Tag Archives: SBA

Who Speaks for Small Business?

As a small business owner who was once a journalist, when I read Taking Mom And Pop To The Cleaners on the Huffington Post, I think I know how that happens, why it’s bad, and why it’s also unlikely to change.

(Aside: I’m happy to see Huffington Post and reporters Zach Carter and Ryan Griffin are out there generating investigative journalism, actively researching and reporting on this topic. This may be one answer to what happens to investigative journalism as the print media declines.)

The story is about how the National Federation of Independent Businesses (NFIB), has become the voice of one side of the political spectrum:

… for the past two years, the NFIB has been less an advocate for small businesses than an arm of the Republican Party. When the interests of the GOP and the needs of small firms have collided, the NFIB has repeatedly sided with Republicans, jeopardizing billions of dollars in credit, tax benefits and other federal subsidies that are critical to the small enterprises that form the backbone of the U.S. economy … the NFIB has maintained a lower national profile, and is still routinely referred to in the media as “the small business lobby.”

No group actually knows what small business thinks or wants because small business doesn’t exist as a group. The thing small business owners have most in common is not having very much in common. By definition, they are nonconformists. They did their own thing when they started that business. My anecdotal sense is that they don’t join groups unless they have to. They’re busy. They’re focused on the business. And they are an extremely diverse group.

Journalists, meanwhile, aren’t supposed to have opinions; they have to ask for opinions. And politicians even more so. Therefore, when they look for what small business thinks, they look for a spokesperson. You or I might be that spokesperson, maybe; but then it’s hard to find just anybody; so they go for somebody. And end up with the somebody they called last time. Somebody who sounds like he or she represents small business. And that ends up as NFIB, and the like (see below: the Huffington story, to its credit, also points to groups representing the opposite point of view, like Main Street Alliance)

Nobody’s really to blame for it. It’s just the way it happens.

What annoys me about it is all the people supposedly talking about it are grinding their own political axes. They define what small business wants as constant whining about taxes and regulations and very little else. What about the bigger picture? What about looking up at what the government can do for the economy in general, like regulating the financial chaos, funding education, sponsoring innovation, and hey, maybe just infrastructure, like fibre cable and freeway bridges? Is it bad to protect employees from predatory employer practices? Not to me? Would we be better off with more open policy towards immigration? I think so.

But the journalists are going to ask the groups that turn up first on their speed dials, cell phones, and google searches. Not you and me.

Does anybody care? Well, they had 3,661 comments on that post by this morning. Hmmm …

And I have to make two late additions to this post:

  1. Over at SmallBiz Labs Steve King has an interesting take on the same Huffington Post story, noting that there’s another group, Main Street Alliance, that is as identified with the Democratic Party as the NFIB is with the Republicans.
  2. Meanwhile, and probably much more important, the Obama White House announced its Startup America Partnership yesterday with some very slick online video streaming, some serious financial commitments, and the good sense to lead with real entrepreneurs including Steve Case and Brad Feld, and real information provided by the Small Business Administration and the Kauffman Foundation. That was a great start.

Disney Entrepreneurship Center: Good Idea Well Implemented

Here’s an idea that makes so much sense that it’s surprising it isn’t done everywhere: combine Small Business Development Centers (SBDC), SCORE, chambers of commerce, and related organizations under one roof. That’s what the Disney Entrepreneur Center does in Orlando, FL.

I wonder if it’s just coincidence that Entrepreneur Magazine included Orlando in its most recent list of the best places to start a business.

I visited there last week, and spoke at a business planning event that included people at the center and people online. Center director Jerry Ross talks about synergy by explaining:

We have 13 organizations here, but only one printer, and one receptionist. We work together.

That makes a lot of sense to me, and it seems to be working. And he doesn’t mean just printers and reception; there’s synergy throughout the building. People from most of those organizations joined me there for my visit last week. I’m a member of SCORE, and my company is a longtime supporter of the SBDC network and of our local Chamber of Commerce, but I’ve rarely seen that much synergy in one place.

(Image: ona1a/Flickr cc)

5 Points On Gender Gap in Entrepreneurship

Go ahead, you can ask: what do I know about this? I’m an old white guy, so take what I have to say here with some healthy skepticism. Woman's handsBut I like to think my eyes were opened up to gender inequality by my pre-hippie question-authority mother back in the early 1960s, and kept open by 40 years of marriage to a smart, strong woman and 38 years of fatherhood to four now-grown-up, well-educated, and successful daughters (and one son).

So here’s what I know about this:

1.  The statistics are confusing at best.

Statistics on entrepreneurship, startups, and the like are hard to decipher. It looks like women start more companies than men, but it also looks like those companies get less capital and financing. Some will argue that women-owned businesses perform differently, tend to grow slower, or stay smaller.  The truth, however, is that we really don’t know. There are lots of different studies with different results. I can find statistics or studies to justify just about any conclusion I want on this.

2.  Women are under represented in high tech and startups.

We can argue the causes, maybe we could find competing statistics if we search hard enough, but startups and high-tech companies are disproportionately male. The playing field isn’t level. It’s not statistics, it’s seeing the obvious. Women are under represented in startups. Professional investors are mostly men, and venture capital and angel investment goes much more to male-dominated teams. And commercial loans favor men. I say this from what I see myself, as a frequent judge of business plan competitions, an angel investor, and as an entrepreneur who speaks at public forums.

3.  I don’t believe the stereotypical explanations.

Some people say women are under represented by choice, because they choose not to grow, or they like to stay at home, or because of similar reasons. Here too, if you search hard enough, you’ll find studies and statistics and experts to sort of support that idea. I don’t believe it.

Don’t get me wrong: I love the differences I’m aware of between men and women. Gender difference is the spice of life. But I don’t believe those differences have anything relevant to do with who’s starting companies getting funded, getting loans, or growing their businesses.

I was once in a discussion on how we could make Business Plan Pro more attractive to women. I was angry, back then, with the tone of the discussion. What, make the box pink? That was years ago, and it still makes me mad. Business planning has absolutely nothing to do with gender. Entrepreneurship has nothing to do with gender, except that the field isn’t balanced.

4.  We men don’t know how tough it really is.

Sad but true: none of us men really know how hard it is. We look around and we see lots of women working side by side; things are certainly a lot better than they used to be. But let’s not kid ourselves.

For example, men don’t have to deal with some significant percentage of the population — wrong, of course, but still — assuming we’re bad fathers if we work hard; or that we should be at home taking care of the children; or that the house/home work is ours, because of our gender, regardless of the rest of what we do.

We don’t get up to the podium in a business plan contest as a woman looking out on a sea of male faces in the audience . We don’t stand up in a venture capital conference room or angel investment group as a woman looking out at 90% male faces.

5. So what do we do about it?

That’s the real question. I wish I had a better answer. At the very least, the men in the crowd can recognize that it’s there, think about it, and make sure that we’re not contributing to the problem. Where we can, like in our local angel investment group, we can seek out successful women who qualify to be accredited investors and invite them, maybe even urge them, to join. We can at least know that those women we meet in startups along the way have overcome a lot of mindless stereotypes, and are still fighting them. We can wake up and at least recognize the imbalance. Then maybe we can fight it one situation at a time.

On the larger scale, entrepreneurship is contagious, so we should respect and encourage the women’s entrepreneurship groups, the women’s banks, women-oriented investment funds, and the official government efforts (like the SBA’s Women’s Business Centers).

Hooray for gender differences, yes; but not for gender differences in opportunity, education, freedom, or chance to make your own success.

Federally Funded Small Business Financial Port in a Storm

Bridge financing? A few thousand dollars just to tide us over? I’ve been there, and, in fact, I’ve been there to the tune of $65,000 in credit card debt, which is definitely not the best way to do it.

So I’m noticing today that the US Small Business Administration (SBA) is making good on a promise with the announcement of details for what I call its “port in a storm” program, alias ARC loans, meaning up to $35,000 in deferred payment debt for small companies with 1.) a problem; and 2.) a foreseeable future way out of that problem.

How much will it help? Diana Ransom calls it Financial Help for a Few Lucky Shops in her Wall Street Journal Smart Money column.

Beginning on June 15, the agency will begin doling out 10,000 deferred-payment loans of up to $35,000 to small businesses that are struggling to stay afloat.

The most interesting number in that statement is 10,000. On one hand, that’s a drop in a 24-million-small-businesses bucket. On the other hand, though, traditionally only a few small businesses actually find their way through the banking maze into the helpful programs of the SBA.

To get the real info, click here to go straight to the SBA’s page announcing the program. You’ll see fairly quickly there that ARC stands for American Recovery Capital; and, more important, this is for “viable” companies:

viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability.

In her WSJ piece, Diana lists pros (no fees, no interest, deferred payments, and extra cash flow) and cons of the program. The cons start with the limited number of loans, then add some doubt about banks being happy to participate, and then the real heart of it, eligibility:

Businesses are required to show that they were either profitable or maintained a positive cash flow in at least one of the past two years. A business also needs to demonstrate — via quarterly cash flow projections — its ability to meet current and future debt obligations, including future repayment of the ARC Loan.

So eligibility goes straight to the catch 22 of bank financing, which has always been there, and probably will always be there: banks aren’t allowed to take risks. Don’t be hard on them, it’s banking law, to protect the depositors’ money, but still, an important truth: If your company really, really needs the money, then you’re probably not eligible.