At the height of the Great Recession, Gary Scrutchfield found himself scrambling to find another commercial lender.

“I didn’t think that my bank of 20 years would tell me they no longer wanted me as a customer, that they no longer wanted to serve building supply companies,” said Scrutchfield, president of Lumbermans Wholesale Co.

Fortunately, the small business owner had recently participated in the Emerging 200 (e200) program, a U.S. Small Business Administration (SBA) initiative designed to accelerate the growth of 200 inner-city businesses in 11 cities.

“What made it nice is that when I sat down with the lending institutions, I had a good understanding of what they were looking for,” said Scrutchfield, one of 20 Des Moines business owners in the first e200 class three years ago.

Provided at no cost to the selected business owners, the e200 program provides a 13-week curriculum of biweekly evening training classes designed to help them step back and re-evaluate their strategies for growth.

To be among the 200 companies chosen each year for the program, a company must have been in business at least three years, have $400,000 or more in gross annual revenues and be located within a specified municipal area – locally, the city of Des Moines.

According to a nationwide survey conducted last year, members of the first two classes increased their sales an average of 19 percent in 2009 compared with the previous year. A total of 187 businesses responded to the survey.

“To have those kind of numbers in that challenging of an economic environment really says a lot about the tools and the skills that program provides,” said Joe Folsom, director of the SBA’s Iowa district office in Des Moines. “When you sit down and talk with businesses that have been through it, you find that they’ve used the techniques learned to accomplish specific strategies for their business.”

This month, as the fourth e200 class in Des Moines begins meeting, the Business Record checked in with several small business owners who were part of the 2008 class.

Image Solutions

For John McIlhon, owner of Image Solutions LLC, one of the biggest benefits of the program was the opportunity to network with other small business owners. “It was a good cross section of business people, so there was a lot of good idea-sharing back and forth,” he said. “And a lot of those people I still talk to from time to time.”

Another key aspect of the class was the requirement to develop and present a three-year business plan, which McIlhon said he refers to frequently. It also served as a survival tool.

During the recession, when sales in the promotional marketing industry were down about 30 percent, Image Solutions increased its sales by about 2 percent in 2009, “so the growth plan may have helped us,” he said. Last year, the business budgeted for 15 percent growth in sales, and actually grew by about 22 percent, he said.

“That enabled us to hire a new salesperson that started here the first of the year,” McIlhon said. “Hopefully we can continue that kind of growth this year.”

Noodle Zoo

Verlene Vanderpool laughed when she was told that other e200 businesses nationally said they’ve averaged 18 percent growth.

“They must not have been in the restaurant industry,” said Vanderpool, owner of Noodle Zoo Cafe & Catering. “It was a great opportunity, a great class, and I looked forward to it every week. Then, boom – the recession hit.”

Vanderpool, who enrolled in the program with an eye toward tapping a larger market, operates locations in the East Village and West Des Moines and has franchised restaurants in Ankeny and Omaha.

She said she still hopes to carry out the growth plan she devised when the economy improves. “Tell everyone to come here and eat, and then I can implement my plan,” she quipped.

Beckley Automotive

Steve Beckley’s main objective for his e200 experience was to increase “healthy growth” for his company. Beckley, an auto mechanic by training, started Beckley Automotive Services in 1977 in downtown Des Moines.

“I had had growth too fast, which was a problem, and I had failed to grow, which was a problem,” he said. “So I wanted to hit the middle ground.”

As part of his growth strategy, he looked to improve the efficiency and profitabilty of his parts department. He accomplished that by replacing his parts manager and reducing the department’s inventory by about 40 percent, he said.

“None of these concepts were new to me, but all I had done was talk about them,” Beckley said. “Being in the class forced me to get this stuff on paper, present it and measure it. I have made some solid and consistent gains since the class, so it added discipline.”

Through the business plan, he also identified a need for better financial reporting. “We didn’t have good reporting on cash flow,” Beckley said. “When that improved, overall performance improved as well.”

To attract more customers, he developed a written marketing plan, “and in the past three years I spent what I said I would spend on marketing,” he said, which included hiring a consultant to retool the company website. “Our goal was to increase sales by 15 percent; we did 14 percent.”

Lumbermans

“This program is really in tune for the small business person,” said Scrutchfield, who bought Lumbermans in January 2006 after working for five years as the company’s general manager. “It’s one of those programs that you get out of it what you put into it, and working with these other business people gives you additional insight you don’t get from a book.”

Scrutchfield said he hadn’t written a business plan until he was forced to do so for the class, “and that was one of the things that the banks were impressed with the most,” he said.

Lumbermans currently has 16 employees, down from the 24 it had when Scrutchfield bought the company. “But we’ve added back people, so we’re growing, and focused on the market here in Central Iowa,” he said.

Though sales have been flat in the past three years, the business has continued to turn a profit each year. “In 2010, revenues were good, and some of that was a result of what we had worked with in class,” Scrutchfield said.