Small businesses are the economic backbone Email
Written by Lyn Dean   
Tuesday, September 07, 2021 02:02 AM

Colorado Green NowIn mid-2020 the Small Business Administration (SBA) Office of Advocacy reported there were 31.7 million small businesses in the U.S. These businesses make up 99.9% of all firms and 99.7% of these firms have paid employees, which comprises about 47% of private-sector employees. Since 2000, small businesses created nearly twice as many jobs—10.5 million—compared to 5.6 million jobs created by large companies. Impressive numbers!

What is a small business?
The definition of “small business” is not straightforward. Whereas a simple description— businesses having fewer than 500 employees—is sometimes used as a catch-all definition, in reality, it is more complex. According to the SBA, a small business is defined either in terms of the average number of employees over the past 12 months or average annual receipts over the past three years. The maximum numbers for each—receipts or employees—differ depending on the industry. It is safe to say that with only a few exceptions, ALCC member companies are small businesses.

The appeal of small business
Given the volume of business and the number of people employed by small businesses, the government recognizes their important role in the economy. Therefore, promoting and protecting the growth and well-being o small businesses is considered a national priority. At the personal level, small businesses are a vehicle to a livelihood that is usually associated with a service or product offered by or created by the business owner and the owner isn’t working for someone else. “Entrepreneurship is the strongest path to generational wealth,” said LaJuanna Russell—board of directors chair at Small Business Majority, and founder and president of Business Management Associates—at a webinar in June.
As alluring as starting one’s own business may seem, the benefits of small business ownership may take some time to accrue, especially if started by one person who has a service to offer, as is often the case in the landscape industry. For these people, the “dream” is alive but putting it into action takes some financial resources in addition to the requisite skills, knowledge and the drive to learn and provide the service.

Support for new companies
New companies and entrepreneurs typically need support, which may come in many forms—some support is free and some cost money. To start a business, support is needed in many areas including business formation and management, startup money (may come from friends and family), additional finance (develop a relationship with a community bank early), skills development (classes, seminars/webinars, self-education from books/ videos), personal connections and networking, paid advisers, chance encounters and more.

Additionally, there are multiple resources that a new business owner may not know about. Some can be found locally (within the county or state) and others are national and available to companies in all states.

“Connections and networking, which can even lead to mentor relationships, are important functions of membership with ALCC,” says Cherie Courtade, director of communications at ALCC. And the annual ProGreen EXPO is an ideal event for learning, networking and potentially developing a mentor relationship. (The in-person ProGreen event returns in February 2022).

Finding and using resources
Federal agencies, including the SBA, as well as state entities, provide free resources online to guide and advise small businesses. Several nonprofit organizations exist to help and advise small businesses. The Colorado Business Resource Book1, a collaborative effort of the Colorado Business Development Foundation (CBDF) and the Colorado Small Business Development Center Network (SBDC) and funded through a cooperative agreement with the SBA states, “No business can function without maintaining financial records, filing required reports, paying income and other taxes, or having complete financial records for use in dealing with banks, suppliers, investors, etc.”

Since most new businesses have limited financial resources for legal, accounting or marketing guidance, new owners are advised in the Business Resource book to seek recommendations from other trusted people or entities until they can afford professional advisers.
The importance of getting input from the appropriate professional is echoed by Carolina Salinas, vice president at Leo Landscape LLC, when the company applied for its first line of credit.

“Until we applied for a loan, we had been funding our own growth. We had no experience with banks and the paperwork they needed,” she says. “I did a lot of research on my own [so the company could provide appropriate financial records]. We got QuickBooks and I had to redo how we recorded our numbers. I feel like I got an accounting degree in a very short time! We now hire a CPA when needed.”

The good news is when the paperwork was submitted to their community bank in the format requested, Leo Landscape received the financing needed to purchase the new property for the company.

All businesses owners are not equal
As impressive as statistics are for small businesses and their contribution to the national economy, the benefits of small business ownership have not equitably accrued to all. Small Business Majority (SBM) is a nonprofit organization made up of a network of small businesses, and business and community organizations. Not only does SBM advocate for public policy solutions and deliver resources to small business entrepreneurs, it also does scientific research to educate the public on issues affecting entrepreneurs.

Recent data shared by SBM in spring 2021 about access to capital for small businesses showed that among all small businesses, 19% obtained less financing than they sought. Digging deeper into the data revealed existing inequities for different groups of business owners: 36% of Asian American Pacific Islander (AAPI), 31% of Blacks and 26% of Latino business owners received less financing than sought—exposing the inequities. Furthermore, Black entrepreneurs compared to small-business owners overall were three times more likely to receive high-interest loans.

Small-business owners seeking financing are advised to do their homework—to go online and access reputable resources from organizations such as local area chambers of commerce—including the Black Chamber—SBA, Colorado Business Resource Book, statewide small business development centers and, to name a few.

1 Colorado Business Resource Book, “A Guide to Choosing Your Advisors” tab.

A longer version of this article originally appeared in the September/October 2021 issue of Colorado Green magazine.

Read more in this issue of Colorado Green Now:
SBA to offer virtual summit again for 2021
Cool season trials offer reliable picks for off-season color
SNOW Magazine releases 2021 Top 100