Source: The Columbus Dispatch.com

Newsmaker Q&A

Sunday, October 17, 2010  Politicians in Washington have differing ideas about how to jump-start the U.S. economy, but most agree that entrepreneurship and small business will be the driving forces behind a long-term recovery.

This year, Congress has passed two major job-creation packages, and, in each case, small business was a big focus.

In March, President Barack Obama signed the Hiring Incentives to Restore Employment, or HIRE, Act, a $17.5billion measure featuring tax breaks for companies that hire unemployed workers or invest in new equipment.

Last month, Obama signed the Small Business Jobs Act, which provided an additional $12billion in tax breaks, as well as a $30billion government fund, to encourage lending to small businesses. In the week after the legislation’s enactment, the federal Small Business Administration gave a green light to almost 2,000 backlogged loan applications.

Small-business owners aren’t ready to celebrate just yet, though.

A survey released this month by banking company PNC showed that although two-thirds of small-business owners nationwide plan to increase capital spending in the next six months, most are putting off hiring because of lingering concerns about the economy.

Overall, according to the twice-a-year survey, small-business owners are slightly more upbeat than they were in the spring. Even so, one in five remains pessimistic.

Mike Kallmeyer, host of ONN-TV’s Ohio Means Business program, discussed the trends with small-business expert Sharon Alvarez, associate professor of management and human resources at Ohio State University’s Fisher College of Business. She is also incoming chairwoman of the entrepreneurship division of the Academy of Management, an organization made up of scholars from 106 nations.

Q: Should small-business owners be that pessimistic – the numbers aren’t great – or should they be optimistic in some cases?

A: Well, I’m going to give you the professorial answer and say a little bit of both.

We’ve come through a really, really bad recession – it’s the worst in my lifetime and probably in most people’s lifetimes – and so everybody’s a little bit pessimistic. Consumers aren’t spending and that really hurts small businesses.

On the other hand, they can get capital equipment – and, you know, things that they might not have been able to buy (previously) – at great prices right now. It’s a good time to buy things. And they can hire employees they might not have been able to hire before. … So there are a lot of positives (for) small business right now.

Q: In a down economy, is it fair to say that it might be, in some cases, a good time to start a business? Historically, there are examples of this, aren’t there?

A: There really are. Revlon started during the Depression, and Microsoft and Apple both started when we had the oil embargo in the late ’70s. We see businesses that today we think of as mainstays, and they started as very small businesses during very difficult times.

Q: I guess the bottom line is you can’t suppress a great idea.

A: No, you cannot suppress a great idea. But I also think there’s a little bit of a difference in (approaches): Some people look at demand and say, “OK, here are the niches, and we’re going to fill that with supply.” And some people say, “Here’s what I’m absolutely passionate about, and this is what I’m going to pursue.”

Those passionate businesses – the people who are just passionate – seem to do OK. They’re the ones who seem to be able to ride out these difficult times.

Q: Passion or no passion, what do you think are the biggest challenges, right today, facing small business?

A: They might be magnified today, but there are always challenges. I have this saying, which many entrepreneurs have, which is “cash is king.” Never is that more true than today. Cash is king, so you always have to watch your pennies.

That’s true in good times and in bad, but bad times tend to remind us of that more so. You have to watch your cash, and you have to provide a good product, a good service, at a fair price.

Q: Are you seeing some unique approaches to business these days? Are there some new, nontraditional ways to look at things?

A: Small businesses tend to have more of a “sharing mentality” in some ways. Instead of laying off an individual, oftentimes you’ll see everybody take a bit of a cut in pay or in hours so that everybody kind of shares in the pain. You hate to see people share in any pain, but that’s maybe a better approach, or a nicer approach in some ways, than having one (group of) people bear all the pain.

The other thing that’s interesting and I’ve really seen grow is social entrepreneurship – social enterprises. We see (Columbus caterer) Freshbox, for example, which works with homeless people. They’re hiring homeless people and training them, and they provide lunchtime services.

You’re seeing businesses that are starting that are much more aware of the economy and the plight of others, and they’re saying, “There are things that we can do to better everybody’s living – not just ours, but everyone’s.”