business

Ron Wacks, writes, teaches, conducts research, consults and lobbies on behalf of the nation's millions of tiny companies -- those with 10 or fewer employees.

Wacks, the CEO of Microbusiness Strategies, says it's time policies and resources changed to support the needs of this vital group.

On Tuesday, he'll participate in a jobs summit that Gov. Mark Dayton is holding in St. Paul. We asked for a sneak peak of his agenda.

Q You claim that tiny companies with fewer than 10 employees are overlooked but very important to the U.S. economy. Are there many of them?

A We are talking about 95.4 percent of all U.S. businesses, or 26.5 million microbusinesses. Yet there is precious little research done.

Q You talk in your research about sole proprietors who run businesses by themselves, without other employees. How many are there?

A About 78.2 percent of all U.S. businesses have [an owner but no] employees. [That's] over 21.2 million firms. Yet in terms of political mandates, it is not on the radar. We are talking about millions of people who are essentially getting almost no attention, resources or services. In Minnesota, non-employers are 75.8 percent of all firms [or] 387,125.

Q Yes, but why are self-employed businesses so important?

A Because when we understand that the vast majority of businesses have no employees, and then when we talk about creating jobs, we can understand that we really mean creating income. Then you can help set up one set of criteria, programs and policies that can help prepare [people] for self-employment. We don't do that nationally. I am of the belief that if you hire yourself [by starting your own firm] you have created a job. But the Labor Department does not look at it that way.

Q What are the differences between how employers and the self-employed are treated by state governments and banks?

A It's a money issue ... In terms of political mandates [we] don't count self-employment so it's not on the radar. We need a thinking shift. Let's look at the last 10 or 11 years. How much money have we spent in the name of job creation? Then look at the other side of the ledger. How much money have we spent to help people become or stay self-employed? I would bet you it would be 95 cents on the dollar versus five cents.

Q What do the self-employed and other microbusinesses need most?

A The biggest [problems are] the lack of access to capital and technical assistance that teaches someone how to run a business. We feel that you cannot just give someone money to open up a desktop publishing business. That person needs to know how to run a business. What can state government do? Provide much more technical assistance than we do now.

Q How would technical assistance help?

A If you [started] 100 generic American businesses, after five years 80 percent of them will fail with no intervention what so ever. In another five years, you would have only four viable businesses. But if you introduce only one variable, which is offering them qualified and appropriate technical assistance, our research has found that after 10 years you would have 64 viable businesses.

Q Does anyone provide such help?

A Rural and community banks understand that self-employed people also need technical assistance in addition to capital because that reduces their risk ... . [There are] Small Business Development Centers, groups like WomenVenture, or training through technical colleges. Some are great and some are just OK.

Q But you say that's not enough. Who else should provide the training and basic business education needed to make sure more of these tiny businesses succeed?

A State government can do much, much more in terms of the technical assistance piece and then gaining some sense of control over Minnesota lending. There are a number of community banks and smaller institutions that do some very creative things and we wish they were more mainstream. I talk to government leaders about the state becoming a loan guarantor for small businesses here just like the U.S. Small Business Administration does for the nation. There needs to be many more state offices that are small-business development centers.

Dee DePass • 612-673-7725