Silver City SBDC Director Jane Janson presents at Economic Development Course

By Mary Alice Murphy

As part of the Economic Development Course going on this week in Silver City, Jane Janson, Silver City Small Business Development Center director, gave a talk on Small Business and Entrepreneurship Development on Tuesday afternoon. The course ends with presentation of certificates of completion Thursday afternoon.

This year is the 24th year of the course, which is presented by Western New Mexico University, in cooperation with New Mexico Rural Alliance, New Mexico Economic Development Department and the New Mexico Small Business Development Center Network.

Janson said she was a participant in the course in 2015. "It was with me for a long time. Now I have internalized it."

"The SBDC is about relationships, especially in rural areas," Janson said. "Not only do we work with organizations, but we have relationships with the people in the organizations."

"Yes," she said in an aside, laughing, "this is a secret pitch for SBDC."

She said the SBDC is a "good builder," with a goal of helping startups, as well as helping established businesses grow.

"We are the only organization that has company-based documentation that tracks how many jobs they create," Janson said. "On the topic of small business and entrepreneurship, we need to think about: What makes a business small? Who starts a small business? What about small business failures? What about planning for success? Financial resources? And where to find help."

She said she worked in San Francisco for 21 years, before moving to Santa Fe. "My specialty before I moved to Silver City was as a clean up person" to help businesses solve problems and get out of trouble.

A small business is defined by the Small Business Administration as a business wanting to make a profit, located in the U.S., not dominant in a national business, has fewer than 500 employees and has less than $7.5 million in average annual receipts. She noted there are probably 25 other categories and exceptions.

The U.S. has seen a 49 percent increase in small businesses since 1982. While big business eliminated four million jobs, small business has added eight million jobs.

In New Mexico, there are 154,400 small businesses, 22 percent with employees and 78 percent without employees. About 328,900 people are employed in the state in small businesses.

Janson pointed out the differences between a small business owner and an entrepreneur. Older people consider themselves small business owners. Younger people call themselves entrepreneurs and say they are in business to make a difference. Both do what they are passionate about.

"An entrepreneur is often not the one that comes into the SBDC," Janson said. "They are less likely to write their plan down and see less need for a business plan. An entrepreneur wants to grow; a small business wants to maintain."

She noted advantages of small size are entrepreneurial spirit and flexibility of response. Two things can happen over the life of a business: they can't adapt and become entrenched or they can become complacent.

The entrepreneurial spirit is a mindset, and attitude and approach to thinking, Janson said. Entrepreneurs actively seek out change and embrace critical questioning, innovation and continuous improvement.

She gave the example of Diane Barrett, who began Diane's (now a renowned, high-end restaurant in downtown Silver City) with one counter and a bakery.Next she set aside a room with a table, and expanded. "When she saw something wasn't working, she figured it out. Or she thought, if people like the bakery, maybe they would like a sandwich."

Entrepreneurial characteristics include local/hometown/community, not interested in an exit; problem solver; and loves getting their hands dirty.

In New Mexico, Janson said, you can start a business without much financial risk. But people come here and don't do their homework. They buy a building because it's cheap and find out it's falling into the Big Ditch, or that the roof burned in the past and was just painted over. But they can do it here on the cheap.

"Our entrepreneurs are community-based," Janson said. "They like to be hands on and may not want to be taken over. The flexibility of response has short decision loops, less structure, fewer people, and a willingness to change."

She said small businesses fail more often than they succeed. They fail 25 percent in year 1; restaurants 60 percent by year 3, and 80 percent of retail clothing operations are closed by year 5.

Causes of business failure include no planning, tax delinquency, emotion versus fact, financing, and record keeping, most of which can be lumped into cash flow.

"The biggest problem is payroll tax, and if they came from elsewhere, they don't know about gross receipts tax," Janson said. "They may be living beyond the means of the business.

"At the SBDC, we talk about the nuts and bolts of the business, such as the mechanics of starting a business, planning, marketing, operations, financial forecasting and funding," she said. "Don't forget when you start a business, you have to pay business income tax. You need insurance. If during your business, you have an accident, your personal insurance won't pay."

She defined a business plan as "your business's filter to what you plan to do and how you plan to do it. Know that what you're doing and writing will be obsolete when the ink is dry. What the business plan does is structure the conversation between the employer and the team, so they have buy-in. The lowest clerk often has the real knowledge of the cash flow, for example."

Janson said the business plan can also be an internal document, and perhaps a business needs the internal plan and another plan for the bank.

The basic elements of a business plan are the business description, market analysis, competitor assessment, marketing plan, operating plan and financial plan. "The executive summary is the last thing you do."

The process of building a business plan is non-linear, Janson said. "It's iterative, the elements interact, and it becomes increasingly realistic." She recommended using Post-It-