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AGENDA ITEM BACKGROUND
TO: GOVERNING BOARD
DATE
April 8, 2013
FROM: PRESIDENT
SUBJECT:
ENCLOSURE(S)
2012 SBDC Annual Report
REASON FOR BOARD CONSIDERATION
INFORMATION
ITEM NUMBER
Page 1 of 6
H.10
BACKGROUND:
One of the important ways in which Cabrillo fulfills the California Community College mission
of economic development is through the hosting of the Central Coast Small Business
Development Center. The SBDC contracts with nineteen independent business advisors to
provide free-of-charge, confidential business counseling in Santa Cruz County and portions of
Monterey County. The SBDC also presents low-cost seminars in many areas of business
management.
As the host of the Central Coast SBDC, the College provides a facility to house the program,
provides technical support, and acts as the fiscal agent with the grantors. In turn, the College
receives an indirect rate to offset the overhead of grant administration.
The SBDC also oversees the regional Business and Entrepreneurship Center (BEC) and the
regional Youth Entrepreneurship Program (YEP), serving 17 Community Colleges in the greater
Bay Area. The mission of the BEC is to foster entrepreneurship programs and collaborative
economic development initiatives for the region. YEP is focused on increasing entrepreneurship
within CTE programs and providing entrepreneurial training and large events to youth ages 1428.
Highlights of the SBDC’s activities in 2012
In addition to the client service statistics found on the last page of this report, the SBDC engaged
in some special programs:
Through the Federal Jobs Bill, the SBDC received funding to assist businesses in the
areas of technology, green business, government contracting, import/export, and loan or
equity injection. 214 businesses were assisted, resulting in 36 new businesses, 192 new
jobs created, and over $2.1M in sales increases.
Through funds provided by the Workforce Investment Board, the SBDC provided
employee retention services to Santa Cruz County businesses, and 127 employers
received Layoff Prevention services, resulting in 81 jobs retained due to resulting cost
savings.
The SBDC submitted a $50,000 proposal to Safeway Corporation to provide intensive
business counseling to the merchants affected by the proposed expansion of the Ranch
Administrator Initiating Item:
Rock Pfotenhauer, Dean CEED
Kathleen Welch, VP Instruction
Academic and Professional Matter
If yes, Faculty Senate Agreement
Senate President Signature
 Yes  No
 Yes  No
Final Disposition
190
Del Mar Shopping Center. The SBDC is currently assisting the stores in the lower portion
of the Center with lease review, relocation planning and financing options prior to the
expansion.
The SBDC, in collaboration with the Business & Entrepreneurship Center, Cabrillo
College Extension, VAPA and the Cultural Council, developed and presented a highly
successful series for local artists entitled “The Business of Art: from Passion to
Profitability.” The series has attracted hundreds of local artists who have learned about
business planning, using technology, contracts, taxes and marketing principles. The 2013
series is now underway.
Accessing Capital
The SBA contract includes significant performance goals. The most important goal is to assist
clients to procure capital – both debt and equity. In 2012, SBDC clients received over $9.1
million in capital: $4.6M in loans and $4.5M in equity injection for business start-up and
expansion. This achievement is among the highest for all SBDCs in the Northern California
region. The SBDC Director serves on the loan committee for Cal Coastal Rural Development
Corporation and regularly meets with the SBA lenders in the region to facilitate funding of
SBDC clients.
Program Funding
Continued funding was secured from the City of Santa Cruz, the SBA, the Workforce Investment
Board Santa Cruz County, the Chancellor’s Office of the California Community Colleges, and
the private sector. These funds meet the college’s obligation to provide a cash match to the state
and federal contracts. Wells Fargo Bank has renewed their sponsorship of the business
management seminar series.
Other Activity / Community Partnerships
The SBDC continued to partner with the Monterey Peninsula Chamber of Commerce and
developed and presented the Business Builders Program, a series of 10 customized seminars
for entrepreneurs in Monterey County.
The SBDC also continued the “Build Your Business” Seminar series, collaborating in 2012
with the Community Foundation Santa Cruz County, Business Entrepreneurship Center, and
the continued sponsorship from Wells Fargo Bank. 26 seminars were held in the areas of
Business Planning, QuickBooks, and Social Media at the Community Foundation building,
with over 380 attendees.
Using funding from a Community Ventures grant for local child care business, the SBDC
developed seminars on QuickBooks, Green Business, and Business Plans. The seminars
were followed up by individualized technical assistance from SBDC Advisors.
The SBDC continued to develop and present 9 free-of-charge Brown Bag Lunch seminars.
The collaboration between the City of Santa Cruz, Business Entrepreneurship Center, the
Downtown Association, and the Friends of the Santa Cruz Library presented over 270
business owners with social networking, accessing capital, technology tools, selling on
eBay, bookkeeping, and tax tips. The series was sponsored by Bank of America.
The Director of SBDC, Teresa Thomae, has served on the Board of Directors for El Pajaro
Community Development Corporation (CDC) since 1992. The CDC is dedicated to serving
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very low-income, minority entrepreneurs in the greater Pajaro Valley and is a partner to the
SBDC on many projects.
The Central Coast SBDC was represented on the following committees in 2012
Santa Cruz Chamber of Commerce, Board of Directors
El Pajaro Community Development Corporation, Board of Directors
Cal Coastal Rural Development Corporation’s Loan Committee
Loan Approval Board for the Santa Cruz County Human Services Agency Childcare
Developers Loan Fund
Your Future is Our Business
Employer Advisory Council (EAC) for Santa Cruz County
Advisory Board, Marina Technology Center
Other Activities;
The SBDC is featured in weekly “Business Tips” on KSCO Radio.
Outreach activities included appearances on Community TV and local radio, speeches to
Leadership Santa Cruz and Monterey, local service clubs, Chambers of Commerce and
Business Associations.
SBDC Client Service reports were presented to the Santa Cruz County Board of
Supervisors, and the City Councils of Santa Cruz and Watsonville.
Business and Entrepreneurship Center / Youth Entrepreneurship Highlights:
Presented 2 Extreme Entrepreneurship Tour events to 692 high school students at Pajaro
Valley High School, and the MetroED high school program located at the Central County
Occupational Center in San Jose.
Collaborated with the Bay Area Community College Consortium and the Napa Valley
College Business & Entrepreneurship Center to create “Entrepreneurship Marketplaces,”
regularly held for interested community college faculty members to explore best practices
and resources to start or grow entrepreneurship certificates or degree programs on campus18 faculty from 9 community colleges attended the first event in October 2012.
Partnered with California FarmLink to provide 9 Spanish and English agricultural finance
and business principals trainings for over 300 small farm owners, in San Benito, Santa Cruz,
and Monterey Counties.
Developed the “Youth Entrepreneurship Institute” in collaboration with the SBDC, Santa
Cruz County Tech Education Community Collaborative, Your Future is Our Business, Santa
Cruz County College Commitment and Cabrillo College Extended Learning, providing 2
week-long entrepreneurship workshops for 30 14-15 year old students.
Partnered with Bay Area based BUILD (build.org) to introduce 40 Oakland area high school
graduates with businesses in beta testing phase, to the Entrepreneurship Programs at Chabot
College in Hayward, CA, College of San Mateo and City College of San Francisco.
Organized a regional “elevator pitch” competition with the Foothill College Entrepreneur
Center, with 14 competitors from 4 community colleges throughout the region. The 1st prize
of $2500 was comprised of in-kind services from local attorneys, marketing professionals
and small business experts. 2nd and 3rd place winners received $1000 and $500 of in-kind
services. Judges for the competition included representatives from Google, Sun
Microsystems, Qualcomm and Venture Capital firms.
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2012 Sample Success Stories
Carmel Kitchens & Baths has been designing quality home spaces on the Monterey Peninsula since 1980.
The successful owner for 20 years, Barry Rowley, was ready to retire and wholeheartedly supported an
internal succession plan. He approached Gary, who had worked there as an associate designer for 11
years, to succeed him as owner. Gary contacted the Central Coast SBDC in February 2012 to get
assistance with the acquisition process, and met with Business Plan Advisor Keith Holtaway to develop a
business plan and research funding options.
Funding the purchase and creating a smooth succession experience required due diligence with both
parties and the leaseholder. Since Gary was a first-time business owner, he and Keith met together
numerous times over a four month period to complete the business plan and review lease requirements
and financing options, including bank loans, lines of credit, and seller support. The positive business
relationship between buyer and seller was the key to the final funding of the business purchase, where
both parties provided part of the funding necessary to complete the purchase. The seller also graciously
offered his services as a consultant during the first year of ownership.
The business and four positions were retained. At the end of the first 6-month period in 2012, Gary
reported that their sales had increased 50% over the same timeframe in 2011, and the transition to new
ownership had been completed.
“Keith Holtaway has been exceedingly helpful in directing my focus and helping me to be concise with
the business plan, toward a positive outcome for myself and the business.”
Michael McKinney is a Retired Disabled Veteran of the United States Air Force from 1980-2004, who
was injured while training for combat. He had a great idea to design a detachable front license plate for
performance vehicles, so he came to the Central Coast SBDC in early 2012 and began work with Larry
Hebert, Retail and Business Management Advisor. Mike’s first goal was to create a system for those who
want to maintain the look and character of a high performance vehicle without doing permanent damage
to the front of their vehicle. The second was to comply with state laws of those states requiring a front
license plate to be displayed at all times. It is very important for Mike to give back, so a percentage of all
sales are donated to disabled veterans through such programs as the Wounded Warriors Project and the
Disabled American Veterans Organization.
The first challenge was to begin the patent process, for which Mike met with Central Coast Patent
Advisor Patrick Reilly, who assisted him with a provisional patent. As Larry continued with the business
plan development, the most difficult challenge was locating a good manufacturer, with the goal of a local
business to build the part. The first choice did not work out, and with Larry’s help, Mike found a Santa
Clara manufacturer who could produce a quality product. Another challenge was the unit pricing, and
reducing the cost of goods sold to get the margins at a realistic level for market acceptance. Lastly, Mike
needed funding for the patent and to start the product manufacturing.
Patrick Reilly assisted in securing the provisional patent for the STO N SHO™, and Larry Hebert
reviewed the business plan over a few months to help Mike solidify his pricing, as well as to qualify for
the SBA Patriot Loan. With this funding, Mike started his business, and he had prototypes ready for a test
market at local car dealerships by the summer. He created his website, and hired a sales representative to
assist him. Mike is currently finalizing dealer commitments with Mitsubishi and Ford, and other coastal
representatives. He plans to extend his sales into the 31 states that require 2 license plates, and serve the
many high performance car customers who will value his patented design.
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“Larry is phenomenal, he brought up details that I would have never considered in starting this business,
and I look forward to building our relationship and continuing with the SBDC in the future.”
Ferguson Safety Products opened for business in Santa Cruz in 1989 after Lonna Speer, a public health
nurse at the local jail, was supplied with woefully inadequate bulky coverings to clothe suicidal inmates.
Mrs. Speer resolved to make a special garment to solve this problem and became the first anti-suicide
smock manufacturer. Her design and product line continually improved, and her family joined her in the
business, supplying her products to more than 1,000 prisons and jails.
Mrs. Speer started as a Central Coast SBDC client in 1994, consistently upgrading her marketing
strategies, web presence, customer contracting, recordkeeping software, and employee policies. The
business had been developing new green products that promote health and safety- including a solvent-free
degreaser, anti-graffiti coating and remover, cement and asphalt remover, anti-skid coating, and a
recycled paint product.
In recent years, while the family business had developed their additional safety products, Mrs. Speer was
still concerned about slowing sales and the decision to expand during challenging economic times.
She contacted the Central Coast SBDC to help with the strategic planning for the new product line and all
business operational changes, including an exit strategy. Certifications were also needed to expand
successful contracts with local cities, counties and more government agencies. Lastly, they needed to
develop more successful hiring procedures.
The Central Coast referred Mrs. Speer to the SBDC TAP Program, where SBDC TAP Advisor John
Lundin assessed her new technology needs in order to accommodate the new products, and prepare the
business for an exit strategy. Procurement Advisor Robert Lane reviewed all appropriate certifications so
the client could focus on the certifications that would promote her contracting goals; specifically the
woman-owned (WOSB), and the certified Disadvantaged Business Enterprise (DBE). Penelope Faure,
SBDC Bookkeeping Advisor, reviewed the changes needed to update and expand recordkeeping, and Joy
Hallof, SBDC HR Advisor, assisted with new hire procedures. Family members attended the Central
Coast SBDC QuickBooks Seminar, as well as 2 seminars provided in the SBDC “Brown Bag at the Santa
Cruz Library” seminar series.
Lonna is happy to report at the end of 2012 that sales have more than doubled, they retained 5 jobs and
hired 2 new employees, and they are contracting with two new major metropolitan areas for their new
products. The company received private investment funding for the new contracts inventory, as well as
additional production funding of $100K.
“SBDC has provided consultants in several areas during 2012- bookkeeping, records, HR- which has
helped me move my business up a notch in professionalism. Besides helping me with current challenges, a
greater value is the confidence SBDC gives me to expand because I know that as new situations arise I
can always count on them to advise me. In part because of this support, I’ve had the confidence to add an
entirely new product line, sustainable construction materials, made in America.”
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Central Coast SBDC Client Service Statistics 2010 -2012
% Change
2011 to
2012
2010
2011
2012
SBA 2012
Goals
381
423
439
400
+4%
2,302
2,710
2602
2790
-4%
Retail
69
68
128
N/A
+88%
Service
92
103
183
N/A
+78%
Wholesale
9
6
21
N/A
+350%
Manufacturing
69
48
43
N/A
-10%
Construction
23
28
19
N/A
-32%
Business Counseling
Total Clients
Counseling Hours
Types of Business
Business Ownership by Gender:
Male
144
169
135
N/A
-20%
Female
165
177
175
N/A
-1%
M/F Partnership
52
62
96
N/A
+55%
9
3
N/A
-67%
Business Ownership by Ethnicity:
African American
7
Native American
1
2
7
N/A
+350%
Hispanic Latino/a
99
89
65
N/A
-27%
Asian
18
20
16
N/A
-20%
White
239
250
290
N/A
+16%
No-response
116
140
113
N/A
-19%
Jobs Created
247
234
252
120
+8%
Jobs Retained
457
136
130
120
-4%
$5,097,272
$5,105,000
$4,677,380
$5,540,000
-8%
$3,024,500
$5,030,730
$4,714,792
$2,050,000
-6%
Businesses Started *
37
54
45
47
-17%
Events, Workshops,
Seminars
Attendees of above
events
82
87
53
55
-39%
1,856
1,212
1,224
1,100
+1%
Loans to SBDC Clients
Equity Obtained by
SBDC Clients