Small Business: The Key to the Economic Ecosystem
Tending the Garden of Real Recovery
From the tropical rainforest to the backyard garden there are key elements keeping that ecosystem in balance and nurturing the larger global bionetwork. For economies, that key element is the small business. Nurturing the environment where small businesses can take root and grow is an ongoing challenge.
Around the country, simultaneous light bulbs are turning on across a network of local, state and federal agencies that regulate small business. With over 26 million ‘small businesses’ in America, and fewer than 17,000 ‘other-than-small businesses,’ the S.O.S. messages being sent by small companies over the past few years have finally been heard. These critical lifelines to the corporate world have had weak vital signs since the start of the recession in late-2007 and current assistance program offerings simply haven’t been enough to revive these companies. Small business is the backbone of our economy and people are starting to take notice.
Today, we are seeing the introduction of a plethora of tools to strengthen these small, but powerful economic engines and help spur our economy back to recovery. Maybe officials could no longer ignore the numbers. Small businesses contribute over 60% of new jobs to our state and in Brevard County alone, 63% (or more than 3 out of 5) of all private businesses in Brevard have less than five employees. Whatever the reason, these companies are finally getting the recognition they deserve. It took a recession to reinforce what many already knew: when small business falters, our economy falters alongside.
Why So Crucial?
So what is it about these businesses that hold so much promise and why are they so important to our economic balance? Well, it’s the fact that if they want to grow, there is only one way to go: up. In 2004, Merritt Island-based Luke & Associates began operations by providing medical information management and technical services to the United States military. They started out with three owners, no revenue and had a classification of ‘Small Business’ by the Small Business Administration (SBA). Therefore in competing for government contracts Luke & Associates only competed against other small businesses.
Fast forward to today and this is a company that has grown to nearly $100 million in annual revenue, with over 950 employees. It has a presence at 62 military installations across the globe, and is now officially classified as ‘other-than-small business’ or ‘large business.’ Luke & Associates has experienced an astonishing 16,000% growth rate over the past four years, a feat that is expected to earn them recognition by Inc. Magazine’s “Annual 500 Fastest Growing Companies.” And they accomplished all of this during one of the worst recessions the world has seen and in short order. Some of the greatest success stories in corporate America took longer to simply get off the ground.
Jim Barfield, president and chief executive officer of Luke & Associates, likens his company’s success to staying true to a vision of who you want to be as a company. “From the beginning, Luke & Associates has been preparing to compete and win work in the large business arena. The best time for any company to prepare for the next level is early on and continually thereafter. We began by thinking like a big company in a small business box. Now, Luke is a large business with the controls and structure required on government contracts yet we still maintain our character as a small business.”
Fertilizing the Small Business Garden
Companies looking to create a similar success story to that of Luke & Associates are being encouraged by a series of new funding programs. Coming out of our nation’s capital, nearly $730 million of the American Recovery and Reinvestment Act was set aside for small business in the form of loan fee reductions, higher guarantees, secondary market incentives and additional SBA programs. Thousands of small businesses took advantage leading to an 86% increase in weekly loan approvals over the same time period prior to the program’s introduction in early-2009. There were so many companies that sought to participate that the program was extended three times over the course of the year with an additional $225 million eventually being added. The SBA estimates nearly $23 billion was put into the hands of small business owners as a result of this newly implemented program.
Brevard County businesses were also quick to sign up. The SBA’s South Florida District Office, which oversees requests for assistance from Brevard companies, counts nearly 50 local small businesses that received some type of benefit under the plan. The success of this program can also be directly tied to the strength of our economy. When President Obama introduced the stimulus plan, the South Florida district had been processing an average of 70 loan guarantee applications per month, which was on the low side of normal totals. Clearly, business owners were feeling the effects of an uncertain economy and not willing to take on more risk by obtaining a loan.
Once the program was fully up and running, the loan requests came pouring in. The district office has seen double and even triple digit increases in loan activity, leading many to believe confidence may have finally been restored in this crucial market. An even stronger indicator of the longevity of this confidence is the year-over-year total. The SBA loaned 53 Brevard County small businesses nearly $11 million in Fiscal Year 2009. This year, from October 2009-March 2010, 48 companies have received just over $10 million in assistance (most recent data available at time of publication). In just six months, the SBA has nearly matched totals from the entire 2009 lending period.
James “Tom” Gallman, Sr., Area Leader for the Small Business Administration’s Fort Pierce Field Office, is confident the stimulus program has provided its intended impact on the region by jumpstarting lending to those business owners who need it most. “We are very pleased to report that the Recovery Act has positively impacted our economy. Small businesses are finding it easier to gain access to capital and they are contacting us for assistance at record rates. We encourage business owners to reach out to our resource partners for free counseling and business assistance and to visit our website for full details on all of our programs and services.”
Home Grown Recovery
Even Tallahassee is getting in on the act. Last year, Governor Crist unveiled the Economic Gardening Stimulus Plan, a $10 million effort to help Florida small businesses expand and reach their fullest potential. “Economic gardening” now has become a new catch-phrase in job creation efforts at the state and local levels. The program is modeled after a successful initiative started in Littleton, Colorado after an economic collapse there in the 1980’s, and it focuses on helping second-stage companies which have 10 to 50 employees, revenue of $1-25 million, have been in business for at least five years, and are growing revenue and adding employees. Instead of using valuable resources to cast a wide net and try to convince out-of-area companies to relocate, the economic gardening model encourages officials to provide resources to the companies that already exist within the local business community and have the greatest potential for growth.
The funds, $250,000 per company, are being used to help qualifying companies purchase new capital, train existing employees and hire new workers. In addition to funding, companies also receive a suite of high-end business services like database research and strategy analysis at no additional cost to further growth. Still in the early stages, the program is being facilitated out of the University of Central Florida, which has a local campus in Cocoa, and officials are pleased at the amount of interest already generated.
Sowing and Reaping
Locally, economic development officials are quick to highlight small businesses as a major source of economic growth.
“The statistics paint a pretty accurate picture of just how important small businesses are to our economy,” said Lynda Weatherman, president and chief executive officer of the Economic Development Commission of Florida’s Space Coast, an organization that offers business assistance to both large and small companies looking to grow. “What many people fail to realize is that each time you see news about a smaller company hiring a handful of employees, expanding into more office space or even securing new contracts, the same potential exists within each of these events to add to our economic base. Small business represents a large portion of the companies we target because of the historical pattern for growth that exists within this sector.”
There is no doubt that small businesses have been hard hit by the recession. As we start to see signs of economic improvement, it is abundantly clear that these same businesses will play a large role in our anticipated return to ‘normal.’ Everyone – from President Obama to Brevard’s small business development officials – has taken notice and is making it a priority to bolster these important assets in our business community. From easier access to loans to the availability of additional stimulus funds, the impact small businesses have on our economic health is something worth not only protecting, but cultivating.
Local Resources for Small Businesses
Small Business Development Center (SBDC) at Brevard Community College
www.brevardcc.edu (search for small business)
Women’s Business Center at Florida Institute of Technology
Founders Forum
SCORE – Space Coast Chapter 400
Brevard Small Business Assistance Council
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