Life on the Kenai Peninsula seems to be good when the fish are biting, especially for small business owners. Warmer temperatures make for lower heating bills and the tourist run keeps everyone busy. The real challenge for a small business owner comes when the tourists fly, drive or float away.
"It's always a difficult time to manage a business in the off-tourist season," said Mark Gregory, regional director for the Small Business Development Center in Soldotna. "(One of the) unique challenges is seasonal revenue. (Businesses) go into winter with a different cash flow."
When the tourist flow shrinks and heating bills become a priority, budgeting not only gives existing business owners a chance to see where their cash flow goes during the winter, it also allows new business ventures to figure out whether or not it would work.
The Small Business Development Center seeks to give small business owners in the community, managers and future business owners the tools they need to successfully plan and budget for a business here on the Kenai Peninsula. Simple Budgeting with Big Benefits will take place from 1 to 4 p.m. Friday at the development center's office at the Red Diamond Center in Soldotna. The cost to attend the workshop is $20 and attendees will be able to access six different types of budget templates as well as the center's Optimus business software. Attendees also will receive the advice of a counselor for free.
The Small Business Development Center's budget workshop is a good jumping-off point for new clients interested in learning how budgeting for a business works. Gregory said new clients can take up to two years to begin a new business venture. A budget would help clients figure out what their cash flow cycle is going to be like and how much money would be used toward payroll. Drawing up a budget would also be good for a client applying for a bank loan.
"Budgeting is a cornerstone of a good marketing plan given that marketing percentages and advertising cost is based on targeting sales," Gregory said.
Gregory and the Small Business Development Center offers budgeting workshops two to three times a year during fall, winter and spring.
He estimated that approximately 40 percent of the clients the development center helps are undergoing new business ventures, others are existing business owners or those who may be familiar with the world of small business but are trying something new.
"(They might) realize the need of a more formal budget after testing the market," he said. "The budget is a feasibility test. Those who don't have a budget may not know if their business is feasible."
The reality is it's better to have a budget than to not have one, Gregory said. Business planning research and budgeting is not a guarantee that a business venture is going to work, he said, but it makes it easier to project how much revenue a business would need to break even.
The Kenai Peninsula's seasonal population makes for a difficult environment for a business to operate in Gregory said. In an area with a total population of approximately 50,000, there are more than 6,000 small businesses on the Kenai Peninsula. A large number of those businesses are currently in their start-up phase and may be facing challenges that may lead to business failure. Having a good budget may offset those problems, Gregory said.
Gregory, who used to own a bed and breakfast as well as the Kenai, Kalifornsky Beach Road and Sterling Pizza Boys, said the definition of a small business is based on the industry it's in. Generally, he said, the Small Business Administration defines it as those businesses that make $2 million or less each year or that have 200 employees or less on their payroll. When clients come to him and say they want to start a business one of the first steps for Gregory is finding out the individual's key priorities and core business principles.
"I work with clients from where they are," he said. "(We) give them the tools to develop their own opinion on what their next step needs to be."
Business owners, managers and those who are seeking more information or would like to sign up for the workshop should call the Small Business Development Center at 260-5629.
Jessica Cejnar can be reached at email@example.com.
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