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Lessons learned in the school of hard knocks

By CHRISTINA REXRODE
Published October 30, 2006

Being your own boss might sound fun, but it's not for the faint of heart. About a third of new small businesses close within two years, the Small Business Administration says. With so many hard-knock stories, it's no wonder the Chicken Soup for the Soul dynasty published some pick-me-ups for entrepreneurs last month. Take heart. Here, four successful Tampa Bay entrepreneurs share war stories they accumulated after setting out on their own, and how they picked themselves up again.

Brian Deming, 38, president of Tribridge

The story: The company found some chinks in its armor when it opened an Atlanta office in its second year, 1999.

Spurred by late '90s tech exuberance, Tribridge rented a fancy office in Atlanta and hired a half-dozen consultants and one sales person. The location closed after a couple of years because it wasn't mustering enough sales.

The lesson: Deming says the bullish stock market might have made them jump into Atlanta too fast. They also should have spent less on offices and other overhead, and more on the sales team. "It doesn't matter how good a job you can do delivering," he said, "if you don't have anyone to deliver to."

Deming and his team heeded the lessons learned in Atlanta. Tribridge now has six locations throughout the Southeast, including an Atlanta office. It opened this year in more modest headquarters.

Pat Dominguez, 56, president of Triage Partners

The story: Last year, Dominguez set out to secure a $1-million line of credit for Triage, a Tampa staffing firm for tech companies that she founded in 2003. She thought she was set: She had a stellar background working for other companies, and a list of banks and Small Business Administration loans.

But meetings with 15 or 20 banks and other investors proved fruitless; they told her to come back after her business had survived three or four years.

"This one gentleman said to me, 'You know, you're just going to have to bite the bullet.' " She did, by accepting asset-based lending, which carried service fees and interest rates totaling 23 percent.

The lesson: Dominguez still uses asset-based lending, despite its high cost, because of its flexibility. The big lesson here wasn't necessarily about finances, but about facing reality. She feels like she wasted three months trying to find elusive lending rates, which distracted her from nurturing the company. It's important to have a financial mentor, she said.

Rod Casto, 53, associate vice president for research and executive director, USF Research Foundation 

The story: After years in the pharmaceutical industry, Casto founded his own company, Hyperion Medical, in the early '90s, and later he founded a software company to support Hyperion.

A wound-care product that Hyperion developed for nursing home patients looked like it would be a golden egg. Then, a few days after the product was approved for the market, Medicare slashed its reimbursement policy. The nursing homes pulled out of the deal.

The lesson: Casto said he wishes he had better understood the product's flow - "who's paying for it along the way." Aspiring entrepreneurs should create more than one plan for distributing their product, he said.

They also can't work on just one product at a time, Casto said, though some start-ups tend to do that to save money.

Tony DiBenedetto, 41, CEO of Tribridge, a Microsoft consulting firm in Tampa

The story: Before there was Tribridge, there were bagels. DiBenedetto launched a bagel and pizza shop in Tampa in 1991, while he was still working full-time as a consultant at Arthur Andersen.

He got a wake-up call, in every sense, when the shop's manager phoned at 3 a.m. one day to tell him the guy who was supposed to make the bagels hadn't shown up for work. So DiBenedetto quickly learned how to throw together a cinnamon raisin order, and took over the job (which had a start time around 1 a.m.) for two weeks.

"I think I lost 12 pounds," he remembered with a laugh. "I didn't sleep at all."

The lesson: DiBenedetto, who closed the shop after a year, thought he'd be able to find reliable workers by offering higher-than-average wages. But 10 or 15 percent, he said, doesn't make a big difference when the pay is less than $6 an hour. "If you're going to get into a business where you don't have experience and contacts with talent, you need to think through where the talent's going to come from," he said.

[Last modified October 30, 2006, 01:12:33]