3 ways to boost your small business
When the going gets tough, the tough go it alone.
During recessions, when other job opportunities dry up, the ranks of the self-employed rise, says Brian Headd, economist at the U.S. Small Business Administration, or SBA.
Right now, about 12 million people are thinking about or launching a business, says Paul Reynolds, visiting professor at the School of Public Policy at George Mason University.
That’s about 5 percent more than in 2008, he says, and it’s more than the number of people getting married this year.
It’s about as difficult to succeed in your own business as it is to make a marriage work. “After five years, about 49 percent of startups that were launched during recessionary times are still surviving,” says Headd.
(The success rate for businesses born in good economic times isn’t much higher — about 52 percent or 53 percent reach a five-year mark.)
Studies show that there’s a big link between people who seek out classes or counseling on starting a business and entrepreneurial success, says Reynolds.
Fortunately, there are thousands of places around the country offering free or low-cost help, Reynolds says.
3 agencies to help small businesses
- Small Business Development Centers
- Women’s Business Centers
- SCORE, a nonprofit affiliated with the SBA
Anyone who asks a banker for a business loan is likely to be pointed toward help, says Rose Oswald Poels of the Wisconsin Bankers Association. Lenders expect a reasonable business plan before handing over a check, and help constructing a plan is a main offering of entrepreneurial help centers.
Indeed, enthusiastic entrepreneurs can easily overestimate their business savvy. “Bankers want to see a business plan that’s no longer than about seven pages, but a lot of people come in here with 100 pages and more,” says Sarah Winters, program assistant at the Center for Women & Enterprise based in Boston.
You don’t know what you don’t know. If you’re open to taking advice, says Reynolds, you’ll stand a better chance of going it alone.
Each locality may have its own offerings, like classes sponsored by a city development office or chamber of commerce.
Here, though, is a primer on three of the prevalent programs nationwide:
1. Small Business Development Centers, or SBDCs, which operate under the auspices of the SBA, are the most prevalent entity offering help, Reynolds says.
These centers endeavor to grow entrepreneurial efforts across the country, but each center operates somewhat uniquely.
Even though the aim is to spur startups, don’t be shocked if an SBDC counselor frowns on your idea.
For instance, Carol Cornell, director of the Northern Kentucky University SBDC, says she’s now seeing many laid-off workers who want to open a restaurant, store or franchise outlet.
The poor economic climate, plus the fact that many pink-slipped workers think of these business opportunities as a “default” option because they’re discouraged looking for work, often bodes ill for a business launch, says Cornell.
Instead, she encourages many to scratch their entrepreneurial itch by selling their expertise — whether it be accounting, marketing or other service — on a freelance basis, while still devoting some time to a full-time job search.
You might not be able to immediately secure a one-on-one counseling session with an SBDC. “We encourage people to enroll in a course or go to one of our resource libraries and develop a business plan before (individual counseling),” says Charles Penner, regional director of the Michigan Small Business and Technology Development Center in Ypsilanti, Mich.
Courses may be free or fairly low-cost, such as a few hundred dollars for a three month course, meeting once weekly. Find out more and locate an SBDC near you.
2. Women’s Business Centers, or WBCs, are also affiliated with the SBA. There are about 100 centers in the U.S., originally born to allow women to feel comfortable asking questions about business basics in a female-friendly environment, says Winters.
There’s nothing special that women need to know about starting a business, Winters says. Men are also welcome at the WBCs, says Mary Laughlin, marketing director for the Women’s Business Development Center in Connecticut. “In fact, this year, we’ve seen a 20 percent jump in the number of men we’re serving. That’s because we have been focusing on access to capital and redirecting after layoffs.”
Classes and individual counseling are available through Women’s Business Centers just as with Small Business Development Centers.
Community colleges and extension services at state universities already team up with SBDCs and WBCs to offer courses. Courses may carry a fee, says Winters, but scholarships are often available. Most community colleges also offer noncredit seminars on single topics like establishing a Web site or marketing a small business for minimal fees, says Tommy Goodrow, a vice president at Springfield Technical Community College in Massachusetts.
3. SCORE, a nonprofit also affiliated with the SBA, is composed of volunteers, mostly retired business owners and executives who pass through a training course on startup counseling.
SCORE maintains 370 offices. At some offices, like the one in New York City where volunteer Martin Lehman works, “We have people walk in, and they can usually get an individual counseling session in a few minutes,” he says. Other offices set up appointments between volunteers and entrepreneurs at places such as libraries and coffee shops.
“We’re trained to listen,” says Lehman. Then, after they hear about a client’s plans, counselors should ask pointed questions, such as the total anticipated startup costs, says Martin.
The SCORE services are free. Online counseling is also available, which allows entrepreneurs to question SCORE volunteers with expertise in a particular field.
For more information on all three of these programs, visit the SBA Web site.