This week the Office of Advocacy released its 2009 edition of small business profiles. On the website at www.sba.gov/advo/research/profiles, you will find an array of two-page small business economic profiles for the nation, each of the 50 states, the District of Columbia, and the U.S. territories. Each is loaded with the most current available data on the demographics of business owners, the numbers of businesses, their employment by industry and size, business openings and closings, gross domestic and state product, and the employment picture.

As noted, there are statistics galore. But what’s the story?

Perusing a number of the individual state profiles, I began to notice a pattern in the 2008 data. It seemed that many of the states with the largest shares of small business employment—states like Wyoming and North Dakota, Alaska, and Oklahoma, with between 54 and nearly 70 percent of their employment in small businesses—were often also states with positive—or at least less negative—employment change in 2008. Conversely, states with the lowest employment in small firms—say, between 44 and 49 percent—often had larger overall statewide employment losses—between 1 and 4 percent—in 2008.

This suggested to me that there are some interesting patterns to be found in the data. Take a look at patterns across the years too—there are state profiles on the web going back to 2005.

Dig in, data miners!

—Kathryn Tobias
Senior Editor

            Minority Enterprise Development Week 2009 was a great opportunity to celebrate “Energizing the American Economy with Minority Business Enterprises.” I attended a panel on Thursday morning, August 27 (following an excellent keynote address by Earvin “Magic” Johnson) that featured, as moderator, Derek Dingle, Editor in Chief of Black Enterprise magazine; Aubyn Thomas, Senior Vice President of Marketing for Macy’s; Adrienne T. White, Senior Manager for the African American Market for WalMart and Sam’s Club; and Joseph James of Agri-Tech Producers, LLC. 

Joe James’s business, the only small business represented on the panel, particularly caught my attention. Agri-Tech is commercializing a technology ”using extreme heat on biomass in a low-oxygen environment…to produce a fuel that is easier to transport and store and is carbon neutral.” 

Mr. James, an economic developer by trade for more than 30 years, was astute in obtaining the license to commercialize the technology, which was developed at North Carolina State University in Raleigh and is being manufactured by a partner firm—one of several candidates he interviewed. He encouraged entrepreneurs, particularly those interested in energy industries, to work with the Departments of Energy and Agriculture, with Biomass Councils and with the American Association of Blacks in Energy to learn more about developing their products.

Other innovative ideas surfaced during the Q&A. In response to a question from a small business owner interested in retrofitting large spaces for better energy efficiency, both Adrienne White and Aubyn Thomas encouraged participation in their supplier diversity programs. Adrienne said that mega-retailers WalMart and Sam’s Club are moving toward producing “100 percent zero waste” and becoming energy self-sufficient. They are also finding ways to use local and locally grown products by turning some supplier decision making over to local stores. It’s a way for small businesses to participate as suppliers, and possibly to grow toward larger markets.

– Kathryn Tobias, Senior Editor

            Last week, Massachusetts state regulators responded to complaints from small businesses and stakeholder groups by issuing revised regulations aimed at preventing identity theft by computer hackers.  Small business supporters opposed the original version of the rule, which was released last year.  They included Advocacy’s former Region I Advocate, Steve Adams, who expressed concern that the rules would be too burdensome for smaller businesses to implement. 

            Barbara Anthony, Governor Deval Patrick’s undersecretary of consumer affairs and business regulations, said the latest rules are designed to be more flexible for small firms while still requiring tougher standards for protecting sensitive data from hackers.

             “In listening to the concerns of small business leaders, we understand there were issues regarding the impact these regulations have on those companies,” said Undersecretary Anthony.  “These updated regulations feature a fair balance between consumer protections and business realities.”  

            The new rules are slated to take effect next March.  The Office of Consumer Affairs and Business Regulations will hold a public hearing on the changes on Tuesday, Sept. 22, at 10 a.m. at the Transportation Building, 10 Park Plaza, Boston.  

            For more information about identity theft protection in Massachusetts, please visit the Office of Consumer Affairs and Business Regulation website, www.mass.gov/consumer.   

– Kate Reichert, Regulatory and Legislative Counsel

            On Friday, June 19, I attended a healthcare roundtable at F3 Engineering, a small, women-owned manufacturing facility in Paterson, NJ, to discuss with women-owned firms the state of health insurance in the small business world. 

            The roundtable featured SBA Administrator Karen Mills and the Secretary of Health and Human Services, Kathleen Sebelius, and drew more than 50 business owners and employees came from all over New Jersey, as well as New York and Pennsylvania, to share their thoughts, concerns, and ideas for the future.  

            Administrator Mills opened the meeting by expressing to attendees that she and the President are aware that the costs of both healthcare and health insurance are increasing.  She also addressed the concern that small business owners do not have access to affordable health insurance plans for their employees.  Administrator Mills noted that every year more small businesses are no longer able to continue to provide coverage for their employees because of rising costs.

            Secretary Sebelius discussed her background in the health insurance industry as a former State Insurance Agency head for the state of Kansas.  She stated that as a nation we pay $2 trillion per year for healthcare related costs and that nearly 47 million people are without health insurance.  She told the audience how she is working closely with the President to find solutions that will make health insurance available and affordable for small business and that cost is the major aspect of the President’s reform efforts.

            Many of the business owners shared their stories and anecdotes of high deductibles, coverage and procedure denial, and fighting unexplained bills for procedures.  A common theme among the owners was that they have to spend significant time annually researching new policies for their employees in an effort to keep the costs from escalating too rapidly.  Although some expressed regret for having to pass costs on to employees as the policies have become too expensive, I heard a united voice in that these small business owners felt it was a necessity for their business to remain competitive to offer affordable health insurance to the backbone of their businesses, their employees.

–Christine Glassner, Region II Advocate

From the White House press office:

President Obama Announces More Key Administration Posts

President Obama said, “I’m grateful that such experienced and dedicated individuals have joined my administration at a time when our nation faces great challenges. Their deep commitment to their individual areas of work gives me confidence that they will help us put America back on a path to prosperity and security. I thank them for their service and look forward to working alongside them in the years to come.”

Winslow Sargeant, Nominee for Chief Counsel for Advocacy, Small Business Administration
Winslow Sargeant has been a Managing Director in the technology practice at Venture Investors since 2006. From 2001 to 2005, he was the program manager for the Small Business Innovations Research (SBIR) Program in Electronics, a new office in the National Science Foundation’s (NSF) Engineering Directorate. Previously, Sargeant co-founded Aanetcom, a fabless semiconductor chip startup company with seed funding from Cisco systems which was acquired by PMC-Sierra. Prior to Aanetcom, he held senior engineering positions at Lucent, AT&T Bell Labs and IBM. Sargeant currently serves on the Boards of Silatronix and Pattern Insight. He also serves as a Director of the University of Wisconsin Foundation and is the Vice Chairman of the UW-Madison Astronomy Board of Visitors. He is a member of the Boards of Directors of WiCell, WiSys and the Waisman Center. Sargeant is a Trustee for the Wisconsin Alumni Research Foundation (WARF) and also serves on Purdue University Discovery Center’s Research Board of Visitors. He is a member of the Advisory Board of NSF’s Industrial Innovation and Partnership Division (NSF/SBIR). Winslow received the inaugural 2002 Wisconsin Distinguished Young Alumni Award and was a 2003 Outstanding Engineering Alumni Awardee from Northeastern University. He received a B.S. from Northeastern University, an M.S. from Iowa State University and his Ph.D. from the University of Wisconsin-Madison, all in Electrical Engineering.  Sargeant is also a Kauffman Fellow – Class 11.

            Troubled times are often the fuel of entrepreneurial spirit.  In a recent article in Entrepreneur magazine, Stimulus Package Has Green for Clean Energy, written by Glenn Croston, he notes the importance of supporting green businesses.  He quotes Byron Kennard, Executive Director of the Washington, D.C.-based Center for Small Business and the Environment as saying “[w]e’re calling on small businesses to lead the recovery and do it with green jobs and clean energy innovation.”  He goes on to say that “targeting the recovery with green businesses is the most practical way to get the economy going.”

            With $80 billion for renewables and other energy projects, small business will play a major role in innovation and economic efforts to move forward.  Programs are growing at the national level, and states have now begun to form education and networking forums where small businesses can get advice on the best practices and opportunities in the new green frontier.  

– Chris Monica, Director of Regional Affairs

            Connecticut legislators are currently considering a bill that will help improve the regulatory climate for small businesses in Connecticut.  House bill 5930, sponsored by Rep. Diana Urban, D-Stonington, would require state agencies to consider the costs to small business of proposed regulations.

            Representative Urban discussed the importance of this legislation in a recent Hartford Business Journal Online article. 

 “We all know that small business is the economic engine for this country,” she said. “Knowing the importance of small business to our economy, it only makes sense to do what we can to help them.” 

            Current law already directs agencies to conduct a regulatory flexibility analysis.  The bill would require that the business cost impact and regulatory flexibility analyses be completed when the rule is first proposed, rather than “prior to the adoption of the proposed regulation.” The change will provide small businesses an opportunity to alert regulators to unanticipated costs and less onerous approaches to achieving their regulatory goals.  The bill also expands the definition of small business from businesses employing fewer than 50 employees to businesses employing fewer than 75.

            The bill gained unanimous approval from the Joint Committee on Commerce and was filed with the Legislative Commissioners’ Office on March 11^th.

– – Kate Reichert, Regulatory & Legislative Counsel

            The Connecticut House Commerce Committee met this week to hear testimony on HB 5930 An Act Requiring Small Business Analysis for Proposed Regulation.  Representative Diana Urban, a strong voice for small business in the state as well as trade groups and individuals, voiced her support.

            The proposed legislation would require that a state agency, prior to adopting a new regulation, complete an economic impact analysis.  Several of those who testified noted that this legislation would afford small businesses the opportunity to “weigh-in” on proposed regulations.  Lisa Hunter, Executive Director for the Independent Electrical Contractors, noted that “too often, we are unaware of how regulation will impact us until we are facing deadlines and have to scramble to comply or face penalties.  House Bill 5930 will help address these concerns and improve our business climate.”

            Using a recent regulatory change from the agenda of the Connecticut Legislative Regulation Review Committee, Representative Urban provided a Small Business Impact Analysis Template.  The simple four-step process she presented demonstrated how an agency can determine an economic impact estimate of a proposed regulation in simple understandable terms.  Her proposal lets those of us without an accounting degree understand what the cost is going to be in plain terms.

– Chris Monica

            Today, President Obama will sign the American Recovery and Investment Act of 2009.  I thought that it might be helpful to state what is in this Act for small business.  Here is a run-down of some of the larger items:

·      $720 million to help support a number of programs at the U.S. Small Business Administration (primarily reducing fees on 7(a) guaranteed loan guarantees);

·      $400 million in support for economic development and entrepreneurship, particularly in distressed rural, urban, and low-income communities; and

·      tax incentives for small businesses, including a continuation of section 179 expensing up to $250,000 on new capital investments, loss carry back for up to five years, a delay in the three percent withholding tax for businesses having government contracts, and a reduced capital gains tax for small business investors holding stock for five years or more.

            Small firms can take advantage of other parts of the stimulus package, as well.  For instance, there are major investments in infrastructure, broadband, green technologies, home winterization incentives, etc., which can benefit large and small businesses alike.  Here are some dollar figures for these expenditures:

·      $27.5 billion for road construction projects;

·      $26 billion to local school districts to enable them to have “21st century classrooms”;

·      $7.2 billion for broadband access to underserved areas;

·      $15 billion for scientific research;

·      $19 billion for health information technology investments;

·      $30 billion for improving the nation’s electricity grid and other energy improvements; and

·      $5 billion to help weatherize homes for low-and moderate-income homeowners.

            Hopefully, small businesses will be able to capitalize on the contracting opportunities just mentioned.  In addition, to the extent that the economy starts to improve, small businesses, which account for half of our real GDP and tend to recover quicker from recessions than their larger counterparts, will see indirect benefits from passage of this bill, as well.  For more information, refer to the sources below.

Sources: Speaker of the House, House Committee on Appropriations, House Committee on Rules

– Chad Moutray, Chief Economist

            On January 15, 2009, the Nashville Area Chamber of Commerce will host a Business Outlook Summit.  This first-ever event will focus attention on key business and economic trends for the Nashville area in 2009.  CEOs, sales and marketing managers, human resources staff, facility managers and other local leaders are expected to attend the event and join the discussion on the region’s current business environment.  One of the specific areas of focus will be on the needs and interests of small and mid-sized businesses, with an eye towards business planning for the coming year.

            The keynote speakers include Dave Altig, senior vice president and research director of the Federal Reserve Bank, Atlanta, GA; Robert “Tim” McGee, director of Macro Strategy & Research at U.S. Trust, Bank of America Private Wealth Management; and Rob Atkinson, president of the Information Technology & Innovation Foundation, Washington, D.C. 

            Region IV Advocate Pat Gartland will represent the Office of Advocacy at the event. 

– Kate Reichert, Regulatory & Legislative Counsel