What you need to know to start – and nurture – a business

Kimberly Redmond//March 6, 2023

What you need to know to start – and nurture – a business

Kimberly Redmond//March 6, 2023

It’s definitely a challenging time to start a small business, but that doesn’t mean you shouldn’t do it, financial experts say. Small- to mid-size operations can falter for various reasons, such as budgetary constraints, workforce issues, lack of market need, not researching the competition, incorrect business model, regulatory or legal hurdles, or bad timing.

The success of a business – or lack thereof – can also vary widely based on the state or industry. Nationally, about 1 in 5 small businesses never reach their one-year anniversary, while 49.7% shut by the five-year mark and 65.5% are gone in 10 years, a May 2022 analysis from LendingTree found.

In New Jersey, 20.4% of businesses fail within the first year. After five years, 50.3% of private sector businesses will falter and within 10 years, 69.4% have ceased operations.

Despite the outlook, there are steps that both new and existing entrepreneurs can take to boost their chances of surviving and thriving, according to panelists who participated in NJBIZ’s Feb. 28 panel on the various challenges small business owners in New Jersey are up against.

Moderated by NJBIZ Editor Jeff Kanige, the panel featured:

  • Kelly Brozyna, CEO and state director at the New Jersey Small Business Development Centers, the leading statewide organization in delivering no-cost advisory services and training to upward of 10,000 small- and mid-sized businesses a year
  • Daniel Leary, senior vice president of business banking at Oak Ridge-based Lakeland Bank, the fifth-largest financial institution in New Jersey
  • Chris Levy, president and chief executive officer at Pursuit Lending, a community-focused lender that serves businesses in New Jersey, New York, Pennsylvania and Connecticut

During the 90-minute roundtable discussion, panelists dove into topics such what to consider when starting a business, growth strategies, accessing capital, seeking out non-traditional funding sources, the importance of implementing cybersecurity measures, investing in technology that will add value to day-to-day operations and preparing for a possible recession.

Plan on planning

“Conventional wisdom will tell you that now is not such a great time to start your own business because of inflation, recession looming and interest rates,” said Leary. “But, you know you could say during the pandemic that it was a bad time to start a business and yet so many successful businesses were launched during that time.”

“But, it’s got to be disciplined, strategic and well thought out,” he said. “I think that’s really the key.”

Leary noted the pandemic’s “massive effect on businesses across the board,” saying that while some didn’t survive the extended public health crisis, many “pivoted successfully” to find new, revenue-generating opportunities.

Levy agreed, saying, “One of the things that is really important to us when we’re looking at financing and a small business startup that’s coming in and doesn’t have that operational history … is we’re looking for that business plan. We’re looking for a set of financial projections. It’s incredibly important that that’s on paper, it’s well thought out and that the numbers kind of back up the idea that’s in somebody’s head. So, taking the time and actually codifying what the plan is, I think is really helpful.”

Seeking help

In New Jersey, one of the best places to start that process is with NJSBDC, a public-private partnership that links up its consultants with those who are looking to launch – or grow – their ventures.

Brozyna said, “We sit with an individual and say ‘OK, what do you want to do? Do you need help with your research on doing a competitive analysis and a feasibility analysis? Is there a demand for this? Is this going to work? What is your client base? What does this look like? What is your demographics and psychographics of the audience that you’re trying to sell a product to or do a service for?

“We want to set you up for success before you take that leap of faith and put everything into it,” she said. “It can be very exciting and very rewarding, but it can also be very scary and painful if you don’t do it the right way.”

The ‘R’ word

Economic uncertainty continues to be top of mind for businesses in 2023, making it all the more important to be proactive.

“I think the Federal Reserve views inflation as the greatest concern and they view recession as the lesser of two evils and they’re going to continue to aggressively increase rates,” said Leary, who went on to say, “I’m already seeing businesses that are starting to adjust their model and make adjustments to staffing, assess vendor contracts and sharpen their pencils to make those changes in advance so they’re prepared.”

“If you wait until it’s affected your bottom line, you’ve waited too long,” said Leary, who urged business owners to take action now.

“If a recession doesn’t happen, then you’ll be in good shape,” he added. “If it does happen, you’ll be prepared … It’s much, much easier if you’re proactive in this scenario than trying to be reactive or guessing. Or trying to figure things out too late.”

NJBIZ Small Business Challenges Panel
Clockwise from top left: Moderated by Jeff Kanige, NJBIZ editor, the NJBIZ Small Business Challenges Panel Discussion on Feb. 28, 2023, featured Chris Levy, president and CEO, Pursuit Lending; Kelly Brozyna, CEO and state director, New Jersey Small Business Development Centers; and Daniel Leary, senior vice president of business banking, Lakeland Bank. – NJBIZ


As for consumer spending, panelists said they haven’t noticed a decline – yet.

Leary said, “But it would make sense if we do move toward a recession. Luxury items like vacations or just lifestyle-type investments are going to get pushed aside. I think we saw that in the beginning of the pandemic, because there was so much uncertainty. People weren’t taking vacations, they weren’t spending money, and the money started to pile up, and then, you know, like the floodgates open. There was a flurry of spending.

“Employment numbers are still very strong, so I think that’s why we’re seeing the consumer spending still going, but I think that will change as interest rates start to rise and people start to feel the pinch,” he went on.

Levy agreed, stressing the importance of being able to “maneuver, shift and pivot in these economic times.”

“I think it’s smart for business owners to understand and recognize that these things could be coming, and they have to be ready and prepared,” he said.

‘Wait-and-see’ continues

Financial institutions have noted some hesitancy from borrowers, particularly small business owners.

Levy said, “What we’re seeing right now, for the last three or four months, is people kind of taking a wait-and-see approach … because we just don’t know where things are headed. Are we going to go into a recession?”

“We also just need to take a step back and remember our history,” he said. “People think ‘oh, interest rates are so high right now,’ but if you look back over the last 30 years, you’ll see they’re pretty average. If you take an expanded view on it, we’ve had artificially, very, very low rates after the recession.”

“Then, during the pandemic, we slashed rates considerably, so they were at record lows,” Levy explained. “But overall, paying 8% or 9% on a line of credit isn’t that outrageous. And I think we need to reset expectations a little bit, and just say like, ‘Yes, this is higher than it may have been for the last few years, but those were extreme times, and now we’re almost getting back to normal.’”

Leary said he’s also detected reluctance.

“Some of the business owners that I speak with are reluctant to acquire a line of credit right now because rates are so high. And, it’s really the opposite – they should be getting the line of credit now, while their financials are strong and when they don’t need it.”

“They don’t have to draw on it right now. Maybe by the time they draw on it, the rates will be lower. But, at least they have it in place and that’s important,” he said.

Leary went on to caution, “The line of credit should not be used to sustain a business or prolong a business that’s going to go out in six months. It’s a short-term vehicle to fund growth or cash flow.”

Creative sources

However, there are non-bank alternatives to explore in the lending landscape, such as funding through the Community Development Financial Institutions Fund and the U.S. Small Business Administration.

At Pursuit Lending, which offers more than 15 types of business loan programs and provides financing of up to $5.5 million, the company works with both seasoned businesses owners and new entrepreneurs to help them grow.

Levy said, “One nice thing about CDFIs, and in fairness is a little bit for banks just with some of the regulations banks have, is that the CDFI often times gives grants or other ways that it can support business operations. So, they’re able to be more creative to somebody that may be a step below that traditional credit box because it is fulfilling that mission of lending to a minority- or woman-owned business.”

Replay: 2023 NJBIZ Small Business Challenges Panel Discussion

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While CDFIs will still review financials, Levy said their community-focused objectives widen the scope a bit.

“For example, somebody may have had a medical issue in the past and their credit scores dropped to 640. That may be something that doesn’t fit the criteria of a bank, but from our standpoint 640 is our minimum threshold. So just expanding it slightly, I think, is a way that businesses are able to get access where they may not from other financial institutions.”

Levy said, “It’s a perfect opportunity to take advantage of some of these government programs. I think historically people have shied away from SBA because they thought ‘I don’t need government assistance.’ I think we all saw during the pandemic with the Paycheck Protection Program just how robust SBA lending is in general.”

“There’s a lot of programs that are out there and a lot of it is about awareness,” he said. “And, I think, doing your due diligence, doing your homework and talking to a number of different people, whether it be a bank, whether it be a small business development center. The resources are out there, and especially, you know, in terms of what we do with SBA lending.”

Brozyna agreed, saying, “Not everybody is aware of the resources that are available. We like to think of the NJSBDC as a hub and spoke model. Let us be the hub and resources and we’ll connect you to the right one. We don’t claim to be the ‘end all, be all,’ but we’ll just make sure that we get you seamlessly to the right resource into what opportunities are out there.”

She went on to say, “Women, minority and veterans are a huge target for us to make sure that we help them … because they have been distressed, and they have been affected probably harder than some of the other industries and the communities that are affected. So, we really want to make sure that we are putting those resources that can be made available to them for success.”


Amid continued workforce shortages across numerous industries, Brozyna believes technology will increasingly become “the small business’s best friend.”

“Innovation is one way for businesses to sort of side-step and continue to work around as they can’t get people to come back to the office or get people to come back in the service industry,” she explained, adding that even an upgrade, such as a brick-and-mortar store introducing an e-commerce presence, could easily lift business.

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Join us for the 2023 NJBIZ Energy Panel Discussion on March 28. Find out about this and more by clicking here.

Levy said, “It may take a large initial investment – and not necessarily money, but time to set it up. But what that creates in the long run and those efficiencies are to gain.”

Leary agreed that it typically represents a fairly significant outlay, but that business owners should weigh it against other operational factors.

For instance, a business that is no longer renting office space should consider reallocating the money saved toward technology improvements, such as software platforms for automation and artificial intelligence, that “will make them more efficient and more profitable at the end of the day.”

When it comes to New Jersey’s fastest-growing industries, panelists said they’ve noted a lot of opportunities in green technology, warehouse development, fintech and hospitality.

Levy said, “Those are some sectors where we’re seeing a lot of new and innovative ideas that are coming out there and they’re an area where they are going to be longstanding businesses for our future.”

“So, I think as lenders, we’re trying to open up our eyes to see how do we want to help these businesses that may be something that traditional that we’ve heard of before – because it’s a new and evolving industry,” he explained. “We’re trying to gain knowledge and understanding of these industries and making sure that we’re putting together financial products that suit them.”