Author: Lauren Taber

California Capital News and Updates

The 5 Cs of Credit: What They Are, and How Lenders Use Them

Getting a small business loan is no small feat. It takes organization, foresight, and the ability to be realistic about business objectives–even if you are maintaining ambitious goals. But the need for a capital infusion is something that most business owners run up against during their business journey: according to Fundera, 43% of small businesses across the U.S. applied for a loan in 2020. 

For entrepreneurs and business owners looking to access financial services, knowing what lenders look for in loan applicants is key. Specific criteria can vary based on the type of lending institution one is looking to work with, but most lenders determine the loan readiness of a potential borrower by looking at The 5 Cs of Credit. This method incorporates both qualitative and quantitative aspects to determine creditworthiness–leading to a well-rounded, contextualized profile of a business. 

So what are The 5 Cs of Credit, and how does a mission-based lender like California Capital use them when working with clients in need of a loan? 

CHARACTER

The applicant’s credit history  

An applicant’s history of loan repayment or defaults is a major factor in determining creditworthiness, and in many cases is considered the most comprehensive element. Lenders will look at an applicant’s credit report, which is produced by one of three major credit bureaus: Equifax, Transunion, or Experian. Credit scores–a number produced by an institution like FICO rating an individual’s credit health–are used by lenders to help evaluate a borrower’s creditworthiness, but the full credit report is essential. Often, mission-based lenders like California Capital take a more comprehensive approach. 

“California Capital does not have a minimum credit score. We are more interested in understanding the story behind the credit issues of a borrower,” explains Judy Fletcher, California Capital’s Chief Lending Officer. “In other words, we offer the borrower the opportunity to explain the situation that led to a less than healthy credit score and what [they are] doing to improve their credit standing.” 

While mission-based lenders take a holistic view of applicants’ credit histories, Ms. Fletcher cautions that there are standards. “If there is an extensive number of late payments, collection accounts, or charge offs, then we may not be able to approve a loan request.”

In addition to keeping records and documents as organized as possible, business owners preparing to apply for funding should take care to address credit issues to the best of their ability before applying. 

CAPACITY

DEBT-TO-INCOME RATIO 

Also referred to as “cash flow”, capacity looks at whether a business has the capacity to handle debt, in the form of a new loan, based on their income. Will the business have sufficient cash flowing in every month to cover loan payments? 

Historical cash flow is important for most lending institutions. Traditionally, most banks want the cash flow existing businesses over the previous three years to have a ratio of 1.25. California Capital’s underwriting guidelines allow for a 1.0 cash flow ratio. 

Unlike most banks, Ms. Fletcher points out, California Capital will consider applications from start-up businesses–not just established businesses. “[We] look to how prepared the borrower is in regard to the business plan and projections. Is the business plan well thought-out, complete and [does it]explain the ‘why the business, why now and why me?’ questions of a solid business plan,” she says.  

Along with working with a business counselor to ensure their business plan and financial projections are pristine, start-ups who are new to their industry should make sure they know the difference between a balance sheet and a Profit & Loss statement–also known as an income statement–to accurately determine their capacity.  

CAPITAL

THE BORROWER’S CONTRIBUTION 

Applicants are expected to contribute funds separate from the loan into their businesses, a contribution called an “injection”. This is essentially the cash–“capital”–put towards a potential investment by the applicant. When borrowers have what is called “skin in the game”, lenders consider them to be less likely to miss loan payments. 

This means that if a business owner is applying for a loan to purchase, for example, a new food truck for their restaurant business, they will need to invest a certain percentage towards the total cost, as a down payment. Most lenders will require at least a 20% injection in the business, while California Capital allows for a 10%-20% injection depending on how much the applicant has invested in the business already. (Factors such as industry experience and credit history also affect a lender’s ability to be flexible with cash investment requirements). 

For potential borrowers looking to strengthen their ability to contribute towards an investment, Ms. Fletcher’s advice is straightforward: save your money, as well as any receipts or invoices for business spending, as they could count towards your contribution. 

COLLATERAL

A TANGIBLE ASSET TO BACK A LOAN 

To ensure against a complete loss, most lending banks require some tangible asset to be taken as collateral. This could be land, property (such as a vehicle or other physical capital), or residence. To ensure equitable access to financial services, California Capital approaches collateral slightly differently.  

“Many of our borrowers do not own homes or have collateral they can pledge, which is why they come to us for financing,” explains Ms. Fletcher. California Capital does require, at minimum, a UCC-1 filing on business assets. “If we are financing a truck or a piece of equipment with a cost or value that exceeds $5,000, we will take a lien on that equipment or truck.” That is fairly standard practice. 

“But if, for example, the loan is for working capital (salaries, utilities, marketing, advertising, lease payments), and there is assets to take as collateral, then California Capital will still offer a loan assuming the business demonstrates the ability to repay the loan and other of the 5 Cs of Credit are met (i.e. industry experience, cash contribution, healthy credit).”  

One way in which California Capital operates loan guarantees similarly to traditional lenders is that any business owner who has 20% or more ownership interest in the company must personally guarantee the loan–meaning they promise to pay back the loan if the business fails. 

CONDITIONS

DETAILS OF THE LOAN AND ITS PROPOSED USES

The details of a loan, such as the interest rate and amount of the principal amount, can be affected by the conditions of a business, the industry, and the economy. This can also be the proposed uses of the loan (i.e., if it is intended to be used on specific physical capital), and is influenced by the applicant’s preparation. 

“We [also] take very seriously the experience a borrower has in the industry, how prepared they are in asking for a loan, the types of training they have taken, if they’ve reached out for technical assistance when needed, who they have on their team –CPA, bookkeeper, attorney, business advisor,” explains Ms. Fletcher. 

KEY TAKEAWAYS

While all lending institutions approach The 5 Cs of Credit a bit differently, applying for a loan is a thorough process. Potential borrowers should be ready to provide detailed documentation, but should also be hopeful about the opportunities available to them. Criteria are strict, but resources are available. California Capital considers all applications, whether start-ups or existing businesses, and does not restrict lending to particular industries. 

Any entrepreneurs ready to take the next steps towards loan-readiness should connect with a business counselor, or attend one of the Women’s Business Centers free webinars.  

California Capital News and Updates

Highlighting Business Progress: How California Capital Courses Can Set Entrepreneurs on the Path to Success

When assessing the progress a business owner has made toward their goals—whether they are aiming to start a new business, franchise an existing one, bid on government contracts, or anything in between—California Capital’s business counselors and consultants ask them about their recent achievements. What steps have they taken that have put them closer to their definition of success, and what results have they seen? 

Last month, the California Capital blog featured an article introducing the winners of the first-ever Startup to Success Pitch Competition. Since completing the Startup Generator to Success accelerator program offered through the Women’s Business Center, participants have put their entrepreneurial education to use and many have already reached turning points in their business journey. Progress looks different for every entrepreneur, depending on their goals and business type—and Startup Generator alums are no exception. Some have seen results in the form of entering into negotiations to lease the perfect spot for a flagship cafe; others have successfully pitched their non-profit to secure sizable grant funding, or have begun networking with powerful players in their industry. (The Startup Generator to Success accelerator program is back starting on July 30th. Click here to learn more).

Because success and the steps it takes to achieve depend on a variety of factors, California Capital’s programs cater to the specific needs of entrepreneurs, business owners, and leaders. There is no one-size-fits-all approach to entrepreneurship, so individualized education, counseling, and guidance is key to developing California’s small business ecosystem and ensuring that entrepreneurs from low and middle-income communities have the same opportunities.

Black-Owned Business, California Capital News and Updates, Client Success Stories

Ernestine Winston Puts Sewn Products Training and Entrepreneurial Education To Use For Two Business Ventures

Well over a year into the COVID-19 pandemic, Ernestine Winston is on an entrepreneurial journey she never envisioned for herself. With over ten years of experience as an independent hair stylist, Ernestine is now on a dual mission: she is growing her styling business, while also building a new enterprise offering textiles and other products with custom designs—and several Women’s Business Center courses have played a key role in setting her on that path. 

Ernestine Winston has been an independent hair stylist since 2009.

Creative by nature, Ernestine Winston had long dreamed of being able to provide for herself and her family through self-employment. “I’ve had a job since I was 14. I always worked for someone else because the security of a steady paycheck was important,” she explains. “But I always wanted to be my own boss.”

STEPS TOWARD SELF-EMPLOYMENT

Ernestine began chipping away at this goal in 2009, attending cosmetology school at night, while maintaining a full-time corporate job and raising three children, aged 10, 11, and 13. After graduating, Ernestine did hair part time and built a client base while working various full-time jobs, including two years teaching sales classes at the cosmetology school she had attended. Eventually, a full-time job at ULTA Beauty led to a 5-year hiatus from independent styling, due to the possibility of conflict of interest—but when ULTA shared the news of company-wide layoffs in October of 2020, Ernestine took it as an opportunity. 

“I signed up for the [Women’s Business Center’s] Entrepreneurship Empowered course with the intention of getting a running start at self-employment,” explains Ernestine, who first discovered California Capital’s services as a manager at ULTA looking to improve her managerial skills. “[The instructor] Natasha Palumbo helped me set up a business checking account, build a business plan, and basically get prepared to run a business.” 

SEWN PRODUCTS TRAINING OFFERS PATHWAY TO ENTREPRENEURSHIP

Around the same time that Ernestine was taking the steps toward full self-employment through styling, another business opportunity was percolating. In September of 2020, Ernestine enrolled in the Sewn Products Manufacturing Training course offered by Agee Fashion Institute through the WBC. Knowing how to sew personal protective equipment (PPE) such as masks and hospital gowns seemed like a good way to earn supplemental income, says Ernestine, if subcontracting opportunities 

Bags with a custom design by Ernestine.

ever became available. But the skills she gained in the 4-part course—sewing, cutting, reading and creating designs—dovetailed conveniently with another “pandemic-project” she had recently started. 

“While we were stuck at home, I had started dabbling with my husband’s heat-press, mostly pressing vinyl designs onto t-shirts,” says Ernestine. “It unleashed a new side of my creativity.” As she got more comfortable with the press, Ernestine began taking orders from friends, and applying what she had learned during the Sewn Products Training. Being able to create and manufacture designs from scratch—including scrunchies and hair bonnets—has allowed her to create products that are made with high quality material and fully customizable, creating a competitive edge over similar businesses who print on mass-manufactured textiles and positioning her to operate at a higher price point.

Ernestine went on to take advanced prototyping courses at Agee Fashion Institute, and now works as a trainer for the same Sewn Products classes that set her on this new avenue to self-employment. Ernestine is quick to point out that, prior to the first course she took, she had never touched a sewing machine. Now, not only has she gained employment as a sewn products instructor, but building her

Ernestine’s self-designed scrunchies.

technical manufacturing skills has been key to her entrepreneurial inspiration. “Now I know how to take an idea, turn it into a prototype, and create a product I can sell. I am always thinking of new skills or processes I can incorporate to make manufacturing easier or create more unique products.” 

ENTERING THE STARTUP LANDSCAPE

With a strong manufacturing skillset, Ernestine set out to develop her business acumen, signing up for the Women’s Business Center’s first Startup to Success Generator series. During the 16-week Startup to Success series, Ernestine joined a cohort of aspiring entrepreneurs and worked with instructor Natasha Palumbo to develop a business plan, position financial projections, and prepare for the competition of the startup ecosystem. 

“What I love about [Ernestine] is her eagerness to learn and her ability to execute on what she has learned. She is a lion! And a very talented one at that,” explains Natasha Palumbo, who has continued to work with Ernestine since the course concluded and provided key insights on how to manage the growth of both of her businesses. “And though this journey hasn’t been the easiest, she has continued to show up week after week and put in the work. There is no stopping Ernestine.” 

When the course wrapped up in mid-June, Ernestine joined her cohort in a Pitch Competition, putting to use the pitch deck she created and getting a first look into what the process of securing funding will look like. 

“She truly shined during the pitch competition,” says Natasha. “Her energy was by far the best of the bunch and she gave an incredible pitch. 

Starting and operating a business takes remarkable resilience and patience, but Ernestine is optimistic that the services she offers will continue to pay off. “This is the first time that I know for certain I will be able to have an income just working for myself,” Ernestine explains. Her immediate focus now is creating a high-quality website for her design business that streamlines the ordering and customization process for customers. Further down the road, she says, her goal is to find a brick and mortar location from which she can operate both of her businesses. But for now, she continues to research and learn about the business landscape and let her creative side get the best of her as she dreams up new ways to put her manufacturing skills to use.

Black-Owned Business, California Capital News and Updates, Client Success Stories

Meet the Winners of California Capital’s First “Startup to Success” Pitch Competition

JUNE 22, 2021 |  In March, a survey conducted by Yelp revealed that nearly half a million new businesses opened in the U.S. during the Covid-19 pandemic, suggesting that the entrepreneurial spirit is difficult to quench. Illustrative of that fact is the Start-Up to Success Generator series offered by California Capital Business Consultant Natasha Palumbo, which just wrapped up its first 16-week run and saw a cohort of students graduate with a comprehensive startup business plan.

 As a first foray into the culture of entrepreneurship, the course wrapped up on Friday, June 11 with a “Pitch-Off”: each student presented their business plan to a panel of guest judges, fielded questions, and worked through feedback. Judges selected the top 3 pitches for recognition. Meet the winners of the first Startup to Success Pitch Challenge, and stay tuned for more information on the next offering of the course. 

MARINA ONACA, BOBA WITH ME

Marina Onaca is a mother of three whose business idea sprouted in response to a need she saw in her community: more spaces where teenagers and pre-teens can socialize, express themselves, and enjoy the boba beverages that are climbing in popularity among that demographic. Parents in the community, like Marina, who wanted their children to enjoy these benefits were regularly driving 15 to 20 miles several times a week. As an answer to the gap in the local market, Marina decided to start Boba With Me, a boba cafe designed as a safe space for community members of all ages to gather. Marina spent much of the Covid-19 pandemic exploring the resources available through the Small Business Administration (SBA), and working with Natasha Palumbo to develop a thorough business plan. Boba With Me’s flagship location opens this summer, and Marina has high hopes for the future. 

What are your dreams for your business? 

“We see our business as a place where ideas will be generated, artists will be promoted, friendships will develop and community will come together, which is why we look to grow to many new communities and open our doors to friends all over the state. We see our concept embraced by each community looking for a positive environment in which our young generation can interact and collaborate. Our goal is to open a new store every six months.”

JUNE ARMSTEAD, BRAIDZ N’ THANGZ

June Armstead is the owner of Body, Soul, and Spirit Salon in the San Francisco Bay Area, whose latest venture, Braidz N’ Thangz,  is a nonprofit beauty school that will provide young women from underserved Bay Area communities the opportunity to develop professional styling skills and secure apprenticeships. The inspiration for this mission-based organization came when June, a Bay Area native, began working in the beauty industry and notice that her first clientele were young women Black in need of opportunities for gainful employment. She made it her mission to create pathways to entrepreneurship in the formal sector for at-risk youth, and has self-funded the training program for 20 years. Now, seeking funding as a 501c3 non-profit, June plans to expand her offerings and elevate the impact in her community.

What are your goals for Braidz N’ Thangz?

“Our salon and training facility has a dedication to education and empowerment. We are targeting 16 to 24-year-old females at risk, and we want to build employment skills within the natural hair industry because they are far too often turning to sex work. We provide a pathway to success with a career focus, and our vision is to be the leading cosmetology training institute for black youth and young adults in Northern California. Our program values Power, Purpose, and Poise!”

LAMERE CARTER, NEW MILLENNIUM DRONE RACING 

Lamere Carter is the founder of New Millennium Drone Racing, a premium drone racing startup currently in its planning phase. With the ultimate goal of being self-employed, Lamere spent years searching for a passion he could tap into to bring that goal to life. Eventually, with support from Natasha Palumbo (a.ka. “Professor P”), Lamere landed on drone racing, and began researching the market, from industry leaders to Federal Aviation Administration (FAA) regulations. He hopes to spend the next year scaling up his capacity, launching a web presence, and have New Millennium Drone Racing off the ground by summer of 2022. 

Do you have any advice for other aspiring entrepreneurs? 

“Be consistent. So many people start then stop. I’m guilty of this bad habit as well. Secondly,  business is all about problem solving, that’s a majority of it. Forget solving your own– can you solve someone else’s problem? If you can answer this question, congratulations you’ve taken your first step to being an entrepreneur.”

Black-Owned Business, California Capital News and Updates, Client Success Stories

California Capital Clients Gain Contracts With Sacramento International Airport Retailers, Highlighting Opportunities For Other Small Businesses

Two small business owners recently found success after a California Capital matchmaking event that connected them with large retailers at the Sacramento International Airport (SMF). While their stories showcase individual success, they also highlight the ways in which minority-owned small businesses can expand through unique avenues, and the growing breadth of airport-based concessionaire opportunities. 

California Capital clients Truthful Kernel and Sugar Coated Cupcakes began talks with international retailers Marshall Retail Group and Travel + Well, respectively, last month. The opportunities each business pursued are part of the Sacramento International Airport’s broader efforts to connect local business owners with airport retailers—an outreach strategy that was reflected in a Small Business Working Group (SBWG) event in February. The virtual event, hosted by California Capital and the Black Small Business Association of California (BSBA), allowed small business owners to meet with representatives from the Sacramento County International Airport and learn about procurement opportunities with airport concessionaires. 

“Through our concessionaires there are many opportunities for small businesses to sell their products,” explains Renata Romero, Airport Economic Development Specialist at the Sacramento International Airport. “We conduct outreach events to reach the small business communities and partner with local agencies to promote our available opportunities.” 

Procurement an Avenue for Expansion

Selling at the Sacramento International Airport was of particular interest to LaQueanya Henry, who founded Sugar Coated Cupcakes with her daughter Mechiala and is focused on contracts with companies or government agencies as a way to expand beyond e-commerce. 

“I have been looking for a storefront for us for a while, so I reached out to [Airport Economic Development Specialist] Andrew Durkee who suggested working with established vendors,” explains Ms. Henry. Mr. Durkee put Sugar Coated Cupcakes in contact with the owner of the Travel + Well kiosk, and once the relationship was established, business followed. “He really went above and beyond facilitating that connection.” 

Similarly, Truthful Kernel co-founder Jon Jew recently expanded his capacity, and was looking for ways to reach more markets with his health-conscious popcorn snacks. Having worked with a California Capital Women’s Business Center business counselor as he built the foundations of his brand, Mr. Jew knew that California Capital would be a valuable resource for leveraging growth.

“California Capital put me in contact with Marshall Retail Group’s local sundries buyer, and everything clicked right away,” explains Mr. Jew. “We’re starting off by selling at their locations at Sacramento International Airport, San Francisco International Airport, and Los Angeles International Airport. Who knows how far this will go?”  

Community-Focused Buying

Facilitating the expansion of small businesses in localities across the country is a key element of Marshall Retail Group’s operations, says Renee Ellis, Local Sundries Buyer. “The Marshall Retail Group prides itself on being part of every community we are given the distinct honor to be part of. We firmly believe in promoting small business in the area and helping them to grow. We currently work with over 300 vendors across the US and in Canada and that list grows everyday,” explains Ms. Ellis, emphasizing that Marshall Retail Group also works with their vendors to expand beyond their community, as they have with Truthful Kernel. 

In many ways, Truthful Kernel and Sugar Coated Cupcakes are examples of typical Sacramento entrepreneurs: ambitious, resourceful, and dedicated to the quality of their product, often  leveraging the Sacramento region’s farm-to-fork culture to source local, fresh ingredients. And this homegrown ethos was a perfect fit for SMF. 

“The Sacramento International Airport strives to highlight local businesses in our retail and food and beverage programs. We have been participating in local outreach events in efforts to become more visible to the local community,” explains Ms. Romero, whose team is also currently revamping their website to include resources and guides for businesses interested in selling at the airport.  

Business Opportunities Through Partnerships

A valuable resource in building business connections are events such as the Small Business Working Group, which inform business owners of the opportunities available and put them in touch with the necessary decision-makers. 

“Through these partnerships [with community-based organizations], small businesses become aware of the opportunities and gain insight into the process. With the assistance of the resources provided, small businesses are better prepared and equipped to compete for the available opportunities,” explains Ms. Romero, adding that while many businesses do not think of airports as a viable location for their operation, the traveling public are a dynamic population, and opportunities to sell a variety of products and services will evolve and increase as air travel begins to return to pre-pandemic levels. “From 2022 through 2026 we will be issuing Food & Beverage and Retail Requests for Proposals (RFPs) that will effectively open most of the airport concessionaire spaces to new concepts. Now is a great time for local companies to learn and prepare for doing business with the airport to ensure they are competitive in the upcoming RFP processes.”

With communities across the nation returning to air travel, the express commitment of large entities like the Sacramento International Airport to increase participation of small businesses—and particularly small businesses that hold Airport Concessionaire Disadvantaged Business Enterprise (ACDBE) certifications—will be crucial to elevating small business ecosystems across the nation. By working with organizations like California Capital to complete the ACDBE application and stay up-to-date on RFPs, taking advantage of these evolving opportunities can be a reality.

California Capital News and Updates, Client Success Stories

Vive Cosmetics Brings Authentic Latinx Representation to the Beauty Industry—And With a Loan from California Capital, They’re Expanding Their Impact

May 28, 2021 | When Leslie Valdivia and Joanna Rosario-Rocha started Vive Cosmetics, the beauty industry was overdue for change. What has grown into an acclaimed national brand with a wide range of lip products began as a problem the pair knew they could solve: the need for authentic representation of the diverse Latina and Latinx communities that constitute the make-up industry’s largest consumer demographic. Now, as their influence grows, the founders are using a loan from California Capital’s Lending Center to expand their reach and continue effecting change.

ENTREPRENEURSHIP INSPIRED BY WOMEN

Leslie and Joanna met through their partners—now husbands—, who have been friends since high school. The two became friends, but did not have designs to enter into business together—until  2016,

L-R: Joanna Rosario-Rocha and Leslie Valdivia. Courtesy of Vive Cosmetics. 

when Joanna accompanied Leslie to BlogHer, an annual conference for Latina business owners, bloggers, and social media influencers.

“There was a lot of energy around creating digital content and being online at that time,” says Leslie, who was working in social media and attended the conference every year. “There was innovation happening, and Joanna was interested in learning more.”

During a session where entrepreneurs pitched their business ideas, the pair shared an “aha moment”. Participants framed their businesses as solutions to problems they had yet to see anyone tackle, and one entrepreneur in particular stood out. She preferred to dress conservatively because of her religious faith, and was frustrated by the lack of options that were both cute and modest.

“At one point she said, ‘Why should I have to compromise?’,” explains Leslie. “That’s when it clicked. Joanna and I looked at each other and said, ‘We have to do something’.”

A NEED FOR BEAUTY CON CULTURA

They immediately began to brainstorm around their shared passions, and quickly landed on make-up: Leslie has been a beauty enthusiast since middle school, and Joanna even had a make-up tutorial channel during the early days of YouTube.

Two models from one of Vive Cosmetics’ first campaigns. Courtesy of Vive Cosmetics. 

From there, a vexing question naturally presented itself: Latinx beauty shoppers outspend other demographic groups by nearly 30%, so why was it so difficult to find Latinx representation in the industry? Why aren’t their cultures celebrated authentically?

What Joanna and Leslie saw the more they researched the industry they had supported for so long was a system that relied on stereotypical and narrow depictions of Latinas to make a profit, ignoring the differences in ethnicity, skintone, gender, and shape that exist amongst Latinx beauty aficionados. What’s more, they struggled to find cosmetic or beauty brands that were founded, owned, or operated by Latinx entrepreneurs. It was clear that the industry could do better—Leslie and Joanna were no longer willing to compromise. They would create a brand to speak to and represent the Latinx beauty community as a whole.

VIVE COSMETICS: A LABOR OF LOVE

Joanna and Leslie got to work quickly, researching all elements of what it takes to develop, produce, and sell high quality beauty products. They worked with a California Capital Women’s Business Center Business Counselor to develop a business plan, all while maintaining their full time jobs.

Initially, the learning curve was steep. Neither founder had a background in beauty, retail, or even e-commerce—they were starting from scratch in a $62 billion industry.

“The biggest challenge was finding a manufacturer,” says Leslie. “It’s extremely difficult for small brands to even get a response most of the time, because so much is based on having the right contacts to get traction.”

Eventually, they connected with a manufacturer from New York, and continued to leverage resources

Vive Cosmetics Liquid Lipsticks. Courtesy of Vive Cosmetics. 

for business development available in the Sacramento community. They put their business plan into action, and received a start-up loan from the U.S. Small Business Administration via Opening Doors, a Sacramento-based nonprofit. With their first line of product ready, Vive Cosmetics was officially launched in 2017.

BUSINESS AND COMMUNITY: GROWING TOGETHER

Vive Cosmetics launched as an e-Commerce shop with a website and social media presence to live up to its mission of beauty con cultura—and beauty shoppers responded. To this day, the company has not invested in paid advertising or public relations campaigns, but their Instagram profile has grown to have over 40,000 followers—and was even highlighted by Congresswoman Alexandria Ocasio-Cortez last fall. As a result of this organic online success, Vive Cosmetics has been featured in Teen Vogue, The Huffington Post, and “O” The Oprah Magazine, among other national publications.

“We are built for community, by community,” Leslie explains, reflecting the role that social media, and Instagram in particular, has played for them over the past four years. “The way folks have responded to

Vive Cosmetics finds much of the talent they work with via social media. Courtesy of Vive Cosmetics. 

what we’ve offered has made us realize that it’s going to work. We’re doing the right thing.”

Vive Cosmetic’s digital presence, which now includes growing YouTube and TikTok profiles, has become central to the brand’s existential project of honoring Latinx communities and building equity in the beauty industry. Followers and online shoppers are able to see lip products modeled by Latinx talent that represents a range of skin tones, body types, and ethnicities, and browse lines that are “created with inclusivity in mind” . Moreover, they are invited to participate in the process of inclusivity.

“We find so many of the models, photographers, and creative directors we work with through Instagram,” Leslie says. “We’ll put a call out to our community when we’re working on a campaign and need talent, and we will get hundreds of people tagging their friends or reaching out themselves.” That’s one way, says Leslie, that Vive is working to increase opportunities for BIPOC beauty professionals on all sides of the industry. “Representation does not just mean on camera or in campaigns.”

NEW PRODUCTS, SAME PURPOSE

Thanks to their quick success since the 2017 launch, Leslie and Joanna were able to pay off the start-up loan. Now, their ever-increasing fan base is eager for new products. But the nature of product-based businesses means that new offerings must be formulated and developed before they can be

Samples from Vive Cosmetics’ Cremosa Matte Lipstick Line. Courtesy of Vive Cosmetics. 

sold, so any hopes for expansion would require a good deal of up-front investment. Still, explains Leslie, innovation is crucial.

“Looking at our metrics, we understand that when we launch new products, our customers come back,” she says. “We need to do new things. That will in turn help us grow our revenue and expand the company.”

Luckily, they had stayed in touch with California Capital, often having their Business Counselor review their applications for grants or pitch competitions—so they knew where to look when the company was ready for a larger capital infusion. They worked with California Capital’s Lending Center to apply for a sizable loan, and were approved for the full amount in February of 2021.

“It was a thorough and intense process, which is understandable given the amount we were applying for,” Leslie explains. “We had to create financial projections for the next three years, which was tough in the middle of a pandemic. But when we applied, our sales were growing, so we were confident that it was the right time.”

Collaboration Over Competition

Now, with capital to work with and a clear picture of their financial goals, the founders are busy expanding and planning for the future. Leslie now works for the company full-time, and they are working with a product development consultant who is providing valuable guidance as they create new products and reformulate some of their traditional offerings. They have already launched a new line of tinted lip balms, and collaborated with Brujita Skincare, a Latina-owned skincare company out of Los Angeles, to create a Rosewood Hibiscus Facial Mist.

As they seek to continue innovating their products to meet the changing needs of customers—including a foray into product lines beyond lipstick, and revamping their packaging to make it more sustainable—, synergy with other Latinx beauty companies will remain a priority. Since 2017, they have seen a shift in how many Latinx-owned companies are around, and that has come with different types of representation and different stories being told.

As they seek to uplift the Latinx community as a whole, the focus will be on collaboration rather than competition—staying true to their passion for beauty con cultura.

LISTEN: LESLIE AND JOANNA SHARE THEIR STORY ON LA RANCHERA SUPERSTATION (IN SPANISH, ORIGINAL AIR DATE AUGUST 8, 2021)

 

California Capital News and Updates

California Capital Survey Sponsored by T-Mobile, California American Water, Provides Insight on Needs of Small Business Owners Hoping To Do Business with Regulated Public Utilities Companies

May 6, 2021 | When small business owners look to expand their operations, questions of how to access new markets and build a broader customer base arise. A promising option for many, one that can lead to higher revenue and access to a broad business network, is procurement. Procurement is the process through which private companies or government agencies enter into a contract with specialized businesses to acquire goods and/or services. It is how military bases source ingredients for their cafeterias, and how regulated utilities companies hire experts for inspection services and project documentation. Contracts are not always distributed equitably, however, with smaller businesses from marginalized communities often left out of the procurement process.

FOSTERING INCLUSIVE SUPPLY CHAINS

To ensure that these opportunities extend to minority, women, LGBT, and disabled veteran owned businesses, the California Public Utilities Commission (CPUC) instituted a Utility Supplier Diversity Program in 2015 through General Order 156. Through this program, CPUC monitors the diversity of the businesses that utilities contract with, and maintains a public directory of certified diverse businesses for use by utilities companies. Despite a commitment by regulated utilities companies to foster inclusive supply chains, many diverse small businesses still face obstacles.

California Capital FDC is committed to the success of Supplier Diversity Initiatives across the state, and connecting diverse small businesses with the procurement counseling, certification assistance, and training they need to acquire and perform on contracts. With this in mind, with the support of T-Mobile—a regulated telecommunications company—and California Water Association (CWA), California Capital undertook a statewide survey of diverse business owners to determine what barriers to access they experience when looking for procurement opportunities, and how capacity-building services can best respond to those needs.

T-MOBILE’S SUPPLIER DIVERSITY PROGRAM: BUILDING EQUITY

As a regulated public utilities company with their own robust Supplier Diversity Program, T-Mobile’s sponsorship of this survey was a natural fit, and reflects the importance of groups across industries creating equitable opportunities for businesses that traditionally face higher barriers to success.

“We are a part of  T-Mobile’s procurement team which supports the goal of reaching more small and diverse suppliers with opportunities. We meet suppliers, sit on panels, and attend industry events to network with qualified suppliers that are interested in doing business with T-Mobile,” explain Stacie Harwood and Joyce Christanio, Supplier Diversity Program managers reporting to the Director of Supplier Diversity Chi Pak. “We seek opportunities for connection across the enterprise.”

Business owners from population groups in supplier diversity initiatives—including minority, women, disabled veteran, and LGBT business communities—were surveyed over the span of  18 months, from October 2019 to April 2021. Beginning in October 2019, survey responses were collected in person via random sampling of participants at industry events.  From March 2020 onward, as Covid-19 led to event cancellations and social distancing precautions were implemented, responses were collected virtually via Survey Monkey email campaign. The numbers presented below represent data collected virtually from March 2020 to April of 2021.

DATA DRIVES ACTION

The data collected reveals the barriers that exist for diverse business owners hoping to sell their services to public utilities companies, explores the types of training and assistance that would be most effective at crossing those barriers, and addresses differences in demographics—like business maturity and location—that must be considered when responding to business needs.

Respondents were asked to provide basic information about their businesses, such as how many years they had been in business, and in what zip code they operate, and their industry.

19% of the businesses surveyed had been in operation for between 1 to 3 years, while 68% had been in business for more than 5 years. 60% and 30% of respondents were located in Northern California and Southern California, respectively, while only 10% were located in the Central Valley region.

While these data points on their own do not indicate what challenges diverse business owners may experience, they are an important backdrop to the more specific questions, and can inform the actions of public utilities companies and organizations like California Capital when they look to create new opportunities. Of the 396 respondents, only 17% of respondents said that they are currently working with regulated utilities companies, and only 8% have worked with any in the past. 297 respondents—75%—reported that they have not yet worked with any regulated utilities company.

“The challenge for a new business entering the procurement space is precisely that they’re new,” says Ms. Harwood. “Community-based organizations, like California Capital, are a vital tool. They coach  companies to build capability statements and encourage companies to build business traction through networking.”

DIVERSE BUSINESSES, OVERLAPPING OBSTACLES

The challenges that businesses face in taking advantage of procurement opportunities vary, but common themes do arise. Of the 280 survey respondents that shared examples of obstacles they have encountered, many said that a lack of information on bids and available opportunities posed a significant challenge, including information on the bidding process not being open to new vendors and reliance of utility companies upon existing contracts or vendors. Others said that lack of access to decision makers was a concern—and the desire to create relationships with decision makers in order to establish contracts was referenced many times.

“Since finalizing our merger with  Sprint in April 2020, we are integrating the two mature supply chains which entails new processes and supplier rationalization,” explains Ms. Christanio, who joined T-Mobile after 10 years of managing Sprint’s Supplier Diversity Program. “Virtual conferences, matchmaking events, and industry panels are valuable for us to connect  with new diverse and small businesses of all kinds.”

“KNOWLEDGE IS POWER”

Even with robust and dedicated Supplier Diversity programs, the contracting process can be daunting for small businesses like those surveyed (60% of whom have annual revenues of less than $1 million). Outreach initiatives, individualized procurement counseling, and informational programming are essential for demystifying the process.

For example, diverse small businesses hoping to do business with regulated utilities companies can benefit from gaining certifications, such as Minority/Women/Disabled Veteran Business Enterprise (DVBE) and LGBT Business Enterprise certifications that can help them qualify for certain Supplier Diversity program initiatives. Unfortunately, the application process can be difficult to navigate, as they require personal and company tax returns and a laundry list of supporting documents that can be difficult to compile. In these situations, guidance from experienced procurement counselors can be a key to success.

“Knowledge is power,” says Ms. Harwood, reflecting on the ways that educational opportunities provided by community-based organizations like California Capital can lead businesses interested in procurement toward success. “Education is huge, because it helps business owners not only understand technicalities like the contracting process and how to write a capability statement, they also get to speak with folks who know the companies they want to work with and help them research the best opportunities.”

AN INFORMED RESPONSE 

To serve diverse business owners in the most effective way  and connect them to contracting opportunities for which they are qualified candidates, California Capital is using the data collected to create programs that are responsive to the needs of business owners from marginalized communities. 48% of respondents requested training in the areas of business development and marketing; 22% in contract management and compliance; 18% in planning and research; and 25% requested training in growth management, with 31% also reporting that financial services and access to capital would be helpful.

“As an organization that provides training to our small business community in the greater Sacramento area, it is important that our programming meets their specific needs. The survey does just that,” explains SiewYee Lee, California Capital’s Program Development Manager. “The data collected educates California Capital on the type of training that is asked for by diverse businesses that we serve. Access to Capital, Business Development and Marketing, and Planning and Research remain the primary focus of our surveyed business owners, regardless of their maturity level. California Capital is committed to providing a networking platform between diverse businesses and buyers.”

The data collected from the survey will allow California Capital to provide effective, responsive training and matchmaking opportunities for diverse businesses across the state, preparing them for contracting opportunities with private companies like T-Mobile, members of California Water Association and more—and when all stakeholders are actively engaged in building an inclusive small business ecosystem, everyone benefits.

California Capital News and Updates

Capital Region Small Business Week Returns in May with Innovated Virtual Setting

April 22, 2021 | Capital Region Small Business Week, the annual event that brings together small business experts from across the Sacramento region, will return in May with two days of webinars and online panels. Sponsored by Sacramento Municipal Utilities District (SMUD), the events on May 18th and 19th will take place virtually as restrictions on gatherings related to the Covid-19 pandemic remain in place across the region. 

“We have learned so much about connecting remotely over the past year,” says Sophia Kanaan, Director of California Capital’s Women’s Business Center. “We have taken what Capital Region Small Business Week looked like in the past and revamped the programming to be as safe and accessible as possible, while still creating an engaging and inspiring atmosphere.”

With the goals of engagement and inspiration in mind, the programming has been designed to cater to specific types of business owners: sessions on Day 1 (May 18th) are geared towards start-up businesses and new entrepreneurs, while Day 2 (May 19th) will focus on topics most relevant to established businesses and those that have had to pivot their operations in recent times. 

Innovation For a Changing Business Environment 

While this structure is a departure from years past, the change reflects the evolving needs of small businesses across the Capital Region. Sessions, webinars, and business opportunities offered with specific types of businesses in mind will allow for deep dives into highly relevant topics, and ensure that business owners and entrepreneurs leave with information and connections that will help them thrive. 

“There will be presentations on a wide range of subjects, and our hope is that everyone leaves with tips, or leads, or new business contacts that they can leverage,” explains Ms. Kanaan. “We want to celebrate small businesses, but we also want them to see this as a chance for growth.”

Indeed, the growth of America’s small business ecosystem is celebrated annually across the country. National Small Business Week (NSBW) was first designated in 1963, and is now led by the U.S. Small Business Administration (SBA) each May. While highlighting outstanding entrepreneurs, business owners, and advocates, NSBW also honors the fact that, according to the SBA website, “more than half of Americans either own or work for a small business, and they create nearly two out of every three new jobs in the U.S. each year.” Capital Region Small Business Week honors this impact on a local level.

Click here to register for Day 1 of Capital Region Small Business Week, geared towards Entrepreneurs & Start-Ups (May 18).

Click here to register for Day 2 of Capital Region Small Business week, for Existing Businesses (May 19).

Capital Region Small Business Week will include presentations from: SMUD, Sacramento County Business Environmental Resource Center, Internal Revenue Service, California Capital Women’s Business Center (WBC), The City of Elk Grove, CSU Sacramento College of Business, The Truthful Kernel, Small Business Development Center, East West Bank, Marshall Retail Group, California Capital Procurement Technical Assistance Center (PTAC), U.S. Small Business Administration (SBA), Sacramento Employment and Training Agency.

Black-Owned Business, Uncategorized

How One Veteran-Owned Barbecue Restaurant Is Looking To Government Contracts As An Expansion Opportunity

Mack Thomas is a father, a Disabled United States Marine Corps Veteran, a Black business owner—and someone who knows good barbecue.

Mack Thomas co-founded MacQue’s Barbecue with his wife, Charlie, in 1986.

In 1986, he and his wife, Charlie, founded MacQue’s Barbecue in Sacramento as a catering business to serve customers across the area smoked meats and sides made from scratch. As a graduate of California State University Sacramento, Mack is passionate about serving his community. Over the past 30 years, The Thomas family have learned the ins and outs of the business and grown MacQue’s Barbecue into a staple of the Sacramento area: in addition to catering, they now boast two restaurant locations, a bottled hot sauce business, and earned the title of “Small Business of the Year” from the Elk Grove Chamber of Commerce in February.

Even with this success, The Thomases have had to adapt to the uncertain business environment caused by the pandemic. As agile business owners, they have looked to enter new markets with their product, and California Capital FDC is helping them get there. 

Experience Drives Expansion

Mack and Charlie began selling MacQue’s Barbecue sauces wholesale since the mid-1990s, with a presence in national grocery chains like Sam’s Club and regional outlets like Raley’s. But with the expansion of their restaurant operations—MacQue’s Barbecue opened a second location in Elk Grove, California in August of 2019, adding to their flagship restaurant in Sacramento—the wholesale sauce enterprise was less of a focus. Plus, partnerships with grocery chains proved challenging to maintain. 

“The company’s buyers would change and we no longer had a relationship, so we would get dropped as a client,” reveals Mack, who would spend hours each week sampling sauces at the stores, “or a larger brand would see our success and edge in with a lower price.”

When Covid-19 caused many office workers near both MacQue’s locations to transition to remote work, and the restaurants lost much of their reliable lunchtime clientele, the need for diversification became clear. It was time to find new wholesale opportunities for MacQue’s sauces, and Mack had an idea that felt more promising than relying on grocery chains. 

“I knew there were opportunities to sell to mess halls and commissaries on military bases from my time in the Marine Corps,” Mack says. “So I was interested in government contracts, but I wasn’t sure how to get in.” 

The Promise of Contracting Opportunities

MacQue’s BBQ Hot Sauce can be purchased at both MacQue’s BBQ restaurant locations.

Like many government agencies and operations, mess halls and commissaries—essentially the cafeterias and general stores on military bases—source their products from private business through a fine-tuned procurement process. Businesses must have the proper certifications, know how to search out contracts and bid on them, and ultimately have the capacity to perform on the contracts. 

Contracts can be particularly impactful for Black, Indigenous, and People of Color (BIPOC) owned businesses. Data for businesses of color indicate that they are highly concentrated in the retail sector, where sales volume is relatively lower—which can cause disparities in overall business growth. 

“Moving from retail into business-to-business or business-to-government sales is a huge opportunity to grow, especially for diverse businesses” explains Clarence Williams, Chairman of California Capital’s Board of Directors. “But it is one of the most difficult things for a business to do.” 

In search of guidance on navigating the procurement process, Mack turned to California Capital’s Procurement Technical Assistance Center (PTAC). Working with a PTAC counselor, Mack has been able to take the first steps to bidding on and securing government contracts. MacQue’s Barbecue has become certified with the Systems for Award Management (SAM), a necessity for any business hoping to sell their goods or services to the Federal Government. With that foundation laid, Mack is now focused on recertifying his Disabled Veteran Business Enterprise (DVBE) status, which will allow him to take advantage of programs that cater specifically to veteran-owned small businesses. 

“The fact that California Capital operates a Procurement Technical Assistance Center is extremely important to the way that our continuum of services is able to help businesses, particularly those owned by people of color, expand and succeed,” explains Clarence. 

Procurement as a Catalyst for Equity 

Seeing more businesses owned by people of color pursue procurement opportunities is reason for hope, says Clarence. Income and revenue inequality for BIPOC-owned businesses in retail spaces is prevalent at national, local, and regional levels. 

“When you look at the data, the reality is that small businesses of color are still very small in terms of revenue relative to total sales,” says Clarence. 

Mack Thomas at the original MacQue’s BBQ Stand

As Clarence explains, procurement opportunities—like those with the Federal Government that MacQue’s BBQ is pursuing—are key for addressing that disparity and building equity in the business landscape.

“[Procurement] is an avenue for them to grow their revenue in a way that can be more impactful than retail expansion,” says Clarence, “California Capital’s services are designed to build that capacity for business owners and create more inclusive opportunities for disadvantaged businesses.”

Procurement can be, in many ways, an expansion of business owners’ view of what is possible. When entering into a contract with a government agency, small businesses also gain access to networks that can lead to even more opportunities, and the fortuitous cycle continues. Building the ability of disadvantaged and diverse businesses to pursue and be prepared to take advantage of these opportunities is where the expertise of California Capital’s business counselors lays.

“You Have to Have The Best Opportunities”

Knowing this, Mack and his family are determined to take advantage of procurement opportunities, and use them as an avenue for growth. MacQue’s Barbecue is a true family operation, and with their son Michael Thomas at the helm of the restaurant locations, Mack and his wife Charlie are able to continue envisioning the future of the enterprise. 

“I’ve improved myself,” Mack says, reflecting on his decision to pivot away from traditional wholesale ventures. “I’m being more strategic with the growth opportunities I pursue.” 

MacQue’s journey is proof that even with years of experience in your industry, searching for unique opportunities and continuing to learn is crucial to expand and thrive. With decades of wisdom acquired, Mack has learned to be patient while working towards a goal. 

“You may have the best product, but you have to have the best opportunities,” Mack says. “We have the capability to make great hot sauce, now we’re just building the capacity to get it out there.” 

California Capital In The News, California Capital News and Updates

California Capital Receives Wells Fargo Open For Business Fund Grant, One of Three Regional Recipients

March 25, 2021 | California Capital FDC, Opening Doors, and Rural Community Assistance Corporation (RCAC) have received grants as part of the Wells Fargo Open For Business Fund program. The funds awarded to the three Sacramento-area Community Development Financial Institutions (CDFIs) are part of Well’s Fargo’s national effort to help small businesses recover and rebuild in the face of the economic effects of COVID-19. California Capital will receive a grant of $500,000.

The Open For Business Fund program is designed to foster an inclusive recovery for U.S. small business, paying special attention to access to capital and technical assistance for diverse businesses from communities that have been disproportionately impacted by the pandemic. Many businesses in communities of color have less access to financing and other resources to help them survive.

California Capital seeks to bridge this disparity and reach women, minority, disabled veteran, and LGBT business owners and low to moderate income communities with financial services and technical assistance. The Open For Business Fund program focuses on increasing access to capital through CDFIs, technical assistance, and long-term recovery and resiliency programs. Through a Lending Center, Women’s Business Center, and Procurement Technical Assistance Center, California Capital offers these services to business owners in 28 counties across Northern California.

The Open For Business grant will allow California Capital to continue offering free technical assistance and business counseling, and to reach even more diverse business owners with financial services. With equitable access to these resources, California’s small business community will be empowered to rebuild and economic opportunity will be amplified.

Read the full press release here: Sacramento CDFIs California Capital, Opening Doors and Rural Community Assistance Corp receive $3M from Wells Fargo Open For Business Fund to Help Minority-owned Businesses Recover

 

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