Entrepreneurs responded with a mix of frustration, optimism, and concern when asked about the real state of small business in America. As we inquired about whether help was available for their own businesses, themajority of the entrepreneurs surveyed said, “No.”
“The speech has been that small businesses are the “backbone” of the American economy. So far, that has only been “hot air” as far as I am concerned,” said Dorothy Pittman, owner of Horton’s Books.
“Last year the SBA offered a loan for small businesses to consolidate their outstanding debts into a lower rate loan, but my bank did not participate because of the regulations related to it. Three increases in the minimum wage in two years also did a number on my bottom line. If the Congress can give money to GM, where is the money to help small businesses?”
While many entrepreneurs share Ms. Pittman’s frustration, financial analysts at Sageworks, Inc. argue that a lack of access to capital is not the real problem for America’s small businesses. “Small businesses need an improved economy with an increased demand for goods and services, not just access to more capital. Businesses need business, and legislation cannot give that.”
Recent Sageworks data (see below) reveals that small business sales are up 1.37%, and analysts say that the 6.29% profit margin is a result of small business owners cutting cost to cover slower sales. “Sales are no where near what these businesses need to move into expansion and begin to borrow again for payrolls, inventory, and other costs.”
Some small business owners still say, “YES” help is available, even though the economy has not yet fully recovered. “There is help for small businesses. I am currently utilizing 2 free staff members provided by the Work Ready Missouri program. They will “intern” for me for 6 weeks,” said Sharonda Ellis, owner of Events Above The Rest.
“At the conclusion of that program there is another program provided by the state that these individuals can continue to work for me where the state will pay 50% of their salary for 6 months and I will pay the remaining 50%. This is an awesome help for me. This is a time where I NEED assistance, but cannot afford to hire additional staff. With these programs, I can hire staff and gradually work my way in to paying their salary.”
David Hogg, CEO of Springwood Hospitality, shares Ms. Ellis’ optimism. “A temporary program has opened up to help hoteliers refinance loans that could otherwise be classified as “troubled” by a bank. Banks are lending less money now for a given project value, making it extremely difficult to raise capital, but the SBA 504 program helps close the gap and make some projects possible. We are exploring several opportunities to utilize this program to help create a total of about 100 jobs.”
While some entrepreneurs have tapped into resources to help their businesses, so many small businesses are still in need of assistance. Michael Slemmer, CFA of The Collaborative, shares his thoughts on what entrepreneurs should do to make themselves more attractive to investors and lenders:
“To pry funds from investors or lenders today an entrepreneur must have – like never before – some history of success as a business person, great testaments to his or her success and character, and a unique value proposition. If he or she doesn’t have the former two, they must at least have the latter “in spades”.
We call this being able to answer the “so what?” question – why is what I’m offering truly unique and why should anyone care? Vetting the plan with industry heavyweights and being able to add their testimony to the plan as you go forth to find investors is also key.
An entrepreneur should push all the buttons, and pull all the levers they can to get funding (and other help for their businesses).”
What’s your take? Is help available for small businesses? Which programs and resources are (or are not) working for your business? Share your thoughts below…