The SBA: good help - if you can get it - Small Business Administration

Home Office Computing, May, 1992 by Timothy Middleton

The SBA--what good is it? "The SBA is a cautiously optimistic group of people who'll tell me that other people have started businesses and have succeeded, and that I will, too," says Neil O'Farrell, partner in O'Farrell & Sattler, a home-based publications studio in Washington, D.C. "That shot in the arm is one of the best things the SBA offers."

O'Farrell tapped the Small Business Development Center (SBDC) at Howard University in Washington, D.C., for help reviewing the proposals he sends to federal agencies; he also took their course in government contracting. SBDCs operate at about 650 colleges across the county, providing management training and other start-up business assistance. "Next I'm going to have the SBDC review my business plan," says O'Farrell. That plan calls for his two-person compay to grow large enough to support a professional staff in outside office space. "I got my money's worth out of the SBA," O'Farrell quips--the agency's services are free.

O'Farrell and thousands of others have benefited from the SBA's free advice, publications, business couseling, and direct loans and loan guarantees. But because the SBA is so big, caters to such a diverse group of businesses, and has a relatively small budget, many businesspeople walk away empty-handed and disappointed.

The SBA--what good is it? "From observing clients over the years, I've found that there's a big gap between the number of people who apply and the number of people who wind up with results from the SBA," says Danny Frank, a New York City communications consultant who advises small companies.

It's clear that people who have received help from the SBA laud it, and those who haven't think the institution is a big-government trick. Part of figuring out the trick is knowing what the SBA has to offer, and deciding whether you're the type of person who could benefit.

A BROAD MANDATE

The United States Small Business Administration, created by Congress in 1953 to encourage the formation of new enterprises and to nurture their growth, exists to serve small businesses by providing information and financial backing and speaking on their behalf in the corridors of Capital Hill. "The SBA performs a critical role informing Congress of the state of, and needs of, small business," says David L. Birch, president of Cognetics Inc., a statistical-analysis firm based in Cambridge, Massachusetts. Cognetics tracked the growth of small business during the 1980s.

But the SBA's mandate is broad, and its resources limited. The agency's definition of small business--service companies and retailers with annual revenues of $3.5 million or less, manufacturers with fewer than 500 employees, wholesalers employing fewer than 100 workers--embraces 98 percent of the companies in the United States. The SBA's staff is just 4,000 nationwide, organized in 110 offices. So taking advantage of the SBA requires learning what it's equipped to offer, and then how to tap into its abundant resources.

Many self-employed people perceive the SBA as designed to help "big" small businesses, and they don't even bother to approach the agency. "Our contact is pretty limited," says Robert E. Hughes, president of the 300,000-member National Association for the Self-Employed. "Our membership is primarily composed of self-employed people with up to five or so employees. They, by government standards, are very small businesses."

The SBA, however, has much to offer even the smallest companies--if you know where to look, and if you're lucky enough to hit the right buttons.

SCORE

One of the biggest potential aids to developing businesses is the Service Corps of Retired Executives (SCORE). Some 12,000 volunteers, who can be reached through reginal SBA offices, are available to consult without charge on topics from writing a business plan to setting up your books. "Their advice is geared to early-stage businesses," says Mark Quinn, acting district SBA director in San Francisco. "Lots of people seeking advice are individual proprietorships--very, very small."

Tom McGlinchey, an independent CPA who works from his home office in Little Neck, New York, has often referred clients to SCORE. "For people putting together a business plan on shoestrings and prayers, and seeking confirmation that they have covered their bases, I refer them to SCORE. A retired executive will see the sparkle in a good business plan, if you have sought out a volunteer who was worth his salt as an executive. The good SCORE adviser will send you away to do additional work if he or she sees a hole and isn't mandated to complete your work for you."

Not everyone feels the same way. "About 22 years ago I was approached by an attorney, who was a client of mine, to join a process-serving business he was opening," says Bob Taylor, a private investigator who works from his home office in East Brunswick, New Jersey. "We couldn't reach an understanding and went our separate ways, each starting the same type of business. He failed at it, and I struggled. A couple of years after he closed his operation, I went to an SBA office in Newark, New Jersey, for assistance. They sat me down and counseled me, then said they would put me in touch with an expert. The 'expert,' one of the SBA's SCORE counselors, turned out to be that very same lawyer who had failed in his own business. I figured I wouldn't get too far with guidance like that from the SBA and closed the book on that source of help."