| Pat Blanchard Director Jacksonville Women’s Business Center Jacksonville Regional Chamber of Commerce | Cathy Hagan Area Director Small Business Development Center University of North Florida | Marshall Reddy Florida Principal FranNet Franchise consulting and business brokerage | Stephen Veniard Senior Vice President CenterBank of Jacksonville | |
| Define “small business” based on your professional purposes. | Small businesses typically for the chamber’s Small Business Division are from 1-99 employees. We say that a business with one to nine employees is stage one, while those with 10-99 employees are stage two. This would be inclusive for women-owned and men-owned businesses. It doesn’t matter which industry or type of business is involved. | The SBDC uses Small Business Administration size standards to define “small business,” which vary based on the type of business. For example, retail businesses are considered “small” if they have revenues of $7 million or less. Most manufacturers are considered “small” if they have fewer than 500 employees. In Jacksonville, 98 percent of all businesses have fewer than 100 employees, so the vast majority fit the profile of an SBDC client. | There are different definitions depending on who is asked. Personally, I believe a small business, on average, employs 15 people or less and has revenue of $1 million or less. | Small business is sometimes defined by annual sales and number of employees. We typically consider a small business as $5 million or less in annual sales. A large portion of small businesses in Jacksonville have less than $1 million in sales. That’s a significant gap from one to the other, so we have to be sensitive to the needs of really small business and those about to enter the middle market business size. |
| Could you estimate what percentage of small businesses in the Jacksonville area did not survive the 2007-2009 recession? | We do not track that at the Small Business Division of the chamber. (The Women’s Business Center is part of that division.) | It is difficult to determine if businesses that closed during this time period did so as a direct result of the economic downturn. While the recession has created uncontrollable external challenges, often it is the mismanagement of internal “controllable” variables that results in the failure of a small business. | The national Small Business Administration average was 12 percent for those with SBA loans, which does not account for all small businesses, so the number is higher, I am sure. My “guess” is probably around 25 percent, maybe more. With my franchise clients during the same time frame, I do not recall one of them closing their doors. | Our best estimates have been falling in the 10 to 20 percent range. Traditionally, about one-third of all small businesses fail within two years. I’m unsure as to how many businesses may have been founded and failed from 2007 to 2009, but we know that a significant number of businesses older than two years did fail. Some crashed quickly, others fought hard to stay afloat, but the challenges of the economic conditions were too harsh to overcome. |
| What is the most significant challenge facing the small businesses with which you work? | Access to capital to either start or sustain their business or help it grow is the most significant challenge. Another challenge is accessing the time to utilize the resources in the community to teach them about running a successful small business | Uncertainty is the biggest challenge. Customers are uncertain about their future financial situation, so they are not spending as much. Small business owners are uncertain about the impact of health care reform or changes in tax law, so they are being cautious about hiring. Banks are uncertain about the future lending environment, so they are being ultraconservative in loaning money small businesses need for growth. | Funding from the banks. Fortunately, most entrepreneurs are finding “work-arounds” for the lack of money that banks are willing to lend. Necessity is the mother of invention, as they say. Across the United States, I would say that less than 20 percent of our clients have actually gotten a bank loan in more than two years (so they work around the issue). About 80 to 85 percent of our clients are using some of their retirement dollars now to fund their businesses. | By far, the tepid economic climate is still hostile to small business. Struggles come in reduced sales, often as a result of high unemployment rates and reduced consumer spending, and also in cash flow and access to capital. To address these points, CenterBank introduced a no-closing cost commercial mortgage for owner-occupied real estate on purchases or refinancing. Small businesses can take advantage of low rates and low real estate prices, which can improve cash flow. |
| What are the strongest survival traits among the small businesses with which you work? | The strongest survival traits are persistence, cutting all but critical expenses from their operating budget and taking advantage of small business workshops and programs. | Persistence and perseverance are key characteristics for survival. Businesses that are surviving today, and thriving in some cases, are for the most part those that had a strong foundation before the economy began to slow down. They are persistent in nurturing relationships with existing customers and pursuing opportunities to innovate and diversify to attract new customers. At the same time, they persevere by looking for ways to be more efficient. | Dream, desire, fear, courage and vision of what they want their lives to be moving forward. Most people that I speak to have come to realize that the their future is dependent on them, not a company they work for or the government. | It’s tough to run a small business in good times and incredibly difficult in bad times. We see small businesses that survive these times are the ones that stay focused, are conservative in their bottom-line thinking, and are somewhat adaptable to the changing environment. Core-business offerings for some companies are radically changing, or disappearing, and it helps when leadership is flexible enough to change their businesses to offer products or services for viable markets. |