Helping Small Businesses

David Robinson has a business editorial in today’s paper about assistance to small businesses.  94% of this area’s businesses have 50 or fewer employees, yet they are generally overlooked by politicians and funding agencies who are more interested in the big score with larger employers. 

What was interesting was Robinson’s remarks about helping “to finance would-be entrepreneurs with loans of $25,000 to $50,000” as a way of providing seed capital.

Robinson is lumping small businesses into a single category of “we need money” beggar-types who won’t succeed without an influx of cash.  That may be true for a small fraction of these businesses, but I argue (based on my experience with startups and small companies) that a loan is not going to help most of them nearly as much as a mentor.

Businesses that succeed do so because they find a respectable balance among business practice, marketing, sales, finance and product development or delivery.  Small businesses tend to fail because the few persons in charge can’t cover all those bases efficiently or with expertise.  That’s where a mentor, or a board of advisors, or a consulting group, would come in handy.

If we are to get the government to create a fund supporting small businesses, I would suggest that rather than give out cash, it finance qualified mentors and consultants to help develop the strategies that those businesses need in order to succeed in the long term.  We already have local business volunteer mentoring programs:  The Center for Entrepreneurial Leadership thrives on the business/mentor relationship; SCORE (Service Corps of Retired Executives) volunteers its members’ time to help businesses, and the Buffalo Niagara Partnership also has mentoring programs in place. But these volunteer programs can only go so far.  A funded mentoring program, with payment incentives based on corporate long-term success, would go much further.

A cash influx is a short-term remedy but does nothing to fix the experience gap that most small businesses suffer.  Just throwing money at the problem may be simple to do but is not a very good solution.

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