Small Businesses Pack a Big Economic Punch
Northwest Florida survives on small businesses, and the Fort Walton Beach-based Small Business Development Center helps to launch many of them.
Small Businesses Pack a Big Economic Punch Small Business Development Center launches the Growth Acceleration Program By Zandra Wolfgram
Operating a small business is a big deal. In fact, 99.7 percent of all companies in the United States are considered small businesses — and they account for more than half of all private industry jobs.
With unemployment still high across the nation, any relief is likely to come from growing small businesses. And, indeed, the U.S. Small Business Administration (SBA), reports that 64 percent of the new jobs created within the past 15 years have been within small businesses.
The Emerald Coast thrives on small businesses. But only savvy, well-run businesses tend to survive over the long haul. According to the SBA, only half will make it beyond five years. The Small Business Development Center (SBDC) hopes to change that statistic.
If Gulf Coast Insulation, owned by Erin Lagrosse and her husband, Jon, is any indication, its services are paying off in Northwest Florida. Since it opened in 2009, the DeFuniak Springs-based business has grown from three to 15 employees. “We feel great about our growth and are looking at investing in more equipment, too,” Lagrosse says.
The SBDC, operating in partnership with the University of West Florida, is part of the Florida Small Business Development Center Network, a non-profit service organization comprising 34 offices from Pensacola to Key West. The SBDC formed 35 years ago to bolster the Florida economy with its mission to provide entrepreneurs and established businesses with the assistance needed to start, grow and succeed.
In Northwest Florida, there are full-service offices in Pensacola and Fort Walton Beach that service Escambia, Santa Rosa, Okaloosa and Walton counties. The coverage of the region continues with an office in Tallahassee and one in Lynn Haven.
The SBDC is funded through a federal grant from the U.S. Small Business Administration, which is matched by the University of West Florida. It operates on a budget just under $600,000 a year. Currently, they have 1,124 active business clients.
Under the direction of Larry Strain, who works out of Pensacola, the staff is a cross-section of business professionals with broad backgrounds that range from business planning and process improvement to sales and marketing strategy and website development. “We aim to provide high-quality management counseling, training and information access to enable them to maximize their growth, competitiveness and profitability,” says Tom Hermanson, associate director of SBDC for Okaloosa and Walton counties.
The SBDC wants business owners to know it isn’t just a resource for start-ups. “We provide a lot of excellent services for existing businesses who need help for expansion, acceleration and new initiatives, services, products and strategy,” says Louis J. Tsunis, a business analyst.
But business leaders do not have to go it alone. SBDC services center on no-cost counseling. “We sit down with them and identify where they are weak and how they can improve,” says Tsunis.
Like him or not, most of us are not born with the innate business savvy of a Donald Trump. Virtually anyone can acquire a business license, but keeping a company in the black is a file folder of another color. Leigh Rice, owner of Daybreak Senior Services in Shalimar couldn’t agree more. “Many people like me are passionate about what they want to do, but know very little about the nitty gritty of business,” she confesses. Rice went to the SBDC for assistance with a business plan and has called them regularly for advice since her business opened in 2009. “I appreciate that they never made me feel silly asking a question, and it’s nice knowing someone has my back,” she says.
When Hermanson counsels a new client he rarely begins with answers. Instead, he prefers to ask a question: Are you asking the right questions?
“Typically the hot questions small business owners ask are not always what they need,” Hermanson confides. This business expert understands that his job is to guide them in the right direction, which may mean providing information on any number of topics such as: start-up assistance, business plan development, access to capital, financial analysis, accounting, marketing, feasibility analysis and website development and strategic planning.
Lagrosse sought out advice from the SBDC a year before Gulf Coast Insulation opened. She began by attending workshops and talking to counselors.
After reviewing research on the market and her competitors, she crafted a business plan, which for her, was just the beginning. “It’s a process, so you have to keep working hard,” she says.
Hands down, Hermanson says, the biggest concern for most business owners is gaining access to capital. “As soon as we get that question our response is to look at why are they asking it. We want to know why don’t they have money. It may not be a financial issue. Are sales down? It may be a marketing issue. It could be their pricing is wrong, or their margin is low and they are not making money. Perhaps it is a business model problem. Are their fixed costs too high? If the business model is functional and viable, it may very well be a case that their growth is limited by access to capital. So, we may assist in putting together a loan proposal,” Hermanson says.
Though capital is the greatest concern, according to Sharon Triplett, associate director of the SBDC, the most consistent weakness comes down to the basics. “The biggest area that clients don’t know they need is understanding their financial statements.” Triplett says because small business owners may only see their accountant once a year, financials are often not a priority. “What they don’t understand is that they need to manage through understanding their financial statements,” she says.
This area of need became clear after the cloudy days of the BP oil spill in April 2010. The SBDC assisted numerous businesses with filing claims for bridge loans. Hermanson says the most pervasive issue was a lack of records. “It was difficult. The public was being forced to interpret their financials to make a claim. It is one of the weak areas they have not tended to along with developing historical statements. It crippled them,” he says.
The SBDC is eager to set that record straight. “We can help them establish good record keeping, financial reports and help them interpret those reports,” Hermanson says.
Beyond its one-to-one, no-cost consultation, the SBDC also offers training in the form of year-round workshops, seminars and brown-bag lunches on the most requested topics from Starting a Business to Business Taxes: Figuring & Filing. “We work with any client at any level, but we’ve seen this so much, we’ve designed a program to address all the topics they need to think about,” says Hermanson.
SBDC also provides competitive and demographic research; access to vendor and sales lead resources; a fast-track to technology services, such as patents, trademarks and licensing; and navigation through government services such as the Procurement Technical Assistance Center (PTAC), which helps businesses compete for local, state and federal government contracts.
He says few business owners know exactly where to begin on their own, and fewer still are likely to begin their road to success at the same place. “Assessment of the business really comes down to judgment of where that business sits, rather than a one-size-fits-all,” Hermanson says.
To help established business owners rise to the next level the SBDC has launched the Growth Acceleration Program (GAP). It is targeted to small and mid-sized existing enterprises with sales at $500,000 up to $10 million who employ between five and 20 employees and have a three-year history in business. The GAP program is designed to help “businesses that have reached that first tier, have some substance, but may have stagnated.”
The GAP program employs a two-phase process. The first includes a comprehensive assessment of the business and financial analysis resulting in recommendations. The second phase includes implementation of those recommendations either with or without the SBDC’s staff. How is it different from the existing SBDC program? “These clients are given priority, we’ll get to them more quickly, we’ll dedicate more time and effort to them, and we’ll have more resources dedicated to them,” Hermanson says.
The program is free and there is no deadline for applications. For information, visit sbdc.uwf.edu or call (850) 833-9400.