According to the US Small Business Administration, greater than 90 percent of all businesses in the US are small. Employing more than 60 percent of all workers, these small businesses also create 80 percent of new jobs in the US. Clearly, small business is the backbone of our nation’s economy and their success is crucial.
In 1976 the US Congress recognized the challenges facing small businesses and identified under capitalization and management inexperiece as key reasons for the failure of many.
As part of an 8-state pilot program, the Florida Small Business Development Center was initiated with the program fully incorporated across the US by 1980.
With a location here in Gainesville (35 throughout Florida) on SW Hawthorne Road, the Florida SBDC plays a vital role in Florida’s economic development by assisting entrepreneurs in every stage of the business life cycle.
I recently spoke with Michael Chung, the Assistant Area Director for the Florida SBDC Network, which offers a number of valuable resources to North Florida businesses. “I’m told we’re the best kept secret,” Chung said.
Business Report (BR): What are some of the biggest mistakes you see small businesses making?
For those early stage companies, especially the ones just getting started, Chung says the biggest mistake is they (the business owners) focus on the cost and not on “how much sales do I have to generate to make the kinds of profits that I need to make to pay myself, cover my debt, and re-invest in the business?”
“For those that are in business for a while, the main [mistake] that I see happening is they run the business as if it’s their personal piggy bank. They take a lot of cash out of the business for personal use. They’re not working on growing their business. All their energies are funneled into doing the actual work and not actually working on growing a company that they’re creating value and equity in.”
Chung adds, “For our more advanced customers, I think it’s a lack of a proper exit strategy. An exit strategy is something that we encourage clients to start thinking about from the day they start their businesses.”
BR: How does the SBDC help small business owners avoid making these mistakes?
“As a consultant we will help them get to that next level through analysis or strategy development. We also wear the hat of mentor. Often times some of the small businesses know what needs to be done but not necessarily how to do it. The SBDC serves as a sounding board for them in terms of their strategy and vision.
We can help you build your idea, develop the business plan, but it’s up to the business owner to execute that plan. That’s another big mistake with businesses. They have a business plan, but they don’t execute it. Or if they execute, they don’t measure performance, so they don’t know if they’re doing well or not.
One of the things we help business owners with is financial management, helping them grow sales and revenue and profits but also with cash flow management.
BR: What is the Florida SBDC’s mission?
Our focus is to help businesses grow and be successful. We are in the business of economic development, and to that end, under Florida statute 288.001, we are designated as the premier service provider for small businesses in the state of Florida.
I would also want to mention the SBDC is the organization in the state of Florida that originates and processes the state emergency bridge loans. The bridge loans are no-interest loans from the state of Florida to small businesses who get impacted by disaster.
Services from the SBDC are completely confidential and free of charge. For more information, please visit the SBDC website: http://floridasbdc.org/.
By Dylan Klempner