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North Bay Business Journal

Monday, October 25, 2010, 3:31 am

Small Business Development: California official urges understanding of small businesses

By by Dan Verel and Jenna V. Loceff, Business Journal Staff Reporters

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    Elected officials proclaim to understand and support small businesses but often fail to provide a truly conducive atmosphere for a sector that makes up the majority of the economy, according to Hector Barreto of the California Commission for Economic Development.

    Speaking at the Napa Chamber of Commerce’s E3 Economic, Education and Expectations Conference at the Silverado Resort, Mr. Barreto shared his experiences and knowledge gleaned from his tenure as the head of the Small Business Administration under former President George W. Bush.

    He told the crowd of about 200 that 99 percent of all businesses within the U.S. are small business — those with fewer than 500 employees and less than $6 million in annual revenues.

    And government should be more accommodating of the 27 million such businesses in the country by providing clear incentives rather than confusing rules and regulations, Mr. Barreto said.

    “You can call them small businesses, but they are not small in what they do,” he said. “We hear a lot about small businesses from our elected leaders. But it always strikes me how ignorant, for lack of a better term, they are about them.”

    “Small businesses are really struggling. Government is not very good at creating jobs. It’s really entrepreneurs and small businesses, and government is needed to create the right environment,” he added.

    Particularly, small business owners express uncertainty about what lay ahead, with respect to how health care reform will impact them, the deficit and uncertainty about taxes, Mr. Barreto said.

    But there are resources, he said, and business owners should be mindful of three things as they seek stability and growth — capital, contracts and capacity.

    Capital has been challenging, as banks have reduced small business lending by as much as 30 percent in recent years, he said. But small businesses should seek contracts from the federal government, where as much as $100 billion is available, Mr. Barreto said, adding that a vital resource is the Small Business Administration.

    “Anything we can do to help them get that, they can take care of a lot of issues,” he said of the SBA efforts.

    He also urged small businesses to remain ever watchful on the political process to keep abreast of what they need to know to operate their companies.

    “In the U.S., 50 percent of businesses fail in the first four years. Why? They don’t know everything they need to know. When times are good, small businesses only look at what’s in front of them, but when times are bad, they’re looking up and around,” Mr. Barreto said.

    Small, struggling businesses might consider micro-lending options and smaller loans from the SBA, even if they may have posted consecutive losses. “Get one of those small loans, service that loan and that will get you the credit,” needed for a larger loan.

    He added, “All businesses start small. No one starts as a Fortune 500 Company.”

    Other speakers at the conference included Assemblyman Tom Torlakson, D-Contra Costa, Gary Craft, principal and founder of Craft Consulting, Jim Cassio, principal of Jim Cassio and Associates, Marc Johnstone, a business coach for Shirlaws, David Crane, special adviser to Gov. Arnold Schwarzenegger for jobs and economic growth, and Alan Deutschman, author and motivational speaker.

    ***

    Small Business Majority, a Sausalito-based, national non-profit advocacy group for small businesses, recently said that Assembly Bill 32, California’s clean energy law, could generate as much as $4.6 billion for a wide range of small companies through 2020.

    “Under AB 32, California’s small businesses will be able to take advantage of the increased investments, innovation and energy efficiency savings that the law will generate,” said John Arensmeyer, founder and CEO of the organization.

    According to a report by the nonprofit group, California’s clean energy standards provide numerous opportunities for small companies to “gain a financial edge in the burgeoning clean tech and energy efficiency sectors.”

    More than 15,000 jobs could be added and the financial benefit could equate to an extra $1,115 per employee for California small service companies, according to the report.

    ***

    California Community Colleges through Economic and Workforce Development, have created the Business and Entrepreneurship Centers program.

    There are seven centers located at community colleges throughout California that aim to support the natural cycles of entrepreneurship and business development in California by bringing entrepreneurial training and education to existing business owners and future entrepreneurs.

    Through partnerships, collaborations, and relationships with businesses and industry and the 113 California Community Colleges, the BEC strives to heighten awareness of entrepreneurship as a proven career path.

    Michael Roessler is the director of the program and said, “Our message to these groups is that we want to strengthen entrepreneurial spirit.”

    “We want to go out and take the resources that we have to partner with the local business groups that already exist.”

    More information can be found at www.cccewd.net.

    •••

    Submit items for this column to Dan Verel at dverel@busjrnl.com, 707-521-4257, or Jenna V. Loceff, jloceff@busjrnl.com, 707-521-4259.

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