By Darcie Nolan
Business resources and community support are a big draw for startups in the region, while startup funding and government regulations are a challenge for some small businesses. Attracting new hires continues to be a challenge, hindering small business growth.
Those were some local takeaways derived from the Wells Fargo/Gallup Small Business Index for Q1 2017. Results stem from interviews with 602 small business owners across the country with annual revenues of up to $20 million. The responses were added to quarterly responses compiled since August 2003.
Limitations of the Survey
The data released in the Wells Fargo/Gallup survey do not indicate which industries were surveyed, how long the small businesses have been in operation or the number of employees at the businesses. However, the survey states that the median age of those interviewed was 57, with only 19 percent of respondents under the age of 45.
Aikta Marcoulier, executive director of the Pikes Peak Small Business Development Center, said the data would likely change if more nascent businesses and younger business owners were better represented in the sample.
“It seems as though the people surveyed are those that have been in business for a while,” she said. “They have been growing their business and they are older. If you interviewed younger business owners and the tech startup community, this would not look the same.”
SBDC works with a variety of businesses, including startups and those that need help with strategic growth.
“I would say most of our business owners are 35-plus. We see younger business owners, especially as more and more universities are pushing Bachelor’s of Innovation and entrepreneurship programs,” Marcoulier said.
“The trend here is that we are really trying to support that youthful entrepreneur because that is a large demographic here. We also get retired people looking to start a business for supplemental income and a lot of people transitioning out of the military.”
There has been a significant increase in the number of people considering starting a new business, according to Dustin Kunkall, program director for the SBDC.
Resources and challenges
The Wells Fargo/Gallup survey indicates that small business owners are finding it fairly easy to get credit when needed. Forty percent of respondents said it was somewhat easy or very easy to get credit, which is up from 34 percent in the last quarter of 2016 and up from 30 percent year-over-year. Meanwhile, 20 percent of current survey respondents said it was somewhat or very difficult to obtain credit.
Lacie Richardson is the founder and owner of Wild Woman Fish Company in Colorado Springs. She started the business in 2014 with the help of local resources and family.
“I brought my business to Colorado because of all the support for small business here and because this is my hometown,” Richardson said.
Some of that support came via the SBDC.
“The SBDC has workshops and mentors, business counselors and free access to lawyers and, in the very beginning stages of my company, I needed all the help I could get,” she said.
Richardson, who also had weekly access to a business mentor, said she found startup capital to be a major barrier to entry.
“The biggest hurdle that I didn’t realize was going to be so hard was getting my financing, getting capital,” said Richardson. “Basically there are no options for startup capital for new business owners. For a startup company you need two years of proven profits. Prior to those two years, there are not a lot of options.”
Richardson funded her business with loans from friends. “I was broke when I started. I just tried to turn one box into two and two into four. I took some small personal loans from friends that believed in what I was doing so I could buy a couple of the necessities to get going,” she said.
The Wells Fargo/Gallup survey indicates that 29 percent of small business owners expect to see an increase in employees while 66 percent expect to stay the same. Some local companies ready to hire are experiencing setbacks.
“Right now, our biggest challenge is a little bit of a location challenge,” said Mike Juran, co-owner of Altia, a software development firm headquartered locally with offices in Detroit, Germany and Japan. Altia employs 60 people and is looking to hire more in the coming year. About half of all new hires will be for the Colorado Springs headquarters, he said.
“We have to recruit tech employees — so younger Millennials — as well as executives in the tech industry. Often they are not here [in Colorado Springs] already. So bringing them here is a challenge,” he said, adding Colorado Springs is no longer considered a tech hub. Juran said that could mean tech employees won’t have anywhere to go if they want to switch companies.
One recruiting positive, he said, involves downtown.
“The changes in downtown are certainly ones we have been encouraging,” Juran said. “Like creating a more urban environment where Millennials might want to live and socialize, a more attractive urban community mixed with the outdoors as opposed to just relying on the fact that we have Pikes Peak. Younger, single software developers have other needs beyond that.
“Certainly the city is working hard to change this, but recruiting and attracting people to Colorado Springs and changing the kind of reputation the city has for the Millennial crowd is not automatic.”
Transition planning and retirement
Survey results show that only 30 percent of businesses surveyed had a written transition plan. While 59 percent of them expect to create a plan in the future, 51 percent do not consider that to be a high priority.
“I think this is really accurate,” Marcoulier said. “And it is a big deal. We have been working on business continuity and preparedness in a variety of ways since 2012.”
“We believe business owners should start thinking about transition planning right now.” — Aikta Marcoulier
Juran said his company does not have a transition plan in place.
“We are building a company such that it is not dependent on me. We are a fairly mature software company. It’s not like if the founder gets hit by a bus it is all over, in our case.”
He said his top leadership is fairly young, but Marcoulier said it is never too early to make a transition plan.
“We believe business owners should start thinking about transition planning right now,” she said.
“We have seen disasters happen.”