Maryland Gazette article featuring local entrepreneurs.

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Maryland Community News
Published: Friday, October 7, 2011
State’s entrepreneurs taking the plunge by Kevin James Shay
Staff Writer
Related story: Venture capital pool drying up for entrepreneurs
The start of the Great Recession was still a few months away when Kendall Tant got word in 2007 that he would be laid
off from his job as vice president of account management at a medical transcription company.
He sensed he had to break from his past, and having his own business appealed to him, because he could better control
his career.
So he became an entrepreneur — during the nation’s biggest economic downturn since the Great Depression.
“I got very focused on what I would do,” said Tant, president and CEO of iData Medical Documentation in Annapolis,
which has grown from a staff of just one — himself — to five employees.
Some observers say that Maryland’s entrepreneurs such as Tant face a tougher task than their counterparts in states
such as Virginia. They cite many Maryland entrepreneurs’ reliance on government contracts amid shrinking federal
budgets, as well as a perception by some that the state is anti-business.
Maryland has a “cultural aversion to risk-taking,” Thomas M. Brandt Jr., senior vice president and CFO of
TeleCommunication Systems in Annapolis, said during a recent discussion on the state’s tech industry.
Maryland does have many programs such as incubators that can help entrepreneurs, but it also carries high taxes, more
regulations than most and the uncertainty of what new regulations lawmakers will pass, said John M. Collard, chairman
of Annapolis turnaround company Strategic Management Partners.
“People don’t want to invest where there is uncertainty,” Collard said.
The Kauffman Foundation of Kansas City, Mo., which bills itself as “the world’s largest foundation devoted to
entrepreneurship,” put Maryland in the bottom 20 percent of states for entrepreneurial activity in 2010 in a report
released this year. In Maryland, 240 entrepreneurs per 100,000 adults started businesses each month last year, below
the national average of 340, according to the research group. Nevada, Georgia and California had the highest rates.
Maryland’s activity last year was also down from 2009 when its rate was 290 entrepreneurs per 100,000 adults. Still,
Virginia, which has a reputation of being more business-friendly than Maryland, had the same rate as Maryland last year,
and Pennsylvania had a lower rate.
Another indication of entrepreneurial activity is the annual Inc. 500 list, which ranks mostly entrepreneurial private
companies nationally according to how fast they grow revenues in the previous three years. Maryland had 18 companies
on this year’s list, the same as last year and two fewer than in 2009. Virginia, with a population almost 40 percent larger
than Maryland’s, had 37 this year, down from 48 in 2010.
With a wide variety of resources from state and federal loan assistance to chambers of commerce and networking,
mentoring and business advice groups, Maryland is a great state to start a business, said Elda Devarie, president of
EMD Sales, a $31 million ethnic grocery wholesale and distribution company she started out of a van in 1990. The
business recently moved from Landover to Baltimore, tripling its space to 153,000 square feet.
“You have to be persistent,” Devarie said. “You can’t quit.”
Networking groups and Facebook
Tant said he benefited through a partnership that Women Entrepreneurs of Baltimore had with the state to provide
training to entrepreneurs. The program is still in place but not the partnership with the state, he said.
“It allowed me to pursue my strategy,” Tant said.
He is involved in numerous groups, including the Business Opportunity Network and Chesapeake Regional Tech Council.
“It’s very helpful to meet other people who have started businesses themselves,” Tant said. “It often leads to more
business.”
An upcoming event of interest to entrepreneurs is the Baltimore-Washington Mid-Atlantic Entrepreneurial Bash,
co-hosted by Strategic Management Partners on Oct. 17 at the University of Maryland, College Park. Scheduled
speakers include professional sports team owner and Internet pioneer Ted Leonsis and SurePayroll founder Troy
Henikoff.
The event will give local entrepreneurs a chance to learn how these businesspeople took startups to multimillion-dollar
enterprises, Collard said.
Social marketing sites such as Facebook and online sales sites such as Etsy are important marketing tools for
entrepreneurs, said Stacey D. Streett, who opened Junction Streett Art & Jewelry late last year. She works full-time at
another job in Frederick and markets her handcrafted artwork and jewelry on weekends at festivals and other venues.
“Social marketing is just very easy to use and can capture a wide audience,” Streett said. “It makes the businessperson
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easily accessible to the public … It allows me to see what people like in my work, so it is a good tool for feedback.”
The first year of being a craft or artisan vendor can be the hardest because people aren’t familiar with you, she said.
Getting her federal employee identification number wasn’t difficult, and the state has made it convenient to report sales
tax data online, Streett said.
“Certainly, starting one's own business is a lot of work, but I find it a labor of love,” she said.
Increasing interest
Asher Epstein, managing director of the Dingman Center for Entrepreneurship at the Robert H. Smith School of Business
at the University of Maryland, College Park, said he has seen more interest in entrepreneurship in the past year or so.
The center’s programs include a $20 million venture capital fund, a technology-transfer initiative, entrepreneurs-
in-residence who advise students and portfolio companies, and seed funding for student startups.
The center works with anywhere from 10 to 30 entrepreneurial enterprises at a time, depending on projects and the time
of the year, Epstein said. Many are virtual companies.
“Investors have been a little bit gun-shy in the last five years,” Epstein said. “But they are still investing in startups. It
helps to have a lower valuation to offer.”
During the Great Recession and since, more Americans became entrepreneurs than at any time in the past 15 years,
with unemployment forcing many to go their own way, according to the Kauffman Foundation, which analyzes federal
labor and census figures. However, more entrepreneurs kept the businesses as sole proprietorships in 2010 than in
2007, rather than hiring others.
“This trend, if it continues, could have both short- and long-term impacts on economic growth and job creation,” Carl
Schramm, president and CEO of the foundation, said in a statement.
But a survey of entrepreneurs conducted during the Inc. 500/5000 Conference last month at National Harbor in Oxon Hill
showed that 96 percent plan to add employees next year. Some 41 percent said they will hire more than 20 people in
2012.
Among the Maryland entrepreneurial businesses hiring this year is Rockville information technology company GlobalNet
Services, which wants to add 50 more employees by the end of the month. Revenues have grown from $1.9 million in
2002 to $16 million last year, said Ori Reiss, president and CEO who founded the business in 1995.
“Right now, it’s a tough time to start a business,” Reiss said. “But if you work hard enough, it will happen.”
Like Collard and Tant, Reiss said the state could make it easier for new businesses with fewer regulations and more of a
commitment to limit taxes. But the state’s excellent school system and availability of skilled employees are positive
factors, he said.
“I have no major issues with doing business here, but you can always see improvement,” Reiss said.
kshay@gazette.net
Maryland below national average in entrepreneurial activity
Last year, 240 entrepreneurs per 100,000 adults started a business each month in Maryland. That was below the
national average of 340 per 100,000 and Maryland’s 290 per 100,000 in 2009. A look at other rates for 2010 and 2009,
respectively:
*Virginia, 240, 270.
*Washington, D.C., 310, 320.
*Pennsylvania, 180, 200.
*Delaware, 220, 300.
*North Carolina, 350, 250.
*Massachusetts, 320, 330.
*Georgia, 510, 440.
*California, 470, 410.
*United States, 340, 340.
Source: Kauffman Foundation
© 2011 Post-Newsweek Media, Inc./Gazette.Net
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