Starting up in a slowdown

Loan, advice program gives food-service entrepreneurs a helping hand with dreams

When she graduated from Hampshire College last year, Lucy Valena watched many of her classmates scramble to land career jobs. Valena took a slightly different route. With the goal of starting her own business, the 23-year-old Jamaica Plain resident packed a bag and went to Seattle to work in cafes so she could learn about coffee.

Now back in Boston, Valena has opened Voltage Coffee, an upscale coffee catering company. She has dreams of one day owning a coffee store in Boston that mirrors the ones she worked at in Seattle.

"I would love to be able to roast my own beans," she said during a gathering of fledgling entrepreneurs at Boston Beer Co.'s Sam Adams Brewery in Jamaica Plain last week. "I just generally want to get Boston more interested in coffee and the culture surrounding it."

But Valena, like most of the entrepreneurs at the event, is trying to be realistic about her goals, especially given the economy's downslide. They know most start-up businesses fail, even in good times. Now, it's tougher than ever for small companies to become established -- and stay in business.

To help them, Boston Beer is working with Accion USA, a Boston-based, national nonprofit organization, to offer assistance to food service industry start-up companies like Voltage Coffee.

"It would be scary to start a business at any time, but now is especially scary," Valena said as she served espressos, lattes, and coffee. But that hasn't discouraged her from trying. "I decided the economy is so bad that if I can start it now, things can't get worse and I can ride the recovery up," she said.

In June, Boston Beer partnered with Accion to launch "Brewing the American Dream," a program to provide loans and business advice to small and start-up businesses in the food services sector.

So far, the program has made loans to more than 30 businesses, ranging from a small, one-person start-up to an eight-year-old sandwich shop that was looking to expand to a second location.

Last week's event was billed as a "speed coaching" session. Following a speed dating model, entrepreneurs could meet with lawyers and finance professionals, as well as Sam Adams marketing and distribution executives, for 15-minute sessions where they could get answers to a wide range of questions and plot strategies for growing their businesses. A separate component of the partnership, now in its sixth month, is a loan program funded by Boston Beer and being overseen by Accion USA.

Ana Hammock, Accion's program director for New England lending, said the nonprofit has never been busier. Laid-off workers see now as a good a time as any to start a business, while tighter lending standards from traditional banks have increased demand for Accion's loans.

"Traditionally, we have focused on low-income entrepreneurs," Hammock said, referring to newly minted small business owners who often don't have the credit histories required for traditional business loans or the experience venture capitalists look to tap into. "Now, with banks making fewer loans, we're seeing more and more high-income entrepreneurs."

In a poor economy, Hammock said, cash flow is the biggest challenge entrepreneurs face. With their money tied up in receivables, some are increasing credit card debt, one of the most common ways start-ups fund operations until they turn a profit.

Sarah Pike, 31, said the deteriorating economy has caused her to look for ways to quickly expand Good Tastes, a meal assembly service based in Newburyport that she started in April. To help pay the bills, Pike has continued to run her Internet marketing consulting business, but dreams of one day operating Good Tastes full time.

The economic situation "forced me to be really creative," said Pike. "I ended up getting my wholesale license so we could sell our meals in grocery stores, which has been huge." She is also putting less emphasis on the catering component of her business and focusing more on Good Tastes' home-delivery service for meals. At about $6 per serving, Pike said, it could be an affordable alternative to dining out.

"In some ways [the downturn] is helping," she said. "A lot of people see this as a way to do something special at home without having to go out to a restaurant."

To date, the Boston Beer-Accion USA partnership has made loans to more than 30 small, food-service businesses in New England. David Warner, who owns City Feed and Supply with his wife, Kristine Cortese, said a loan from the program was crucial to helping the eight-year-old company open a second location in Jamaica Plain in August.

The new location -- which is bigger than the company's Boylston Street store -- involved converting a vacant video store into a coffee and sandwich shop. Warner noted that City Feed and Supply hit its crucial second year just after the Sept. 11, 2001, terrorist attacks caused financial markets to slump badly, but the company still managed to prosper. He's confident that it will succeed in the current recession, too.

"I don't know when you stop being a start-up. I guess when you stop growing," Warner said. "We've grown every year -- some years we've grown less than in other years, but we've always found a way to keep growing."

Pike, who has a 23-month-old son at home and likes the flexibility her business offers, is also remaining positive. She has no regrets about starting a business in the gloomiest economic climate since the Great Depression.

"You have to take the opportunity when it comes, and this was the right time for me," she said.