Nearly 62 percent of small businesses in America have four or fewer employees, and we know in South Florida that number tops 90 percent.
Helping small businesses scale offers enormous, and largely untapped potential in creating new jobs and generating economic development, according to a new report titled “The State of Small Business in America” by Babson College.
“We all benefit if we are able to foster a vibrant entrepreneurial ecosystem that best supports ongoing small business growth and job creation in America,” said Babson College President Kerry Healey. “Public and private sectors must work together to support small businesses, which comprise 99 percent of all U.S. employer firms and which account for more than half of the private sector’s net new jobs over the past two decades.”
More than 1,800 businesses across the United States were surveyed for the report. Most of them were participants in Goldman Sachs 10,000 Small Businesses, a national program available in South Florida that helps existing small businesses grow. Key findings included:
▪ Obtaining capital remains a big hurdle. Small businesses are four times more likely to go to a bank for capital needs. Looking across all sources of capital, survey respondents apply for a median amount of $100,000, but receive only 40 percent of what they seek. Businesses say they need more flexible loan terms.
▪ Business owners find regulation both difficult and time-consuming. On average, four hours per week is spent dealing with government regulations and tax compliance, which totals over 200 hours per year.
▪ The skills gap is overwhelmingly a small business owner’s No. 1 issue with respect to hiring. Over 70 percent of respondents find it difficult to hire qualified employees because they say potential candidates lack the requisite skill sets — over and above competition for talent, salary requirements, and the provision of benefits.
This new report comes out on the heels of the Kauffman Foundation’s Index of Growth Entrepreneurship ranking the Miami area as second to last among metro areas for scale-up businesses. Yet the 10,000 Small Businesses Program, among other programs, is directly addressing the very issue of helping existing small businesses to scale, including assistance with capital raising, navigating government regulations, and team building.
And it’s working.
Nationally, over about six years, 10KSB with program locations in 22 states has now served more than 6,100 businesses, representing more than $5 billion in total revenues and more than 80,000 employees. Nationally, more than 60 percent of program alumni have added jobs 30 months after graduating with average job growth at the rate of 114 percent, and 82 percent of program alumni have increased revenues by an average rate of 106 percent within 30 months.
John Hall, executive director of the 10,000 Small Businesses at Miami Dade College program, said the growth trends of local 10KSB graduates have been consistent with the national averages. The local, free 16-week 10KSB program, which uses Babson’s curriculum and supplements the education with individual mentorship and a sharp focus on growth strategy, kicked off its first cohort in early 2014.
Enrique Torres, who owns Excellent Fruit & Produce in Miami, was part of Cohort No. 1. Since graduating in May 2014, he said his company, a fresh produce distributor to restaurants, hotels and hospitals in the region, has more than doubled revenues and employees. Through the program’s workshops, “I discovered the identity of my company,” he said, and that resulted in a complete re-branding, from new trucks to the design of the produce boxes.
Torres said he learned how to hire smarter, professionalize procedures, add technology to make the company more efficient and, in essence, “using all the tools to attain your goals.” Networking with fellow entrepreneurs who are outside his industry was also very valuable, he said. The homegrown company that he has owned since 2005 now has 16 full-time employees.
Locally, 39 companies are enrolled in Cohort 8, the largest class yet for the business education program that launched at Miami Dade College in September 2013 with $5 million in funding from Goldman Sachs.
“The local program has served a total of 230 businesses to date, representing more than 3,900 jobs throughout Greater Miami and more than $340 million in aggregate revenues,” Hall said.
The 10KSB program at Miami Dade College’s Wolfson Campus runs several cohorts every year. Applicants should own or co-own a business in operation for at least two years, with at least $150,000 in revenues in the most recent fiscal year. To apply, visit http://www.10KSBapply.com or call or call 305-237-7824.
Babson College is also involved locally in launching the Women Innovating Now (WIN) Lab, a new Miami accelerator program that aims to help female entrepreneurs start and grow businesses. Find out more about WINLab here.
Follow Nancy Dahlberg on Twitter @ndahlberg. Read more small business coverage here.