Start-Up
An article in this week’s edition of Buffalo Business First reports that although levels of entrepreneurship are the highest they have been in the last 15 years, few of these new enterprises are hiring employees. This data comes from a recent study conducted by the Kauffman Foundation. It seems that while the recession is providing a ripe environment for start-ups (particularly, new tech start-ups), it’s not easy for these individual proprietors to establish and staff their new enterprises.
Niagara County Community College Small Business Development Center (SBDC) counselor Andrea Lizak weighs in: “The main problem is that entrepreneurs can’t afford to hire, so the transition [from entrepreneur to business owner] is difficult.”
Are we reaching a phase in which entrepreneurial growth does not necessarily coincide with job creation or economic growth? Kauffman Foundation president and CEO Carl Schramm says that this trend could have “both short- and long-term impacts.”
It’s clear, however, that the small business sector is growing…gradually. The monthly small business index (compiled by the National Federation of Independent Business Owners) “has hit its highest level since December 2007,” Kent Hoover reports for Business First. Businesses are also investing in equipment (computers and software), according to a study by the NPD Group. So why aren’t small businesses hiring?
What we see here are two parallel issues:
From a broad perspective, how do we invest in small business in a way that promotes job creation? What kind of regulatory atmosphere fosters job growth in the small business sector?
On an individual level, how does one make that transition from sole-proprietor to small business employer?
I don’t know about you, but I’m not an economic strategist. So I’ll defer to the real economic advisers for solutions to our nation’s high unemployment.
But for the individual entrepreneur, we have some insight:
As a sole-proprietor, you are the entirety of your company. But, as you might come to find, you can’t do everything. Still, it’s not as simple as finding the right person and signing their paychecks (if you can even manage to do that, that is). Other administrative and tax-related steps must be taken, such as applying for an EIN, filing I-9s and W4s, and reporting new hires to the state. The SBA outlines these steps in this comprehensive article.
If you’re not yet at this point, then you’re main challenge is how to grow your business. For that, we encourage you to talk to a counselor and explore what specific resources are available to you. You can also check out our small business self-audit to determine what areas you need to work on to establish your business or take it to the next level. Also, I recommend tuning in to this video series put on by SBA and Dell about small business growth strategies.
It’s important to know that this kind of information and support is out there. Because in the grand scheme of things, it’s in everyone’s interest when a small business succeeds, grows, creates jobs, and contributes to our rebounding economy.
What are your thoughts on small business and job creation? What is your experience with the transition from sole-proprietor to small business owner and employer? Let us know in a comment below.
Author: In the News, Resources, Start-Up | 2 Comments »
It might seem counter-intuitive to think of starting a business during these (still) tough economic times, but — according to some — there are some particular advantages to taking the leap now.
The Wall Street Journal recently reported that there’s never been a cheaper time to start a new business. Small Business reporter Rosalind Resnik says:
Ten years ago, a typical Internet start-up needed $1 million to launch a product and millions more to prove its business model and scale it to profitability or an IPO. Today’s start-ups run lean and mean thanks to the plunging cost of technology and a surplus of real estate and talent. “The popular ‘lean start-ups’ approach favors developing a product and getting it into the hands of customers as quickly and inexpensively as possible,” says Mr. Ronick of UpStartBootcamp.com. “Plus, the stigma of freelancing has lifted for both companies and individuals so start-ups can hire top talent on an as-needed, virtual basis. This lets founders hire better talent with more flexibility, reduced office space needs, and lower benefits costs.” And thanks to the power of social networking, it’s no longer necessary to hire an expensive PR firm to generate press.
Read the full article for the rest of Resnik’s reasons for starting a business this year.
The lending marketing is also starting to open up again (Reuters: “Regulators see small business lending improving“) and there is unprecedented assistance available for the underserved: namely, women and minority business enterprises. For instance, the Small Business Administration (SBA) just announced two new loan initiatives: Small Loan Advantage and Community Advantage. According to a recent press release, these programs “are aimed at increasing the number of lower-dollar SBA 7(a) loans going to small businesses and entrepreneurs in underserved communities. The agency’s most popular loan product, 7(a) government-guaranteed loans can be used for variety of general business purposes, including working capital and purchases of equipment and real estate.” Find out more about the Advantage Loan Initiatives.
Additionally, there is a new emphasis on opening contracting opportunities for women-owned businesses as part of the SBA’s Final Rule, which we wrote about back in October.
Besides these supporting developments, there are many benefits to owning your own business. You can be your own boss. You can achieve financial independence and fully utilize your skills and knowledge, all while maintaining your creative freedom. And if you’ve been laid off or are currently unemployed, see this as an opportunity or an alternative to entering a saturated job market (a huge talent pool of your own potential employees!). So go ahead, take the leap in 2011, and like countless other innovative and creative women (and men), discover the joy of owning a business.
Author: Biz Tips, Resources, Start-Up | No Comments »
Just a quick post today.. In case you don’t already follow the ever-popular blogger and marketing guru Seth Godin, I’d like to share with you his recent post, “How can you do it?!”
Recounting a conversation with an incredulous someone, he quotes:
JK asks,
“It’s like, how does anyone start their own business? How is it even possible? How do they deal with the crippling fear and harsh economic realities?”
But Godin counters, “How can you not do it?” He says:
The people who successfully start independent businesses (franchises, I think are a different thing) do it because we have no real choice in the matter. The voice in our heads won’t shut up until we discover if we’re right, if we can do it, if we can make something happen. This is an art, our art, and to leave it bottled up is a crime.
I think his point is meant to be motivational. But this is something we see at the Women’s Business Center every day, and perhaps even more so now that the nation and the Buffalo area has become entrenched in economic hardship. People are taking this opportunity – because of a lost job, or whatever it might be – to pursue a dream, to start the business they’ve always wanted to start, to explore the possibilities of entrepreneurship, to create their own job. And we’re here to encourage dreaming, and to support this personal and economic growth.
Tell me, how can you do it? Leave a comment.
Author: Marketing, Media, Motivational, Start-Up | No Comments »
A majority of the start-up businesses that come through our doors inquire about grants, loans, and initial funding. Answers to these questions are often hard to give. There is a widespread notion that there is money out there for people looking to open a hair salon or consulting firm or whatever it might be. Unfortunately, that is not the reality.
Government grants are given out for research, for non-profits, and not much else (i.e., not for commercial ventures). Even if you happen to be starting a non-profit, grants are often hard to secure, and there are some pretty particular reporting requirements in order to maintain that funding.
Sometimes grants are allocated to small businesses in industries like childcare or green technology through state or local organizations, but they often require matching funds or other combined financing. Business.gov offers this online tool to search for grants you might qualify for.
Loans, on the other hand, are pretty widely available to small business start-ups. Here are some resources:
SBA 7(a) Loan Program guarantees small business loans from banks and other lending institutions for both start-up and existing small businesses. This is the most common option for SBA guaranteed loans and because most banks and some other commercial lenders participate, loans are widely available. While the lender agrees to structure the loan, it shares the risk with the SBA, making it easier to make loans to small business owners. Find out more about the 7(a) Program on the SBA website.
SBA Micro-Loan Program is another lending option with the SBA that provides. These are small, short-term loans that average $13,000 and max out at $25,000 and are distributed through community organizations with SBA funds. Find out how to apply for an SBA micro-loan here.
New York State’s Community Development Financial Institution Assistance Program (CDFI) provides micro-loans to business owners who may not qualify for bank loans, as well as minority and women-owned businesses. CDFI also offers one-on-one counseling and business development assistance to facilitate credit-readiness. Click here to find more information and a list of participating financial institutions.
New York Business Development Corporation (NYBDC) is an organization that works in partnership with lending institutions to provide term loans, many of which do not meet the requirements for traditional financing. NYBDC, a WBC resource partner, handles lending for non-profits, veterans, women and minority-owned businesses, business located in Empire Development Zones, and other conventional business ventures. Find out more about these services on the NYBDC website.
If you’re looking for further resources, Business.gov has a lot of information on small business financing. Check out the user forums for additional insight.
What has been your experience looking for grants and loans as a small business owner or start-up? Leave a comment.
Author: Biz Tips, Financial, Funding, Resources, Start-Up | No Comments »