Helping New York's Small Businesses
Feb 21, 2005
Small businesses, like these in Flushing, provide vital jobs and services in many New York City neighborhoods.
New York may be the center of corporate finances and big business, but in most of the city's households and neighborhood, small business reigns supreme. More than 2 million New Yorkers work for small businesses, which account for the vast majority of all businesses in the city.
Policy makers often neglect this backbone of the New York City economy. But on February 15, at a panel sponsored by the Center for an Urban Future and the Center for New York City Affairs at New School University, five experts offered their views on what government at all levels should - and should not do - to help New Yorkers start small businesses and to help existing ones thrive. These are excerpts from their comments.
PIGEONS, POLITICS, AND PERMITS
About 98 percent of all business in New York City have fewer than 100 employees, and overall those small businesses employee 2 million workers. When you compare the numbers from 2000 and 2003 the number of new business has actually declined. That's a bad thing for New York City's economy.
There is a huge role for local government to play. Take the Roosevelt Avenue commercial strip. We have hundreds and hundreds of small businesses. [We have been] trying to get them to see, whether you are selling shoelaces or selling flowers or a delicatessen, that they have a huge common interest. Government can steer that -- let's get together, let's form a group, let's meet once a month. Then maybe with some investment from the public sector and some investment from the private sector, we'll bring in the Doe Fund -- the people in blue uniforms who clean streets.
We did that in Queens, and now Roosevelt Avenue is cleaner today than it's ever been in my entire life. That matters to a small business owner because, if you have clean streets, you've got more foot traffic and people come into your store more often.
Right now, if you want to open up a restaurant in New York City, you must fill out eight different applications for different federal and state agencies. You have to become a navigator trying to get through some of the most complex red tape that you could ever imagine.
And that shouldn't be. In the City Council, I'm proposing two things. One is a master application to open a restaurant and, two, a one-start center for small business people. Note, I say one start, not one stop, because it shouldn't be where you're stopping but where you're beginning
When you're in a small business, you care about raising money. All too often in government, it's about status quo and its about deflecting criticism. To give you one example: Along Roosevelt Avenue, the 7 train is a magnet for pigeons. The business owners were driven crazy. It decreases foot traffic because people don't want to walk where they're going to have to dodge pigeons. So I complained about this to the Metropolitan Transportation Agency and to the Sanitation Department. Then I started getting phone calls from small-business owners who said they're writing us tickets because the ground is soiled. I said, "They're blaming you for the pigeons?" and they said yes. This is government at its very worst. The pigeons do their business, it decreases business and then we punish the small businesses for attracting pigeons. We need to have a mentality that government should be here to help and not be a hindrance.
On the role of the federal government, I'm not one to diminish the importance of rhetoric. I'm happy that President Bush talks about the ownership society, but you need to match your deeds with your words. And when you're slashing the Small Business Administration budget you're not putting your money where your mouth is.
--Eric Gioia, New York city council member
THE POWER OF TAXES
Local state and federal policy makers can have a tremendous effect Many small businesses are afraid when the legislature is in session. No action in some instances is better than taking action. Although there are some instances where taking action is important
From the federal perspective, the president proposed and Congress approved some tax rules. One of the areas where small businesses have benefited is the increase to $100,000 deducted for expenses. If someone invests in the business and purchases equipment, they can take up to a $100,000 deduction on their income tax return for that investment. Joe Guido, who is president of Foro Marble in Brooklyn, has been a Small Business Administration success story for decades. When this specific tax relief was enacted, he called me and said, "Mike, I've just made an order for a piece of equipment for $50,000 and I'm hiring a person and I'm only doing it because I know I will be able to deduct this expense from my income tax." That's a real life example.
Two other points that I think are important: Health care is very critical to small businesses and employees. The administration has a proposal to try to make health care more affordable.
The U.S. government is the single largest purchaser of goods and services in the world. The Small Business Administration has a division of government contracting and business development, and their focus is to try to help people gain access to government contracts. We have conferences around the country where small businesses can go on line and complete a profile and then federal agencies or large corporations can complete another profile with what goods or services they are trying to purchase, and we try to match the two. We have been able to track over $28 million in contracts that have been awarded [[as a result of these efforts]]. Fifty percent of those contracts have gone to minority owned businesses.
-- Michael Pappas, regional administrator, U.S. Small Business Administration
LITTLE MONEY, BIG EFFECTS
My mother started her business, Lillian Vernon, in 1951 with $2,000, and that $2, 000 grew to a company that is on the stock exchange. So I understood, growing up, what a small amount of money does.
Microloan programs [making loans of a few thousand dollars] are expensive, You're taking someone who has an idea, does not have a credit history, may not have a checking account at that point, and giving them small amounts of money to start a business. A lot of these businesses are home-centered, home day-care centers where frequently women, often minority women, take care of five, six, seven, eight kids in the neighborhood and thereby help six or seven other families go to work and keep a job.
Particularly in New York, with a very, very large minority population and a large immigrant population, these programs are very important because a lot of people are just afraid to go to a bank. They don't think they have the clothes to walk into a bank, they don't know if their English is good enough to go into a bank, and so these programs really do strike a very responsive chord, a very much-needed chord.
First and foremost what [local] government can do is create the environment, create the environment in education, create the environment in terms of a trained workforce, create the environment in a sense of optimism and confidence and a good business environment
Fred Hochberg, dean of the Milano Graduate School at New School University and former deputy administrator of the Small Business Administration:
Sometimes we have a passion for a product or service that we want to launch. We think it is the best thing in the world, and we do not want anyone else to tell us why this cannot work. We go through this, and a couple of businesses later, we learn from it. So, technical help can be much more helpful than just getting money.
It would help if we can ease regulations somewhat, such as being certified as a minority business. There's a federal certification, New York City has its own certification, New York State has its own certification, the Port Authority has its certification. How much time can a small businessperson spend on getting the certification?
Small businesspeople could get some assistance from the government in the international arena. The international area is great for major corporations because they have huge budgets and can set up departments. Small businesses themselves just cannot have that structure to do that. Having one person represent the state of New York in one office is not enough.
One of the best examples I've seen is the Hong Kong Trade Development Council. They have an office here. They have catalogues of everything you can think of. They are very creative. They have an airport tax and part of that airport tax goes to fund that agency. They hold events all over the world, trade shows and so forth. Most of the businesses are very small.
No government agency can ever satisfy 100 percent of the business owners. To the extent that they can help, it's great, but the businessman needs to help himself.
--Fred Teng, president of DVS New York LLC and a member of the National Small Business Development Centers Advisory Board
FINDING CAPITAL, FILLING GAPS
The role of government is always important.
Businesses are always - always - going to need capital, so the access of capital issue always exists. It is not only an issue of the federal government; it is an issue of the banks as well.
Microlending continues to get the short end of the stick. While there are programs out there, the microlenders take the highest risk and because they take the greatest risk, the fees are high. I think there's an underlying issue as it relates to start-up companies that we need to address and that's an educational issue - how prepared are people to go to a microlender and establish themselves as a business and get all of the resources that they need. We developed a technical assistance manual as a result of all the calls that we were getting and for ourselves, as we were trying to understand the lay of the land, as to who is doing what for the small business community. We had to identify entities—non-profit and profit -- that fund microloans,
The role of government is always important. Wherever we find a gap, wherever we see an issue, government should be involved.
--Madeline Marquez, executive director of the Bronx Initiative Corporation
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