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What I Heard from Small Businesses Through Advise the Advisor

Summary: 
Austan Goolsbee, Chairman of the Council of Economic Advisers, responds to feedback from small business owners and entrepreneurs across the country.

Last week, through our new Advise the Advisor program, I asked small businesses and entrepreneurs for their feedback on the challenges and obstacles they’re facing.

We heard from small business owners and entrepreneurs around the country.  On Tuesday, during a special live discussion at the Winning the Future Forum on Small Business in Cleveland, I addressed some of the questions and concerns you submitted, and President Obama even dropped by to take a few of your questions as well.

You can see the full video of the discussion, President Obama’s answers to your questions and his closing remarks at the Forum in this video gallery:

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A team of folks here at the White House helped me comb through all of the comments you’ve submitted, and here’s a summary of what we heard from you on each of the questions I posed last week.

Entrepreneurship

Entrepreneurship is important in driving innovation and growth. When you first had a new idea for a business how did you convert that idea into a growing business?

Not surprisingly, many of you told me about the key role access to capital plays.  Some folks had stories of success when a little seed money helped them get their business off the ground.  Others were frustrated at how difficult it can be to secure capital in these tough economic times.

Many of you also told me about the importance of having mentors and other support networks to help entrepreneurs succeed.  Larry from Alabama said:

Of all the available options, I believe business incubators could be the best answer that would enable people of all capabilities to explore their dreams. And, perhaps the most effective way to make that a reality, all over the country, is government and universities partnering in offering business incubators.

Larry, I agree with you, and providing expanded educational opportunities and mentorship programs for entrepreneurs is one of the goals of the new Startup America initiative that President Obama announced a few weeks ago. Startup America brings together an alliance of the country’s most innovative entrepreneurs, corporations, universities, foundations, and other leaders, along with a wide range of federal agencies with the goal of dramatically increasing the prevalence and success of America’s entrepreneurs. 

Access to Capital

The President has focused on increasing access to capital and tax breaks for small businesses. What role does access to capital play in your small business, and how can the government help small businesses ensure they can access the financing they need to grow.

Many of you told me that access to capital just doesn’t exist for your small business, and you’re frustrated with all of the hoops you have to jump through to get a loan.  James from Texas said:

With the virtual death of local banking, it is next to impossible today to get bank loans for anything other than fixed assets. For working capital or speculative funding, entrepreneurs must look to saved capital, family, friends, or possibly a first customer. Traditional financing sources only help the more traditional forms of business. Innovators must look elsewhere.

The President actually addressed James’s concern during our session on Tuesday.  It’s no secret that over the last two years, the credit crunch has made it tough for small businesses to get the capital they need to grow and create jobs.  President Obama has been focusing on addressing these shortfalls since he took office.  From the Recovery Act in February 2009 to the Small Business Jobs Act in September 2010, his Administration has fought for tax cuts for small businesses and new mechanisms to help small and growing businesses access the capital they need.

And last year, President Obama announced the Small Business Lending Fund a new program which authorized a maximum of $30 billion to support small business lending. The fund targets community and small banks that lend the most to small businesses and it offers incentives for banks to increase small business lending.

Workforce Development

As different industries in our economy grow, the workforce must adjust. How can government and business work together to better prepare the next generation workforce for the jobs of the future?

We heard from a lot of folks that improving education at the K-12 level will help prepare today’s students for the jobs of tomorrow.  But we also heard loud and clear that we can’t forget about the folks in the workforce right now who may need some retraining or new skills to compete for 21st century jobs. Michael from Indiana said:

Workers who need new skills and training are often unable to pay for the courses.  They have families they must support.  They need more grants and scholarships, rather than loans.

Community colleges can be a great place for folks who’ve been in the workplace for awhile to get the new skills they need to compete for today’s jobs at an affordable price. Starting this year, the Department of Labor is making $500 million available for competition each year over a three year period to help community colleges and other eligible institutions develop, offer, or improve education and career training programs suitable for workers who are eligible for Trade Adjustment Assistance.

The Administration also launched a program called Skills for America’s Future that brings together businesses, nonprofits, and schools to train Americans for the jobs of a new century. This initiative is designed to have businesses and community colleges work together to match the work in the classroom with the needs of the boardroom.

Exports

Promoting U.S. exports is an effective way to grow businesses and create jobs. What obstacles does your business face in exporting goods and services to foreign markets?

Many of you told us that tariffs on American goods in foreign markets make it difficult for you to compete abroad.  Others cited high shipping costs as a barrier to increasing exports.  We also heard from many people breaking into the export business is sometimes just too confusing for small businesses. Roy from California said:

The export business acumen of the typical US businessman needs to be improved.  Every manufacturing plant that I visit could export or export more.  It is an investment of time and energy but all will see the return on this investment. 

The Department of Commerce is working to do just that – help U.S. small businesses navigate the waters of exporting and increasing sales to new global markets through the U.S. Commercial Service.  The Commercial Service helps exporters target the right markets for their products, provides counseling and information to navigate the export process, connects businesses with partners and prospects and advocates for U.S. companies to level the playing field for international procurement.

Clean Energy

In the President’s State of the Union he emphasized that an investment in clean energy technology will strengthen our security, protect our planet, and create new jobs. How can your business benefit from opportunities in this growing industry?

We heard from a lot of small business owners would like to go green in their businesses by using more clean energy sources, but were worried about rising energy costs.  Shannon from Pennsylvania said:

Create grants and no-interest loans to small businesses if they use green energy; help them to get solar panels, energy efficient appliances and vehicles etc.  Give them tax breaks for the same.  Make it easier and cheaper to use clean/green energy…Grow the economy and save the planet at once.

I agree.  It should be easier for small businesses to take advantage of clean energy resources, but for many small businesses retrofitting their operations to take advantage of clean energy is still too costly.  That’s why the Small Business Administration is working to encourage existing lenders to take advantage of recently increased loan size limits to promote new energy efficiency retrofit loans for small businesses.