Grab Your Business Plan: It's National Small Business Week
May is a popular awareness month. Its 31 springtime-y days contain Star Wars Day (May 4), Accounting Day (May 16), and PCMag.com EIC Dan Costa's personal favorite, Geek Pride Day (May 25), among many more. But while geeks are great, my own favorite May awareness initiative began yesterday because that marked the beginning of National Small Business Week, which this year runs from May 1-7. National Small Business Week is sponsored by this country's greatest, though oft overlooked, small business resource: The US Small Business Administration (SBA).
In the mad race to snag mountains of venture capital (VC) dollars from angels and prominent Silicon Valley tech investment firms, many start-up founders and small business owners skip over the SBA because they think it's just about small loans for small businesses in small locales. That's a mistake. Founded in 1953 by President Eisenhower with the signing of the Small Business Act, the SBA facilitates billions of dollars worth of funding to start-ups and small businesses every year (more than $80 billion since its inception), both directly and indirectly. To get a breakdown of what the SBA can do for your company, I spent some time on the phone with Mark Walsh, who heads the Office of Investment and Innovation (OII) at the SBA.
Walsh started with the SBA early in 2016 after spending more than 30 years as a technology entrepreneur and executive, including co-founder of GeniusRocket and senior executive roles with companies including AOL, GE, HBO, Homesnap.com, and more. Walsh was an angel investor in his own right, and has acted as a board member and advisor to numerous successful start-ups. He's got technology start-up chops like few others on the planet, and he loves heading up the OII because it focuses on "high-growth companies," which is government and financial speak for something close to his heart: start-ups.
Direct and Indirect FundingWalsh and the SBA help grow companies in many ways, but financially they do it through two primary channels: by loaning money to licensed private investment funds [otherwise known as Small Business Investment Companies (SBICs) so they can invest in small businesses on their own], and by providing cash grants directly to growing companies via the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
"We work with more than 300 licensed SBICs all across the country," said Walsh. "Whatever money they raise to invest in growth companies, we can provide them double that amount, at 3.5 percent interest over 10 years. They then go and invest that money in thousands of small businesses every year. It's not quite free money but it's darn close."
And it's effective, too, with alumni of these investments comprising companies such as AOL, AmGen, Apple, Costco, FedEx, and many more. But, while enabling third-party equity companies to invest in small businesses with less risk is key to Walsh's mission, he really likes working with SBIRs because it enables him to directly interact with the start-up and small business community.
"Through SBIR and STTR, we get about $2.5 billion a year to hand out directly as cash grants so we can fund start-ups that are mapped against the needs of other government divisions," explained Walsh. "So, if the DOD needs a new way to weave Kevlar to make a more effective bulletproof vest, we help find an innovator capable of that advance. Then, depending on their response to our RFP [request for proposal], we give them a first cash grant to prove out the tech and, if that's successful, a Phase 2 grant to show that they can effectively manufacture and scale. If that works out, we introduce them to their customer—in this case, probably some generals at the Pentagon."
It's an effective system and one that Walsh's team works hard to execute year round, including an Accelerator Growth Fund Competition, which began in 2014 and is just around the corner in 2016. In this contest in 2014, more than 800 entities applied for $2.5 million in cash prizes, with small compaines competing against each other for 50 prizes (each worth $50,000). That got bumped to $4 million in 2015, and will run this year (from May 2 to June 3) for the same prize amount, up to a total of $3.9 million.
"But one of the things I love most about these funding programs," said Walsh, "is that they're not subsidized in any way. We're a zero-subsidy government organization that funnels billions of dollars into the US economy every year, while actually making money for the US Treasury Department."
More than MoneyBut what many people don't realize is that the SBA is about far more than just handing out money. Entrepreneurs can benefit from the SBA almost as soon as they're done with their first napkin doodle. That's because, aside from dishing out greenbacks to deserving companies, the SBA also deals in another important start-up commodity: experience.
"When I walk into a staff meeting, I often can't get over how much experience is in that room," said Walsh. "Every time we meet, there's more than 110 years of combined entrepreneurial experience around the table, and we use every bit of it when evaluating businesses, technologies, and applications."
The SBA has several mentoring and learning programs available to small business owners and entrepreneurs and, if you're in the US, you've got several within driving distance right now. There's SCORE (previously known as the Service Corps of Retured Executives), which provides free learning and face-to-face mentoring by experienced business executives to budding entrepreneuers at a local level. That means you'll sit down with someone who's got real-world business chops, and can help you write and organize your business plan, strategize future growth, and find the right funding options for your situation. And if SCORE isn't your cup of tea, there are also Small Business Development Centers at every state university in the country, as well as at most large and midsize cities (they offer similar services as do the various demographic- and minority-focused SBA offices).
"I'm so often amazed by how fuzzy people are when they come in to talk about their business plan," said Walsh. He indicates that it's both easy and free to have the experts at the SBA help you focus your ideas and your plan. If you think you're ready for that kind of mentoring, Walsh has five tips to help you get started engaging with his organization.
"First, make sure you're a US-based business," said Walsh. "You'd be surprised how often people forget that. Also, be sure to come to us for advice before applying for anything officially. We've got a huge number of advice givers on staff."
Aside from the resources mentioned earlier, the SBA also supports a load of online learning available via webinar, chat, and forum-style communication; just check the national SBA website or the one for your local chapter.
"Next," Walsh said, "choose the financial program that makes the most sense for you and we can—and should—help you do that. Fourth, get your paperwork started early. Hey, we're the US government so you know there's going to be a lot of paperwork and it's best to get started on that right away. And, last, and maybe this is circling back a bit, but be sure to have a clear, detailed vision. Our expertise can help, but it's up to you to understand what you offer, what you want to do, and, most importantly, how you define success."
You can get a better feel for the SBA and what it has to offer by attending some of the events the agency is sponsoring during National Small Business Week. PCMag will be covering a live panel discussion on cybersecurity later today, but there are events scheduled throughout the week that you can attend locally or view live online through the SBA's website. And after you've participated in these events, scratch together your napkin idea collection and head over to your local SBA office to discuss your future. It doesn't matter whether you're heading a team of MBAs or you're just a solo operator with a dream; it's all the same to the SBA. Or, as Walsh puts it, "Once you connect with the SBA, you're never alone."
This article originally appeared on PCMag.com.