ECONOMICS AND TRADE | Achieving growth through open markets
21 July 2008
BOOSTING SMALL BUSINESS
A discussion of how the Small Business Administration helps entrepreneurs
Welcome to Boosting Small Business, where the Small Business Administration's Sean Rushton will discuss ways his independent agency helps the owners of small businesses. Some of the help comes in the way of offering financing for a new business, and some involves offering expertise to those planning an expansion or reacting to a setback. It is all about protecting the entrepreneur -- the horse that pulls the cart of the American economy.
July 21, 2008
Students Help Local Businesses
Scott Allen learned the machining trade while he was in the U.S. Navy, where he also learned the importance of precision, quality and discipline. After he left the service, Scott started Supreme Machine LLC, in 2000, with a loan of $11,000. With his wife JoAnna, Allen worked to make the welding and metal fabrication business a success. As production increased, the business grew to 17 accounts, allowing the Allens to hire the company’s first non-family employee.
With help from SBA’s Small Business Development Center at Louisiana Tech University, Supreme Machine teamed with local industrial engineering students, whose analysis gave a new perspective on manufacturing technology. The result was improved efficiency and a 31 percent increase in net income.
The SBDC program provides training and management and technical assistance to those who want to start a small business and to existing owners. The SBDC program is a cooperative effort of the private sector, the educational community and federal, state and local governments.
Located primarily at colleges and universities across the country, the program boasts a network of more than 1,100 small business development centers; there is one network in every state. SBDC service centers provide information and advice on how to start or grow a business.
Supreme Machine now operates 23 machines, valued at over $367,000. The business has grown to four full-time and three part-time employees, with annual sales growth of 4.5 percent.
July 7, 2008
Helping communities help their small businesses
Anyone who has faced the challenge of taking care of elderly parents knows how difficult it is to find good home-care providers, as well as legal and financial advice. Don Kramer’s innovative idea was to help seniors and their families find information, advice, care and services all in one place.
His 1998 brainstorm led him to open a small agency providing private, in-home senior care. He expanded the company in 2006, with the help of an SBA 504 loan, and it became One Senior Place. Now housed in a beautiful 1208-square-meters center, the company provides financial and legal advice, a senior recreation center, assisted living and hospice care.
Also called the Certified Development Company (CDC), the 504 Program is a long-term financing tool for economic development. It provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land, buildings and equipment.
CDCs are nonprofit corporations set up to contribute to the economic development of their communities. They work with the SBA and private-sector lenders to provide financing to small businesses.
Most companies that qualify as small businesses can qualify for a CDC/504 loan. Companies must meet specific SBA size standards: they must not have a tangible net worth of more than $7 million, nor have an average net income of more than $2.5 million after taxes for the two preceding years.
One Senior Place and its subsidiary, Senior Parent Care Services Inc., now have a team of more than 140 caregivers delivering assistance to clients across four Florida counties.
June 27, 2008
Women-led successes
Although she enjoyed being a nurse, Deborah Moore was tired of the daily 9-to-5 grind. As a single mother of two, she wanted the flexibility and quality of life of a home-based business and set out to create it.
AccuStat EMR was born in 2002; it offers medical transcription services in the Myrtle Beach, South Carolina, area.
Moore’s hard work, dedication and commitment to excellence, along with an SBA-backed loan and guidance from the South Carolina Women’s Business Center, built a dream job from scratch.
America’s 9 million women-owned businesses employ 28 million people and contribute nearly $4 trillion to the economy -- yet women continue to face unique obstacles in the world of business. The U.S. Small Business Administration works to level the playing field for women entrepreneurs, and the SBA’s Office of Women’s Business Ownership leads the way.
The Women’s Business Center program, launched in 1988, is one of the basic units of SBA assistance to women across the country. The community-based centers are in nearly every state, the District of Columbia, Puerto Rico and American Samoa, and serve a wide variety of economic environments in urban, suburban and rural areas. Centers offer innovative programs, including Internet training and courses in different languages. They help with business and technical training, access to credit and capital, federal contracts and international trade.
In just five years, Moore has taken AccuStat EMR from a home-based transcription service to a full electronic medical records consultation company housed in 2,400 square feet of office space, with $2.7 million in revenues.
June 9, 2008
Staying in a tough neighborhood, and thriving
Lynn M. Carter came home to Wetumpka, Alabama, after college to work for the construction business her mother had started. Although she handled mostly support duties, Carter was thrust into the leadership role when her mother died unexpectedly two years later. Her determination and faith gave her the strength she needed to beat the odds and grow the business from a small grading and paving company into a turnkey construction firm.
The company’s wide range of construction services includes erecting, enlarging, improving, repairing and renovating buildings, structures, roads and properties. Through certification in SBA’s HUBZone program, Southeast Cherokee Construction managed to increase its revenue from $500,000 to more than $17 million.
The HUBZone program provides contracting assistance to small businesses located in economically distressed communities -- referred to as historically underutilized business zones, or HUBZones -- to promote job growth, capital investment and economic development in these areas, including Indian reservations.
The program’s benefits for HUBZone-certified companies include contracting and subcontracting opportunities and a 10 percent price evaluation preference from government agencies that purchase goods and services from HUBZone firms. The federal government has set a goal of delivering 3 percent of all federal prime contracts.
The SBA has enrolled more than 12,000 HUBZone-certified firms in the program. These firms employ more than 177,000 people, and they average annual receipts of $22 billion.
Southeast Cherokee Construction’s headquarters remain in Wetumpka, with four branch offices in three states. Carter, the company’s sole corporate officer, has grown the business from 12 employees to 73 today.
June 2, 2008
Help after a hurricane
When disaster strikes, the U.S. Small Business Administration is prepared to support homeowners, renters and businesses of all sizes as they rebuild in the aftermath.
In 1998, after many years in security and law enforcement, Nicky Maxwell founded Mississippi Security Police (MSP) on a shoestring budget with help from two friends. In 2005, like thousands of others along the Gulf Coast, Nicky and his security company were dealt a severe blow by Hurricane Katrina. His and his employees’ homes were damaged; the firm’s office was in shambles. To complicate matters, the need for security services surged to an all-time high in Katrina’s wake. To help the Mississippi Security Police and its employees recover from Katrina, Maxwell provided housing, and financial and transportation aid to his employees. He also secured a $150,000 SBA disaster loan.
Since 1953, the SBA has approved 1.7 million low-interest disaster loans for more than $33 billion. After the devastating 2004 hurricane season, when four major storms hit Florida and 13 other states, the SBA approved more than $2 billion in disaster loans to about 63,000 residents and business owners.
Most disaster loans are made to homeowners and renters. When a disaster causes property damage to a business of any size, the business owner may borrow up to $1.5 million to repair or replace the building or other business assets.
SBA also makes economic-injury disaster loans of up to $1.5 million to small businesses that may not have suffered any physical damage, but were hurt by the disaster.
MSP is now a leading security firm in southern Mississippi and has grown from a three-person operation to more than 350 employees with a diverse client base.
May 28, 2008
Old pros help small businesses grow
With clients ranging from The Kroger Corporation to the Tennessee Titans football team, Mike Turney, president and co-founder of Mama Turney’s Pie Company, likes to say that every bite of his homemade pies transports his customers back to the “good old days” of American Bandstand and drive-in movies.
Turney’s wife, Barbara, had a reputation for crowd-pleasing homemade pies, and the couple founded Mama Turney’s in 1996 with the goal of mass producing homemade-tasting pies. The Turneys went to the Nashville Chapter of SCORE which helped them prepare a business plan.
SCORE -- “Counselors to America’s Small Business” -- offers free and confidential small business advice, to help entrepreneurs who are anywhere in the process, from the idea stage to startup to managing profits. The SCORE Association in Washington is a partner of the U.S. Small Business Administration. It is a nonprofit association dedicated to entrepreneurial education and the formation, growth and success of U.S. small businesses.
SCORE’s national network of 10,500 volunteers comprises experienced entrepreneurs and corporate executives. SCORE matches volunteer business management counselors with clients in need of advice. SCORE has experts in virtually every area of business management and maintains a national skills roster to help identify the best counselor for a particular client.
The Turneys received two SBA-guaranteed loans to finance various phases of the business’s growth, and today the company has nine employees, sales of almost $1.1 million, and more than 2,500 commercial customers throughout nine states.
May 19, 2008
Helping owners who face discrimination
Robert Delhome started Charter Environmental Inc., in 1997 with two employees and $300 in seed capital. His company provides specialized solutions to challenging environmental problems.
Born in Panama, Delhome is a graduate of the Massachusetts Maritime Academy. He worked for environmental firms that worked on government projects for several years before deciding to branch out on his own. Delhome utilized the SBA’s 8(a) Business Development Program, intended to help socially and economically disadvantaged businesses compete in the federal procurement marketplace.
Program participants must be from a group that has been subjected to racial prejudice or cultural bias. Because of this discrimination, these entrepreneurs have less access to capital and credit, which diminishes their ability to compete. The 8(a) program helps owners develop their businesses and provides them with access to government business
The 8(a) program includes specialized business training, counseling, marketing assistance and high-level executive development provided by the SBA and its partners. Also, the SBA assigns business opportunity specialists to 8(a) participants to help them receive training and gain access to opportunities in the areas of procurement, marketing, finance, management and surety bonding.
The 8(a) program gave Delhome’s company a boost as it grew successful in the competitive environmental field. From Charter’s modest beginning as a two-employee shop in the spare bedroom of Delhome’s home, the company has grown into a $30 million a year operation with more than 100 employees.
May 14, 2008
Loans made less risky for lenders
After 11 years working at a spa in Tulsa, Oklahoma, Marilyn Ihloff decided it was time to step out on her own. She leveraged the equity in her home to secure an SBA 7(a) loan and opened the doors to The Marilyn Ihloff Salon and Day Spa in 1980.
The 7(a) program is the most basic type of loan the SBA offers to small businesses. In fact, to be precise, it is not a loan per se, but a guaranty that the SBA provides participant lenders to make it easier for them to make loans they otherwise wouldn’t touch.
Under the concept, businesses apply for a loan from a commercial lender. The lender, using its own criteria, decides whether to make the loan on its own or whether the application has some weaknesses, which would call for an SBA guaranty. If the lender would rather not take the risk alone, it turns to an SBA 7(a) loan guaranty.
The SBA’s guaranty assures the lender that, if the borrower does not repay the loan, the government will reimburse the lender, up to the percentage guaranteed by the SBA.
Ihloff’s first salon offered hair, nail and facial services. In 1987, she relocated to an area twice the size of her previous space. In 2004, the salon uprooted again and landed in an even larger facility, with 30 hairstyling stations, four manicure stations, four pedicure stations and six spa rooms. The spa’s growth rate has hit 11 percent each year. Ihloff’s dream has grown from one salon and one employee, to three salons with more than 140 employees, and sales in excess of $3.5 million.
See "Federal Agency Encourages, Supports Small Businesses" to find out more about the U.S. Small Business Administration.
