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Obama demonstrates his focus on small business expansion

aroraRohit121610_optBY ROHIT ARORA

During his State of the Union Address, President Obama extolled the way the stock market has come roaring back, gains in corporate profits and growth in the economy, yet presented few details on how to boost small business expansion. However, less than one week later, the White House introduced Startup America, an initiative to inspire and accelerate entrepreneurship throughout the country.

Startup America is an important part of President Obama's overall innovation strategy. Its goals are to:

  • promote entrepreneurship as a core American value and source of competitive advantage;
  • increase the number of new firms creating economic growth, innovation and quality jobs; and
  • inspire and empower greater diversity of communities and individuals to build great American companies.
  • The initiative will pursue these goals in a number of ways:
  • expanding access to capital;
  • supporting entrepreneurship education and mentorship programs that empower Americans to create jobs;
  • strengthening commercialization of the $148 billion in annual federally-funded research and development;
  • allowing entrepreneurs to request faster review of their patents; and
  • identifying and removing unnecessary barriers, including some capital gains taxes.

These should prove to be valuable efforts.

The President has also rightly acknowledged the important role that technology has played in transforming business in the 21st century and challenged American students to put greater emphasis on math and science. Investments by China and India in math and science have helped their economies grow, particularly in research and technology arenas. He is correct in saying, "We won't be able to "make America the best place on Earth to do business" and "out-innovate, out-educate, and out-build the rest of the world" unless the next generation of American workers is willing to pursue careers in engineering, IT, and other industries in which innovation dominates.

In running my company, I see first-hand the dearth of IT skills in our economy. Businesses are looking to outside the U.S. for talent, in part because we don't have as many workers in technological fields. The laws of supply and demand dictate that the talented American workers can charge premium rates for their skills. Corporations are outsourcing technical work not because they want to, but because they have to.

So what do small businesses need in order to compete more effectively in the marketplace?

The first step is to better leverage technology. Many companies have learned to use tools such as eBay, Facebook and Twitter in their marketing efforts. Unfortunately, there are still thousands of small business owners who have not yet embraced these tremendous marketing tools. Many do not even have web sites or Internet access. Ignoring the benefits of utilizing technology puts companies in a competitive disadvantage. Small business owners who are intimidated by technology must embrace it. They must either train to learn how to utilize it better or hire people who do know how to take advantage of these innovations that help business compete more efficiently.

Small business owners can better implement the power of technology in their financial management. Budding entrepreneurs are increasing using the Internet to shop for the best deals on small business loans, in much the same way that consumers embraced eCommerce sites such as Amazon during the 1990s. Founders of start-up businesses look for capital online through companies like Biz2Credit, which also offers comprehensive financial management services. Thus, small business owners are now essentially able to farm out their CFO duties, making their companies leaner and freeing their founders to focus on developing new product offerings, sales and customer relations — the things that they are good at doing.

For instance, West Orange-based Vista Pharmaceuticals, founded by a group of doctors to manufacture and market bulk over-the-counter and prescription drugs and nutraceutical products, received FDA approval to start shipping bulk drugs to the U.S. market from its manufacturing plant in India. The firm needed working capital to recruit U.S. marketing staff as well as set up the infrastructure needed to handle all the sales calls. Vista's founder, Dr. Dhananjaya Alli, did not have a lot of experience in American corporate finance. He approached Biz2Credit to help raise debt financing — a challenge since his company lacked a U.S. revenue stream, which made banks hesitant to provide financing. Vista was able to amortize $2 million in R&D expenses over five years and got an industry valuation for the FDA license. By taking these steps, the company became eligible for a $575,000 SBA 7(a) loan at a low interest rate of six percent and has created five jobs in New Jersey.

I wholeheartedly concur with the President's assertion that Americans do big things. It's the reason why I — and countless other immigrants — came here. I applaud the creation of Startup America and the White House's continuing support of innovation and its focus on helping small businesses grow. If we are to fully recover from the Great Recession, small businesses must help lead the way.

Rohit Arora, an expert on small business lending, is co-founder and CEO of Biz2Credit (www.biz2credit.com), which connects small business owners with 150+ lenders and service providers via its safe online platform. KPMG ranked Biz2Credit among the top 100 emerging companies in 2008.

ALSO BY ROHIT ARORA

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Small business needs access to capital more than tax cuts

AL

 
Comments (2)
2 Wednesday, 22 February 2012 04:42
Small Business Loans
Seems like the president has really big plans for small business lets see what will be the outcome. small business loans
1 Monday, 21 February 2011 01:32
Rama
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