Small businesses are the backbone of our economy. They account for 99 percent of all U.S. firms, employ 57 million people in the U.S. and make up 63 percent of net new jobs. In addition to creating jobs and fostering economic opportunity, small businesses play an important role in driving innovation, competition and diversity.
In honor of Global Entrepreneurship Week, we sat down with some of the most inspiring small businesses we work with across the globe to hear how they got started, what obstacles they’ve had to overcome and what advice they have for other aspiring entrepreneurs.
For the first in our series celebrating entrepreneurs and small businesses, we spoke with Mike Schmiedicke, the founder of The Strong Oaks Woodshop, a small business based in Front Royal, Virginia, focused on transforming reclaimed wood into beautiful furniture.
Bill Ready: How did you come up with the idea for your business?
Mike Schmiedicke: Right out of college I started working in IT. I loved it at the time, but found myself sitting for hours at my desk to the point where it was impacting my health. I ended up getting surgery for carpal tunnel and had to go to physical therapy for back pain. My physical therapist put me on a schedule where every two hours I had to get up for a 20 minute break. During my breaks, I found myself working on woodworking projects. It got harder and harder to pull myself away from woodworking to go back to my desk. I knew I didn’t want to be a programmer for the rest of my life, but I had a wife and three kids to support and my job gave me a good, steady salary. I knew that if I wanted to focus on woodworking, I would have to make a business out of it where I could continue to support my family. So I came up with a five year plan to transition out of my IT job and into my job as a small business owner.
BR: What was the biggest challenge to starting your own business?
MS: I faced a few major challenges. First, I was late in the game. I was 40+ years old and I was married with kids and I needed a decent salary to be able to support my family. Figuring out how to wean myself off of the steady, predictable salary I had and into something that was at the time unpredictable, was a bit scary. Second, since there was a five year period where I was working full time in IT but also working evenings and weekends to get my business up and running, I had to deal with a lot of time management issues. Third, in 2017, when we were at the top of our game, enjoying steady growth, doubling in sales and expanding our business, there was a fire in our workshop and we literally lost everything overnight.
BR: Tell me about that? What happened and how did you recover?
MS: At the time, in April 2017, the business was doing really well. We were growing steadily, our sales were doubling, our business was expanding and then there was a fire in our workshop. All of our tools, our lumber, our inventory, our workspace, 15 years of effort -- it all burned to the ground. The fire happened on a Saturday night and we had $40,000 worth of inventory ready to ship that Monday -- but it all burned.
We had an overwhelming outpouring of support from our friends, our clients and people we had worked with in the past. People shared their tools, gave us lumber and offered their workspaces for us to use. But even with all of that, we were going to fall short.
Because we’ve been part of the community for so long, and because both my wife and I have local businesses, we have a long standing relationship with our bank. I know the bank managers by name. They’ve seen our books and they know my business well. But as much as they wanted to and tried to help us get a loan, the bank ultimately didn’t approve a loan for us.
So we turned to PayPal Working Capital. PayPal knew what we did in sales with them, and based off of that, they were willing to extend us a $100,000 loan all in. In a situation where nobody believed in us and we had nothing left, PayPal Working Capital was there for us. In just 10 months, we paid back the entirety of the loan and went from being on the verge of bankruptcy to a business with $1.5 million in sales. That loan made a big difference to me and my family and the families that are a part of our business and it kept our business alive.
BR: What advice do you have for other aspiring entrepreneurs thinking about starting their own business?
MS: Take a really sober look at it. It’s not the easiest road, you’ll face ups and downs, and getting started is the hardest part. Leaving predictable work and a steady paycheck for a really unpredictable world is not easy and it takes a specific type of person. But at the same time, it’s deeply fulfilling. For me, it’s hard to imagine going back and doing anything differently. Not everyone can honestly say they love what they do, but I genuinely do.
BR: Any lessons you’ve learned or tips you can share with other small businesses?
MS: When you first start your business you will likely feel compelled to say yes to everything. You just say yes because you’re so desperate do just about anything to make money and keep your business running. If there’s anything I’ve learned, it’s that I’m better off being very clear about what it is that we do and what we don’t. Be true to your vision to what it is that you really want to do and can do well.
Watch to Learn More About The Strong Oaks Workshop
You can read more entrepreneur stories this Global Entrepreneurship Week from PayPal Stories here.