Small Business

Small-Biz Talks: Interview with the NYC SCORE Chapter

SCORE is widely hailed as one of the best resources an entrepreneur can leverage. We had the chance to speak with a representative of SCORE and get a closer look at how they operate and their view of the small-business landscape.

SCORE is an organization focused on helping small-business owners and entrepreneurs. It’s primarily known for its mentoring services, but it also offers workshops, seminars and more. Although most of the mentors are volunteers, SCORE has a rigorous mentor-selection process that ensures you’ll be advised and consulted by someone with years and years of small-business experience. With over 300 chapters throughout the nation, you’re likely to find a SCORE chapter near you.

We sat down with Ed Cowen, a volunteer with SCORE. He walked us through exactly what SCORE does and why it can be so helpful for small-business owners.

This interview has been condensed and edited for clarity. If you're a small-business owner interested in sharing your funding story, tweet us at @ValuePenguin.

Can you briefly describe your background?

I graduated from New York University School of Law and have been a practicing attorney for 40+ years. I was a senior partner of two major nationwide law firms, dealing in all areas of corporate and business law, business problems, finance, and litigation. Much of my professional time was concentrated on advising and guiding companies that had financial or organizational problems, including reorganizing businesses, contract negotiations, out-of-court workouts and in-court reorganization proceedings.

How did you get involved with SCORE?

At this stage of my career I felt fortunate in the success I achieved, and it became meaningful to me to continue to feel validated by helping others who needed, but couldn’t afford, to retain a lawyer or consultant to assist them. A friend suggested I contact SCORE. By volunteering with SCORE I help business people and, at the same time, feel I’m contributing in a meaningful and worthwhile way. In short, SCORE was an extension of my lifetime law and business advisory roles. With SCORE experience, I’m not only able to remain relevant by interacting with and helping others, but in the process able to continue to learn, grow and contributor to the community.

What does SCORE do?

SCORE is the mentoring arm of the U.S. Small Business Administration (SBA). SCORE has over 300 chapters throughout the United States, with over 13,000 volunteers who help people to start a business or deal with problems as they come up. The volunteers have enormous experience and are able to advise clients in areas such as marketing, social media, ecommerce, accounting, financing, personnel, business plans, etc. The New York office of SCORE this year alone will help over 5,000 entrepreneurs in the starting or growing a business, or in solving major business problems. Fifty-eight percent of SCORE’s clients come back for multiple sessions with the same or different mentors, depending on what their particular needs may be.

SCORE also provides an Advisory Board service for businesses with at least 40 employees. Under this important service, clients are provided with a team of three or four SCORE mentors whose expertise relate specifically to the client’s challenges. Each Advisory Board team will stay with and help the client with its business problems for at least a year, but most engagements go longer. The goal is to make the business prosper and grow.

To best assist the client, the Advisory Board meets onsite with the CEO and/or principal shareholder and the client’s management team on a regular basis. This is different than your typical consulting firm, in that the advisors will not just deliver a write-up and leave. On the contrary, our Board advisers are positioned to stay with a client’s business for the long term. In this process, the Advisory Board doesn’t just help the CEO, but also helps to guide the organization and managers of the various divisions or departments of the business.

Recently I personally experienced serving on a SCORE Advisory Board. The client was a midsized company that had a myriad of problems across the entire business, from HR to IT to marketing. The Board members had expertise in the business areas in which the client needed assistance and, as a result, the Advisory Board was able to offer valuable advice to assist the client in its areas of challenge.

Each Advisory Board asks its client for a very minor contribution when the Board begins its assignment, and will ask for a voluntary contribution at the end of the year in an amount the client feels SCORE has benefited the business. This model has been successful thus far. Almost all the Advisory Board clients have continued with our Advisory Board service beyond the initial year. With this Advisory Board service, Score aims to have long-term engagements, because it’s a sign that the clients feels we’ve significantly helped them grow their businesses.

SCORE also organizes about 145 workshops, where it offers free or minimal-cost sessions with experts in various areas— anywhere from QuickBooks, to legal topics for business owners, or financial management, or things that may be of particular interest to the attendees. In addition, SCORE also has business owners’ roundtables, where three or four weeks over a several-month period the same business owners will come in and sit with one or two experts—mentors—who will help them with their problems. It’s a roundtable where the participants discuss their issues, which are often common to a number of the people at their roundtable.

Have you noticed any big trends or patterns, especially during recent times, in specific problems that people bring to you?

A growing area of concern is social media. The whole nature of marketing has changed over the years, and we find that e-marketing and social media are some of the biggest issues. Another big issue is financing. SCORE New York has a Funding Committee that will assist clients in this area. We will see what the business is, will help them work up a business plan and then will introduce them to lenders who have indicated to us that they would be receptive to funding the particular type of business the client is in. To aid in the process, we not only coach the client through the business plan, but also through the need for them to understand their financial requirements.

Is there anything that business owners have done well in the past that you think clearly identifies that they’ll be successful?

The best way to judge the likelihood of future success is to look at their business background, business acumen, and willingness to work hard. If they have some experience and knowledge in the area of the business they’re looking to go into, that’s always a good sign. Other than that, a business owner needs to understand that starting a business is one of the toughest jobs they could have, and growing a business is usually a full-time occupation. Successful business owners typically demonstrate their potential by showing that they’ve researched their idea and the market, and that they have the skillset to organize a successful business. SCORE doesn’t make any judgment calls, but you can’t ignore that these are the biggest signs of likely success.

Why doesn’t everyone use SCORE?

SCORE is probably New York’s best-kept secret! Promoting SCORE requires putting a lot of money into marketing and advertising. While word-of-mouth is the best seller of a product or service, if we had the funds we would definitely advertise more.

What do you think about the current small business lending market?

There are definitely more small-business loans available today, and they include crowdfunding, and micro loans. Banks typically only lend to businesses that have been operating for at least a year. That’s given rise to alternative lenders that lend limited amounts if they feel the business owner has a good business plan and product, despite the lack of a real track record. Of course, it’s always easier to borrow money when you’ve been in business for a number of years and have some sort of provable record or adequate collateral, but the majority of SCORE’s clients are those who are just beginning.

How can startups get financing if loans are so hard to obtain?

There’s always friends and family, microlenders (including Kiva and the SBA), crowdfunding, high interest credit card loans, and some lenders who will look primarily for collateral. I’ve also dealt with startups who are able borrow money if they have adequate orders from one or more reputable buyers. Factors will lend them money against those receivables, albeit at a high cost. However, currently it’s looking like more and more lenders are willing to take on risk. I’ve seen more lenient lending for amounts smaller than $100,000, particularly where the business owner demonstrates financial or business acumen. Currently, it seems like there’s an increased appetite for some lenders to accept limited risks. However, it’s risky for the borrower, because of all these lenders require personal guarantees. I do think that individuals should think twice, have a sound business plan with cash flow projections, and test their products in the marketplace before they borrow funds.

What’s the difference between a small business versus a startup?

Although the business principles are the same, a startup is usually a riskier enterprise. The startup’s financial projections have no historical base to give it demonstrable reliability, and often the owner’s skills at running the business have not been tested. Nevertheless, both an existing small business and a startup need a sound business plan and positive cash flow projections, and they both need to test what they’re going to do in the marketplace to see whether or not it’s worthwhile investing their time and money. I often recommend to a client who wants to start a business, particularly if they’re on the younger side, to work for somebody in that field for a while and get to know a little more about it. The more they know, the better their chances are for success. I think anybody who has been around, is in their 50s, and wants to start a business, needs to do much the same thing. Startups, whether you are somebody who is starting a new business, or has already been in business and wants to invest anew, have the same problem. And that is…in some sense they’re all startups, and the risk of failure of a startup is very high.

Finally, do you have any remaining tips for our readers?

Only to educate themselves in what they plan to do, try to find out what they don’t know, and seek advice from others who know more than they do. It’s all a learning experience, and it’s usually better to learn before you experience. Everyone is going to make mistakes, but recognizing what you don’t know, and doing something to deal with that, are essential characteristic for a successful business.

Justin Song

Justin is a Sr. Research Analyst at ValuePenguin, focusing on small business lending. He was a corporate strategy associate at IBM.