Posted on June 18, 2013 by Brock Blake, Forbes (Entrepreneurs)
Like so many of the United States Presidents that have gone before, President Obama has declared this week (June 16-22, 2013) as National Small Business Week. In fact, this is the 50th anniversary of Small Business Week in the United States — first declared by President John F. Kennedy in 1963.
I couldn’t agree more with the President when he proclaims, “In America, we believe that anyone willing to work hard and take risks can get their good idea off the ground and into the marketplace. It is a notion that has made our Nation bold and bright, and the best place to do business for generations—from small-town storefronts to pioneering startups that keep our country on the cutting edge. This week, we celebrate America’s entrepreneurial spirit, and we recommit to helping our small businesses get ahead.”
I’m going to go out on a limb and guess that when you think of a ‘small’ business, you aren’t thinking of the same type of business the SBA does when they think of small business. You’re probably thinking of a local gas station, hair salon, or retail store you frequent down the street. In fact, it’s likely you know the owner or manager by name. You probably don’t consider the 1,000-person company that operates in your state the same way as the Main Street businesses you regularly patronize? Me neither.
Unfortunately, the U.S. Government’s definition of ‘Small Business’ includes companies with 1,500 employees & $35.5M in annual revenues!
When it comes to politics, every politician refers to the restaurant owner, landscaper, or plumber in their speeches. No doubt, it’s effective; we can all relate to those businesses. However, did you know that all of the stats that they use to justify their results and the programs they’ve created to help ‘small’ business include companies with $35M in annual revenues? According to Census information, about 72 percent of business enterprises in the United States are entrepreneurs, sole proprietors or home-based business. These are the ‘small-town storefronts’ and ‘pioneering startups’ that keep our country on the cutting edge. I sure hope we aren’t overlooking their needs because we’re lumping them into the same category as 99 percent of the other companies called “small” business by the United States government.
The definition is critically important because loans, government contracts, and other resources are put in place to help ‘small’ businesses compete with larger corporations. If the definition is as currently defined by the U.S. Gov’t / SBA, then every other industry (including small business lenders) inherit the same mindset of helping ‘small’ business. In reality, they are completely overlooking the segment of businesses that President Obama was referring to above. Organizations (including small business lenders) could get an over-inflated sense of the impact they are making to Main Street business because most of their resources are going to the large corporations the SBA wants to classify as “small” businesses and not the micro-business on the corner of Main Street and Washington Boulevard.
At Lendio, we see the real small businesses that make our country tick. They aren’t looking for multi-million dollar loans when they look for financing—it doesn’t take that much cash to keep them strong and thriving. The average loan size request by a business owner on Lendio.com is about the same amount you’d spend on a really nice luxury car. Usually, the business has 1-5 years in business and less than $10M in annual revenues. We see requests from every industry, but especially from retail, construction, accommodations, and food services. In general, they are looking for working capital (to hire) or expansion capital (to grow). The needs of these business owners are much different than the needs of the larger corporations the SBA calls “small” businesses.
Micro-businesses Need a Voice
At the end of the day, I think President Obama’s intent with Small Business Week is to help the local Main Street businesses you and I can identify with. They’re the businesses that hire your neighbors and keep your communities thriving. The President is right to celebrate the business owners in our communities, our friends, and our neighbors. They’re the folks who really contribute to job creation, the products and services we use every day, the innovations that make our lives better, and keep America competitive in the global marketplace.
I hope you’ll celebrate Small Business Week with me by making it a point to tell a friend about your favorite small business, patronize a locally owned and operated restaurant, or share with your family and friends why you think Main Street businesses are such an important part of your community.
Click Here for more information on SEED’s loan programs