When Debi Pierson learned of an opportunity to finally operate a toy shop of her own, she knew a bank was unlike to lend her money.
Pierson saw potential to buy the inventory of a Franklin store that was going out of business and move it to a new location that needed renovation, but she didn’t have enough money for the project, so she asked family members for help.
And now, she is focusing on sales, sales and more sales to pay them back.
Toodleydoo Toys is one of the more than 1,500 businesses in the county with four or fewer employees. The businesses are small, but make up more than half of the 3,000 businesses that call Johnson County home.
Owners of those businesses know that the challenges most often revolve around finances, with many of those costs coming at the beginning for inventory, equipment, advertising and store space.
After the recession, local businesses have found that they don’t have the credit history or collateral required by a bank to get a loan.
Business owners who have recently started operations either weren’t eligible for a bank loan or didn’t want to take on any debt, so many looked for alternatives. One area landscaper managed to draw a small loan from a new revolving loan fund.
Pievson was able to borrow from family members, while others drew from their own savings or are simply striving to keep overhead low enough to pay as they go.
One alternative for businesses that don’t qualify for traditional bank loans is a revolving loan fund operated by Human Services Inc. The program was a response to the economic downturn of 2008, said its manager, John Harmon.
The program offered about $100,000 total in low-interest loans for businesses in Johnson, Jackson, Decatur, Shelby and Bartholomew counties that are considered nonbankable. So far, 13 loans have been granted, with the first one paid in full last month.
“The premise was to zero in on entrepreneurs,” Harmon said. “Especially low-income individuals who had already decided to start a business.”
Other small business owners said they didn’t want to take on debt and instead used their personal savings or operate on the money they are making.
Teresa Moreno-Williams didn’t know what to do.
It was the fall of 2010. After her parents and other family members had passed away, the former Indianapolis homemaker had moved from Indianapolis to the Nineveh area and was now an unemployed single mother with two sons.
“I didn’t know anybody in the area. We were kind of out in the middle of nowhere. I hadn’t worked outside the home in a long time, and I honestly didn’t know what to do just to make it through the winter with my boys.”
After finding a job waiting tables in the Taylorsville area and struggling through winter, she began looking at ways to earn more money for her family.
Moreno-Williams had done landscaping work for free, as a ministry to help elderly and disabled people. She decided to try to make a living at it in the area of Prince’s Lakes in southern Johnson County and Sweetwater Lake in Brown County. The idea was to offer her services to the many vacation homes in the area.
“A lot of people here are weekenders, and they want to come down here and enjoy their leisure time,” she said. “They don’t want come down to do work, and I don’t blame them. But it takes a lot of upkeep when you live in this type of area, so I thought we could start a business to do that.”
What she lacked was money for the proper equipment. Smaller, older tools like spades and hoes would have to be replaced, and she needed some bigger equipment, such as power saws, used for building retaining walls.
“There’s no way a single mother like me could walk into the bank, going through a divorce and having my credit ruined with no income left over after just some groceries,” she said. “I mean, someone would have just laughed at me.”
That’s when Moreno-Williams heard about Human Services and its revolving loan fund. The concept fit her situation perfectly. A $5,000 loan at 5 percent interest allowed her to purchase badly needed new equipment for her startup, which she named Lucy’s Landscaping.
Their investment has paid for the business. In the first year, the company typically would work a landscaping job and not know what work be available after that job was complete.
But the calls kept coming, and Moreno-Williams and her older son stayed busy through the spring and summer. Now, she has more than 150 customers per year, bringing in enough revenue to purchase additional equipment and hire five workers. Her son has begun attending Ivy Tech Community College.
“I don’t have to wait tables anymore,” she said. “I can pay things off, and we’re not penny-pinching and struggling like we were before. Every year it’s gotten better.”
Moreno-Williams sees herself as proof that those wishing to start a business can find a way, even if the situations look dire.
“I really love that they (Human Services) were honestly genuinely caring people,” she said. “They looked at our situation and took a chance even though it would have been easy to say, ‘She has no way to pay it back.’ They were willing to go out on a limb for the little guy.”
In 2011, Joan Edwards was an unemployed dental hygienist living in Greenwood after she had been laid off a year earlier.
“I didn’t know what I was going to do. I couldn’t find work, so I thought about what it was I like to do,” she said.
What she really loved to do was bake, and she knew her red velvet cheesecake, brownies and cookies were well-liked by friends and family.
Edwards said she wanted to work for herself and wanted to do something she enjoyed, so operating a bakery was a simple decision.
“Nobody ever suggested that I sell my products; I just went back to what I love to do,” she said. “Since I was young, I was the one who cooked the family meals. I was always feeding somebody. Even now if I prepare something and someone tells me they like it, it does something for me.”
She began operating Limberlost Sweets out of her home in late 2011.
Her business idea was to bake desserts and then sell them to local restaurants. She began calling on Greenwood-area establishments and working out agreements with places, such as La Trattoria, Hal’s Vegas and Vino Villa.
Vino Villa was her first customer. When the business she planned to call on turned out to be closed for the day, she saw one of the managers of the Greenwood wine bar in the parking lot across the street.
“I just drove up and gave them some samples,” she said. “The next thing I know they called me and said it was amazing, and that they wanted to buy from me. It had me in tears. I’m a shy person by nature, but I knew I had to push myself and go out and market.”
She paid for expenses — mainly just baking ingredients at first — as she went.
Business began to grow, with more restaurants signing up and opportunities to cater parties and other events. Edwards knew she was outgrowing her home kitchen and began leasing kitchen space for $100 per month from Community Church of Greenwood, which has expansive facilities and was near her home.
She got help with planning a business model, month-to-month operations and training in food service from the Indiana Small Business Development Center and SCORE, a national nonprofit with local chapters. But she found her ambition growing.
“It just kind of developed as it went along,” she said. “I started thinking I would like to have my own place. But expanding was going to cost money.”
Edwards was pleased with her sales but thought she had a greater chance to succeed if she opened a place that served food as well as desserts. She settled on a location in Columbus, where she had recently moved. Addison Bakehouse, at 17th and Pennsylvania streets, opened about a year ago.
“I love to cook as well as bake,” she said. “I’ve been trying to develop more and more dishes as we’ve started to cater to dinner parties. It’s fun developing menus, and it’s fun to venture into new things.”
The Human Services loan fund played an important role because of Edwards’ relatively short business credit history. While revenue from the business was helping her fund the costs of opening a new restaurant, it didn’t cover all of them. She obtained a loan of $7,500, most of which went for an icemaker at the business. She also purchased other small items for the store with the loan money.
“I felt very lucky to get that,” she said. “For someone like me who has never done this, even though I have excellent personal credit, I would be rejected if I walked into a bank just based on the fact that I’ve never done this. But I couldn’t wait six months, I needed the money in order to get started.”
Now, Edwards plans to expand the business further by obtaining a license to sell beer and wine.
“I don’t want to sound arrogant, but I have operated this like it was going to make it,” she said. “Now I want to step it up even more. You have to have a vision and go for it.”
When the opportunity came to buy a business of her own, Debi Pierson sought help from family.
Pierson, who owns Toodleydoo Toys in downtown Franklin, got a loan from relatives to purchase inventory and cover other expenses.
She had been an employee of longtime Franklin toy store Imagination Station, and when that store closed its doors earlier this year, she had the opportunity to buy its inventory. She knew she wanted to open her own store, but she didn’t want to get a bank loan.
“From what I hear, it’s not as easy to get a loan from a bank. They are much more selective on who they loan to,” Pierson said. “The (subprime mortgage crisis) taught them something about bad loans. Banking in general has changed a lot.”
Pierson is a fan of radio host and author Dave Ramsey, who strongly advises against taking on too much personal and business-related debt.
Her business plan focuses on keeping overhead down as much as possible.
She bought the inventory from the old store in April and moved it to a building just west of the courthouse on Jefferson Street in Franklin.
Family members helped renovate the building she leases, including rebuilding the interior of what had been a dry cleaning business. Her store opened for business this month.
Pierson works at least 30 to 35 of the store’s 40 weekly hours as another way of lowering overhead, employing two part-time employees and using volunteers for other store activities, like story times.
Her goal is to have earned enough revenue by the end of the year to pay for all monthly bills and advances from toy suppliers. Then she wants to earn enough to pay off the family loan.
The store’s ability to buy new inventory will depend on sales.
“I’ll share with my employees that we have to sell this amount each month to break even,” she said. “Break even means I get paid, you get paid. It doesn’t get into buying new toys to sell.”
Borrowing from family rather than a bank means less pressure but does not mean there is no pressure, she said.
“I do like that I don’t have a bank breathing down my neck. My lenders are much more generous and forgiving and might allow me to wash their windows as payment,” she said with a laugh.
“But there’s a good kind of pressure, too, and that’s how we will operate. I’ve seen people who start businesses who don’t put any pressure on themselves to do well, and you usually guess the results from that, too.”
Anna’s Style Boutique
Selling clothes online had been a nice niche business for Annamaria Doddridge.
The Franklin-area mother of three started an online store a year ago. Her husband’s job in the transportation industry allowed her to pay for inventory and any other operating costs.
But she wanted to do more.
“I’ve always loved fashion. I’d been at home with my kids for three years,” she said. “I needed something for me. It’s kind of a gamble like any new business, but I thought trying it online would test whether it might work.”
She decided to make the transition to a store this year and shares space with Toodleydoo Toys on Jefferson Street.
Doddridge, who still sells items online, said she sees advantages to having a storefront along with selling items online.
“A lot of people would tell me that they wanted to try things on before buying them, that they were afraid to buy things online,” she said.
“It turned out a lot of my business was in Franklin anyway, and I would take packages to them directly rather than pay to ship them in town. I liked seeing and talking with my customers.”
Opening a storefront meant an expanded inventory and rent, but Doddridge said she wanted to avoid going into debt. She also recognized that with her business being so new, a traditional bank loan wasn’t really an option anyway.
Doddridge has added a line of new children’s clothes and estimates her monthly overhead, not including inventory, at $1,000. That gives her a starting point in determining sales targets.
“I’m surprised at how many expenses there are,” she said. “When it was just out of my house and online, it was not as complicated. But once I opened a storefront, it was much more involved. I’m still trying to figure out my clientele, what people like and what their price points are.”
Avoiding debt has been a priority for Doddridge, which limits the amount of overhead she has to work with to the amount the business earns and what she and her husband are willing to spend on it.
“I don’t take a paycheck and mainly just pay off our credit cards so far,” she said. “I want to build it slowly and be smart about it. I wanted to be able to get out if I needed to.”
As a nurse, Lesley Watkins saw a need locally.
The Franklin resident had worked as a registered nurse, directing nursing at Indiana Masonic Home for 15 years, but she wanted to operate a company of her own.
Her idea was to sell scrubs and other medical supplies. With no store in Franklin or Columbus, and several nursing homes, a hospital and other medical offices in the area, she believed the market needed her business.
“I think there is a need for it,” she said. “There is one in Greenwood and one in Southport, but this is much more accessible for businesses in Edinburgh, Trafalgar and Columbus.”
She looked into obtaining a loan through her bank and the Small Business Administration but didn’t get anywhere.
“I kept hearing ‘No’ even when I was asking the simple questions. I looked into using my own savings to get a secure line of credit, but it still came down to not having been in business for two years. So I decided why jump through all those hoops when I can just bite the bullet and pay for it myself,” she said.
The store, named Lesley’s Uniforms, opened in Northwood Plaza on U.S. 31 in Franklin this month.
Startup costs have included installation of counters, replacing floor tiles, carpeting part of the store and painting, most of which Watkins and her husband have done themselves. Inventory accounts for more than half of her total startup cost. The only debt she has incurred is being liable for a year of rent from the strip mall.
Now, Watkins is focusing on marketing her store’s inventory of uniforms, stethoscopes and other medical equipment.
“There’s not a lot of money to put into advertising because most of it is wrapped up in inventory. We made fliers, and my husband went around to different places in Franklin and Columbus to make sure they were aware we were opening,” she said.
The nursing community is tightly knit, allowing word of mouth and social media outlets to spread the word about the store, she said. She believes workers in Edinburgh, Columbus and Trafalgar will find the proximity of her store to be attractive.
That word of mouth is important, since keeping costs down is a major part of the business plan.
“I’ve tried to watch every penny. I’ve gotten lucky with finding bargains on a number of items,” she said. “I’m excited to be doing this and knowing I’m saving a lot of money, and not owing a bunch of money gives me a comfort level in case this venture doesn’t work. But it’s going to work.”