Why Not Take Advantage?

28 November 2013


Fifteen a
Day


A recent post to the Manufacturing Extension Partnership Blog [1] got my attention. That post points out that an average of 15 American manufacturing facilities have closed each day since this century began. And I see nothing in the statistics to indicate a turn-around (less bad, yes — turn-around, no).


Everybody knows that times have been tough for manufacturers. Since times don’t appear to be improving very quickly, it behooves manufacturers to take full advantage of resources that do exist. The Small Business Administration is one of these resources. SBA offers a number of useful services as well as the business loan assistance programs that almost everybody has heard. Here are some things to think about:


>> What “Small” Means: Most manufacturing firms with 500 employees or less qualify for SBA assistance programs. However, that varies from industry to industry — in some industries, “small” includes up to 1,000 employees. There is a chart available, so you can check.[2]

 

>> Exporting: Your good government wants to increase exports. So, SBA has joined with other government agencies to help your firm develop an export business. Potential new business is always worth looking into.[3]


>> On-line Resources: The SBA website offers free on-line training courses, video presentations and “chats” (something like webinars). Last I looked there were 120 offerings on management, finance, marketing and other useful topics. Use what suits you.


>> ACA (Obamacare) Info: As a business, your firm may have responsibilities under the Affordable Care Act, whether you like it or not, even if you are a one person shop. You do need to know. Start with the SBA website.[4]


Here’s more on SBA from an earlier post to this blog:


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Resources Are Where You Find Them

From: 6 December 2012


A recent post to this blog [5] demonstrated a firm grasp on the obvious by pointing out that large manufacturers, generally speaking, have considerably better access to resources — capital, talent and technology — than do smaller manufacturers. However, smaller manufacturers [6] do have resources available to them of which they may not be fully aware. Believe it or not, the federal government can provide smaller manufacturers with significant access to capital, talent and technology resources on a local, personalized basis.


S.B.A. Isn’t as Remote as You Think


A manufacturing business is, first of all, a business. And it is necessary to be a viable business before it is possible to be a Sustainable business. The Small Business Administration (S.B.A.) is the primary small business assistance program of the U. S. Government. As such, S.B.A. provides lending, management and technical assistance programs to small businesses.[7]


SBA Loans ChartS.B.A. lending programs today are virtually all monies provided from banks and financial intermediaries, where the debt is guaranteed by the federal government, usually with terms more lenient than the market can provide. For example, a bank making a business loan will typically require a loan be supported by historical cash flows, collateral in excess of the loan amount, and short term in nature, even if used for real estate or other long term need. An S.B.A. loan can, in contrast, be supported by projected cash flows, offer longer terms (up to 7 years for working capital and 25 years for real property) and may not be fully supported by collateral. And to a banker who makes an S.B.A. guaranteed loan, the loan may not fully apply against their reserves as a typical commercial loan does. In FY2011, S.B.A. provided over $30 billion in lending support to smaller businesses.


Small Business Development Centers


The Small Business Development Center (SMCD) network consists of about 61 centers with over 1,000 local offices across America. [8] The SBDC network consists of local partnerships with institutions of higher learning that provide sponsorship, facilities and expertise. SBDC network offices are staffed paid professionals who are dedicated to client assistance and training. They provide assistance for small businesses at low or no cost, and follow strict guidelines from the S.B.A. on confidentiality, conflict of interest and conduct.


In Arizona, for example, the Community College system is the primary participant, and Maricopa Community College District runs the State Network. There are more than 20 offices throughout the Arizona offering specialized programs in Technology, International Trade (export assistance), Veteran Initiatives and general counseling services. The Arizona SBDC network maintains core proficiencies in planning, marketing, finance and counseling skill, and all counselors are certified within the network with annual professional development requirements. Working with small businesses of all sectors, including manufacturing, the SBDC provides a range of services, but focus is on helping small businesses grow their operations in terms of jobs, revenues, capital and profitability. The SBDC helps businesses reach their goals, providing assistance at every step of the process. SBDC programs are tailored to local needs, and program offerings vary as needs change.


SCORE Some Expertise


The Service Corps of Retired Executives (SCORE) — another service from S.B.A. — offers highly personalized assistance for small businesses at no cost. [9] SCORE consists of all volunteers, and most are retired professionals from industry who now want to give back to their community and help small businesses succeed. As such, they focus on being a mentor for the people they serve, and often have specialties. For a small manufacturing business you might find a mentor that has prior experience in working for a manufacturer or with Lean techniques, who could provide valuable service to your business. SCORE executives follow strict guidelines from the S.B.A. on confidentiality, conflict of interest and conduct.


Get Ahead of the Business Cycle


SBA LogoThe Great Recession re-emphasized the critical importance of financial, especially working capital, contingencies. This is especially true for fixed asset intensive businesses including manufacturing. Assisted lending is at the core of S.B.A.’s activities. It is simply prudent to establish a relationship with S.B.A. and to take advantage of that resource to assist your firm’s financial planning, especially working capital contingency planning. The graphic reminds us of how difficult it is to find additional capital in bad times. In spite of what I was told in 1998, the business cycle is not dead.


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Photo - Mark EngleSpecial thanks to Mark Engle, the Director of the Maricopa Small Business Development Center, who co-authored the Resources Are Where You Find Them post with me. The Maricopa SBDC serves as a lead SBDC within Arizona.


In 2011, Mark and his colleagues in Arizona: [10]

  • Counseled more than 3,100 clients;
  • Helped start 268 businesses;
  • Created or retained 1,674 jobs;
  • Helped clients increase sales by more than $85.1 million;
  • Helped clients create over $45 million in new capital. **

* Source: Economic Impact Study of Small Business Development Counseling Activities in Arizona, 2008-2009; James J. Chrisman, Ph.D.
** Source: 2011 AZSBDC Center reporting data.

 

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Thoughtful comments and experience reports are always appreciated.


…  Chuck Harrington
(Chuck@JeraSustainableDevelopment.com)


P.S
: Contact me when your organization is serious about pursuing Sustainability … CH


This blog and associated website (
www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on Wednesday evenings.


[3] U.S. Government export program information is available at www.export.gov.

 Also see Sell More in 2014! this blog:

http://blog.jerasustainabledevelopment.com/2013/10/09/sell-more-in-2014—export/

 

[4] SBA website: www.sba.gov

[6] The Small Business Administration defines “small” differently for different kinds of businesses. For most manufacturers, the upper limit is 500 employees. Check for your business at: http://www.sba.gov/sites/default/files/files/size_table_07222013.pdf

 

[7] There is a wide range of resources and services available from S.B.A., including about 30 on-line training courses. The S.B.A. website www.sba.gov is worth taking some time with.

 

[8] Find your local SBDC at www.sba.gov/local-assistance

 

[9] For more on SCORE see www.SCORE.org

 

[10] The figures cited here are from the Arizona Small Business Development Center Network website: www.AZSBDC.net