In Business

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Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and nonprofit organizations on Martha’s Vineyard.

In this monthly column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.

It is “the season” and SCORE clients, like all small business people on the Island, are hard at work trying to amass sufficient profits to see them through the lean off-season. There is little time now to think about business management issues; however, there is much that can be learned during the summer rush that will help businesses in the slow times and even help them prepare for a better 2014 season.

It is my opinion that this summer offers the opportunity to address the most loudly heard customer complaint about Island business owners—the lack of business sense. Few customers believe the plethora of excuses for missed appointments or deadlines that translate to “my dog ate my appointment book.”

If you tell a customer you will be back tomorrow to finish the work, be back tomorrow to finish the work.

If you tell a customer you will be there at 9 am, be there at 9 am, or go to the system of a cable company and give the client a two-hour window during which you guarantee that you will be on site to do the work.

If you chronically fail to keep these promises to clients or customers, now is the time to figure out how to do it in 2014.

SCORE counselor Bill Skinner also suggests that communication is key. “The other part of customer service is calling someone when the ‘part did not come in,’ or when the promised delivery date cannot be met,” he said. “Offer alternative dates because this goes miles in establishing trust and a long-term relationship with customers that will be remembered when the crowd goes home.”

SCORE counselor Mike Adell said that now is the time to learn from customers and staff what works and what fails to hit the mark.

Mr. Adell recommends conducting an in-store or post-sales/services survey. Now is the time to find out what your customers think of your services and products or skills. Ask customers if your employees (or volunteers for non-profits) are knowledgeable about the services or products offered. Ask your customers if the staff creates a favorable impression.

“And, now is also the time to consider how you might improve profit margins, increase revenue and improve marketing efforts,” he said. “Ask yourself, ‘Am I buying at the best prices for the goods I use or sell? Are my prices competitive?”

I think the summer is also the time to find out how competitive your company is in the Island marketplace. Become a “mystery shopper” and check out the competition’s prices, displays, and quality of service. It is also time to figure out how you can better distinguish yourself from your competition—is it new products, better advertising, or more frequent discounts?

SCORE counselor and CPA Norm Werthwein recommends that plans be developed so the business will survive during the lean times. “Consideration should be given to reducing expenses, limiting inventory and capital purchases, and negotiating extended payment terms with supplying vendors,” he said. “In some cases, it may be necessary to curtail business for a period of time. All of these actions are intended to preserve cash during the off season and allow the business to continue.”

SCORE on the Island needs your help. If you are a retired or semi-retired business executive, become a counselor. If you don’t have much free time but are able to provide resource expertise in the areas of law, accounting or technology and you could offer as little as ten hours of time annually, let us know. Please contact SCORE at 508-696-9687 to get involved.

Seeking counseling service? Go to www.score.org and complete a brief application.

Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.

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Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and nonprofit organizations on Martha’s Vineyard.

In this monthly column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.

The autumn and winter months are the perfect time for Island business owners and would be business owners to seek out assistance from SCORE volunteers. During the summer months, of course, Island entrepreneurs are much too busy to think, plan and make more than minute-to-minute business decisions. This winter the Island’s SCORE volunteers have been flooded with requests for meetings.

In addition to providing what we hope is valuable experiential knowledge, the clients are providing the SCORE counselors an abundance of “smart business’ reminders as well.

For instance, the Island may have enough cleaning services. It is difficult to help a SCORE client start or expand a cleaning service when there seems to be an abundance of service providers already established on the Island and not much to differentiate one from the other. Finding a niche, a specialty, is critical when there is competition for a defined market.

The Island probably also has enough T-shirts featuring Island vistas.

Recent SCORE clients have wanted to sell “more affordable” versions of artwork. More affordable may translate to mean work by artisans that just doesn’t measure up. The price of a product is not the only reason a customer will make a purchase— the quality of a product does matter.

A number of new clients have come to a SCORE meeting with a great idea for a product or service and lack any start-up finances. The vast majority of small businesses begin with financial support from family, friends, and credit cards. Few if any traditional lenders will back a start-up enterprise, and fewer will back a start-up with none of its own financial backing. It costs money to start a business. Simple things like business cards, advertising, insurance, production expenses require funding.

Because you love doing something, or creating something, does not mean it is a viable business idea. The entrepreneurial spirit can take you a long way but SCORE counselors suggest that before launching a company solid marketing research be conducted to determine the competition, the target customer and demand.

One recent client created a survey that is being conducted in-person with potential customers to answer these questions. It may take time but it helps to ensure that the product or service is something that the targeted customers will purchase.

Look before you leap into an expensive commitment. A recent SCORE client came to a first counseling meeting after signing an expensive lease but before realistically determining if the business was viable. And, after a busy summer season with lots of foot traffic, many potential customers looking but not buying, the business folded.

Perhaps a careful analysis and a thorough, well-researched business plan might have determined beforehand that the business was not going to generate enough revenue to be worth working six or seven days a week, 12 to 14 hours a day for five months.

Similarly, another new SCORE client with a smart product idea was about to lease retail space in a location with almost no shopper traffic and little available parking. The client was excited because the rent was affordable. Often there is a reason why a space is available and the rent affordable.

Businesses rarely succeed by magic. Sometimes it is timing and sometimes it is the right product or service. And most of the time, it is combination of all three with a large dose of entrepreneurial spirit and energy thrown in. However, it really helps to be realistic and SCORE counselors offer that perspective.

SCORE on the Island needs your help. If you are a retired or semi-retired business executive become a counselor. If you don’t have much free time but are able to provide resource expertise in the areas of law, accounting or technology and you could offer as little as ten hours of time annually let us know. Please contact SCORE at 508-696-9687 to get involved.

Seeking counseling service? Go to www.score.org and complete a brief application.

Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.

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Bethany Seidman, Curves Martha's Vineyard franchise owner and manager. — Photo by Janet Hefler

After seven years going round the Curves exercise circuit, franchise owner and manager Bethany Seidman has decided to get off. With her franchise agreement coming to an end, Ms. Seidman plans to close her studio space at Woodland Center on March 16. Members can get in their last workouts on March 15.

Curves of Martha’s Vineyard is part of a national chain of women’s fitness clubs. Its program, designed specifically for women, offers a complete cardio and strength-training workout in 30 minutes, according to the company’s website. Participants move around a circuit made up of resistance machines that work every major muscle group.

In addition to the workout circuit, Curves offers a complimentary weight management program, with free classes once a month open to the public. The club also participates in the CurveSmart program, which involves a programmable, personalized card that holds a member’s data, based on periodic fitness evaluations and individual progress. Curves members receive one-on-one instruction, as well as a supportive group environment.

Since Curves opened nine years ago, Ms. Seidman estimates about 1,000 Island women have been through its doors. She said there are now 100-plus members that use the club on a regular basis.

In addition to exercise and health benefits for members, over the years Curves Martha’s Vineyard has contributed to many non-profit causes. Projects included food drives for the Island Food Pantry, collections for the Red Stocking Fund, and workout events to benefit the American Heart Association, American Cancer Society, and breast cancer organizations.

Curves, before and after

Ms. Seidman is the Martha’s Vineyard franchise’s second owner. The first, Sandie Burke-Gaudet, opened Curves behind Radio Shack’s former location on State Road in May 2004. Ms. Seidman said since she has always been athletically inclined, the new fitness club caught her interest and she became a member in 2005. When she learned the business was going to be sold, she said, “It seemed like something I wanted to venture into, which I did.”

Ms. Seidman and her husband, Dan, bought the franchise in 2006. They moved Curves to its present location at the Woodland Center at 495 State Road in Vineyard Haven in 2008. Their franchise agreement was for five years, which they extended for two more. Rather than opt for another extension, Ms. Seidman said, “I’m ready to let go and move on.”

The Curves venture was a complete lifestyle change for the former operating room nurse. “It’s a 24/7 job,” Ms. Seidman said. “Although nursing has elements of that when you work long shifts, it’s a different kind of intensity.”

Part of what makes Ms. Seidman’s job so demanding is that unlike many other franchise owners, she also manages her own club. As a result, she said, “You’re still connected with it, even when you’re away from it.”

In spite of that, Ms. Seidman said she is the kind of person who always likes to be learning something new. She completed a 12-month course a year ago to become certified in medical coding and billing. When asked what she plans to do next, Ms. Seidman said her first choice would a job in that field, and her second choice, to return to nursing. She has kept up with her continuing education requirements to maintain her license as a registered nurse.

“Even though they’re sad, the members are very positive in encouraging me to move on,” Ms. Seidman said. “I find that very helpful.” She recalled that long-time member Ruth Schaffner told her, “You need to go and do what you want to do.”

What members will miss

Many members are holding out hope that someone will purchase the franchise before March 16, Ms. Seidman said. Although she and husband have been actively seeking a buyer, no one has come forward yet. Their franchise is currently listed on a Curves website, www.buycurves.com/fsbo, that advertises ones available for purchase world-wide. She said they want to make it affordable and are willing to negotiate on a price in order to keep the club going.

“Our goal, ideally, would be to have someone who will purchase the club and come in and take it over,” Ms. Seidman said. “We would like to let people know we’re looking for someone to take it over, so that we could keep these women who are really loyal to this type of workout coming here.”

Curves has served as a niche for many middle-aged to older women who are more comfortable there than in clubs with a younger crowd, she added.

“They just really like the atmosphere, that it’s all women, and they can come in anytime, rather than having to attend classes,” Ms. Seidman said. “But they really like the fact they can come in and it’s just 30 minutes, because women don’t want to waste their time. Thirty minutes is it and they want to be out.”

Some do hang out longer, though, because of the social aspect.

“A lot of friendships developed here; it’s a very community-oriented place,” she said. “Women like to come together and work out together, but there’s also a lot of networking that goes on. ‘Do you know someone that can fix this,’ or, ‘Where’s a nice place to go to eat?’ It’s definitely more than working out.”

Several members discussed what the loss of Curves means to them when The Times visited the club last week.

“Somebody buy it quickly so we can keep coming here,” Wendy Rose of Oak Bluffs, a member since 2004, said. “We’re all feeling very bad about this. It’s perfect for what we need. It keeps us strong and moving.”

Her friend Maureen Anderson, also of Oak Bluffs, agreed. “I’m really going to miss it,” she said. “I’ve met a lot of friends here.”

“A big draw to this place has to do with the social aspect,” Judy Baynes of Edgartown said. “I’ve gotten to know people from all over the Island whose paths might not have crossed with mine if it hadn’t been for Curves.”Ms. Baynes said many Curves members get together outside the club for lunch and to participate in activities such as walks sponsored by the Land Bank.

In addition to the social perks and the workout circuit, Ms. Seidman said a lot of members have told her that what they are going to miss most is the strength-training equipment Curves offers.

“They’re not quite sure about going to a traditional gym, because these machines are designed for women,” she said. “The size of them sort of fits women better, and because the machines are all hydraulic, they don’t have to hop off the machine and set the weight, and hop back on, that type of thing.”

Ms. Seidman said she and staff members Barbara Ravera and Deborah Pytko are “brainstorming daily” on what other Island health clubs to recommend that their members go to next to keep up their workouts.

December marked 12 straight months of rising year-over-year home sales and Massachusetts last year recorded more home sales than in any year since 2006, the State House News service reported. Home sales in 2012 were up 18 percent over 2011, according to data released January 24 by The Warren Group.

Prices are up too, posting their biggest monthly increase since 2005. The median sale price in December hit $300,000, up from $267,000 in December 2011. In all, 46,887 home sales were recorded last year, compared to 50,724 in 2006. December home sales were up 8 percent, compared to December 2011, and fourth quarter sales were up 13 percent, compared to the fourth quarter of 2011.

Warren Group CEO Timothy Warren Jr. called 2012 “the year of robust recovery in the real estate market.” The bump in sales rose over a depressed base, as 2011 home sales in Massachusetts were down 6 percent compared to 2010. For the year, the median sale price of a single family home in Massachusetts in 2012 was $290,000, up from $285,000 in 2011.

The Massachusetts Association of Realtors released its own data January 24 showing a spike in residential real estate activity last year. “December capped off a very active year in 2012 as the real estate market in Massachusetts made significant progress towards recovery,” MAR President Kimberly Allard-Moccia, broker-owner of Century 21 Professionals in Braintree, said in a statement. “With the ‘fiscal cliff’ averted for now and pending activity remaining strong, we anticipate a healthy start to 2013.”

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Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and nonprofit organizations on Martha’s Vineyard.

In this monthly column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.

Recently new SCORE Island clients have come to an initial counseling meeting with lots of enthusiasm, a willingness to invest “sweat equity” and little or no real financial means, wanting to start a business on Martha’s Vineyard. Excitement only goes so far when there is a need for things like a place to work, machinery and/or materials.

The SCORE counselors turned to the South Eastern Economic Development Corporation (SEED), for advice. In 1982, the U.S. Small Business Administration (SBA) created these certified development companies to serve as intermediary lenders to make loans below the market interest rate, and service these loans, to small businesses that are too risky for traditional bank loans.

SEED does not compete with commercial lenders to help make investment capital available to small businesses. As a non-profit, SEED’s mission is to create and maintain jobs in the region it serves — Massachusetts and Rhode Island. With its own guaranteed lending programs including a recently created “community advantage program,” SEED lends directly to small business people who do not qualify for traditional loan programs because they are start-ups, have no collateral, and/or fall below the established credit guidelines.

Tamarah Bacon, SEED business development and assistance manager, told The Times that there are currently nine companies on the Island that are operating with SEED loans and “our overall default rate is less than 2 percent which is fantastic in this economy.”

A SEED loan recipient may receive working capital, refinancing of high interest credit card debt that was accrued in order to run the business, or funds to purchase real estate and/machinery.

On the Island, SEED works closely with Edgartown National Bank and the MV Savings Bank by receiving referrals from these institutions and on occasion may assist banks in completing a loan application package by doing the paperwork required, according to Ms. Bacon.

To qualify for a SEED loan, a pure start-up “must have a secondary source of income,” Ms. Bacon said. This may include a working spouse or other source of income. “It usually takes a start-up three years to break even,” she said, adding that 75 percent of start-ups fail in the first three years.

SEED loans may be for as much as $250,000. The SBA will guarantee 85 percent of the first $150,000 of a loan and 75 percent for loans greater than $150,000. SEED will be looking for a business owner’s equity, collateral, and seriousness of purpose. “The ability to repay the loan is the critical factor. Is this a business or a hobby…is it just some extra spending money or going to create and maintain jobs,” said Ms. Bacon.

Commercial lenders (banks and thrifts or savings and loans) may also make government guaranteed loans under ten separate SBA 7(a) programs. The Massachusetts SBA Small Business Resource guide provides the details of each program. These loans vary from $5 million to $250,000 depending on the use and duration. Edgartown National Bank and MV Savings Bank are listed among the SBA’s top lenders based on 2011 figures.

According to the Resource guide, “For loans of $150,000 or less the SBA may guaranty as much as 85 percent and for loans over $150,000 the SBA can provide a guaranty of up to 75 percent.” Borrowers must meet the lenders criteria and the 7(a) requirements. The lender must also state that without the government guarantee the loan would not be made.

SCORE on the Island needs your help. Retired or semi-retired business executives are encouraged to become counselors, people with expertise in the areas of law, accounting, or technology who could offer as little as ten hours of time annually.

To get involved, contact SCORE at 508-696-9687.

To receive business counseling, go to www.score.org and complete a brief application.

Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.

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Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and nonprofit organizations on Martha’s Vineyard.

In a new, regular column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.

The U.S. Small Business Administration (SBA) says that small business is where it is for employment (49 percent). And 99.7 percent of all businesses are, by federal definition, “small” because they employ up to 500 workers. By that definition, here on the Island nearly 100 percent of the businesses are “small” and 100 percent of those working here in the private sector are employed by a small business.

While small businesses on the Island strive to carve out a unique niche, owners often are faced with the same questions. Recently Islanders asked SCORE counselors these questions.

Question: Should I start a small business in this economy?

Answer: Yes and no.

Starting your own business is not the way to escape a bad work situation — a bad boss, long hours, too little income.

If you want to start a business because you are tired of working for others, which SCORE counselors often hear, that may not be enough of a reason. After all, successful small business operations require enormous hours of commitment. In fact, you hear small business owners saying that they are working 24/7.

If you have the time, the energy and the financial resources plus a great idea, the answer is yes. A “great idea” may be a new product or service. Or a “great idea” may be a way to do something that is more efficient or effective than what is already in the marketplace.

Although the current economy is often described as “sluggish,” getting started takes time and so your timing may, in fact, be perfect. Just about the time you are ready to “launch,” the economy may be healthier than it is right now and a pent-up demand may have been created.

Q: How can I write a business plan for a business that is just an idea right now?

A: Before you get started may, in fact, be the best time to write a business plan. And do not be surprised if you have the answers to most of the important questions in mind but not yet committed to paper. The process may also help you develop the answers to key questions as you create an executive summary, a description of the business, financial forecasts, and supporting data.

Q: I am about to launch my business and am wondering if I need to go to the trouble to incorporate. If I do, what type of incorporation is best for me?

A: A SCORE counselor would tell you that we need more information to be able to answer this question. Incorporation decisions are based on both the company’s financials as well as legal issues, including liability and ownership.

The SCORE booklet “Simple Steps for Starting your Business” provides brief explanations of the types of legal structures available to for-profit and nonprofit organizations.

To summarize, for-profit companies may be created as: a sole proprietorship, partnership, “C” or conventional corporation, “S” or subchapter corporation and limited liability company (LLC). Each classification has distinct advantages and disadvantages, including the extent of liability protection and taxation. You should consult both an attorney and an accountant before making this decision. However, no decision you make is final: as the nature of a company changes so too may its legal structure.

SCORE on the Island needs your help. If you are a retired or semi-retired business executive or nonprofit organization manager, consider becoming a counselor. If you don’t have much free time but are able to provide resource expertise in the areas of law, accounting or technology and you could offer as little as ten hours of time annually, let us know. Please contact Susan at 508-696-1835 to get involved.

Seeking counseling service? Go to www.score.org and complete a brief application.

Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.

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State’s new bathroom access law is in effect

A state law approved over the summer that went into effect October 30 allows people who present a doctor’s note to use employee-only restrooms at retail businesses with three or more employees on duty. If a public restroom is immediately accessible, businesses do not need to provide access to the private bathroom.

Businesses are not liable for any accidents that occur, unless there is negligence. Businesses are also not required to make improvements and may bar colitis and other sufferers from access to a bathroom if it would create an obvious health or safety risk.

The Crohn’s and Colitis Foundation suggested that employers secure personal and company supplies and keep the bathrooms well stocked, clean, safe and accessible. The foundation said employers should inform their employees, especially managers, of the change in policy.

A first-time violation could result in a $100 fine, and a second violation could result in a $200 fine. The law is restricted to people with IBD, Crohn’s and other ailments that make bathroom access a necessity.

“Anyone who suffers with these diseases knows firsthand how difficult and traumatic it is to be denied access to a public restroom when they need it,” Foundation President Richard Geswell said in a statement. “Companies that enforce this law are doing a simple gesture that can make a big impact on someone’s life. It should be looked at as more of an act of human decency than an act of legislation.”

Massachusetts is the 13th state to pass a bathroom access law for people with gastrointestinal disorders, according to the foundation, which is working to pass similar legislation throughout the remaining states.

Mass home sales rose 18.5 percent Q3, price dip noted

Home sales in Massachusetts rose 18.5 percent in the third quarter and year-to-date sales over the first nine months of 2012 are up nearly 22 percent, according to data released October 25. The Warren Group also reported the median price of single-family homes in Massachusetts during September fell 4.5 percent to $277,000. It’s the first time since May that the median price statewide has dropped below $300,000.

Activity in the condo market is also up significantly. Condo sales in September rose more than 23 percent, third quarter condo sales are up 33 percent and year-to-date condo sales are up 27.5 percent. The median condo price held at $275,000.

“Home sales have reached the highest level in nine quarters, a strong sign that consumers have regained some confidence in the economy and are making home purchases with more enthusiasm,” Warren Group CEO Timothy Warren Jr. said in a statement. “But, the end of the summer selling season and a slight increase in unemployment could mean sales will slow at the end of the year.”

Study sees hurdles, opportunities in New England infrastructure

At $14.53 per kilowatt hour, Massachusetts is the fourth priciest state for electricity, behind New York, Connecticut, and Hawaii, according to a New England Council study released October 23. That ranking places Massachusetts just above other New England states, and the study recommends the region maintain its nuclear power plants, develop natural gas infrastructure, and consider an alternative liquefied natural gas terminal, which would provide backup capacity during peak demand, beyond the region’s lone on-shore terminal in Everett.

The study, which was written with the consulting firm Deloitte, also recommended weaning residents off home heating oil and onto natural gas, and developing a regional consensus on renewable energy, including offshore wind power. In some parts of Massachusetts, low costs are an advantage. The Interstate-91 corridor, which transects Vermont, New Hampshire, and western Massachusetts, can produce highly engineered products at a cost of only about 5 percent more than the southeast region of the country.

The Downeast corridor, running through New Hampshire and up the Maine coast, is slightly cheaper, but both are far less expensive than Boston, where highly engineered products are about 33 percent more expensive than the southeast. The council’s study recommended developing infrastructure, including broadband, and supporting job training and innovative financing strategies to boost the region’s competitiveness.

“Perhaps the most significant message of this year’s research is this: for every $1 billion New England invests in smart infrastructure, a potential 27,000 new and sustainable jobs may be created over and above the immediate construction work,” New England Council President James Brett wrote in the report’s introduction. “With this report, we present an unequivocal call to transform our thinking about infrastructure.”

Among the ideas the region should consider are consumption-based pricing for roadways, including a high-occupancy-toll lane on Interstate 93 through Boston. Other ideas including updating the region’s airports, improving the transfer of freight from train to truck, and developing rapid bus transport.

Flawed assumptions may lead to spike in public pension payments

In addition to the underfunding of public pension systems in Massachusetts, the investment returns assumed by 105 pension boards are unrealistic, according to a Pioneer Institute study released Wednesday. In a statement, James Stergios, executive director of the institute, said Massachusetts retirement boards assume an average annual rate of return of more than 8 percent while private sector companies with defined benefit plans generally assumed annual returns of between 4 and 5 percent.

According to the study, state payments to retire unfunded pension liabilities, based on current investment assumptions, will gradually increase from about $1 billion last year to about $3.2 billion in 2040. If all pension boards and liabilities are included, payments are projected to reach about $3.5 billion by 2040. However, under the most optimistic scenario presented in the study, one assuming annual returns of 7.5 percent, annual state payments, which include funds for the teachers’ retirement system, would hit $3.6 billion by 2040, or $3.9 billion if all 105 retirement boards are included.

And under a worst case scenario assuming returns of only 2 percent, state payments would soar to $7.9 billion by 2020 and statewide payments would rise to nearly $8.7 billion. The Patrick administration and the Legislature, in response to investment losses in 2008-2009 and in order to avoid a spike in pension system payments in the fiscal crisis that followed the last recession, extended the target date to fully fund the system from 2025 to 2040.

According to the study, the 105 pension boards reported liabilities of $922 billion at the end of 2010, of which almost $31 billion were unfunded. The study calls for “more rigorous actuarial assumptions and accelerated funding of liabilities,” noting the prevalence of high assumed investment returns “is likely to engender long-term underfunding and, ultimately, insolvency or significant cuts in benefits.” The study’s author is Iliya Atanasov, Pioneer’s senior fellow on finance.

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Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and nonprofit organizations on Martha’s Vineyard.

In a new, regular column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.

Annually, small businesses are born and others shutdown. In 2009, the year of the latest U.S. Dept. of Commerce data, 552,600 were created and 660,900 were closed.

What does it take to succeed? SCORE volunteers on Martha’s Vineyard offer a few answers to that question.

A business plan

Bob Iadicicco, a recently retired SCORE counselor, believes that “a well-constructed business plan will guide you through the process” of creating and growing a successful small business.

The U.S. SBA and the SCORE website (SCORE.org) offer several formats for creating a business plan.

Mr. Iadicicco suggests that in developing a business plan the entrepreneur needs to answer a number of questions including:

What do I want to achieve: being my own boss, earning a good living, having an outlet for my creativity, etc.?

What type of business do I have in mind: manufacturing, professional services, personal services, retailing, etc.?

Who are my customers?

What is my competition?

How much will it cost to get this business started: do I need manufacturing equipment, sophisticated computer technology, purchase or rent a facility, employees, licenses, insurances, etc.?

Do I have enough money to get started: am I going to self-finance, borrow from relatives, will I need to secure a bank loan, will I need investors?

According to the U.S. SBA research, startups rely about equally on the owners’ cash injections into the small business and bank credit. Bank credit translates to loans, use of credit cards, and lines of credit.

Adequate capitalization

SCORE counselor CPA Norman Werthwein says, “one of the most important elements of a start-up business plan is the cash flow projection.”

For new or existing businesses, Mr. Werthwein says, “Determining the timing of cash receipts and disbursements during the establishment, start-up, and growth of the business is crucial in order to determine the capital requirements of the business.

“Whether you are financing the business yourself, with other investors or lenders, all will focus on the cash flow in order to determine the viability of the business and the expected time frame for potential recovery of the capital invested.

“Most start-up businesses will not experience positive cash flow (excess receipts over disbursements) for several years. Therefore, securing access to the required capital during this phase of the business is essential to maintain viability for the venture.

“Many ‘profitable’ businesses fail due to lack of adequate capital to finance operations and growth. Remember ‘happiness is positive cash flow.’ ”

A strong team

SCORE counselor MBA Michael Adell, with a background in corporate sales and marketing says, “It is the people that count!”

Mr. Adell suggests six steps to attract the very best people for their field of expertise.

1. Determine how many folks you will need and for what position.

2. Be sure to include these headcount numbers in your business plan and budget.

3. Establish clear and specific job descriptions.

4. During the hiring process find out who is available that you know and respect or ask friends and associates – search for the best. Evaluate resumes against your specific requirements. Select a few candidates for personal interviews with other employees and yourself. Prepare for the interview by writing questions and listen to the candidate. Pick the best with feedback from others and be sure to check references.

5. The first day is most important. Clearly set work ground rules including attire, hours, pay. Review process, merit increase opportunities, customer demeanor. Establish a training schedule including meeting co-workers.

6. Schedule a six-month review of measurable objectives. Tie these reviews to the merit increase opportunity. A well-trained employee has the best chance to excel.

Good fortune

And, finally, one cannot discount pure, unadulterated luck, a great idea, or perseverance and hard work. Small business owners will admit that a 60-hour week is not abnormal. And being at the right place at the right time has a lot to do with their success.

Have a question you would like to have SCORE counselors address online or in print? Send your query to the MV Times website or susan.silk@scorevolunteer.org. Need free SCORE counseling? Sign up at the SCORE.org website.

Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.

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Main Street, Vineyard Haven is a center of summer and year round business activity. — File photo by Ralph Stewart

Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and non-profit

organizations on Martha’s Vineyard.

In a new, regular column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.

“I think I have a great idea for a business. There is nothing like it on the island… I need help getting it started.”

“The new services I am offering are unique on the island. What I need help with is marketing. Should I be using social media…?”

“I have been the owner and ‘face’ of this business for 30 years. Enough is enough. I would love to retire, but I have to sell this business. How do I make that happen?

These are typical challenges that SCORE volunteer mentors are asked to tackle. In fact, only thinly disguised because all SCORE counseling is confidential, these are the real questions that have been posed by clients during the past year.

Question 1: “I think I have a great idea for a business. There is nothing like it on the island… I need help getting it started.”

Island entrepreneurs are ready to roll out a new business often before doing the important pre-work called for. SCORE counselors remind new clients that many start-up companies fail for lack of a Business Plan. A Business Plan is a document that asks the entrepreneur to describe the proposed business, determine what competition it faces, define its unique attributes, and develop a preliminary budget that identifies start-up expenses and the expected cash flow.

SCORE clients receive a simple-to-follow printed guide that helps in the development of the Business Plan and may work with the counselor to complete the process. There are times when working through the development of a Business Plan informs the client that the idea, while great, is unaffordable.

Question 2: “The new services I am offering are unique on the Island. What I need help with is marketing. How should I be using social media…?”

Social Media, tweeting, twittering, Facebook, for example have opened up new channels for marketing unimaginable even five years ago. However, as the SCORE counselor suggested, when it comes to marketing professional services, research indicates that clients select a doctor, lawyer, accountant etc. based on the referral coming from trusted friends, family members, colleagues — people whose judgment is considered sound.

For this SCORE client it was suggested that the client conduct some informal marketing research among existing clients to determine what, if any, social media the prospective clients rely upon.

(In future columns, In Business will explore the pros and cons of web-based marketing and social marketing in depth.)

Question 3: “I have been the owner and ‘face’ of this business for 30 years. Enough is enough. I would love to retire, but I have to sell this business. How do I sell, and what is it worth?

As is often the case, this longtime owner of a business has no “next generation” to take over the operation. The business owner wanted to sell the business to a trusted employee who “knows” the business and is as committed to its success as the owner.

The challenge in this situation is determining what the business is worth, setting a price that both the owner and the buyer can afford, and finding a way to generate that payment.

For this SCORE client counselors Norman Werthwein, a certified public accountant (CPA) and Michael Adell, with a masters’ degree in business administration, reviewed documents the client’s accountant prepared and asked a lot of tough questions. The client rents office space, the furniture is aging, the computers are leased. And few of the client’s customers return annually for service. Further, the professional services offered are not unique to this company and the competition is fierce.

Determining the value of the firm was impossible, according to Mr. Adell. “There was nothing in the business model — no proprietary software, no contracts for ongoing customers, no facility-owned, nothing to suggest a decent payoff,” he said.

All the SCORE counselors could recommend was that the owner arrange a monthly buy-out that would be some percent of revenue on a sliding scale over a couple of years. Such an arrangement would be an incentive to the current owner to help in the transition and make the deal affordable.

Was the SCORE client pleased with that answer? No. The client wanted out with a sizeable payoff. Sometimes SCORE counselors have to deliver bad news.

To receive free SCORE counseling, visit the SCORE website (SCORe.org). To attend a SCORE workshop register at the ACE website (www.acemv.org/courses). Submit comments or questions for future “In Business” columns to either mvt@mvtimes.com or susan.silk@scorevolunteer.org.

Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.

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— Photo by Ralph Stewart

Sports Haven will become the new tenant of the Pro shop at the MV Ice Arena in Oak Bluffs.

Bill Miner, since 1995 the owner of the sporting goods store in Vineyard Haven, said it was a logical step. “When first approached by Kurt Mundt, Arena general manager and other individuals, we realized that it was the perfect opportunity to complement our seasonal store and service the Vineyard hockey community,” he said.

Sports Haven is open full time on a seasonal basis March through Columbus Day. Sports Haven at the rink will be open seven days a week from September through April. “We are looking forward to the opportunity to service the needs of the large number of Vineyard hockey players and figure skaters,” Mr. Miner said.

Mr. Miner previously owned “Miner’s Sports World” in Medfield for more than 25 years where he specialized in skates and hockey equipment.

For more information, call 508-696-0456 or go to mvsportshaven.com.