Chris Busse was one of more than 1,000 teachers laid off last August by Chicago Public Schools.
For more than four years, he taught art to kids in kindergarten through 8th grade. The layoff came a few days before the start of the school year and Busse, 27, didn’t have time to get another teaching job. So he put the business plan he had worked on that summer into action.
Busse had been saving for a downpayment on a house. Instead, he used that money to start Penguin Foot Pottery in Chicago’s Logan Square neighborhood. Busse says the business wouldn’t be possible without help from his friends and family, a bank and a nonprofit.
“They were happy to help,” he said. Busse grew up in the Chicago suburbs, where his father works in construction. As a gift to his son, he paid for the materials and supplied some the labor to get studio space in working order. Then, Busse’s mother, father, uncle and sister helped tear out the ceiling, refinish and paint walls, put in a new floor and do some general “cleaning up.” Busse estimates he would have paid around $10,000 for the work on the open market.
The unpaid work helped a lot, but wasn’t quite enough. Hull House, a Chicago area nonprofit, helped Busse fine-tune his business plan and figure out the rest of the financing. They put him in touch with Borrego Springs Bank, a small bank owned by the Viejas Band of Kumeyaay Indians and based in La Mesa, Calif. The bank has a niche business providing small loans of $50,000 and less to businesses for working capital. Busse was able to get one of these loans, for $15,000.
Terry Crispin, a senior vice president at the bank, said loans from friends and family are not exactly uncommon in business lending, both for small and larger businesses. (John Edel, profiled in Niala Boodhoo’s recent story, relied on his family to help him buy an abandoned factory.) But, he said, “It’s not something I see every day in a file.” For a small business, he said it’s more typical for somebody to go to friends and family exclusively, or go to a bank; it’s less common to do what Busse did and get support from both sources.
Small-business advisers say loans between friends and family should have a written loan agreement to minimize family drama.
Busse’s arrangements with his family are less formal. In exchange for all the work his family did he gives them ceramics for free whenever they ask (“it happens to be often,” he says).
But, he and his girlfriend, Paige Bailey, reached a different agreement. She has a 10 percent ownership stake in the business. In exchange, Busse said, “she really stepped up and filled a lot of the gaps, in terms of making sure our bills are paid.”
Without Bailey, Busse’s business would likely not be viable. At the end of its first year the studio is in the black, and things are looking good for year two. Even so, Busse has seen his income drop from about $40,000 as a teacher to about $1,500 this year.
“It’s been a little hard for me,” he said, “I’m used to being able to save money and not have to worry about paying for things.” Asked if he would start a business again and finance it the same way, he said, “Definitely, I just would have gotten more money for advertising. I had no idea how expensive that was!”