Sunday, March 25, 2001
Save the centers
Federal program costs little, does lot of good
By Rhonda Abrams
Gannett News Service
Nobody likes taxes. So we welcome an honest discussion of ways to reduce taxes. Right now, the focus of our national debate is President Bush's $1.6 trillion tax-cut proposal.
This column is devoted to the proposed cut in spending and how it affects small business.
One of the best, least-known services the government helps fund and I emphasize the word helps, since the federal government only provides matching funds is a national network of Small Business Development Centers (SBDCs). There are more than 1,000 SBDCs, primarily at community colleges or in Main Street storefronts across the country.
They've provided one-on-one counseling and training programs free or at very low cost to small businesses and startup entrepreneurs for more than 20 years. If you haven't heard of them, it's because they don't spend money advertising. They just do their job.
SBDCs serve 600,000 small businesses a year in face-to-face counseling sessions, and another 750,000 businesses turn to them for information, resources, and call-in assistance. They provide business plan guidance, computer training and help small companies regroup rather than fold up when an industry is phased out in a region.
The result is a remarkable track record. SBDC clients generated 67,800 new jobs in 1998. Small businesses helped by SBDCs have a higher survival rate than other small companies. And while the entire SBDC network received a paltry $83 million in 2000, SBDC clients generated additional tax revenues in excess of $468 million. This is one federal program that actually makes money for the government!
Yet, Mr. Bush has proposed cutting the SBDC program by 14 percent. Congress authorized $125 million for the SBDC program, while Mr. Bush has proposed only $76 million. Keep in mind that every federal dollar has to be matched at least dollar for dollar by local or state governments, so federal action whether increases or decreases has a multiplier effect.
This couldn't come at a worse time. As our economy slows, and more workers face lay-offs and early retirement, business startups actually increase. More people begin their own companies when the economy is bad than when it is good. Historically, this has meant SBDCs have seen their client load increase as well.
Remember, small businesses have been the major generator of jobs in this country for the past decade. As we face an economic downturn, we want to do everything possible to try to help create jobs. That means providing help for small companies because small companies create jobs. Estimates show an appropriation of $105 million to the SBDC network would generate 92,000 new jobs!
The people who use the SBDC network are not rich and powerful. They're not corporate fat cats getting government subsidies for marketing products overseas or research and development tax credits. They usually don't have much experience running a business, and virtually none has much money. What they do have is ambition and good ideas and the willingness to work hard.
What they need is a bit of help and direction and information. That's what the SBDC counselors give them.
Let me be clear about my bias. I work with the SBDCs, and I've been an SBDC client myself. When I was starting a business, I turned to an SBDC for assistance. And now, I provide SBDCs with free information they can give to their clients to help them succeed in business. That's how much I believe in the program.
I recently heard Jack Kemp say the tax proposal should not cut programs that make the government money. Well, if he's right, then we certainly shouldn't be reducing the allocation to the SBDC program.
Nobody likes big government bureaucracies. But this isn't one.
Nobody likes government waste. But this doesn't waste money; it makes money.
Nobody likes government bureaucrats. But SBDC counselors aren't bureaucrats, and they're some of the most dedicated, hard-working people I've ever met.
I urge Mr. Bush to reconsider his cut in the SBDC program, and the Congress to restore the $125 million appropriation. It's a very little bit of money for a whole lot of help for small business.
Rhonda Abrams is the author of The Successful Business Plan: Secrets and Strategies and Wear Clean Underwear. For free business tips, register at www.RhondaOnline.com or write her at 555 Bryant St., No. 180, Palo Alto, CA 94301.
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