Entrepreneurs want government to do more
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President Barack Obama is promoting small business this week, with a new bridge loan program announced on Monday and a White House press conference scheduled for Tuesday afternoon.
But his administration’s message has so far failed to resonate with many entrepreneurs according to a new study which shows that nearly 40 percent of small and medium-sized businesses (SMBs) believe the government has been “unsupportive” of their efforts.
The study, Understanding Growth Priorities of Small and Medium-Sized Businesses, was conducted by the Economist Intelligence Unit and sponsored by web hosting firm Verio Inc.
While they may not be bullish on the government’s efforts to help them, 83 percent of the 328 small business executives polled said they are optimistic about their company’s long-term ability to rebound when the economy improves.
So why are businesses so positive on the one side and so negative on the other?
“I think it has a lot to do with the fact that these small businesses are really taking it upon themselves to be successful,” said Nina Piccinini, senior manager of marketing communications at Verio. “It truly is that entrepreneurial spirit.”
It wasn’t only their leaders in Washington who displeased them, as 48 percent of respondents stated that local government was “unsupportive” or “not at all supportive. Almost a third of the respondents cited “mid-size businesses do not attract enough attention” as a primary reason behind the lack of support. Larger enterprises garner greater media attention due to their size putting smaller companies at a disadvantage. In fact, 28 percent of SMBs said that the public at large perceives large enterprises as more important.
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist.
SMBs demonstrated great optimism in their own employees and leadership to ensure survival in the current economic climate with nearly three quarters of respondents indicating that employees are their greatest supporters.
Other findings in the study:
- 57 percent “agree or strongly agree” that technology will be a critical competitive advantage to bring them out of the recession.
- Once the economy improves, 65 percent of respondents expect their firms will enter into new geographic markets.
- 51 percent of respondents said their technology efforts will focus on improving processes and new ways to improve their business.
- 52 percent of respondents said Internal IT departments will be most important to helping firms achieve success. External or outsourced service providers are also key, with one-third of respondents stating outsourced providers of managed IT services and external technology consultants (systems integrators, value added resellers or application developers) as most important in achieving IT objectives.
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Small and medium businesses are the backbone of society and accordingly should get a fair share of the money spent by the government. This is not happening at the moment as most of the money disappears into the deep pockets of the banking world and other large enterprises.
As a 20 year veteran small business and enterprise attorney representing over 200 businesses across various industries, I can attest to the difficulties faced by these business owners. While, on its face, the new SBA ARC loan program appears helpful, I have personally contacted one of the largest national banks (Citibank) and asked for these loan applications. The response from Citibank was, it was not participating in this program. There seems no good reason why large national banks should be permitted to unilaterally exclude themselves from participating in SBA-sponsored programs where 80 to 100% of such loans are government guaranteed.
These SBA programs will not have the intended consequences unless they are promoted by the commercial lenders.
If you look at any recession, small business owners find ways to adapt and eventually grow again — even if it is tough or impossible to get government support. Basically, for them, failure is not an option. So, while I think these loan programs will have a positive effect, the fact remains that the entrepreneurial spirit will make the biggest difference.