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What price independence?

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    The $150,000 needed to launch the Salad Galley in downtown Toledo was accumulated from several sources.

    <Lisa dutton / blade

  • What-price-independence-2

    Michael Thomas so far has taken out no loans for his lawn-care business.

    <Simmons / Blade


The $150,000 needed to launch the Salad Galley in downtown Toledo was accumulated from several sources.

Lisa dutton / blade Enlarge

It appears there s a never-ending supply of would-be entrepreneurs.

Lots of people are eager to get into businesses of their own. But can they afford it?

The cost of opening a business can range from next to nothing for a home-based service enterprise to millions of dollars for a brand-name restaurant, car dealership, or motel.

For example, Toledo retirees David and Fran Smith opened Complete Security Services with a total investment of $2,500.

Toledo Jeep worker Michael Thomas started a growing sideline lawn-mowing service, called Iron Mike, with just a few thousand dollars worth of equipment. And Elaine Woodward and her sister opened Woodward s Expressions, a graphic-art studio in her Toledo home, with about $5,000 worth of computers and software.

But many others, such as Donna Perras, had to use multiple sources of financing to achieve their entrepreneurial dreams.

Ms. Perras opened the Salad Galley restaurant on St. Clair Street in downtown Toledo two months ago, at a cost of nearly $150,000. The financing included a bank loan of $75,000 backed by the U.S. Small Business Administration, a $12,500 loan/grant from the city of Toledo, and about $60,000 through a home-equity loan.

This is going to have to be a success, or I ll have to live here [in the restaurant], said Ms. Perras, who worked 20 years in marketing and fund-development for area nonprofit groups.

Years ago, she worked for the late restaurateur Betty Timko, whom she regards as a mentor. I always wanted to own a restaurant, Ms. Perras said. I worked downtown and knew how limited lunch service was.

There are several ways to get into business and a number of options for financing one, said Aggie Dahar, senior business adviser for the Toledo Small Business Development Center operated by the Toledo Area Chamber of Commerce.

But would-be entrepreneurs need to come up with a viable business plan, including a realistic assessment of costs for start-up and for operating and working capital, she said.

The major reason businesses fail is undercapitalization, said Ms. Dahar. Say you open a beauty salon. You could probably do it for $60,000 to $80,000. But you have to ask, Do I have to lease? Do I have to make leasehold improvements? That could make the cost much higher.


Michael Thomas so far has taken out no loans for his lawn-care business.

Simmons / Blade Enlarge

Another example, she said, is opening a restaurant. It could cost $60,000 to $70,000 if the owner buys used equipment and the building doesn t need much remodeling.

But the cost would grow to $180,000 or more if new equipment is bought.

It s not just brick and mortar and equipment, either. Experts warn that small-business owners should take into account their own living expenses and should consider that they may have to wait years to turn a profit.

Prospective business owners, Ms. Dahar said, could buy an existing business or work for one before buying it.

About half of the time locally, small businesses are sold to a longtime employee, which lenders often prefer, she added.

Still, she explained, it s often cheaper to start a business than to buy an existing one, for which the name can have a good reputation and thus a price tag.

The typical small-business loan in this region is under $250,000, but some, especially government-backed loans, are for millions.

Ms. Dahar said her office assisted in 11 loans last quarter, totaling $1.5 million and averaging $136,000 each. But in the previous quarter, 22 loans totaled nearly $1.5 million, for an average of $68,000. Bank loans under $20,000 typically are done through a credit-card-like arrangement, she added.

Small loans for hundreds or a few thousand dollars are available through Assets Toledo, a nonprofit business-education organization, and some neighborhood economic-development groups.

Loans up to $100,000 are available through two city of Toledo economic-development programs, and even bigger amounts are offered through the Toledo-Lucas County Port Authority, the state of Ohio, and SBA-backed bank loans.

Among the publications available at the Toledo-Lucas County Public Library on starting businesses is Bond s Franchise Guide, which profiles more than 1,000 franchises.

The book calls franchising a time-tested, paint-by-the-numbers method of starting a new business, but warns that buying a franchise is not foolproof and requires a commitment to hard work such as 60 or more hours a week and playing by the rules.

Bond s lists many franchises with initial fees and total cash investment of only a few thousand dollars, but most cost substantially more.

Some examples: Aamco Transmission, $75,000 cash (including a $30,000 franchise fee) and total investment of $200,000; Thrifty Car Rental, $150,000 cash, $200,000 to $250,000 total; Red Roof Inns, $100,000 to $500,000 cash, total of $2.6 million to $3.5 million; Golf USA shop, $75,000 to $100,000 cash, total of $235,000 to $300,000.

Among food franchises are Dunkin Donuts, $200,000 cash (including a $50,000 franchisee fee), and total investment of $255,000 to $1.1 million; McDonald s, $500,000 to $1.6 million total; and Denny s, $970,000 to $1.9 million total.

Ms. Perras bought into a regional franchise.


Elaine Woodward, left, and her sister Christina Pluckhorn opened a graphics design studio in Ms. Woodward's basement, financing the venture out of their own pockets.


Her Salad Galley is one of three in the Toledo area. She urged prospective restaurant owners to consider costs beyond equipment.

For example, she needed an architect to redesign the downtown space she wanted. And, insurance and licenses are other costs that most people don t think about, she added.

In addition, inventory and supplies can be costly. When a semi-truck pulls up with your order, you think, Oh, Lord, she said.

Ms. Holden, of Assets Toledo, said many of the students in the last five years have opened successful businesses with minimal investments, including about a dozen who started lawn or landscaping services.

Those seem to blossom, she noted. They can start off very small, and once they get some money, they can reinvest back in the business.

One of those students, Mr. Thomas, is a Jeep worker by night and an entrepreneur by day. So far, he said, he has avoided the need for loans to keep his lawn service going but will need bank financing for his new venture, a banquet facility in a former grocery store on Dorr Street near Reynolds Road.

He said he has about $12,000 wrapped up in the business, including a couple more mowers and a used pickup truck, and four workers taking care of lawns for about 50 customers.

Ms. Woodward and her sister Christina Pluckhorn, both in their 20s, opened their studio last year in Ms. Woodward s South Toledo home.

We financed it out of our own pocket, she said, including buying five computers and a lot of software.

She said business is progressively getting better, the sisters have about 50 steady customers, and no bank loans so far.

But it will be a happy day when they finance to expand, perhaps next year, she said.

The Smiths also have avoided loans for their security service, which does employment background checks and private investigations.

But the couple are thinking of expanding into a business offering armed guards. They have also considered getting financing, but at this point I believe we can do it on our own, because it s not our only source of income, said Mrs. Smith.

Contact Homer Brickey at: or 419-724-6129.

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