More With Less

Feb 14th, 2011 | By Dawn Rivers Baker | Category: Policy Matters

Small business policy really is interesting to watch.

One of the most interesting things I see when I watch small business policy is that the relevant policy makers all seem to think the most important thing they can do for small business owners is to make sure they can borrow money.

That assumption is a top-notch fail on several different levels.

On the one hand, access to capital is certainly a permanent thorn in the side of most microbusiness owners, according to several NASE studies.

But policy makers don’t want to expand the one access to capital program that is more or less tailored to meet our needs — that is, Microloan — because it costs too much.

Meanwhile, those of us among the “underserved” — which is all of us, because microbusiness owners are generally underserved, no matter who we are or where we live — are offered incarnations of a 7(a) lending program that we probably won’t be able to use.

On the other hand, most of us don’t really need loans.

We need training and technical assistance.

While you’re at it, we could use a little regulatory relief.

Oh … and tax simplification would be nice, too.

In short, we need a bunch of things that are difficult to accomplish politically because they are not particularly urgent — unless you are a small business owner — and they are not particularly sexy, so they don’t make for riveting headlines.

Small business regulations could never hold a candle to a Congressman’s flexed biceps.

Not meaning to whine but it’s really very unfair. The political narrative of the legion of small businesses growing and hiring people and saving political careers left and right is probably very attractive to narrator and audience alike.

We don’t even mind rescuing you and your economy, since it means our businesses will be thriving, too.

But you need to give us something to work with. That’s not so very much to ask.

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3 comments
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  1. Kevin W. McCarthy February 14th, 2011 7:49 am :

    Hi Dawn,
    I agree with your premise. Access to loans isn’t the issue unless the feds want to create a debtor nation. When interest rates rise, then many a person who borrowed cheap money will find themselves upside down and out of business. This will only exacerbate the problem and delay the recovery.

    Microbusiness owners most need customers, clients, and contracts. Even those who are sound at delivering a quality product or service, often have substandard marketing strategy, plans and execution so that sales are lacking. A bad economy more readily exposes these weaknesses.

    Fortunately, email and social media marketing are making more regular access to opt-in customers more readily available. Still, the basics of marketing and sales regardless of medium are still lacking for many microbusiness owners and that’s why they remain micro.

    Thanks Dawn for your insightful and thoughtful commentary.
    Be On-Purpose!
    Kevin

  2. Jeri Vespoli February 15th, 2011 7:12 pm :

    I like that, Kevin..Be On-Purpose!

    Dawn, so true - start the road to recovery by asking the right questions first, then finding answers. We just had that discussion, among many other really great ones, at a regional Small Business Summit in Northeast Ohio put on by our Council of Smaller Enterprise.

    Among the other things that came out of the 300+ businesses discussing positive change for economic growth, a theme was better support for and more conversations/communication about really small businesses and startups. Access to credit, however, was still a pain that many still wanted solved - even the micros.

    Maybe we should explore why they want the credit and just go straight to finding new ways to provide the resources they might buy with it? Ask the right questions.

  3. Dawn Rivers Baker February 15th, 2011 8:20 pm :

    @Kevin
    Actually, most micros remain micro because they want to. Some don’t, some want to grow in traditional ways but there’s research suggesting that most don’t. When you know that, it kind of changes everything you thought you knew about small businesses since most small businesses are micros.

    @Jeri
    Interesting what you heard form those small business owners at your event, it is echoed by what we heard from Minnesota microbusiness owners during the Issues Live series events that were the basis of the research paper I published just about a year ago. “Ask the right question” is exactly the key; too many people want to tell micros what to want and what to do (thus implying, if not outright saying, that what they want is “wrong” and what they do is not the way it’s “supposed to” be done), instead of listening to their goals and their needs.

    Since the issue with micros and access to credit is a chronic one (and it’s being ignored because the policy makers see the booming credit card market and believe the problem is solved), dating from long before the financial markets collapsed in 2008. I suspect if they could get financing, a lot of them would find ways to expand their markets and otherwise gin up their revenues, adding technologies that allowed them to do that without increasing the size of their organizations. Microbusiness owners tend to be very good at figuring out ways to enjoy unbelievable profit margins. That’s why they can keep going when they are making practically no money; their firms tend to be really cheap to run.

    I’d like to see us spend more time asking the right questions and talking to microbusiness owners. Economy-wide, I believe they are underperforming. If we could unleash all that unrealized potential, it’d be a long time before we’d have to worry about GDP growth again.

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