Since its inception in 1953, the Small Business Administration (SBA) has been an invaluable resource for entrepreneurs. Whether it’s providing loans through its many lending partners or offering counseling services via the nearly thousand small business development centers (SBDCs) nationwide, the SBA helps small businesses advance to the next level of their development. Recently, business writer Iris Dorbian spoke to Michael Chodos, associate administrator for the SBA’s Office of Entrepreneurial Development about a host of new initiatives spearheaded by the agency. A former Los Angeles-based lawyer who once ran his own firm, Chodos explains why it’s a good time to launch a small business, and which demographic group is taking the lead in start-ups.
ID: What are some new SBA developments or initiatives that small business owners should be aware of?
MC: The SBA just announced its new veterans’ pledge initiative where a number of SBA lending partners agree to expand their lending to vets by $475 million over the next five years. It’s a wonderful new opportunity for the SBA to help with its private sector lending partners to get more financing into the hands of our vets as they start to grow their businesses
We’re also putting in place the foundation for rolling out our veteran entrepreneurship-training program at bases all over the country as part of our transition program for returning vets. We have about 250,000 returning servicemen and women each year who are going to be coming back within the next five years. Vets start new businesses at a 40 percent higher rate than most anybody else.. They are great natural entrepreneurs and this gives them the tools they need to succeed.
We also have a partnership with AARP to support encore entrepreneurs. Over the next few years, 70 million folks are going to reach early retirement age (age 50 and over). What that basically means is that at age 50, many folks have been in business or in a particular career for 20 years to 25 years. In the past they were looking to retire at age 62 or 65. For more and more folks, having 20 or 30 years after that when you are not working is not feasible from a financial perspective—and it’s not necessarily how they want to spend those additional productive years in their lives. Entrepreneurship rates among those over age 50 are growing much faster than entrepreneurship rates among those between the ages of 20 and 30.
Many of those folks are particularly interested in making sure they have the tools to succeed if they decide to start a business. So they are very actively engaging with us to find out what courses and other resources we have for them. In April we completed our national encore entrepreneurship month where we had events at over 100 locations around the country to introduce encore entrepreneurs to our resource partners network, small business development centers, SCORE chapters, and women business centers.
ID: Given the still sluggish economy, is it a good time right now to be a small business owner or launch a small business?
MC: Absolutely. There’s a truth that every tough time represents a tough time for each individual business as well as a huge opportunity for the coming years. The recession over the last four years was difficult for America’s small businesses, but new business startup rates are now double what they were at the bottom of the recession.
ID: But are these digital, home-based businesses that have a sole proprietor?
MC: They are all over the map. We have construction businesses that are opening; consulting businesses for folks that are leaving large firms and opening their own shops. We have food-based businesses and all kinds of personal lifestyle businesses including everything from Main Street salons to hair care product businesses. We have importers and exporters. There’s an incredibly broad range of businesses starting right now. And, of course, we have lots of businesses that have been flourishing, while their competitors, who have not been planning as effectively, have not survived.
MC: The first and most important quality for successfully launching a business is an openness to learn from others. You might think the first thing you need is money or a great product or service. But the most important element is the willingness to learn from others so you don’t waste time or money making mistakes that other people have made. A business owner who has problems is one who’s not willing to get advice.
ID: Based on your insight and knowledge, where do you see the small business space evolving in five years or 10 years?
MC: This is going to be an incredibly vibrant time for small businesses. Everything that small businesses thought they knew about how to be successful had to be reassessed. This is a time when our focus on startups, on how to improve the methodology for Main Street businesses, and on how to support growth, especially among our manufacturers, is going to be completely renewed and reinvigorated. You’re going to see a real golden era in the expansion and growth of small businesses and associated job creation in the next five years. What’s going to be most important about that is that our young entrepreneurs now believe in a way that they haven’t in years. They can create their own opportunities by starting and growing a business and they don’t have to wait for somebody else to employ them.
ID: Why is that?
MC: I think they look around and see the rates of business startups in underserved communities. With folks coming out of universities and the expansion of entrepreneurship education across the country, both supported by SBA and many of our partners, [there’s an increased] awareness of entrepreneurship as a legitimate career path.