New Jersey SBDCs Provide Fabulous Return On Investment

As a previous board member of Gov. Whitman’s Prosperity New Jersey, I am aware of the administration’s genuine desire to cut government spending while finding ways to put more meaning in the phrase “New Jersey is open for business.”

Eliminating New Jersey’s Small Business Development Centers (SBDC) may initially seem like a cost-saving measure, but such a move would set back New Jersey’s efforts on the job creation/tax generation front.  It would definitely be a penny wise and pound-foolish decision to eliminate SBDCs.  In an attempt to save more money, it is important not to inadvertently eliminate programs that create jobs and attract taxpaying businesses to our state.  The SBDCs do both.

Answers to the most frequently asked questions will help our representatives as they deliberate about budget priorities:

Question:  Isn’t the SBDC just another government bureaucracy full of red tape that achieves not results?
Answer: No, and nothing could be further from the truth.

At a cost to the state of New Jersey of less than $38.50 per client, New Jersey’s Small Business Development Centers worked with over 13,000 people in 1995.  Over 3,000 SBDC clients qualified for and received loans to enlarge their businesses, and these firms provided $15.5 million in state taxes.  Nine percent of all the new jobs created in New Jersey in 1995 can be traced to work done by the SBDCs.  That is a fabulous return on investment.  When you think about it, we should all be amazed at what the New Jersey SBDC staff accomplished despite the ever-present threat of elimination.

Brenda Hopper, the executive director for New Jersey’s Small Business Development Centers, recognized the need for measured results and efficiency.  I am sure that the administration, the Department of Commerce and the Legislature would be pleased with the responsible steps she and her managers take to constantly improve return on investment for New Jersey taxpayers.

Question:  Why can’t the SBDCs be self-sustaining?
Answer:  The SBDCs nationally have been precluded from being charged fees by Congress.

They provide one-on-one counseling for start-up companies that can’t afford market rates.  Although clients do pay for some of SBDC’s services, the overwhelming majority of SBDC’s clients do not have enough money to pay the normal fees of management consultants, accountants, lawyers, etc.

Question:  Don’t the SBDCs compete with the private sector?
Answer:  Through the SBDCs, New Jersey invests $38.50 per client in people who are trying to take responsibility for their futures and not relying on unemployment or welfare.  A private company could not cover its basic operating expenses on so little money.

Question:  Aren’t there other places to get similar services?
Answer:  No.  Local colleges and chambers of commerce provide courses, but the New

Jersey SBDCs have received national recognition for efficiency and effectiveness.  If they were eliminated, New Jersey would inevitably have to recreate the same thing; only that would be very difficult to do.  The SBDCs have accomplished a true public-private partnership that other organizations just talk about.  They provide one-on-one counseling, training, targeted assistance (exporting, procurement, tech hotline, etc.) and an incubator.  The Entrepreneurial Training Institute is good at what it does, but it provides only a small piece of what start-up companies need.

Question:  Doesn’t the SBDC compete for money needed by the Commerce Department’s Division of Small Business, Women and Minority Owned Business?
Answer:  Even if the SWM Division and the SBDCs performed the same function (which they do not), it would be important to remember that 2 to 1 federal matching makes each dollar invested in NJ SBDCs worth more than $3 (closer to $4) because the SBDCs also attract private contributions and grants.  Plus, over one-third of the clients served by the SBDCs in New Jersey represent women-owned business, and over one-third are minority-owned companies.

The SWM Division’s role is very different.  Its WBO and MBO vendor certification programs have been every important.  There is a great deal to be done on the economic development front these days.  I view the SWM Division as the small business arm of the Department of Commerce.  People like Michael Rambert are important to attracting and retaining small businesses to New Jersey.  His division would not need to duplicate what is being done well by SBDCs to be meaningful.

In this day and age of corporate layoffs, New Jersey needs to have stable Small Business Development Centers.  Government representatives should consider the effectiveness of New Jersey’s SBDCs as budget proposals cross their desks.

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