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The Game has Changed – Adapt or Fail

October 2011

There’s nothing “small” about small business. Federal guidelines define a small business as an entity with fewer than 500 employees for manufacturing businesses and less than $7 million in annual receipts for most non-manufacturing businesses. Those are impressive numbers when most people envision a small business as the little jewelry shop on the corner or the deli down the street. And, as far as the big picture goes, small businesses represent 99.7 percent of all employer firms and have generated 64 percent of net new jobs over the past 15 years. That’s some major mojo for something … well, small.

Russell Teter, director of the Northern Maryland Small Business Development Center, agrees. “By those definitions, there are few people who could scoff at the idea that small businesses aren’t a big deal.”

The Small Business Development Center that Teter runs is hosted at Harford Community College, part of a partnership between the U.S. Small Business Administration and the University of Maryland, College Park to bring counseling and training opportunities to local regions. Teter has been with the SBDC since 1997 and was promoted to director of the Northern Maryland region in 2003. His office was recognized as a national model in 2001 by the U.S. Small Business Administration, and he personally received the agency’s “Innovator & Excellence” Award for Maryland in 2008.

“I love helping people,” Teter says. “I thrive on the idea of helping people out of the darkness of the cave so that they can be empowered to help others out, too,” alluding to Plato’s allegory, “The Cave.”

What do business owners need to do now in this new economy?|
What is your role and the SBDC’s role with new businesses?|
What isolates a business owner during the process of building a business?|
Who is the SBDC’s customer?|
What is the number one cause of business failure?|
What is your take on job creation?|

It was this passion for service that led Teter to study pre-law and accounting at Hartwick College in New York with the hopes of joining the FBI at graduation. After a medical condition made him ineligible to join the Bureau, Teter looked for other ways to combine his studies with his desire to help. He landed a job working for New York Congressman Ben Gilman who was involved in helping form the legislation that would become President Clinton’s AmeriCorps in 1993. Teter went on to join the first class of AmeriCorps participants in 1994, working with disabled veterans, disaster victims and third-grade at-risk students.

The Small Business Development Center (SBDC) is a partnership between the Small Business Administration and the University of Maryland, College Park and is hosted at Harford Community College. Their mission is to provide FREE and low cost educational services for small business owners and aspiring entrepreneurs.Facts About Small Business Development CentersLOCATIONS
• Located in all 50 states as well as the District of Columbia, Puerto Rico and the U.S. territories.
• Operated statewide or at a region-wide level.
• 63 Lead Small Business Development Centers (SBDCs)
• Lead organization coordinates program services offered to small businesses through a network of sub-centers and satellite locations in each state.
• Each center has a director, staff members, volunteers and part-time personnel.WHAT IS OFFERED?
• SBDC services include, but are not limited to, assisting small businesses with financial, marketing, production, organization, engineering and technical problems and feasibility studies.
• All services given at SBDCs are free and confidential.
• Additional low-cost training options are available.ELIGIBILITY
• Assistance from an SBDC is available to anyone interested in beginning a small business for the first time or improving or expanding an existing small business, who cannot afford the services of a private consultant.Northern Maryland SBDC
Russell Teter, Director
Harford Community College
Edgewood Hall
401 Thomas Run Road
Bel Air, MD 21015-1698

Through AmeriCorps, Teter met his future wife in Maryland and decided to relocate here, working briefly for the Harford County Chamber of Commerce. In a previous position, Teter had observed the absence of training programs to support small businesses in rural community, so he decided to commit himself to opening an office of the Small Business Development Center at Harford Community College. What started as a three-month temporary assignment has grown into a 14-year career of helping over 13,000 small businesses launch, survive and grow.

When you ask Teter about the SBDC, be prepared to stay awhile. His enthusiasm for his job and your success is infectious, and he’s not shy about sharing.

“Most people think the SBDC is only for mom-and-pop shops or pre-ventures,” he says describing very small establishments or businesses that have yet to open their doors. “That’s the biggest misconception about what we do here.

“I’ve counseled owners of dog-walking businesses and inventors of bio-defense kits. I’ve seen it all,” he says with a grin. “We have proven systems for all types of businesses under $10 million, but our ‘sweet spot’ is established businesses in the $500,000 to the $2.5 million range. That’s where we can make a real difference,” he says confidently.

Teter explains that businesses in this size range are often struggling. They face implosion because the systems they have in place can’t keep up with their growth or because the owner is struggling with the No. 1 reason businesses fail – owner burnout.

“Most people think the SBDC is only for mom-and- pop shops. That’s the biggest misconception about what we do here,” says Russell Teter (right), as he meets with Lindsey Uhrin of Motile Robotics.

“The business owner in this situation has to face the decision of scaling back and returning to self-employment or setting strategies in place for expansion. However, by this point, they’ve lost both of the drivers, the motivators, that made them start the business in the first place – the idea that they can do something better or differently or the desire to improve their own life,” he says.
The entrepreneurial itch is a powerful impetus. For the courageous who take the step, its origins can usually be traced to an “aha” moment of clarity. As technicians in a particular skill, they see an opportunity to dramatically improve the way something is done or invent a solution to a problem that has gone unsolved. As someone who answers to someone else or who is yearning for quality of life and balance, they see a chance to steer their own ship and forge their own path. But, for as powerful as those reasons are for action, they are not strong enough to sustain a business or its owner in the long run.

“Most people who start their own businesses are great at a particular skill. They bake the best cupcakes. They design the best houses. They create the best websites. That doesn’t mean they can run a business and be a CEO. Those are skills they have to learn,” Teter says. Adding, “And we can teach them.”

The systems that Teter and the SBDC utilize help the owners identify their challenges and look at them objectively. He and his network of business professionals and successful entrepreneurs will work with the owner to find the root cause of why the business is stalling or why the owner is dissatisfied.

Teter likens the situation to the cliché of not seeing the forest for the trees. “Except, with business owners, they are running into the trees on a daily basis,” describes Teter. “They are focused on keeping the doors open or making payroll. We have to help them take the aerial view again so that they can refocus and move forward.”

“It’s very easy to get caught up in the details of managing a business and lose sight of the big picture, and it’s difficult to maintain the personal accountability when you are the boss,” admits Michelle Wyatt, partner at CadmiumCD, a conference technology service provider located in Forest Hill. “One of the biggest benefits of attending our SBDC course was meeting a business coach, Gary Stokes, who was one of Russell’s partners in teaching the course. We have been working with Gary over the past year to implement and execute new strategies and processes to improve our business, and in 2011 we anticipate a 50 to 60 percent growth over 2010 sales.”

• 63 percent of SBDC face-to-face consulting clients are existing business owners (over one year).
• The Northern Maryland SBDC provides management and technical assistance to over 1,000 business owners and aspiring entrepreneurs
each year.
• More than 50 percent of all pre-venture clients started their business within one year after receiving SBDC services.
• In 2008, Maryland small businesses totaled 526,663.
Of these, 109,693 were employers, and they accounted for 52.4 percent of private-sector jobs in the state. Source: SBA.govNational Stats
Small Businesses that benefited from in-depth SBDC assistance experienced:
• 50 percent better chance of survival than those who do not.
• Sales growth of 24.8 percent compared to 6.3 percent for businesses in general.
• Nine times the job growth of average businesses (15.2 percent compared to 1.7 percent for U.S. businesses in general).
• Employ just over half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Hire 40 percent of high tech workers (such as scientists, engineers and computer programmers).
• Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.Source: National Independent Study of the SBDC by Mississippi State University2 Sources (see the Office of Advocacy’s Research and Statistics page): U.S. Dept. of Commerce, Bureau of the Census and International Trade Admin. Advocacy-funded research by Kathryn Kobe, 2007 CHI Research, 2003 U.S. Dept. of Labor, Bureau
of Labor Statistics.

When a business owner works with the SBDC, they can choose from several format options for their training and counseling. Teter can guide the owner though an examination process for self-discovery, or he can analyze the business objectively and present his findings. He admits to having a keen ability to sense an owner’s capabilities and personality and will suggest which path he thinks would be most beneficial. However, the decision is ultimately up to the owner.

Other systems employed at the SBDC include facilitated groups of multiple and noncompeting businesses; offsite workshops to get all employees on the same page; assistance in defining – or redefining – a company’s unique selling proposition; developing a vibrant business plan; or creating new marketing strategies to increase market share or weather a recession.

“Some of our best results come from the small group sessions of non-competing businesses,” advises Teter. “It’s like having your own board of directors. Owners get to hear other owners with the same struggles, but they also hear the solutions or the blinding realities. Sometimes, an owner just needs to hear it from someone else.”

If business owners are skeptical, the numbers can prove to be very influential. According to an independent study conducted by Dr. James J. Chrisman, a professor of management and director of the Center of Family Business Research at Mississippi State University, small businesses engaged in the training and counseling sessions offered by the SBDC have a 50 percent better chance of survival than those who do not and a projected sales growth of 24.8 percent compared to 6.3 percent for businesses in general.

“Our job is to help businesses succeed. We help owners build million dollar businesses,” proclaims Teter. Interestingly, he admits that he counsels business owners to work toward the goal of selling their business in five years. He explains that the five-year mark is tangible and attainable in most people’s minds. They can stay focused without feeling overwhelmed. And, at the five-year mark, they should have a thriving business that they can keep growing or one that can be successfully sold so that they can move on to something else. “That’s a powerful position for an owner to be in,” Teter affirms.

Getting to the five-year mark may seem an impossibility in recent times for new or established business owners. Teter emphasizes that the business playing field and the rules have been irrevocably altered. The business owner must find their “game changer” or fail.
“It’s a new game in town,” Teter says. “The economy has changed everything. Businesses have to prioritize and find their game changer – the one thing that will make them survive and succeed. With our help, they can win the game,” he adds assuredly.

“A new game in town” may be the understatement of the year – in fact, of the last 30 years. That’s how long Americans have been spending more than they earned – roughly $1.20 for every $1 in income according to a BCA Research Study in 2011. This spending has fueled the economy for three decades. Many businesses and entrepreneurs seeking quick fortunes could quite literally survive on the peripheral – on the scraps – because so much spending was going on. Those businesses that popped up to gather those scraps are gone. Americans are spending less than they earn for the first time in decades, and it’s changed everything. There is stiffer competition for fewer dollars, leaving no room for passivity and no margin for error.

Dave Joynt, franchise owner of CertaPro Painters in Bel Air, recognized this. In 2009, over 40 percent of painting contractors went out of business in the local market. He realized this new economy presented both a challenge and an opportunity to reposition his company, so he sought out the services of the SBDC. Through peer-to-peer counseling and several workshop sessions, he developed an action plan that doubled his business in 2010.

“We see a lot of business owners who are treading water,” says Teter. “They are waiting until the return of the way things used to be. That’s not going to happen. And, really, should it?” he questions.

“This new economy has forced those peripheral business to give up and move on. Consumers are realigning their expectations for service and demanding higher quality and longevity from their purchases. They want more for their money. Business owners can sit around and blame the macro environment. They can blame the economy. They can blame the government. The fact is they have to ignore those elements that they can’t control. What they can control is how they operate their business in the face of these new challenges. They can change their product. Change their target market. Change their marketing. The SBDC can help with all of those.”

Motile Robotics and the Small Business Development Center

Motile Robotics utilized the SBDC for their Entrepreneurs’ Business Academy training to develop and implement their strategic plan. The SBDC facilitated a two-day companywide retreat off-site to hone in on employee perspectives and determine what current practices needed revamping from their point of view.

Standing in Motile Robotics simulation facility, Lindsey Urhin explains to Russell Teter how they can offer wind, rain and lighting to accompany their urban dwelling, all-terrain and jungle terrain simulation scenarios.

Motile Robotics also turned to the SBDC for advice on smart growth opportunities. Having spent their first four years developing core competencies and retaining a staff of diversified and experienced scientists, the company was at a point where it needed to focus their efforts on expanding their portfolio and seeking opportunities that provide the best return on investment. The SBDC’s mentorship program provided a fresh perspective into the organization and allowed management to revisit their strategies from the outside
looking in.

Lindsey Uhrin, business operations manager, states, “The SBDC has been a great resource for Motile Robotics. The program has taught management to stay vigilant within the environment that we are doing business, and listen to the opinions of our employees.”

Motile Robotics, Inc. (MRI) is a research and development firm founded in 2007 to provide support to government institutions and programs, academic universities and commercial enterprises. Located off Fashion Way in Joppa, MRI offers expertise in the areas of robotic design, materials science, machine learning, perception, controls and mechanical design. Their research currently includes small-scale combustion and hybrid propulsion systems, micro-scale biomimetic platform design, nano-scale multifunctional material design, and intelligent, cognitive based software design. Motile Robotics’ goal is to further micro-scale, bio-inspired, robotics systems, capable of near-autonomous ground and air mobility, through analytical research, focused creativity and deductive reasoning. I95