Cathy Hagan Presentation – January 19, 2011 Answers to advance questions 1)
How have Northeast Florida’s small businesses been affected by the Great Recession?
The answer to this question really stems from how the economy is affecting the consumers in Northeast Florida. Bottom line is that consumers, that is individuals like you and me, as well as business consumers are not spending money. Individuals may be cutting back because of a job loss (or the inability to find a job) or perhaps a pay cut. It also stems from uncertainty about where the economy is going from here, and how long will it take to get there. The business consumer also faces uncertainty. As consumers demand less, businesses feel it. With fewer customers, and declining sales, they have no pressing need to hire employees. They are less likely to make capital investments until conditions improve; with less demand for product, businesses have decreased their investment in inventory; many businesses have tried to attract customers by cutting prices – which results in lower sales revenue and net profit. As for the credit market, with existing businesses contracting or maintaining, they don’t need to borrow money or don’t want to add another fixed cost in light of lower sales and profits. And for start-up businesses, the credit market is virtually non-existent. So, ultimately, the solution lies in the hands of individual and business consumers – spend more money!! 2)
The roles of small business development and small business growth in creating jobs?
Small businesses are still responsible for creating 50% of net new jobs, even during the recession. As big business looks at a big payroll as a place to cut spending, small business owners tend to do everything they can to retain employees, oftentimes forgoing salary for themselves when money gets tight. In last week’s session, the focus of the discussion was on “bringing jobs” to Northeast Florida. And certainly, attracting large businesses to the region is critical for small business development and growth. These businesses coming from outside the region create demand for goods and services that are more often than not met by small businesses. For small business development and growth, the focus should shift from “bringing jobs” to “creating jobs”. One thing the recession has done is to create the “opportunity” for people to start a business – because they have found themselves unemployed. And people are doing just that. And while these business start off with few employees, if any at all, very few businesses “start” with hundreds of employees. The vast majority of large businesses were at one time “small”. Beyond start ups, small business development must focus on nurturing existing businesses in the region. “Economic gardening” is a catch phrase in economic development – tending to the businesses that are already here, with a specific focus on fast-growth companies that over the next 5 – 10 years have the potential to create many jobs. These businesses, in particular, need access to capital, information, and resources to fuel growth and in turn, create jobs. The Northeast Florida region does not need to create a new program to meet these needs. The resources to create and nurture growing businesses already exist in this region. In fact, Jacksonville’s Small Business Assistance Providers group was created to bring together the many partners that support the growth of small business to exchange ideas regarding small business issues and needs, to coordinate assistance activities, and to advocate on behalf of their small business members/clients. Some of these
Cathy Hagan Presentation – January 19, 2011 Answers to advance questions providers leverage a local investment in programs with matching federal or state dollars. For example, the SBDC at UNF receives funds from several cities or counties that is matched with other economic development dollars, oftentimes providing a 4 to 1 return on investment. Most recently, the SBDC has received dollars through the Jobs Bill t