As the new year begins, small-business owners need to look at the big picture. While many business owners are concerned with making the monthly payroll, other issues — such as managing employees, competing with bigger players, and determining which customers are profitable (and which aren’t) — should be addressed now and throughout the fiscal year.
With that in mind, the Intuit Small Business Blog asked Robert Goetz (pictured), director of the Small Business Development and Veterans’ Business Outreach centers at Gulf Coast State College in Florida, to share his thoughts on what 2014 will bring for small businesses.
ISBB: What kinds of services does
the Small Business Development Center offer to small businesses? Are there similar centers throughout the country?
Goetz: The SBDC provides free consulting services, confidential financial advice, and various training programs — including numerous courses on QuickBooks — designed to assist entrepreneurs in developing successful and thriving businesses.
All 50 states have a small-business development network funded through the Small Business Administration, which varies from state to state. Most are associated with institutions of higher education. All offer free, confidential, one-on-one consulting, training, and other services. The 40 SBDCs in Florida, headquartered in Pensacola, are also funded by state dollars (as in other states). All of the centers are designed to reach out to businesses, regardless of size, although the focus is on small business. The centers work with businesses in various stages, from concept and early/startup to mature/existing businesses. The goal is to help small businesses be as successful as possible, which in turn leads to job creation.
What are the biggest challenges facing small businesses in the U.S.?
The biggest challenges to small business are finding customers and finding capital. Both are critical to sustaining small-business ventures. Small-business owners have technical or vocational skills, but their managerial skills are not up to par. They don’t know how to manage limited resources. What most SBDCs do is equip business owners with the skills and managerial understanding necessary to be successful.
Are there any current misconceptions regarding small businesses?
I like to make a distinction between entrepreneurship and small-business management. Often they are used interchangeably, and this is not the case. The small-business owner is engaged in running a business venture; entrepreneurship is about discovery, exploring new things.
The best definition I’ve seen of “entrepreneurship” is [the one] Howard Stevenson (Harvard Business School, 1975) coined in his book Breakthrough Entrepreneurship: “Entrepreneurship is the pursuit of opportunity without regard for resources currently controlled.” This is critical to sustaining American capitalism.
How do you see the business landscape changing for small businesses in 2014?
First and foremost, on the capital side, capital is becoming more readily available. Banks are more willing to lend, and crowdfunding is changing the landscape, making it easier for businesses to find funding. Federal regulations on crowdfunding, however, are yet to be determined.
Will the increase in minimum wage affect small-business owners?
I don’t think so. It may affect restaurant owners, but they are exempt from paying minimum wage to servers because tips are part of their compensation. I think it has been blown out of proportion by the media.
Will mergers and acquisitions continue to gobble up competitors, or will the smaller players be able to hold their own?
I don’t think
consolidation is necessarily a bad thing. The negative is when conglomerates purchase a small business and move it out of the local community. If the company is allowed to remain, or the existing owner is bought outright, then it keeps the jobs local. That’s how Silicon Valley got to be what it is today. Such mergers and acquisitions bring additional resources into the community.
All of the buzz seems to be around mobile devices. Do you agree that small businesses will need to reach their target markets via mobile?
Absolutely. Not having a presence in mobile is like not having a presence on the web 10 years ago. And that’s not going to change. Mobile is a great opportunity for small businesses to compete with large businesses as well.
Any advice you’d give to small-business owners for the coming year?
It’s the same advice I gave them last year, in some ways. January is a good time to look over your customer list. Don’t be afraid to “fire” customers. The customer is always king, but not always right. Determine the customers who are most profitable for you. Lose the customers that are a pain in the ass and let them go to your competitor. Let them off easily: Tell them they’re just not a good fit. They become a drain on your resources, and they hurt your profitability. Revenue growth is always desirable, but equally desirable is profitability.
Look at your best customers and determine what makes them best. Define those characteristics; those are the types of customers you want to attract in 2014. A lot of small business owners don’t do that.
January is also a good time to reach out to key stakeholders: customers, employees, vendors, and stockholders, too, if applicable. Wish them a Happy New Year and keep the rapport open. It’s all about relationship building.