Study Shows New Businesses Emerging Out of Recession

PHILADELPHIA, June 22 SBDC-new-businesses
Small Business Development Centers play important role in fostering entrepreneurship

PHILADELPHIA, June 22 /PRNewswire-USNewswire/ -- Turns out there's an upside to this downturn, according to a new study by the Ewing Marion Kauffman Foundation: more entrepreneurial activity.

"We're certainly still seeing individuals interested in starting businesses, and I can't say we're surprised," said Christian Conroy, State Director of the Pennsylvania Small Business Development Centers (SBDC), a network of 18 university- and college-based centers which provides assistance to new and existing businesses across the Commonwealth.

Helping new businesses start is a hallmark of the SBDC program, which counts roughly half of its client base -- nearly 4,500 individuals -- in the pre-venture or start-up category. On average, the SBDC helps 2,600 businesses start annually. New business activity has occurred across the state, even during the recession.

On-Site Heavy Equipment Repair in Clarence, Pa. is one such example of a start-up that forged ahead despite a dubious economic outlook. Husband and wife team Don and Coleen Reese began their business last April -- just after the collapse of Bear Stearns. Counsel from the Penn State SBDC on financial proformas and market research ultimately helped the Reeses secure the capital needed to start the business.

"Their services are phenomenal. We could not have started without their help," Coleen Reese said. The owners have continued to use the center's services for marketing and QuickBooks assistance.

Greg Buckner of Bradford, Pa. began seeking financing to start his business last fall, at the height of the financial collapse. He worked with the Clarion University SBDC to develop a business plan and conduct market and competitive analysis, which supported financial projections presented to the bank and area partners. Buckner secured total funding of $119,000 and began his crematory service in late October.

The business is already above the projections, and Buckner has since hired a part-time employee. "I would recommend the SBDC to anyone starting a business," he said.

Others, like Sharon and Frank Gundy of Hazleton, Pa., looked at a new venture as a way to make up lost income. Frank had been laid off, and Sharon, a real estate agent, was seeing a substantial decline in her business. The couple sought assistance from the Wilkes University SBDC this winter for guidance in registering their novelty gift business and building an online presence.

Kelly Shick pursued her own business after being laid off from Osram-Sylvania. The Gannon University SBDC helped Schick take over a former sports bar in downtown Warren, Pa., after navigating her through the loan process. "I might have given up without the assistance and encouragement from the SBDC," Schick said, who is now proud owner of Kelly's Pub.

The Gannon SBDC also helped a retired Navy veteran purchase a three-business operation consisting of West Hickory Beverage, Fox Pizza and Hickory Video and Grocery. Mark Zofcin secured $400,000 needed to supplement the purchase, relying heavily on SBDC consultants to prepare the financial proformas. "We really appreciate that the SBDC was there when we needed a business plan," he said.

Zofcin and his wife took ownership of the East Hickory, Pa. complex this March. Their Memorial Day business already exceeded that of last year.

"History supports that new firms emerge during times of economic turbulence, when unemployment is high and the entrepreneurially-minded seize the opportunity to start companies," Conroy said.

According to the most recent independent analysis of the program, the SBDC plays an important role in fostering entrepreneurship through its assistance to pre-venture clients. "Those clients add to the economic development of Pennsylvania and the United States and, not incidentally, generate a large number of new jobs," concluded Dr. James Chrisman of Mississippi State University.

As the state's largest provider of entrepreneurial services, Conroy believes the aggregate assistance of the SBDC program will have a substantial role in turning the economy around. Small companies that sought help from the Pennsylvania SBDC during 2001-2002 added 7,900 new jobs, a 6.25 percent growth rate, compared to a 1 percent loss for the average Pennsylvania firm.

"We've actually expanded our reach and refined our services since 2001, so I think we'll see a greater impact," he said. "We're already helping thousands of small companies survive and grow, and there is no doubt this is making a difference," he said.

About the Pennsylvania SBDC
Since its inception in 1980, the Pennsylvania Small Business Development Centers (SBDC) has evolved into a network of 18 university-based centers and more than 100 outreach locations, operating under the guidance of the State Director located at the University of Pennsylvania. Funding support from the Commonwealth of Pennsylvania, the U.S. Small Business Administration and the SBDC host institutions enables consulting services to be provided at no charge to the client. For more information on the Pennsylvania Small Business Development Centers' services and impact, visit www.pasbdc.org.

CONTACT
Megan Schmidgal
(215) 898-1219
megands@wharton.upenn.edu

SOURCE Pennsylvania Small Business Development Centers