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Lyneir Richardson is a man with a mission. He is executive director of the Center for Urban Entrepreneurship & Economic Development at Rutgers University in Newark, N.J., which has set a goal of helping 1,000 urban entrepreneurs grow their businesses through a nine-month program it runs. The program, which raised $110,000 in funding at an event in October, has enrolled about 400 entrepreneurs so far.
“Our goal is to take the folks who are generating less than $1 million and get them above $1 million,” says Richardson, who was previously the former chief executive officer of Brick City Development Corporation, an economic development organization, under now-Senator Cory Booker, when Booker was Newark’s mayor. He has also been a real estate developer, after starting his career as an attorney.
Located in the same building as Audible, the Amazon-owned audiobook company, the Center has been promoting entrepreneurship in the city since its founding in 2008. It currently runs programs such as the Entrepreneurship Pioneers Initiative program, which provides intensive classroom instruction for first-generation urban business owners and runs capacity-building programs to serve urban entrepreneurs in the arts, technology, and retail/restaurant industries, so they can go after bigger projects and clients.
At the Rutgers Center for Urban Entrepreneurship & Economic Development, entrepreneur Lyneir ... [+]
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The center also has space within the Rutgers Department of Arts, Culture and Media in a building that was once home to Hahne & Co., a historic department store, at 609 Broad Street, and now includes a Whole Foods. Within Rutgers’ expansive space is an incubator that includes office space for eight microbusinesses.
The center has targeted underserved communities in the entrepreneurial sector. Within the Center, about 70% of the entrepreneurs are African American and Latino, 62% are women and 40% are Newark residents, Richardson estimates. Most have no connection to Rutgers. About 60% of the businesses employ fewer than five people, and some are one-person operations. Richardson believes many have the potential to grow.
Newark, which is a 15-minute train ride from Manhattan, is now home to a growing entrepreneurial scene, thanks to its high-speed internet and abundance of university students. Newark Venture Partners, a fund with corporate partners such as Audible, Dun & Bradstreet and Panasonic—has been investing in early-stage, B2B tech companies in the area.
Recently, Richardson shared some of the advice he is giving to businesses that want to get to $1 million. Here are his strategies for entrepreneurs.
Embrace the profit motive. A business needs to make a profit and become sustainable before it can contribute significantly to its community, as Richardson sees it.
“Many of the folks we see want to do something good in the neighborhood and start a business for social impact reasons,” says Richardson. “We spend a lot of time helping entrepreneurs feel comfortable thinking about and talking about being profitable. They are often reluctant to talk about being profitable in a way that is unapologetic. We always say ‘Be profitable first. Have your business be profitable without apology.’ If it’s not profitable, it’s not sustainable.”
One way to become more profitable is through pricing that reflects the value of what you provide, he says.
If you offer top-tier service, don’t be afraid to ask for what it’s worth on the open market, he advises. “I love situations where we have an entrepreneur who is expressly not trying to be the cheapest,” he says. “Because of the value of their goods or services, they can take on fewer customers.” That helps them to maintain a high level of service that keeps customers coming back.
Give customer acquisition top priority. Even if you have a great product or service, it will be hard to grow your sales to seven figures without spreading the word to potential buyers.
“Always focus on how you can get more customers,” he advises.
For some businesses, the best route to customer acquisition maybe by making more pitches or advertising more. For others, it may be raising their visibility by speaking on more panel discussions. The method doesn’t matter. What is important is whether it is effective.
Learn how to find funding. People of color and women have historically had trouble accessing capital. Some have found that turning to friends and family or alternative funding sources, such as community-based programs, can help them pick up momentum on this front.
Learning how to pitch friends, family and other potential investors is an important part of this, says Richardson. “Entrepreneurs tend to raise capital almost with an apology,” says Richardson. “With some planning, you can figure out how to have a conversation about the capital you need and put together a list of organizations that provide supportive capital.”
In addition to community organizations, universities sometimes provide funding to new entrepreneurs. The center makes capital available through its Banking and Financial Services Affinity Group and Angel Investment Fund for Black and Latino technology entrepreneurs, for instance.
Keep a close eye on receivables. It’ll be easier to run a sustainable business if customers pay you on time. “Have a focused and consistent strategy to get your payment as soon as possible,” Richardson advises.
Some businesses incentivize clients to pay them early by offering them discounts.
“Having customers who not only pay but pay between 15 to 30 days is the difference between a struggling entrepreneur and one who has good cash flow,” says Richardson. “Cash flow is like oxygen. Without cash flow, you can’t breathe.”
But good receivables management isn’t just about keeping an eye on your QuickBooks and sending reminders when a client pays you late. “Take the accounts receivable person to lunch,” he suggests. You might come away with some tips on how to better prepare your invoices or internal programs that can help you get paid faster.
Never stop learning. “Always do something that is advancing your education, whether it is reading books, going to industry conferences or taking a capacity-building program at a university,” advises Richardson. “What I have found is that when I read or am going to industry conferences, it helps fuel the drive that is needed to be successful.”
He hopes to bring that fuel to the 1,000 entrepreneurs in Rutgers’ program. “As much as people get value from the intellectual pursuit, there is a camaraderie that goes along with being part of an entrepreneurial community,” he says. “We all need each other to grow.”