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Memo To SBA

David Kaplan - Houston Chronicle


I enjoyed your well-written article in the Saturday Business Section of July 23, 2011 "They're The Engine Of This Economy."
     I started my business more than 30 years ago with a direct SBA loan and a SCORE Counselor - God rest his soul - a retired small business owner who grew his own company from startup to significant profits. Among the valuable lessons he gave me included "Avoid seeking advice from people who have no experience."

     I have benefited from the SBA's mission for small business and my business is small business assistance. I own Texas's oldest small business incubator http://www.servicesca.org/entrepreneurial-development-center.htm and also founded the first Womens Business Center in the nation, http://www.servicesca.org/womens-business-center.htm and the first Virtual Business Incubator in the world. http://www.servicesca.org/virtual-remote-business-center.htm

     We're private sector, operating entirely without gifts, grants, contributions, donations or public funding. We stay in business by providing value to our customers, just as you do with your readers.

     Loren Steffy quoted me in an article he wrote in the Sunday Business Section July 16, 2011. It was regarding "Entrepreneurons." You can read the article here: http://www.chron.com/disp/story.mpl/business/steffy/7655885.html.

If you wish, you may learn more about Entrepreneurons here: http://www.servicesca.org/entrepreneurons.htm.

     The upside of the various SBA programs is that they are supportive of small businesses. The downside is that they are sometimes not very efficient and frequently actually compete with private sector assistance efforts.

     Here are a few of the challenges faced in starting and growing small businesses.

#1) "There exists within some people an inherent quality; an entrepreneurial exponent. With it, the likelihood of business success is dramatically increased. Without it, all the government funded small business development resources in the world won't yield a successful business." Private sector utilizes various screening methods to validate entrepreneurial exponent and declines the client when it's not present because there is no win possible. Regrettably, the various SBA agencies do not and it's not uncommon to observe the same people going to each new public sector aid program, yet never getting their business started. It's a horrible waste of resource. I'll bet I can give Ms. Johns a few names of people who have already signed up for the assistance programs at the new Houston Galveston Women's Business Center and double the bet that once again a business will not be started. Let's bet a pizza. Make mine ham, sausage and mushroom, please?

#2) "The quality of the business counselors providing assistance has a significant impact on launching a successful business." Our observation is that those with actual hands-on startup business experience make the most valuable contributions to successful business starts, while those without cannot. Unfortunately the SBA assistance programs don't provide the salaries to attract and retain those with successful business experience as counselors. Further, since there is little or no accountability or performance standards set by the SBA for these assistance programs, the inexperienced counselors are the ones who remain, year after year, business failure after business failure. They can't get fired and they can't get jobs elsewhere.

#3) "Some of the SBA assistance programs compete with private sector by soliciting clients who can well afford to pay private sector and do so solely to inflate their economic development statistics." Our opinion is that government competition is never a good thing and are encouraged that Congress has actually passed laws to prevent it. What Congress did not do, however, was fund an "enforcement" arm. If you wish, you may obtain complete documentation here: http://www.servicesca.org/failed-incubators.htm.

#4) "Houston already has more startup assistance programs than any other city in the world." Several of us in the business are frankly wondering why the SBA would feel compelled to add still another tax-funded assistance program when the other two it already funds in Houston are no where near capacity. Sources for Houston startup assistance may be found here: http://www.servicesca.org/HoustonProud.htm

#5) "We know about growing businesses." Three of our self-funded economic development efforts can be found here: http://www.servicesca.org/, here: http://www.servicesca.org/crossroads.htm and here: http://www.servicesca.org/incubator-clients.htm This is real data about real businesses.

We've already written Washington. Our letter is here: http://www.servicesca.org/IncubatorSBDCLetterToWashington.pdf

Despite the "good intentions" of the SBA funded assistance programs, these are tough economic times. If an assistance group is to be funded, have the accompanying funding for an evaluation group to shut the assistance programs down should they not meet performance expectations.


Successful regards,


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C. Dean Kring


cc: Marie Johns – Deputy Administrator, SBA - via email: marie.johns@sba.gov

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