Small business plays a big part in the economy

Small business is the backbone of the economy. It accounts for about 40 percent of the gross domestic product and employs about 67 percent of the work force. The vast majority of businesses in this part of the state are small businesses that employ fewer than 50 people and most employ 10 or fewer. The unfortunate fact is that the majority of start-up businesses fail within the first two years. If I were pinned down to identify the main reason for these failures, I would say that most people who start a business of any kind do not understand that the operative word is business.

Most who go into business for themselves are very good technicians, be they doctors, cooks, gadget makers, repair people, etc. What most fail to do is become business people. We at the Small Business Development Center try to give people the insight as to the kinds of questions they should ask as business people, and at times we even supply some of the answers. We provide a basic three-hour seminar called Steps to Starting a Small Business, which brushes on such areas as market research, feasibility analysis (can I make money doing this?), types of business structure, record keeping, licensing, insurance and other subjects.

We also do a more extensive program (14 hours) in conjunction with NationsBank, which covers the same ground but in more detail. We produce more than 300 seminars and workshops each year, which cover information essential to small business owners.

There is a small fee for seminars, and the workshops are free. In addition, we provide one-on-one counseling at no cost to the client. The SBDC employs counselors with expertise in government procurement, energy programs, taxes, finance, marketing, minority- and women-owned businesses, and general business information. The center also has an extensive list of volunteers from the business community who unselfishly give their time to help others.

The most frequently asked question is "How do I get financing for my business?" If it is a start-up, it is very difficult. Most start-up businesses use the "F&F" method - friends and family. Are you prepared to lose your life's savings? If the business has a track record of at least two years and has a good business plan, then there is a reasonable chance for financing through several sources. However, all financing organizations require major collateral.

Here are some tips on starting a business:
Every business should have a dynamic business plan. It should contain an executive summary, marketing plan, feasibility and analysis, resumes of owners/officers, financials (actual and projected) to include profit and loss, cash flow and balance sheet. Every entrepreneur should do market research about his or her business on a continuing basis. Use the library, join trade associations, subscribe to business periodicals, etc.

Understand how to price. It is an art based on the perception of customers. Know what is important about location and operating hours. Be aware of how to deal with vendors. Be particularly cautious about record keeping. Most small businesses, like individuals, overpay their taxes because of bad record keeping. Good records allow the owner to analyze potential trouble spots early and correct for them. Understand that in small business procrastination equals failure.

Be aware of the advantages of leasing or buying. A rule of thumb for small business: If it appreciates buy it; If it depreciates, lease it. Consult a commercial insurance agent and a commercial insurance broker. How much insurance is needed? Does the business need worker's compensation, liability, business interruption insurance?

Above all else, understand that the key to any successful small business is SERVICE. Look around and see all of the competition. It is not often that customers don't have choices. The customer base is finite and if one is disappointed they will tell 11 others. Do whatever is necessary to keep customers happy. The list goes on and, obviously, one could spend his or her entire life just studying the business of doing business, but the bottom line for any entrepreneur is to make dollars. We here at the SBDC do what we can to make that bottom line a reality. Any small business person is welcome to write or call us and we will be happy to respond.

The Small Business Development Center at the University of South Florida is at 1111 N. Westshore Blvd., Ste 201 B, Tampa, FL 33607. 813-554-2341.

Charles L. Attardo is counseling program director of the Small Business Development Center at the University of South Florida