Thank you very much for that nice introduction senator and also for inviting me today. It’s no surprise really to any of us that the senator has hosted an event like this which has been increasingly important over the last six years given his commitment to small business. He started as an entrepreneur himself.
Many of you probably know he was the CEO of Franklin International. Inc. Magazine, I understand, named you entrepreneur of the year for the Rocky Mountain Region in the nineties. And since then he’s been just a terrific advocate for small business. And the senator has served for several years on the committee that actually oversees the SBA, the committee on small business and entrepreneurship. He is also working very hard on legislation to improve tax and health care in our country which are so critical to small businesses.
And I know you all, as I did, enjoyed and were encouraged by the presentation this morning on health care. So thank you once again also senator for supporting our country’s entrepreneurs in continuing to be such a terrific advocate for small business and the challenges they face. The state of Utah is lucky to have you and all of us who are advocates of small business are as well.
I’d also like to recognize Mick Ringsak who is our regional administrator back there and Stan Nakano who is our district director over here and thank them for their dedication. Stan and the entire Utah district office has worked very hard to support people in this region. And I want to tell you how encouraged I’ve been. One person after the other has come up to me, and Stan, either you’ve paid a lot of money over the last few years or you’re doing a good job, because the reviews are just incredible.
And Mick is probably the strongest advocate in the SBA for rural small business that we have. And so we have just two terrific people here representing the agency. And last of all I’d like to thank the co-sponsors. These things aren’t easy to put together. They require money. Those of us in the government couldn’t do these things on our own and it really is with your support that we can do it.
It’s also great here being here talking to you all in Utah. It’s, it’s one of the few places in the country that I can go and tell people I have five children and they don’t think there’s something wrong with me.
So I feel kind of at home here and I told them I think it’s the second or third time I’ve ever been here. It’s also great to be at a forum that deals directly with the opportunities and issues facing rural entrepreneurs. I grew up in Wisconsin. At the edge of my backyard when I was a little boy, there was a cornfield. We got in big trouble if we went in there because my mother couldn’t see us anymore. My high school was surrounded by farms, in fact, and you sure knew it in springtime when when the fertilizers came around. In fact our cross town rivals referred to us as Cow Pie High. This is probably the first time I ever mentioned that in a speech. But it’s true. And I was the treasurer of the Future Farmers of America in Jamesville, Wisconsin. And today most of my family still lives in towns under 2000 people. So rural America is in my blood and, and so is small business really.
Throughout my career I had just a great opportunity to work with entrepreneurs. I’ve worked with them raising capital, advising people on business strategies, working with them on acquisitions, and in many cases watching them grow from small business to big businesses and taking them public. Recently as a leader of Service Master, which is a company based in the Midwest, we were an organization that had over 5000 franchises out there, all of whom were small business owners.
Back earlier in this century, in 1925, Calvin Coolidge, our 30th president, used to say the business of America is business. But for millions of Americans today that business is small business. America has an economy that regenerates, it’s flexible, it adapts to opportunities in large part because our entrepreneurial culture has taught us to dream. It’s taught us to see possibilities and it taught us to make those possibilities a reality. And that is so important for so many reasons.
First of all it creates jobs in our country. Since August of 2003, there have been about eight million new jobs created in our country. That’s more than all the other industrialized countries combined. Two thirds of those new jobs are created by small businesses. Entrepreneurialism creates economic growth. American workers are taking home more pay with those jobs. And our real income per person has risen by 10 percent over the last six years. That’s about $3000. Small businesses represent more than half of our non farm GDP.
Entrepreneurs drive innovation and competitiveness in our country. They drive a tremendous amount of innovation in our country. Small patenting firms produce 13 to 14 times more patents per person in those firms than their larger competitors do. And on a different level all together, small business ownership allows people to realize their dreams, not only for their owners, but for their families, for their employees, for the customers they serve and in many cases for their communities.
When you look into the character and the drive of the entrepreneur, it is no surprise that our economic success is driven by small business owners. Many of you started your business on a hope and prayer knowing that you needed to do whatever it took to make that business successful. It’s not only a job for the entrepreneur in many cases, it’s sort of who you are. And in many cases you’re not only the founder and the president of the company, you’re the head of marketing and you fix the copy machine when it breaks.
I often tell people, and I probably said it 100 times now, but I think one of the reasons small business owners are so successful is they match every dollar of equity they put in that business with 10 dollars of sweat equity.
And many of you from the chuckles, know what I’m talking about.
I also think entrepreneurialism is in our national DNA. It’s an underpinning of our country’s greatness. And the spirit of entrepreneurship and small business ownership is essential to who we are as a country. Small businesses drive innovation that keeps us competitive. It provides opportunity for millions of Americans who might not find it elsewhere. And it enables transformation in communities in our country that need economic revitalization, many of which are the rural communities in our country.
Shortly after I came into this job I appeared on a half hour show with John McLaughlin. I don’t know if you know who he is. He’s one these Sunday morning guys. And in fact I have to tell you this story. I’ll know by your reaction uh, what your television watching habits are so be warned.
We had been in Washington for 10 months and things were still kind of new to me. And I got invited to the Washington correspondents’ dinner. I don’t know if you’ve seen it but it’s this big thing every year where thousands of people get together and everybody tells jokes about the president and the president gets up and tells jokes about them. And it’s sort of this big brouhaha.
I kind of got out of my car and, you know, I’m in my tuxedo and I’m walking in into the place. And there’s this big red carpet and television cameras and newspaper reporters. And there’s somebody standing there and flash bulbs are going like crazy. I’m thinking it must be Condoleeza Rice or Hillary Clinton or Senator Bennett, you know, or somebody
[Audience laughs]
And I walked through the door and I see Sanjya standing there. [Audience laughs]
And I didn’t know who he was but you obviously do. [Audience laughs]
I had told my children I was going to this dinner with the President. They were kind of mildly interested but when I got home I told them I had seen Sanjya, it was a whole different level of interest. [Audience laughs] You know, my six year old looked at me and said, “Really? In real life you saw him, not just on TV?”
But anyway I saw John McLaughlin there at the dinner. That’s what reminded me of this story. And he said to me in this interview, “You’re now the biggest advocate of small business in the country. You are the guy.” I just said, “You know what? I hear what you’re saying but I actually think the biggest advocate for the small businesses in the country is our President.”
He really is and that’s one of the reasons it’s a joy to be in this job is because of that acknowledgement. He recognizes the tremendous contributions small businesses make to our economy to our society. He also realizes the road to business ownership can be bumpy. And he’s often said that the role of government is to create and sustain and environment that allows small business to flourish and to grow. And his record is very clear on these issues. He said health care has to be affordable, accessible, flexible and he has renewed the call that basic private health insurance be made available and affordable for more Americans.
There is no shortage of great ideas for health care proposals. The president came out in the State of the Union with a proposal to level the playing field for tax deductibility to make your, if you’re buying insurance on your own, to make it tax deducible. He’s advanced health savings accounts and I think they’re about three million of those in the country that are available today.
He’s been a huge advocate of something called association health plans, which allow small businesses to band together to leverage their buying power and buy as a buying group on a leverage basis so that you’re not going to a health care provider with five people trying to buy in, you’re going with 5,000 or 50,000. These are good common sense proposals. And you heard this morning a whole other level of innovation that the senator provided to you. There are a lot of terrific proposals out there.
We’ve also seen, I think, in this administration a lot of advancement on the tax side. The president has led by cutting taxes very significantly, especially on capital which is investment. And you all know how precious that capital is in your business. Those cuts incentivize more saving and investment across the economy and they enhance worker productivity, which translates over time into higher salaries for workers at all levels and they free up the dollar on the margin for additional investment. And that is a very powerful benefit to small business owners.
I mention these items and there are other issues on the regulatory front because it is critical that we have thoughtful, fiscally responsible policies in place to unleash the power of entrepreneurial capitalism in this country. It’s not only good for you, it’s good for your employees, it’s good for our communities and it’s good for our country. And you as small business owners should expect from Washington a continuation and an advancement, of sound economic policy that have fostered an environment in our country where innovation can succeed and where small businesses can flourish and fuel our economies and create those jobs that are so important to all of us.
One of the most gratifying aspects of being at the SBA and having the opportunity to lead that organization is we have the privilege of helping so many Americans along the pathway of business ownership. And many of you might not know but some of our best known corporate icons received help from one of our programs AOL, Intel, Outback Steakhouse, Apple, Amgen, Ben & Jerry’s, Calloway Golf, Staples, Under Armor, Nike and Federal Express. And if you go a tier below that and a tier below that, you can find thousands and thousands of people in the same situation.
Today we extend or guarantee over $80 billion worth of capital that’s at work with small businesses and home owners today. Last year over 100,000 small businesses received capital through one of our programs. Those programs are largely self funding. The fees we charge cover the delinquencies on those programs. I think that’s very important for us. Many of those recipients would not have gotten access to affordable capital elsewhere. So as a result it has helped us to expand business ownership across the country.
Our lending programs have doubled since 2001 and lending to minority small businesses has grown by 150 percent. Last year our technical assistance programs reached about a million and a half people. Those are training and counseling services and mostly delivered through partners of ours that we helped fund. Our website, SBA.gov, which offers training, among other things, got 26 million hits. We’ve gotten some government-wide recognition for that. But that continues to train a number of people.
And we help small businesses along the road of selling to the federal government. We work with other agencies. We’ve helped small businesses in that picture. Small businesses received about $80 billion in revenue from the federal government last year. I tell people time and again, treating small businesses right in the federal contracting picture is not just an issue of fairness, it’s good business. Small businesses are often more competitive. They’re more flexible, and they often deliver a higher quality. They are just a little tougher for contracting officers to find. And we work in the middle of that picture to help people find the right business.
And then finally through our office of advocacy, the SBA protects small businesses from harmful new government regulations. And through our ombudsman’s office we help small businesses deal with unfair application of existing regulations.
I have made it a strategic priority of the Small Business Administration to focus much more intensively on taking these programs that we have and reaching communities in our country that have higher unemployment and poverty rates. We call them our underserved markets and frankly many of them are located in rural areas of the country. I believe that driving successful and sustainable business formation into those underserved markets can change the game for millions of Americans by bringing jobs, by bringing economic activity and investment to areas in our country where they’ve often been in short supply. We want to play a greater role in harnessing that power of entrepreneurial capitalism to transform those rural communities in our country by creating proactive partnerships at all levels of government as well as with the private sector.
We all understand how difficult the economy has been in many areas of rural America in spite of the fact we’ve seen tremendous economic success over the past couple of decades nationwide. In fact during the nineties, a period where we saw tremendous growth, at the end of the decade there was almost 200 rural counties that had sustained poverty rates at 20 percent or higher over the last 40 years.
And it’s also important, I think, as we look at rural America, that we recognize the diversity in those communities and the issues they face, because there is really no single recipe to get after the issue. Opportunities and challenges facing rural America vary by community and by region. Farming communities in the great plain states face different problems and different solutions than poor areas in the Mississippi delta country or in California’s central valley.
As a result rural development issues are most effectively dealt with at the regional, local level. The federal government, I think, can create a hospitable environment for business as well as broad based programs like those that we offer. But to be effective, they need to be delivered well at the local level and they need to be coordinated well with other efforts that are much more tailored to meet those local needs. That is one of the reasons we have about 100 locations across the country. And one of the reasons it’s so important for us to have people like Stan in place who understand what’s happening locally and how we can take our programs and marry them with what’s happening locally.
Senator Bennett obviously along with your governors are among the leaders in business development in rural markets. In fact the governor’s office of economic development was created to bring a new spirit of business development to Utah. The first point of that plan for economic revitalization is to facilitate access to capital. As you know, liquidity is air to a small business, you really can’t do anything without it. Without capital you can’t get started and you can’t expand. You can’t weather tough times. That’s why it’s important for us to be effective in those markets as well.
One of the things that I think is most encouraging is in so many ways the playing field is leveling for rural America. The proliferation of the Internet has simplified the ability to communicate, to market, to find buyers through online clearing houses and to transact, and it’s cheap. Every business looks like a big business online.
The ability of small businesses to get business support technology and service providers have made it much simpler to run small businesses. And the dramatic expansion of shipping alternatives has dramatically reduced logistical challenges for rural small businesses. As a result, we now see a major online printer in the middle of Montana. And in fact the SBA small exporter of the year based right here in Utah, who by the way has been a terrific innovator.
Now I spent 24 years in business before coming to government 10 months ago. So when I look at our opportunities to serve more effectively I see a number of strategic and operational solutions that I think will support our impact on rural America. Our presence in rural America actually is expanding. It’s very important to us and it’s getting bigger.
Our SBIC program reaches many areas of our country that traditional venture capitalists don’t. We see more of our venture money going into places like Utah than we would see from traditional venture capitalists. Nationwide, the number of SBA loans to rural small businesses has tripled over the last four years. Now much of that has been through the expansion of the larger banks, so now we’re working very hard to figure out how to reach out more effectively to community banks that are so committed to the areas that they serve.
To expand our reach through community banks, we’re working more on targeted outreach, more tailored products for those banks as well as supporting them more effectively in the process. As for our outreach in rural communities, we recently rolled out new goals for every district office in our country which focused on driving capital into areas of our country that suffer from higher unemployment and poverty rates. All of our rural markets will have strategic outreach plans specifically for lending.
I’ve also directed a 30 percent travel budget increase for all of our SBA offices which will support our outreach efforts to key economic players in rural communities, which include community banks, governmental organizations, not for profits, chambers and obviously entrepreneurs. We need to network effectively at the local level if we’re going to directly impact the rural entrepreneur.
And to increase outreach efforts directly to those entrepreneurs, we are also adding SBA posts to reach rural areas of our country that were previously too far from our district offices to be reached effectively. These alternative worksites allow us to bring greater awareness, access, marketing and the provision of our services and products to rural entrepreneurs.
We currently have about 19 of these things that are called alternative worksites. Typically it’s a one man or a one woman post a little bit further from the hub. When you add those to our 83 district and branch offices, and then we’re adding another 10, we think it’s going to have an important impact for our rural outreach.
Also, I mentioned our website. We’re also beginning to offer training online. We’ve got 23 free online business courses you can sign up on SBA.gov/training. We’re seeing broader and broader distribution of that. Well over 300,000 entrepreneurs have used that training network last year. I’m also thankful to the small business owners living in rural areas that they’ve been training so effectively and helping our resource partners.
Last year about 14,000 counselors across the country provided training, counseling, technical assistance to small businesses through people that we help fund. Small business development centers, women’s business centers and the network called SCORE, which is entirely composed of volunteer counselors, and we assisted almost a hundred million and a half people through that process.
So the last thing I want to mention is in our area of government procurement. You should know that if you are interested in selling what your goods or your services to the federal government we’re here to help you with that process. And there’s a program called the Hub Zone Program which is specifically designed to provide federal contracting preferences to small businesses located in distressed areas, many of which are, once again, going to be considered rural communities. It’s a very important tool that we have to help support our efforts to invigorate entrepreneurship in rural markets.
And if you’re interested you really should contact the SBA. Give Stan your card over there on the way out. Come see us if you need support in any of these areas: capital, training, selling to the government. We’re here to support you.
You know the president once said and I really appreciate this quote. He says if you own something, you got a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America. And the more people have a vital stake in the future of our country.
You know, I believe that ownership anchors us in what is important for our businesses, and for our employees, for our communities and for America. Millions of small businesses like many of you across our country combine to form the most powerful force we have for economic activity. You’re all part of that, you know. And I think sometimes when you’re trying to wear those multiple hats and get your employees paid and keep your customers happy; you don’t really realize that you’re part of this sea of energy in our country that really drives us forward.
And I think it’s important for you to acknowledge that because it’s a big part of who we are and a big part of our country’s success. And as a result, I like to ask people to think big, even if they’re small business owners. If you’re at a point or you get to a point soon where you’re business is operating comfortably, don’t stop there. Continue to innovate. Continue to drive new products and service innovation. Expand locally or even expand into new communities where you might see opportunity. Use your skills to start another business to create more jobs. If you’re good at it, there’s a lot of opportunity out there for you.
Look at export opportunities. Foreign markets are more open to U.S. exports and specifically to small businesses than they ever have been before because of free trade agreements, ease of communication and the ability to ship goods more cheaply. And more and more businesses are taking advantage of foreign markets. In fact, Secretary Gutierrez took a huge group of businesses to China a number of months ago and one of his under secretaries took them to India.
Markets that we traditionally think of as all coming our way, these people came away with billions of contract opportunities, because they’re reaching out. Those markets are available to small business more than ever before. I think we can find access from it.
I couldn’t help but look at the Senator’s slides this morning that listed the number of uninsured people and how that grows as you go further down the business sizes. As you benefit from this expansion, you’ll have the resources to be a great employer, training and developing your people, providing access to health care, and giving them a future.
And as you think about where to locate, where to hire, where to invest, always think about the impact you’re having on your communities because small businesses are the ones that are the first movers and the most energetic movers when we see community transformation in our country.
I’ve told this story a number of times. One of the first trips I took, actually before I became administrator, I went down to New Orleans because we actually are disaster lenders as well. I won’t get into that, unless you have questions about it. But I went down to New Orleans. And if you haven’t been down there, it’s a little different now. It is just a shocking, shocking image.
Not so much when you look at the severity of the devastation in one place because I think the pictures up there they can’t capture it, but they give you a sense. But when you get in your car and you drive two or three or four hours and you barely see a house with a human being in it, you realize the vastness of the devastation. We were coming out of the lower Ninth Ward on this drive, which is just a completely destroyed area, and we were kind of going down this boulevard. There was just nothing there except a bunch of hollowed out buildings and in the midst of all this there was this one little grocery store. It hadn’t opened up yet. The front was white washed. The windows were sparkling clear, there were people sweeping the sidewalks, they were stocking the shelves, they were scrubbing the place. So there must have been 10 people in this place.
And I sat there and thought – the previous businessman in me, I thought, he’s got a problem with this place. How can they succeed? Why are they building it here? And I thought, you know, this is it. These guys are the first movers, they’re providing essential services to people who are going to move into this place. They’re the ones that are sticking out their chin, who are taking the risk, who are putting everything they have at stake because they believe in it. Their business is who they are and it is one step in enabling the transformation in that community. And I think that little picture is what we see across the country when we see communities transforming. And that’s what I think is so exciting about the power of small business to come in to transform our communities. And that’s also why we want you all and small businesses all across the country to be successful, because it’s good for all of us and it’s good for America. |
