.S. Bank.

Already, Slatton says the campus has embraced their new business.

“Who doesn’t love popcorn?” he says. “Even people who don’t like popcorn kind of like popcorn. They just don’t want to admit it.”

Slatton says his company sells popcorn made locally, and with recipes he and Collier developed.

A campus favorite is the Cookies N’ Cream flavor, which blends Oreos and white chocolate flavors. The company also has a chocolate and peanut butter flavor called Mr. Carver.

Slatton and Collier also have developed flavors that honor their respective hometowns of Chicago and St. Louis.

Their flavor dubbed The Taste is a nod to a Chicago tradition: mixed caramel and cheddar-flavored popcorn. Their St. Louis Style popcorn provides a kick with Old Vienna seasoning, a city favorite, and white cheddar.

So far, Slatton says business has been good — “really, really good.”

“Since we opened up in April, quarter two of 2018, we did 250 percent of what we did the previous quarter,” he says. “Coming into fall, we did 350 percent of that [first] quarter.”

He says the university has provided “a huge outpouring of support” to the fledgling company.

At the end of the year, Slatton says he and Collier will find out if their lease is renewed for another year.

“We’re just really excited, based off of how things have been going since we opened up the space,” he says. “I’m excited to hit the second half of the [school) year.”

Beyond the next semester, Slatton says the company is hoping to expand its market in Missouri and across the country. The company is looking for opportunities to expand its reach in Chicago and St. Louis through franchising and catering events for organizations.

Slatton says if he had the ability to start over with what he knows now, he would plan bigger at the outset.

“Popcorn is a universal thing,” he says. “I think we were thinking, ‘It’s a student business, let’s capture Mizzou.’ Now we feel like a lot of people around Mizzou know of What’s Poppin’!, have had the popcorn and enjoy it. Now it’s ‘Where else are we going to go? What’s the next level?’”

Slatton says he’d advise other new entrepreneurs to try to protect their ownership interest in their idea. He also says it helps to be choosy about your partners.

“We don’t want anybody who has a whole bunch of experience in a different industry,” he says. “If we have the idea and just need the capital, that’s another situation. You always want a partner who will invest greater when it comes to the deal.”

Slatton says the hardest lesson he and Collier have learned has been “finding reliable people who can be growth partners for the business” in terms of hiring.

“We’ve been left cooking for 14 hours straight because we didn’t have the right people,” he says. “Now we’ve gotten to a place where we have more reliable people.”

Leave a Reply

Your email address will not be published. Required fields are marked *

*