Why SBA/SCORE are not the place to get help starting a business
by chuckblakeman, Window Shopper
- Created: March 19, 2010, 12:24 pm
Unfortunately the SBA is not set up to actually advocate for startups in any way. To the contrary, the SBA has a long history of making it more difficult.
When the SBA was created in 1953, big business wanted a piece of the pie and lobbied heavily to control the definition of 'small'. As a result, the SBA was tasked with servicing all companies under 500 employees, which constitutes 97.7% of all businesses in America!
97.7% of all people in America are under 7 feet tall. The SBA's definition of small is no different than claiming that everyone under 7 feet tall is 'short'. It's also like getting a super-sized french fry, taking the tip off of one fry and claiming it is now a 'small' bag of fries. No part of society would recognize 6' 11' people or giant bags of fries as short or small, but somehow we're supposed to accept the SBA's defintiion of 500 employees as small business.
The constituency of the SBA is so broad as to be simply without definition. The vast differences between a 3 person business and a 25 person business are significant enough. How much more disparate are the differences between a 3 person business and a 500 person business? How can one agency possibly serve them both legitimately? We make divisions like small, medium and large to make things manageable. Just calling everyone under 7' tall short does not make that artificial division manageable.
Therein lies one problem with turning to the SBA for help starting a new business. With a constituency from 1 to 500 employees, who do you think the SBA is going to expend the majority of its energies on? Companies with 50, 100, 250 and 500 employees are going to be the focus of such an agency and this has proven out over the last 50 years.
As an example, the only SBA loan program that was ever created to assist true small businesses under 10 employees is the ARC loan. In Feb. 2009 Ms. Mills declared it as 'immediate relief' for 'distressed but viable small businesses.' It turned out to be neither of those, as the loans took half a year or longer to get and were only avaialble to very healthy businesses who didn't need them. And halfway through the program Ms. Mills asked Olympia Snowe to introduce legislation to kill the entire program and return all of the remaining funds immediately to the Treasury. There was no protest or comment from the SBA.
Further, all of the recent pontification over the last 18 months on helping small business by politicians and the SBA has been simply the raising of ceilings on existing programs and providing tiny tax incentives that only help large businesses. The ongoing and central issue - the inability of viable small businesses under 10 employees to get access to credit - has been virtually untouched by the SBA. Today the SBA posted a question on one of the forums asking owners to tell them which industries are applying for loans. This demonstrates how out of touch the SBA is with true small business.
One of the 'bones' that the SBA has thrown to startups undert the pretense of helping small businesses is the SCORE counseling centers throughout the US. My sister-in-law told me last year she had checked in with a SCORE counselor on her idea for a new small business. I stopped her and said, 'Let me finish this story for you. You told them what you wanted to do, they did a spreadsheet on it and showed you what a bad idea it was, you didn't try to do it, and you are very thankful to the SBa for saving you from yourself.' Her response was 'How did you know?'
SCORE takes great pride in saying they kill over 90% of the opportunities presented to them, and feel very good about saving grown adults from following their dreams. There are a number of very big problems with this. First, is the makeup of the SCORE counselors themselves.
Tthe overwhelming number of SCORE counselors are retired and are in the most risk-averse years of their lives, having built a lifetime of reasons to not take any more. They've lost that young and dangerous mind that creates, innovates, and goes places no man has gone before. And too many of them want to save people from the pain of struggle when in fact it is that struggle that creates the opportunity and the progress. People don't learn to run a 4 minute mile by avoiding the struggle.
Also, the overwhelming number of SCORE counselors have never started a business from the ground up with no investor. They have no idea what it means to bootstrap. And way too many of them have never even been involved in a small business, having retired from middle management jobs in larger corporations. Their only response to risk is to pull out an excel spreadsheet.
Second is the fact that this is a government agency. Since when has the government ever been considered an expert at taking risks to innovate, create and forge into new frontiers? Putting a startup assistance program in a government agency is like giving a 900 pound gorilla an ant to watch over. The stifling bureaucracy, risk avoidance and focus on maintenance and stability and lack of profit motive that defines the government is not the influence that will give rise to start ups.
Third, it is well established fact that it takes somewhere between five and 14 iterations of a business before it finds its pot of gold. So almost no business makes sense on an excel spreadsheet right out of the gate.
If Stephen Jobs would have taken the mouse and the GUI interface to the SBA and SCORE to ask if he should start a company, they would have proudly done the excel spreadsheet math and showed him it wouldn't work. In fact Jobs bought GUI from Xerox in 1979 (Xerox did an excel spreadsheet on it and couldn't find a way to make money on it) and didn't have a success with the MacIntosh until 1984 - five years later! Hewlett and Packard's first attempts at business were a) an automated bowling lane violator and then b) a harmonica tuner. Imagine how the SBA would have killed their dreams, and yet look what the world gained because they didn't have dreamkllers overssing their startup.
Multiple studies have shown absolutely no correlation between a Business Plan that looks good on an Excel spreadsheet and actual success. Further, almost no startups have ever had a Business Plan of any kind when starting up (and yet everyone continues to promote it as the right way to start a business). I've talked with thouaands of business owners and when I run across the very few that actually started with a Business Plan, I asked them how it worked out and to a person, they all laughed.
Further, where does the government get off trying to save consenting adults from spending their own time and money chasing their dreams? Why do we need a government entity to save us from ourselves? How is it the government, which has never started a business and is full of people who have never started one (something less than 20% of all senators and congressman have done so, almost none of the bureaucrats have) - how is it that they are the experts on who should start a business?
Finelly, the government has no heart. It is a machine that works on numbers. It cannot deal with subjectivity, passion, vision, a burning cause, a heart for solving a problem, complete commitment to a bad idea, bull-doggedness, survival instinct, profit-motive or other ambiguities in life. And yet these are the principle traits of success in a startup.
it is almost never the viability and sensibility of the intial product or service that decides the success of a company. It is almost always the intangibles that reside in the head of the founder. The SBA and SCORE are wholly unequipped to deal with these intangile subjective factors of success. Instead they show you a spreadsheet, you assume they are the experts, and your dream is gone. That's what happened to my sister-in-law, and she was thankful they did it to her.
Albert Einstein said 'The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.'
The SBA, SCORE and the government are built on the rational mind expressed in a spreadsheet. Entrepreneurship is built on the intuitive gift expressed in a vision and a passion for doing the impossible. Why would you trust your dream to the government?
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