I started to write a blog on this topic, but it was too negative (even for me, and I can be pretty cranky), so I deleted it. Then, on Twitter, Jesse Luna asked me what specifically it was that I had a problem with about small business development centers, and that set me off all over again.

Here is my sanitized version of why programs to help small business suck (except SBIR).

1. The section 8a application is more complicated than running Linux on a supercomputer and doing my taxes combined. After a couple of failed efforts involving two other staff members and our CPA with our previous company, last year, I decided to bite the bullet and complete the application, come hell or high water. After the THIRD workshop I attended (remember, now I am the fourth person to have worked on this), I found out we were not eligible. If you were under the mis-impression that this is a program for minority businesses, or women-owned businesses or people who had disadvantages in starting business, well you are not quite right. I am sure I would have qualified for this program years ago, but years ago I did not have the time to devote to the application project because I was starting a business. My husband and I started saving for our retirement when we finished graduate school (which was  a LONG time ago) and now our savings put us over the net worth limit. I understand that budgets are tight and there are people more needy than us, so I am not objecting, but it would have been very helpful if we knew much sooner that this was not only a program aimed at diversity and had limits on what your pension and 401k could be, so we didn’t waste so much time. I’m also not objecting because when I asked for evidence that 8a certification was related to increased revenue, nobody could point me to any data.

2.  With only a single exception, for YEARS (I have been in business over 20 years) the only two pieces of information I ever got from ANY small business program was to be 8a certified (see above) and write a business plan. I have a business plan and I don’t believe for a minute that revising it is going to bring me the slightest bit of business. Now that I can tell them we aren’t 8a eligible I wonder what they will say.

3. Lately there is a lot about helping small businesses get credit. I have a line of credit with my bank. I don’t need a loan.

4. What I do need, what every small business owner I know needs, is WORK. The major help that would assist small business is to reduce the barriers in doing business with the government. The barriers are NOT knowledge of the requirements. The barriers ARE the requirements. Let me give an example: at the federal level, I am registered in CCR, ORCA, grants.gov and era Commons. I know I need to do all of that. I am certified as a small business for the state of California, Los Angeles County and the LA Metro Authority. Twice recently, I have been invited to bid on state contracts. One required that we have FIVE CURRENT contracts doing the exact type of survey that was proposed. Not five in three years, or five years (which we had) but five RIGHT NOW. Why? How is this in any way related to our ability to do the work? A second bid required FIVE previous contracts doing the EXACT type of data analysis that was in the contract. Not just, say, Analysis of Variance, or program evaluation, but (I am changing the details here) “program evaluation using Analysis of Variance of data on substance abuse prevention programs for children in foster care”.   When contracts are written this specifically it makes me wonder whether they were written for a specific business, whether the agency realizes that most small businesses won’t have five simultaneous contracts for the identical type of survey. On top of all of this, when I do get government contracts and subcontracts, I need to fulfill all types of requirements I don’t need for my commercial clients. I need commercial insurance, workers compensation insurance, a written sexual harassment policy and a whole bunch of other things my accountant handles. I just know they cost me money and aggravation. A written sexual harassment policy? I was the world judo champion and our research assistant is the number two ranked amateur woman in the world in mixed martial arts. You’d have to have a death wish to sexually harass anyone in this office.

The ONLY help that I have EVER gotten from any small business development program was many years ago. A small business incubator in North Dakota, where my previous company was founded, was incredible. They put us in touch with the accountant who my current company uses to this day. My previous company still uses her, too. (Donna Remer – she is a godsend ). Thanks to her, our payroll taxes, corporate taxes, taxes on taxes and whatever else it is, gets paid on time and we stay out of jail.

The second thing I have gotten, and which totally does not suck, is several Small Business Innovation Research awards. This is the best program for small business – ever. First of all, completely unlike the 8a application, if your SBIR proposal is approved, they actually give you money to do work. The first phase is a prototype and if you do well, you can get a second phase of funding, for a total of about three years of funding. Secondly, in doing the work, we have built capabilities that allow us to do better work in future proposals and for commercial contracts. Third, while the business plan SBDCs are always pushing focuses on the “staff” functions of business – marketing, balance sheets – the SBIR funding is focused on the “line” part of the business, the part that makes us money.

Now I hear that the various small business programs have a new “Women Owned Small Business” program that is supposed to some how address the fact that far less than 10% of federal business goes to women owned companies. So, all my problems are solved, right?

How much you want to bet that it translates into not one dollar more business except for those people offering services as consultants to get your business certified?

All I can say is that if I get one bit of paper from one agency asking me to prove that The Julia Group is a woman owned business, I am going to strip naked, sprawl across the fax machine and hit SEND.

(When I started as a statistical consultant in 1985 that might have been considered a bribe, now it’s more likely classed under abuse of a government official. And I am sure it will violate our written sexual harassment policy.)

Comments

4 Responses to “Why Programs to Help Small Business Suck (except SBIR)”

  1. Dolly Bhasin on February 3rd, 2011 1:24 am

    What a great piece of writeup. I agree with you on all accounts.
    We have similar situation in India too.
    The best part is the last para!
    Dolly Bhasin

  2. @JesseLuna on February 3rd, 2011 11:19 am

    Hi AnnMaria, thanks for sharing your experiences.

    I would like to offer that programs like the Small Business Development Center (SBDC) are part of a larger attempt to create a safety net for small business owners. Consultants don’t always have the right answers and we can’t always meet the immediate needs of clients. But the answers are in the broader network and the SBDC can be useful in connecting small businesses to the right resources.

    That said, in 2009 the SBDC Los Angeles Regional Network (there’s an office in Santa Monica, BTW) conducted over 450 training events, counseled over 4,200 clients for over 15,000 hours, helped businesses create over 880 jobs, and helped them increase sales by over $18M.

    As business owners and concerned citizens, I think the question isn’t what small business programs can’t and can’t do, but how we can all leverage them with other community and government resources to help us all get out of this economic funk.
    ~Jesse

  3. @JesseLuna on February 3rd, 2011 11:26 am

    I forgot to mention that I am an SBDC consultant in Ventura & Santa Barbara County and am part of the LA SBDC network. [You can add this to the end of the previous comment.]

  4. admin on February 3rd, 2011 7:17 pm

    As mentioned, I did attend three of those training events and as a result registered for three additional small business registries.

    I would like to know on what that 880 jobs and $18 million in sales figure is based and how it was determined that the SBDC helped. Was there a survey of small businesses asking how many positions they had added? If so, how was a connection made between SBDC services and the additional jobs? Did the business owners specifically state they were able to add jobs and increase revenue due to SBDC services?

    How exactly does telling people to write a business plan create a safety net for small businesses?

    I did meet one gentleman at an event in Pasadena. He worked in the construction industry, was an 8a business and had just secured a contract for over a million dollars. So, he was very happy. Would he have received the business anyway? I don’t know but I think the fact that he persevered through the 8a process and took the effort to come to the small business event in Pasadena probably says something about his persistence. I’m a statistician so I am loathe to infer causation from correlation.

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