Nevada has traditionally been a Mecca for small to medium sized businesses rather than a Mecca for Fortune 500 companies and, as the economy turns toward recovery, that traditional economic base should play an important role. Recovery from this recession will happen through small businesses and entrepreneurs who are ready, able and willing to start up new companies in Nevada. The organizations and services that help small businesses and entrepreneurs are often government services – not just for start-ups, but for companies looking for funding, reorganization, expansion or reform.
“Everyone keeps saying the only way our economy is going to come back is through small businesses,” said Kathy Carrico, statewide training director, Nevada Small Business Development Center (NSBDC). “They say it, politicians say it, economists say it, the news says it, if that’s reality, then what we’re doing [at Nevada Small Business Development Center] is vitally important.”
There are government services out there to help existing businesses, struggling businesses and businesses that are succeeding and want to succeed further. There are services for both entrepreneurs and those that are just getting started.
When there are no jobs available, self-employment, start-up businesses and entrepreneurial enterprises become less of a dream and more of a financial reality for displaced workers. This creates the small and medium sized businesses that thrive in Nevada and can, in turn, help Nevada thrive.
Services Available Through Government Programs
The U.S. Small Business Administration (SBA) has branches in every state with services and programs concerned essentially with the three C’s – counseling, contracting and capital. Counseling is available through programs such as the Service Corps of Retired Executives (SCORE), a volunteer organization. SBA counseling can help business owners put together a business plan or obtain a loan through a traditional bank, a certified development corporation or a micro lender. The SBA can get business owners training in networking and marketing, put together training programs and help business owners learn to negotiate.
In addition, the SBA provides advocacy for small business owners, sometimes working to help eliminate laws and regulations that make it difficult for small businesses to flourish or even function.
One of the organizations that partners with the SBA is the NSBDC which is a statewide business assistance outreach program through the University of Nevada, Reno, College of Business. Operating throughout Nevada, NSBDC provides business counseling services as well as programs.
“Our cornerstone program is a 13-week class people are highly encouraged to take that guides them through the core issues of business planning,” said Carrico. The program also covers the legal structure for businesses, market research and cash loan projections. What business owners want to know about, explained Carrico, is marketing and social media, a huge tool business owners need to keep apprized of and understand how to utilize.
Working with the SBA and NSBDC, Nevada Micro Enterprise is an intermediary lender for SBA in Nevada, putting together loans as low as $50,000 and providing business counseling, education, planning and feasibility.
Nevada Commission on Economic Development (NCED) is home to the Procurement Outreach Program (POP), which helps business owners find their way through the minefields of submitting bids for government contracts. POP provides education through seminars and workshops. In addition, the program assists with marketing and bid information for working with prime contractors, technical assistance for putting together proposals and support documentation services to help with forms, specs and standards, procurement history and the like. POP offers e-commerce links to help businesses find and exchange information on government contracting as well as networking assistance.
“Our programs focuses on helping Nevada small businesses that want to expand into federal, state or local government markets,” said Kathy Agee-Dow, deputy director, procurement outreach, NCED. “If a business has a product or service they want to sell to a federal or state agency or a school district or local government, it’s my job to help them find those opportunities.”
Nevada Business Portal
One of the major incentives of the Secretary of State’s office is to make forming or renewing a business as simplified a process as possible. Toward that end, the Nevada Secretary of State’s office will have rolled out the first phase of the Nevada Business Portal by the end ot this summer. The program is intented to eventually become a one-stop-shop for businesses looking to start-up, renew, reorganize or expand.
“We’re in a position to lead the country in services we provide in that regard,” said Secretary of State Ross Miller.
Currently businesses can renew Nevada business licenses, file Articles of Incorporation and Corporate Officer Lists annually. Some 60 percent of filings can be done online. As the phases of the business portal are rolled out, businesses will enter information once and pay all state and local business licenses online. “The system will guide you through one-time functionality and determine what licenses you’d need,” said Miller. “It’s an attempt to demystify the process of starting a business.”
Nevada Business Portal will go beyond annual business licenses. As the phases roll out, the digital formation act will come into effect. Already signed into law, Assembly Bill No. 564 goes into effect in October, allowing for business associations to carry out their powers and duties using the most recent technology available. Not only will Nevada Business Portal be able to take filings and payments, it will also provide model business plans, operating agreements and articles of incorporation, as well as allowing businesses to determine how corporate shareholder or LLC member meetings will be held. Where once shareholders and members were required to assemble in person, now meetings will be legal if held in cyberspace.
“The ultimate vision is for Nevada to be home for entrepreneurial start-ups,” said Miller. “Too many businesses stop short of their entrepreneurial goals because they literally don’t understand the process and requirements to establish a business.”
The digital formation act will allow business partners who may never have met in person to easily establish a business – maybe out of their garage, a la Amazon or Google, put together a corporate entity and pay for all their business licensing in one place while holding their corporate meetings online – all of which frees them up to actually do business.
“We’ve known for a long time Nevada’s business friendly statutes give us a significant advantage, but our real niche is small to medium sized businesses,” said Miller. “We obviously are not going to convince many of the Fortune 500 companies that are incorporated in Delaware to relocate and incorporate in Nevada. But with small to medium sized businesses, we definitely have significant advantages and that’s what this legislation and these efforts are about: to break down the barriers to starting a company, make it extremely easy for companies to organize and ultimately conduct business in Nevada and I think that’s very promising.”
A little competition never hurts and it was Nevada’s competition with Delaware that led the Silver State to become more business friendly. That competition prepared Nevada for the technological revolution and the move to digital formation laws. In the 1990s, Nevada leaders noticed that approximately one-third of Delaware’s general fund came from the state’s commercial recording division, because Delaware was home to most Fortune 500 businesses. Companies that wanted to incorporate somewhere other than their home state looked to Delaware.
So, Nevada changed its statutes to become more business friendly. While this state focuses more on small and medium sized businesses as opposed to Deleware’s Fortune 500s, it fits with Nevada’s demographic. The next step was to think beyond Delaware, putting in place the e-SOS – electronic Secretary of State system – turning business formation processes from a four to six week process to a two to three day process. Having e-SOS up and running meant Nevada was ready to form the Nevada Business Portal and pass the digital formation legislation.
“I think we certainly see a need for government to become more efficient if Nevada is going to get back on its feet,” said Miller. “We can’t afford for the process to be so burdensome or so expensive for businesses that they’re not able to get ideas off the ground.”
According to Miller, any time there’s a recession or economic downturn as extensive and troubling as the one we’re going through, the hope is for economic recovery spawned through entrepreneurial ideas. If the process of corporate formation and licensing is too burdensome or so expensive that individuals can’t readily set up a business or afford to consult with attorneys in order to jump through all the hoops necessary, dot all the I’s and cross all the T’s, then a lot of those ideas are shuttered from the outset. In terms of recovery, government services for businesses – easy, understandable, workable, affordable government services – are necessary.
Nevada is moving in the right direction. According to Secretary Miller, in a speech given to the ABA Young Lawyers Division in May, the number of new business filings for the first quarter of 2010 showed positive growth for the first time since 2006, and new entity filings for first quarter 2011 grew by 12 percent over first quarter 2010.
Micro Enterprise Funds
Another piece of the business puzzle that has recently come about is the Department of Treasury’s allocation of federal funds to help businesses. In Nevada that translates to $13.8 million dollars coming to the state by way of the State Small Business Credit Initiative.
Some $500,000 of the funds have been set aside for the Nevada Micro Enterprise (NME) initiative. NME is expecting the first $100,000 by August of this year, which should allow the micro lender to make roughly 12, $8,000 loans. Because micro loans are for businesses with one to five employees, that amount of money could put anywhere from one to 60 people to work.
“A lot of people who are on unemployment for going on two years have started to do something else,” said Lonnie Thomas, Nevada Micro Enterprise board chair. “Maybe it was a hobby, something they tinkered with and discovered they can turn into a job, whether they’re working out of their garage or home or if they’re successful enough to be out there in store front.” Micro loans can help make dreams of business-ownership reality.
For the most part, agencies and organizations offering government services have seen the need for those services increase with the economic downturn and, it appears, that demand is being met.
Nevada SBA has been witness to that increase in the need for services since the economic downturn, and those services being most utilized revolve around counseling. According to Edward Cadena, SBA district director, state of Nevada, with both entertainment and construction taking a beating during the recession, people in those fields are looking to take their business savvy and head in a new direction.
“We’re counseling a lot more people who are trying to start new businesses, but a lot of these folks are having a hard time obtaining credit. A lot of that is because so many people in the state of Nevada own homes that are worth less now than when they purchased them,” said Cadena. “We’re finding we have more and more people going into business seminars and we’re counseling a number of folks. That number is growing because there are no jobs or less jobs so people do what they do when there are no jobs and that’s go to work for themselves. Americans are, if anything, resilient.”
NSBDC has also been hard at work trying to meet inreased demands. With unemployment and underemployment rising, displaced workers look at options for self-employment, said Carrico. “Some are desperate, some are excited and everything in between. We do an assessment, helping them identify their tools, patterns and personality types. That’s our expertise and that demand has increased because of the economy. People are tired of wondering if they’re going to have a job, what’s the continency plan, maybe I should take a course on small business and learn what I don’t know and be prepared.” Carrico added that when like-minded people come together, the ideas start flying; what once was just an idea becomes a path to making that idea into a reality.
One consistent demand for services Carrico has seen is for networking. It was that way four years ago and it’s the same today as business owners want to learn to leverage social media. “People want more customers,” said Carrico. “I don’t care who they are, they want more customers, and the way to effectively gain new customers is to build relationships.” The other in-demand service is marketing and how to do it. Other business owners may need to learn financial management – understanding where the dollars are, how to spend, save and how to make their money work for them – and some just need to learn the art of communicating.
Thomas has seen an increase in demand for micro loans of $25,000 or less, a niche area that doesn’t work well for traditional banks; banks don’t typically want to do business loans that small because there’s no profit in it for them.
For many businesses, when the economy took a downturn, revenues dropped which led to profitability dropping and difficulties in servicing the loans they already had. Businesses that survived may need more working capital. They’ve used all their reserves to survive, only to find traditional banks don’t want to lend them anything, either because the business is already extended on collateral or doesn’t have any more collateral because revenues and profits are down.
This is where NME is willing to step in and take a look at businesses that have been in business for 10 years yet have no collateral but survived the recession and have a good credit history – in that instance, NME is able to fill the gap.
Turn-about is Fair Play
Not everything to do with government services and businesses is about businesses utilizing government services. Sometimes it’s about private businesses providing government services. There’s definitely room in Nevada for more micro lenders, said Cadena,, and there are a number of public/private partnerships where Nevada businesses can fill in gaps in government services left by the recession.
An example of these partnerships comes from NSDBC, which applies for grants in order to contract with independent contractors to work as speakers and trainers in the 13-week NxLevel for Entrepreneurs class, NSBDC’s signature training program. The master trainer, an independent contractor, needs to own his or her own business, be an outstanding speaker and understand adult learning. NSBDC provides a day and a half of training and the NxLevel workbooks. “There are 15 people in Nevada who get paid to teach this class, and they’re all independent contractors,” said Carrico.
NCED’s procurement outreach program has grown from 750 clients to over 1,000 in the last five years. All federal agencies have annual goals to meet when working with small businesses, and each of those goals is broken into categories, including minority-owned, women-owned and veteran-owned businesses. Every government agency negotiates goals on an annual basis with the SBA, and the government spends about $500 billion a year buying products and services from commercial entities.
“It’s anything from paper clips to jet fuel, consulting services to temporary services, just about anything you can think of for any type of business, there’s a possibility you as a small business could do business with a government entity at federal, state or local levels,” said Agee-Dow.
Since the economic downturn, there’s been a upturn in private businesses looking for government contracts, especially in hard hit industries like construction. In June NCED held an event with Nevada National Guard and Northern Nevada construction businesses, putting the two together as the Guard rolls out construction contracts for projects going forward through the next five years.
“Hopefully our program can continue to facilitate events like that which will help small businesses in Nevada to contract directly with federal agencies to bring federal dollars here and keep them here,” said Agee-Dow.
Getting the Word Out
SBA has a great website, full of information to help business owners, entrepreneurs and those people just starting to think about working for themselves take those first steps. “Anything you need to start a business is there,” said Cadena. “There are business tutorials, counselors available 24/7 on the net and phone counseling, manned throughout the country. If the person who can best help you is in Miami, that’s who you’re connected with.” What business owners, or those people who want to be business owners, need to know is they’re not on their own – SBA and SCORE have services and resources available throughout Nevada.
“We want to let people know where we are, and the reality of how we can help them,” said Cadena. “A dream that creates no profit is a hobby. A dream that creates a profit is a business. At SBA, we stress the business angle. Got a dream you want to follow, make money at and turn into a business? We will do as much as we can to help you out. Our goal is to help small businesses thrive and create more jobs.”
Carrico asks participants in the NSBDC training courses how many of them have worked for someone else (most) and how many had training before starting those jobs (about 85 percent). So why, she asks, would anyone consider going to work for him or herself without training? “Now that you’re stepping into self-employment, who will train you to do what you’ve never done before? And people haven’t thought about that. They’ve never done payroll or worked 100 hour weeks. It’s food for thought. Don’t do this alone. Starting a business isn’t something anybody can do alone.”
If Nevada is going to bounce back from the recession, it’s going to be by way of Nevada businesses, the small, the medium and the large. Finding government services, and utilizing those services, is one way to ensure the success of Nevada’s businesses, and Nevada.