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Monday, May 19, 2014

My comment on change in definition of "small business" by SBA.



“Comments can be submitted on this proposed rule on or before July 18, 2014, at http://www.regulations.gov, identified by the following RIN number: (RIN 3245-AG49).  You may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd St., SW, Mail Code 6530, Washington, DC  20416.”

Monday, May 19, 2014

I’ve done startup workshops in Denver, Colorado for some 20 years as an alternative to the SBA venture capital model of formal market research and formal strategic planning. What I’ve been doing for decades was viewed by most as eccentric when I started in 1994, it is becoming more accepted recently with publications advocating along similar lines, back in ’94 the only theoretical underpinning was from Dr. Amar Bhide the professor of entrepreneurship at Harvard University who’d sent his students to interview successful startups, articles in the Harvard Business Review soon became his very fine, but virtually ignored, book The Origin and Evolution of New Businesses, Oxford University Press. www.bhide.net

The Wall Street Journal had a column a few days ago pointing out that most of what is now being taught on college campuses about startup is not helping. The more talk about startup, the fewer startups, virtually all talk is what I would call propaganda at the encouragement of the SBA and it’s many off-shoots, SCORE, SBDCs, etc, and it is killing small business in America.

One part of the problem is how the SBA defines small business, right now any business with up to 500 employees with certain exceptions. Yes, this definition needs to be changed, but not in the direction the SBA suggests, to 1,500 employees for some businesses. The definition by number of employees needs to be revised down, I suggest to 300.

Why 300? Because that’s what E.F.Schumacher’s experience led him to back in the late 60’s in his very good book Small is Beautiful—Economics as if People Mattered. More than 300 employees and the nature of the interactions between the people starts drastically changing.

I’ve started a virtual “chamber of commerce” with the intention of helping local chambers provide more real help to startups, as an alternative to the very expensive and ineffective SBDC program. Businesses with 10 to 100 employees, the bedrock of American business, is in sharp decline. Why? Because the SBA is killing startups. It’s a tax funded enterprise clearly intending to snuff out the entrepreneurial spirit in America.

But I don’t want to misrepresent my statement here, it is my own and not that of any organization. The Small Business Chamber of Commerce, Inc. does not lobby at this time, and I do not expect that it ever will.

 I say I’m a recovering MBA because much of what I was taught in graduate business school I’ve had to overcome to be of real help to people who are starting their own business. Since 1994 I’ve worked with thousands of people and what I’m saying here is based on that experience. I read a lot, but in no way am I an academic.  That does not mean there is not academic support for what I’m saying here to you now.

Nobel prize winning economist Edmund Phelps points out the very real problem of the sharp falloff in vitalism and dynamism in our culture since the late 60s, I recommend his most recent book to your committee before you make a decision on this, it’s called Mass Flourishing.  Also the recent Harvard Business Review Press book Just Start.

My little book, endorsed by Dr Amar Bhide, has been on sale for the last 20 years, as far as I know it has never done any harm and a lot of people have told me it has helped them. The Kindle version is 99-cents, and I’d suggest the committee buy it and make copies for all committee members, you have my permission to do so. Go to Amazon.com and search on “John Wren, Daring Mighty Things.”

Thank you for your consideration. I’d be glad to answer any questions you might have.

John S. Wren, MBA+++ (Cornell College, University of Denver, BA’69, MBA’80, Regis University)
1881 Buchtel Blvd, #501
Denver, CO 80210
(303)861-1447  cell (720)495-4949

SBA may call business with 1,500 employees small.

This is crazy. I just received this media release from the Small Business Administration. New director's first major effort is to make larger businesses eligible for SBA assistance by changing the definition..

The definition of "small business" that the SBA has used for years of 300 employees does need to be changed, but they are going in the wrong direction.

Here's my idea: let's cut from 500 employees to 300. EF Schumacher (author of Small is Beautiful)  makes a good case for 300 being the right number, beyond that it's hard for the owner/manager to know all the employees personally.

Below is contact information. If you think cutting to 300 is a good idea, I hope you'll take a couple of minutes and send in an email. Thanks!

John S. Wren, MBA+++
Founder & CEO until fired, Small Business Chamber of Commerce, Inc.
www.SmallBizChamber.org  Facebook.com/Small.Business.Chamber
(303)861-1447





SBA Proposes Revisions to Size Standards for Wholesale Trade and Retail Trade Industries

WASHINGTON – The U.S. Small Business Administration has proposed increasing small business size standards affecting businesses in 46 industries in North American Industry Classification System (NAICS) Sector 42, Wholesale Trade, and in one industry in Sector 44-45, Retail Trade.  If they are adopted, nearly 4,000 more firms will become eligible for SBA’s loan programs.  The proposed rule was published in the Federal Register today.  
The proposed size standards would define the maximum number of employees a firm in these industries could have and still be a small business.  The proposed revisions reflect changes in marketplace conditions.
SBA proposed to retain the current size standards for the remaining industries in those sectors.  SBA reviewed all of the employee-based size standards for both sectors to determine whether the size standards should be revised or retained. 
The SBA has also proposed to retain the current 500-employee size standard for federal procurement of supplies under its non-manufacturer rule because Wholesale Trade and Retail Trade NAICS codes and their small business size standards cannot be used for procurement of supplies.  These proposed revisions primarily affect eligibility for SBA’s financial assistance programs. 
Comments can be submitted on this proposed rule on or before July 18, 2014, at www.regulations.gov, identified by the following RIN number: (RIN 3245-AG49).  You may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd St., SW, Mail Code 6530, Washington, DC  20416.
As part of an ongoing review of all size standards, SBA takes into account the structural characteristics of individual industries, including average firm size, startup cost and entry barriers, the degree of competition, and small business share of federal government contracting dollars.  This ensures that small business size definitions reflect current economic conditions and federal marketplace in those industries.  Under the Small Business Jobs Act of 2010, SBA plans to continue its comprehensive review of all size standards for the next several years. 
An SBA-issued White Paper entitled, “Size Standards Methodology,” which explains how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards, can be viewed at http://www.sba.gov/size.
For more information about SBA’s revisions to its small business size standards for various industry sectors, click on “What’s New with Size Standards” on SBA’s Web site at  http://www.sba.gov/size.   
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