Small Business Strategies: Obama's proposal could hurt

By Rhonda Abrams, USA TODAY

January 20, 2012

Want an SBA loan? Don't bother applying if you needed less than a few hundred thousand dollars.

In looking at President Obama's just-announced proposal to combine the SBA with five other agencies, I'm fearful we'll soon return to the days when small business received little attention and fewer dollars from the government.

The president has proposed to consolidate a number of departments focused on business and trade into one super pro-business agency. The goal is laudable.

"We'd have one department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need financing for a warehouse, to the day they're ready to export and need help breaking into new markets overseas," Obama said in announcing the plan.

Everyone can agree it's a good idea to make it easier to navigate government programs and reduce government waste.

But is this really the place to start? After all, it's not like small-business programs are rolling in dough. The network of Small Business Development Centers — one of the most efficient and effective government programs ever created — now receives what one person so aptly described as "budget dust."

"These changes would help small-business owners like you. It would also help medium and large businesses," Obama said.

Uh-oh. What do you think's going to happen when programs charged with helping businesses like yours and mine get subsumed in an agency charged with helping large corporations, too? Who do you think is going to get the bulk of attention?

It doesn't have to be malevolence, just human nature.

If I'm a government official charged with helping businesses grow, it's a lot less effort to help one 3,000-person company grow to 5,000 employees than helping 200 small companies add 10 employees each.

I'm also somewhat concerned about the president's use of the term "entrepreneur."

A trend is developing with some entrepreneurship advocates to focus only on fast-growing companies with the potential of being the next Google, Apple, or Microsoft.

I love those kind of companies. Heck, I live in Silicon Valley, and I'm surrounded by entrepreneurs working on building mega-businesses. America needs them, they keep us competitive and they create tens of thousands of jobs.

But America needs companies with 10 employees as well as 10,000.

Companies with fewer than 20 workers employ more than 21 million Americans, and companies with fewer than 100 workers employ about another 21 million. That's roughly a third of all working Americans.

And that's not counting the many millions of one-person businesses — the self-employed construction workers, consultants, hair stylists, software programmers. In much of America, self-employment is the only path to a middle-class income.

Small businesses and the self-employed represent a significant portion of our economy. We need a decently-financed, strong agency that will work especially for small companies with an independent voice.

If the president's plan goes through as proposed, small businesses will lose their seat at the table.

Obama just elevated the Small Business Administration chief, Karen Mills, to a Cabinet position. But she shouldn't get too comfortable with her chair. In the proposed agency, the new director would replace her.

I'm all for creating a one-stop website to make it easier for companies to access all the resources available from the federal government. But that doesn't require restructuring a bunch of agencies. In fact, Obama announced that he's soon launching a site called Business USA.

Why collapse the SBA?

Being part of a larger agency is almost certain to diminish what little voice it has now. Instead, why not give the Small Business Administration greater powers, bringing more of the far-flung programs within other agencies under its purview?

Details of the proposed uber-agency have not yet been explained, and we'll have to see what those are.

But, remember, while it may be a great idea to bring all the animals under one roof, when you do, the smallest ones are most likely to get trampled.

Rhonda Abrams is president of The Planning Shop and publisher of books for entrepreneurs. Her newest is the 5th edition of The Successful Business Plan: Secrets and Strategies. Register for Rhonda's free newsletter at www.PlanningShop.com and "like" The Planning Shop on Facebook for updates. For an index of her columns, go to smallbiz.usatoday.com. Twitter: twitter.com/RhondaAbrams.
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