Small Business Development Centers seek bigger budget

Avalanche Roofing and Exteriors owner Jesse Russow received guidance from the Colorado Springs Small Business Development Center to grow his business.

About three years ago, Jesse Russow wanted to open his own business, using experience gained from years as an entrepreneur and as a traveling roofing salesman.

He turned to the Small Business Development Center for help, and now has a multi-million dollar business in the Springs.

“The SBDC is amazing. I found an attorney through them, I got financing through them. I can’t say enough about the help they offered,” said Russow, who just secured an SBA loan to expand his company Avalanche Roofing and Exteriors located on Templeton Gap Road. “Now I own five acres, but I couldn’t have done it without them. I probably got 90 percent of my information from them.”

That’s the kind of success lawmakers and small business proponents hope to duplicate with House Bill 1129, which would add $300,000 to the state-level SBDC, which is part of the Colorado Office of Economic Development.

The bill won approval from the House Economic and Business Development Committee but now faces the House Appropriations Committee before it makes it to the House floor and then on to the Senate.

The $300,000 gained by the bill would be matched with federal funds and bump the state’s SBDC budget to more than $3.8 million a year. The extra funding would likely meant re-opening of several SBDC offices that closed when budgets were cut in 2007.

The additional money is a very big deal, said Donna Ettenson, vice president of operations for the Association of Small Business Development Centers, a nationwide nonprofit group whose mission is to help SBDCs across the country be successful.

“The federal government provides money. It’s a line item in the SBA’s budget,” she said. “But the state and local SBDCs must match that money. If the state is willing to give an additional $300,000, in order to receive federal matching grants of $300,000 — that shows how committed the state is to developing small businesses.”

Small businesses make up 93 percent of private sector businesses nationwide, and 53 percent of private sector jobs, she said.

“And there’s a positive return on investment in both the state and federal governments,” she said. “For every dollar spent on SBDCs, the state collects $1.75 in tax revenue. It’s rare that the return is that high.”

But it’s not all about revenue — it’s also about creating jobs, said Kelly Manning, executive director of the state’s SBDC.

The Small Business Development Center can be the one-stop-shop, “everything from soup to nuts,” for small businesses, Manning said.

“We help a lot of nascent entrepreneurs,” she said, “people with ideas; people with a passion. We try to set them on the right path. And it’s not always about what’s trendy or what’s the most popular thing. It’s about what people want to create, achieve.”

Todd Matia was one of those nascent entrepreneurs. A high school math teacher, Matia had an idea: an online tutoring program to help struggling students in middle school and high school.

“But I didn’t have the first idea how to get started,” he said.

So he sought help at the one place he could find counseling for every step of the business process, for free: the SBDC.

The group helped him write a business plan, helped him find an attorney, helped him market his idea. Years later, Matia’s Stinky Kid Math is growing so much he’s hired a new web developer to completely revamp the site. He also plans to hire additional people to help operate it.

And he credits the SBDC with his success — so much so he also testified in front of the General Assembly in favor of the bill.

“I knew I had a great idea,” he said. “There were all these kids needing help, I didn’t have time to help them. But I didn’t know how to do it. I couldn’t even begin to figure it out. It’s a great program, and it needs more money. Think of how many more services they could offer.”

The Springs SBDC, located at the University of Colorado at Colorado Springs, holds 120 workshops a year that cover every facet of business startup and operations. The group also provides new business owners with free one-on-one time with experts in taxes, law, operations management, marketing and social media.

With the volatile state and local economy, more people are considering opening their own business. But there are hurdles to opening a business, decisions that must be made.

“You need a business plan,” Manning said. “I keep having discussions about why that’s necessary: but people with plans in place do better than people who jump right in.”

Russow can testify to the difference the business plan and access to financing can make. In his first year of business in Colorado Springs, his revenue was $1.3 million. His second year, it grew to $1.6 million. In addition to his new Colorado Springs location — where he employs 50 people during the peak roofing season — he also opened a branch office in his hometown of Joplin, Mo.

All of it was made possible through SBA lending and the assistance of the SBDC. And that, Manning said, is just part of what the organization does.

“We’ll give you at least three lenders,” Manning said. “We keep a list about which lenders are most favorable to what business ideas. That way, people don’t get discouraged, just walking into a bank and finding out they don’t give restaurant loans, or retail loans. We’ll hook up the business owners with lenders who are likely to say yes.”

And then they can help with legal advice, with marketing, with advertising.

“I’ve used every kind of counselor they had — and more than one,” Matia said. “I actually hired the attorney they recommended, and I didn’t know anything about marketing — so they were very helpful.”

But Matia hasn’t stopped using the SBDC’s free services just because he’s been in business a few years. He still uses them, and that’s as it should be, Manning said.

“Often, businesses get to a point, say five years in, and they don’t know what to do next,” Manning said. “They don’t know how to grow, if they should grow. They want to know about expanding, about opening new locations, seeing if they can sell to more people. We can help with that as well.”