Return to Transcripts main page
CNN Live Saturday
Dollar Signs: How To Start Your Own Business
Aired January 03, 2004 - 16:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR, DOLLAR SIGNS: Welcome to DOLLAR SIGNS, where we help you make the most of your money.
Many people make New Year's resolutions to lose a few pounds, get organized, or go after their dreams. For some, that includes starting a small business. Hector Barreto and Andy Birol are going to help you get started.
Hector Barreto is administrator of the U.S. Small Business Administration in Washington. And Andy is the author of "Focus, Accomplish, and Grow" and a business consultant in Cleveland, Ohio.
Good to see both of you.
HECTOR BARRETO, U.S. SMALL BUSINESS ADMIN.: Good to be here.
ANDY BIROL, BUSINESS CONSULTANT: Good to be with you.
WHITFIELD: Let's begin with you, Hector, if we could. How important are the small businesses to the U.S. economy?
BARRETO: They're very important, Fredricka. Small business isn't small when you consider there are 23 million of them. They generate over 50 percent of the gross output in the economy. And they probably contribute somewhere around two-thirds to three-fourths of all the net new jobs. They're very important to the economy.
WHITFIELD: We're talking about all of the small businesses out there, about 320,000 of them are franchises. Many people consider that a lower-risk kind of approach to small business. How vital are they to the industry of making money and of selling retail products?
BARRETO: Well, they're a great opportunity. Many franchises are very successful. They have a built-in recipe of success. And if you follow the rules of those franchises, you can be very successful. But there are many ways you can be successful in small business in a lot of different industries and a lot of different sectors.
And the SBA is here to help those small businesses with access to capital and entrepreneurial development. We can even help them access contract opportunities with the federal government.
WHITFIELD: For an awful lot of people who may be intrigued by the idea of a franchise, don't they need to have some capital first? Is it likely this is still fairly risky for those who are inexperienced in the world of making business work? BARRETO: Well, all small businesses need capital. In fact, we think of it as the oxygen that they breathe. The SBA last year helped facilitate about $17 billion in capital through all of our loan programs. Those can be very small loans, micro-loans, they can be working capital loans; we do real estate loans, fixed asset loans, we even do venture capital.
WHITFIELD: So bottom line, though, someone who thinks they want to buy in to having a franchise, they can't think that it's going to take place without any kind of money exchange. They have to come to the table with something.
BARRETO: That's right. Again, that's the place where the SBA can be a very good partner. Oftentimes, there needs to be an initial investment. Every franchise is different. Some require a lot, some don't require as much. But depending on the situation, again, the SBA can do loans up to millions of dollars, and so we can help small businesses that want to get franchises or start any other type of business.
WHITFIELD: Well, it would seem that someone who already has some experience in working in small business, or perhaps even having their own business might stand a better chance of getting that kind of Small Business Administration loan.
How about for the person who really is starting from scratch and is hoping they're going to learn along the way?
BARRETO: Well, we can help businesses at all levels. In fact, last year, a lot of the folks that came to us were people that had an idea that were thinking about starting a small business. We tell them the first thing they need to do is do their homework. They need a strong business plan. We can help them put that business plan together.
Then, of course, they need the access to capital. As I mentioned to you, you don't need to be in business a long time to be able to qualify for one of the SBA loans. We can help provide that very important track record, that a small business is going to need, so they can grow that business and get larger loans in the future.
WHITFIELD: All right. So Andy Birol, you've been waiting oh, so patiently on the right side of our screen waiting for your turn. Let's say now the person has decided they're going to go for a franchise or they've got their small business.
You've got some tips on how to help that small business grow, how to strengthen. Let's go through some of them. You say, number one, target optimistic customers or expand your businesses. Let's target the targeting of the customers first.
BIROL: Yes, Fredricka, it's really a great time. Every sign right now is the economy is on fire, and small businesses are always the ones that lead the way.
If a small business can take a look at its customers and find and pick out the ones that are most optimistic and look amongst its customers who are in businesses to the ones that are growing the most. When you find people with confidence, customers with a sense of urgency, and where they have more money than time, these are a wonderful group of people to target.
And it's exciting because, when you go after folks like that, you can grow right along with them.
WHITFIELD: It almost sounds like you're taking the approach of real estate. It's location, location, location. The same applies for your customer base for your businesses.
BIROL: Well, it's probably attitude. And the attitude is you really want to be working with people who are optimistic or businesses that have already decided to grow. Selling to those two groups of people is going to be so much easier.
WHITFIELD: OK, No. 2, increase your value with your prices. What do you mean?
BIROL: It's a great time. As people are starting to forget about simply surviving and are starting to point towards success, that you really want to try to give people more value while at the same time you're charging them more.
For example, introduce a premium line of either products or services. Offer to get it to them in the way of rushing it to them. If you rush it to them, you can charge them more.
WHITFIELD: OK, you allude to introducing new services and products, but can you really do that if, say, you have a franchise? Isn't there a contract that holds you to selling only certain products and services?
BIROL: Well, that's one of the down sides of franchises. And that's why I always say to folks, if you understand what your best and highest use is, and you're pretty comfortable that you're providing value and you're getting people to pay you for it, I'm always someone to encourage somebody to start their own business, or to grow their own business because the flexibility and the latitude they get is so much greater.
Just think of someone right now who is a Weight Watchers franchise and all of a sudden everyone's running at a low-carb diet. How can they respond to that? They can't respond as efficiently as if they were an independent business person.
WHITFIELD: Creativity is the key for any business to do well, right, gentlemen? If you come up with a good formula, then you may want to stake with it. The real trick is, you know, finding the formula, right, Andy?
BIROL: You want to be nimble, and you want to make sure you're really in touch with what's going on out there. During this recession, whenever a big customer got a cold, the small business supplying them usually got pneumonia. Now it's time to really understand the small business, if he or she is going to be aggressive, can really just jump on a lot of trends.
For example, if you want to introduce new products and services to your marketplace, there's some wonderful opportunities to do that. Offer trial sizes. Give people a chance to pay as they go. Simply increase the hours in which you're willing to do business.
Take a look right now at some of the new airlines popping up. In spite of the terrorism, what you see right now is people are banking on optimistic customers and growing businesses, and we're going to need to get places in a hurry.
WHITFIELD: All right. Andy and Hector, stick around, we're taking your calls and e-mails out there next on DOLLAR $IGNS. Of course, you can still send your questions inform dollarsigns@cnn.com or call in. That number is 1-800-807-2620. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back to DOLLAR $IGNS. We're looking at how you can start a small business and make it grow in 2004. Hector Barreto is with the U.S. Small Business Administration, and Andy Birol is an entrepreneurial consultant.
Good to see you both again. Glad you stuck around. We've encouraged people to call and send their e-mails. We've got our first caller.
Timothy in North Carolina, what's your question?
CALLER: My question is I have a window washing business. I was wondering, on a limited budget, as much as I have, what would be the most cost-effective way of me advertising my business?
BIROL: I would say right off the bat the most cost effective way for you to advertise your business are to find the businesses for whom having clear windows and clean windows is absolutely critical. Simply walking around and asking people if they need their windows cleaned is probably the first and most likely way.
The best way from there, I would say, would be to look at people for whom the need to get recurring cleanliness, where there's a standard that has to be met. When you can find people like that, I would start to profile them on the basis of what they look like in terms of their industries and their needs and actually go out and probably do direct mail and some e-mail to them.
WHITFIELD: Hector, let me ask you. I've heard some suggestions even come to people starting out their small business that perhaps they want to think about providing a service for free, to just kind of get the word out, or even hand out their products, et cetera. You know, obviously, when you're in the service industry, it may be a little bit tougher to do that.
But do you see that might be a prudent approach for a small business or someone just starting out to kind of get the word out on their product? BARRETO: You know, in the beginning of a small business, you need to meet as many people as you can. And you need to really enroll them as what your distinct competitive advantage is, what makes your business so special. And one of the best ways to do that is reach out and do the special offers that Andy talked about.
Also, I want to encourage folks to take advantage of the Service Corp of Retired Executives. That's a program the SBA sponsors. We have over 12,000 senior executives that have been almost in every industry that can really help provide free advice to these small business owners, these budding start-ups that we're talking about.
WHITFIELD: That's a great point, because I was going to ask you about that. You start out, you kind of need some help. You don't want to be out there on your own. It's good to know there's coaching along the way that can be provided to you. For free, right?
BARETTO: That's right.
WHITFIELD: We've got our first e-mail question. This coming from Brenda in Ohio.
"I'm a new business owner and have heard of small business grants. However, I'm unable to locate any information on how to obtain a grant. Can you please advise where and how to get this information?"
Hector, that's right up your alley.
BARRETO: Exactly. The SBA doesn't do grants, per se, to small businesses. We primarily do the loans and the technical assistance. And we can help facilitate contract opportunities. But there are many different grant programs all across the United States. We run into them all the time, sometimes those are hosted by the local city or the county, and so she might want to check into that.
In fact, if you need information on those types of programs that are more localized, please contact your local SBA district office. And if you don't know where that office is, you can call us at 1-800-U- ASKSBA, and we'll help you find it.
WHITFIELD: And I guess you have a web site, as well, right?
BARRETO: That's right, SBA.gov. You know, Fredricka, we get a million small persons visit that website every single week. There's a lot of great information and great services on that web site.
WHITFIELD: SBA.gov. All right.
Greg from California is on the line with us. What's your question?
CALLER: I'm a small business owner located in California, and I noticed that three years ago -- I've been in business since '97. And three years ago I noticed that capital is available, and I really didn't need it because business was doing really well then. But now in 2003/2004, I notice the banks are not as liberal, and they're more inclined to want to loan you money -- like on your home and give you an equity line of credit. I don't necessarily want to risk my future of my home and tie that to my business.
I was wondering what is the best way to get credit lines for a small business owner? Take us up to the next level?
BARRETO: Sure. Well, let me first tell you I'm from California. That's where I had my small business for years. Things have changed. The banks are much more receptive to doing small business loans. We work with every major bank in the United States. In fact, this last year, we broke a record. We did more small business loans than we ever have in the 50 years before hand.
I hope that you'll give that a try. SBA guaranteed loans. You can access those, again, from the district offices or from the web site that we talked about. We have six district offices in California, and we can help you. So I think what you're seeing is that the environment is changing and I think those banks are willing to take a second look at the business. I hope you'll reach out and get some assistance from the SBA on that.
BIROL: Fredricka, I'd like to make a point about capital in general here. I think sometimes people are worrying too much about trying to get money and should be spending more time trying to delight their customers.
We've had interest rates just about at zero the last few years. Frankly, with money being almost free, it's more of an opportunity, if you can just get your customers to buy from you, let them finance your growth. Make offers to them to get them to come back. Yes, you need money to start and maintain a business, but it's so much better if you can get your customers to pay you that money than if you have to borrow it.
WHITFIELD: Good point. Steven in Maryland is on the line with a question.
CALLER: Hello?
WHITFIELD: Hello. Are you Steve? You got a question for us?
CALLER: My name is Jeff. I'm from Georgia.
WHITFIELD: OK, Jeff in Georgia, we'll take your question.
CALLER: My question is I've been a small business owner now for three years. And I bought a new truck this year. And, I was told that I'd be able to write that -- the whole amount of it off because it was like $32,000 truck. I was just wondering is that true?
BARRETO: Sure, one of the things that you might be referring to is the jobs and growth package that was passed last year. This was the proposal that the president put out, and a lot of the benefits of that jobs and growth package really accrued to small businesses. One of those benefits was the quadrupling of the business deduction from $25,000, where it was before, up to $100,000. Now, everybody's situation is different, so I ask you to please reach out to your tax adviser so he can advise you of whether or not you'll be able to write off the truck.
But I can tell you that a lot of small businesses have made purchases over the last few months to take advantage of that business deduction. And that's something that we really believe has stimulated the economy and helped a lot of these small businesses really take it to the next level.
BIROL: Jeff, one of the things I'd suggest you also look at is how much are you utilizing that truck? Are you able to -- are you getting at least 40 hours of a week out of the truck? It seems like, instead of spending as much energy on trying to figure out how to get the financial benefit from it, if you can find a way to make sure you're getting to use it as much as possible, and then you're increasing the prices you charge people when you're using it. Your business is going to grow, and you'll have the kind of income and revenue you'll need to take advantage of these tax laws.
WHITFIELD: And I understand, Andy and Hector, the federal government is starting to reevaluate that law, given the fact that there are an awful lot of people who have taken advantage of that condition. And they've gone out and gotten Hummers and other pretty pricey cars, just to meet that $100,000 ceiling, and they may not be using it really for their small businesses?
BARETTO: Well, a lot of small businesses are also using it for heavy equipment and machines. That's what we're seeing a lot of the benefit of that tax deduction. Now, some businesses that use their vehicle a lot, people in the real estate industry, people in the construction industry, obviously, that is a very important asset and tool for their business.
But we'd like to make some of these tax relief that we accomplished over the last year permanent because we think that that environment has really stimulated the economy and helped a lot of small businesses.
WHITFIELD: All right, guys. Stick around. We're continuing to take more calls and e-mails right after the break.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back to DOLLAR $IGNS.
Do you know that small mom and pop operations in the U.S. employ more than 57 million workers in all? We're talking about ways you can join them with your own small business. The U.S. Small Business Administration's Hector Barreto, and business consultant Andy Birol, are taking your questions.
We've got another e-mail question for you guys. This from Philip, from New Hampshire, who says: "I've done some preliminary work in trying to find a franchise. I've come across several web sites that provide a service that claim will find and match me with a franchise. Any tips on how to select a service that will do this? How do these services work?"
Andy?
BIROL: Yes. I suggest, Philip, that you take a hard look at what I like to call your best and highest use. What have you been valued for doing in the past? What have you been paid for doing? What do you like doing? And then find a franchise that is similar to that as possible.
But, you know, before you go off and buy that franchise, I'd like to suggest to you, and I'd like to suggest to everybody business owner out there that at this point in time in the economy, if you're willing to go out and make one more sale, develop one new product, or go after one new opportunity to help your existing customers, it's a ripe time. And it's a very exciting time to go out there and start your own business.
Call it a franchise or call it your own business, or even if you have one already in line, this is a great time to put some confidence behind your dreams and really go out there and grab some more of what really is out there. There's a lot of money in the economy. Interest rates are still low. Unemployment is still not maxed out. You can hire people, grow your business, get more customers, and the time has never been better.
WHITFIELD: Hector, we're running out of time, but I want to get you in as well. We've got another e-mail to get in. This one from Shea in Florida, who says:
"Where's the best way to find minority funding? And is there any minority coaching or mentorship programs available?"
I know you already touched on the mentoring.
BARRETO: Sure.
Well, last year we were up 38 percent to our minority small businesses. So, I agree with Andy, it's a great time to get all the help that you'll need. You can reach out to the SBA in Florida. We've got great offices there and we can help you get access to the capital you need for your business.
WHITFIELD: One more point on the franchises before I let you all go. You talk about looking for the right franchise that has a product that you believe in, a service that you believe in, so you can be the best promoter for it. When you do finally find that place, do you approach them and say, I've got the perfect location, or has that work already been done? Andy?
BIROL: I think the location is really relevant, where you are looking for people who are making more or less impulse decisions. Where you're really in a small business, and you really want to get people to get to know you as a brand. It's probably more a function of how you have really put yourself, as Hector said, how you've differentiated yourself. And how you've really made yourself better.
I've just made 100 articles available on my site, if folks would like to get them at no cost to help them.
WHITFIELD: Hector, your last encouraging words to get us all started?
BARRETO: I think I agree with Andy. The environment is perfect. I'm motivated. Andy is a great cheerleader for small business, and I hope that all the people that are interested in starting a small business or growing a small business will get some of the help they need.
WHITFIELD: OK, Hector Barreto -- oops! Sorry we lost you there. The camera lost. And Andy Birol, thanks very much to the both of you for joining us. Really appreciate it.
BIROL: You're welcome, Fredricka.
WHITFIELD: That's all we have time for.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired January 3, 2004 - 16:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR, DOLLAR SIGNS: Welcome to DOLLAR SIGNS, where we help you make the most of your money.
Many people make New Year's resolutions to lose a few pounds, get organized, or go after their dreams. For some, that includes starting a small business. Hector Barreto and Andy Birol are going to help you get started.
Hector Barreto is administrator of the U.S. Small Business Administration in Washington. And Andy is the author of "Focus, Accomplish, and Grow" and a business consultant in Cleveland, Ohio.
Good to see both of you.
HECTOR BARRETO, U.S. SMALL BUSINESS ADMIN.: Good to be here.
ANDY BIROL, BUSINESS CONSULTANT: Good to be with you.
WHITFIELD: Let's begin with you, Hector, if we could. How important are the small businesses to the U.S. economy?
BARRETO: They're very important, Fredricka. Small business isn't small when you consider there are 23 million of them. They generate over 50 percent of the gross output in the economy. And they probably contribute somewhere around two-thirds to three-fourths of all the net new jobs. They're very important to the economy.
WHITFIELD: We're talking about all of the small businesses out there, about 320,000 of them are franchises. Many people consider that a lower-risk kind of approach to small business. How vital are they to the industry of making money and of selling retail products?
BARRETO: Well, they're a great opportunity. Many franchises are very successful. They have a built-in recipe of success. And if you follow the rules of those franchises, you can be very successful. But there are many ways you can be successful in small business in a lot of different industries and a lot of different sectors.
And the SBA is here to help those small businesses with access to capital and entrepreneurial development. We can even help them access contract opportunities with the federal government.
WHITFIELD: For an awful lot of people who may be intrigued by the idea of a franchise, don't they need to have some capital first? Is it likely this is still fairly risky for those who are inexperienced in the world of making business work? BARRETO: Well, all small businesses need capital. In fact, we think of it as the oxygen that they breathe. The SBA last year helped facilitate about $17 billion in capital through all of our loan programs. Those can be very small loans, micro-loans, they can be working capital loans; we do real estate loans, fixed asset loans, we even do venture capital.
WHITFIELD: So bottom line, though, someone who thinks they want to buy in to having a franchise, they can't think that it's going to take place without any kind of money exchange. They have to come to the table with something.
BARRETO: That's right. Again, that's the place where the SBA can be a very good partner. Oftentimes, there needs to be an initial investment. Every franchise is different. Some require a lot, some don't require as much. But depending on the situation, again, the SBA can do loans up to millions of dollars, and so we can help small businesses that want to get franchises or start any other type of business.
WHITFIELD: Well, it would seem that someone who already has some experience in working in small business, or perhaps even having their own business might stand a better chance of getting that kind of Small Business Administration loan.
How about for the person who really is starting from scratch and is hoping they're going to learn along the way?
BARRETO: Well, we can help businesses at all levels. In fact, last year, a lot of the folks that came to us were people that had an idea that were thinking about starting a small business. We tell them the first thing they need to do is do their homework. They need a strong business plan. We can help them put that business plan together.
Then, of course, they need the access to capital. As I mentioned to you, you don't need to be in business a long time to be able to qualify for one of the SBA loans. We can help provide that very important track record, that a small business is going to need, so they can grow that business and get larger loans in the future.
WHITFIELD: All right. So Andy Birol, you've been waiting oh, so patiently on the right side of our screen waiting for your turn. Let's say now the person has decided they're going to go for a franchise or they've got their small business.
You've got some tips on how to help that small business grow, how to strengthen. Let's go through some of them. You say, number one, target optimistic customers or expand your businesses. Let's target the targeting of the customers first.
BIROL: Yes, Fredricka, it's really a great time. Every sign right now is the economy is on fire, and small businesses are always the ones that lead the way.
If a small business can take a look at its customers and find and pick out the ones that are most optimistic and look amongst its customers who are in businesses to the ones that are growing the most. When you find people with confidence, customers with a sense of urgency, and where they have more money than time, these are a wonderful group of people to target.
And it's exciting because, when you go after folks like that, you can grow right along with them.
WHITFIELD: It almost sounds like you're taking the approach of real estate. It's location, location, location. The same applies for your customer base for your businesses.
BIROL: Well, it's probably attitude. And the attitude is you really want to be working with people who are optimistic or businesses that have already decided to grow. Selling to those two groups of people is going to be so much easier.
WHITFIELD: OK, No. 2, increase your value with your prices. What do you mean?
BIROL: It's a great time. As people are starting to forget about simply surviving and are starting to point towards success, that you really want to try to give people more value while at the same time you're charging them more.
For example, introduce a premium line of either products or services. Offer to get it to them in the way of rushing it to them. If you rush it to them, you can charge them more.
WHITFIELD: OK, you allude to introducing new services and products, but can you really do that if, say, you have a franchise? Isn't there a contract that holds you to selling only certain products and services?
BIROL: Well, that's one of the down sides of franchises. And that's why I always say to folks, if you understand what your best and highest use is, and you're pretty comfortable that you're providing value and you're getting people to pay you for it, I'm always someone to encourage somebody to start their own business, or to grow their own business because the flexibility and the latitude they get is so much greater.
Just think of someone right now who is a Weight Watchers franchise and all of a sudden everyone's running at a low-carb diet. How can they respond to that? They can't respond as efficiently as if they were an independent business person.
WHITFIELD: Creativity is the key for any business to do well, right, gentlemen? If you come up with a good formula, then you may want to stake with it. The real trick is, you know, finding the formula, right, Andy?
BIROL: You want to be nimble, and you want to make sure you're really in touch with what's going on out there. During this recession, whenever a big customer got a cold, the small business supplying them usually got pneumonia. Now it's time to really understand the small business, if he or she is going to be aggressive, can really just jump on a lot of trends.
For example, if you want to introduce new products and services to your marketplace, there's some wonderful opportunities to do that. Offer trial sizes. Give people a chance to pay as they go. Simply increase the hours in which you're willing to do business.
Take a look right now at some of the new airlines popping up. In spite of the terrorism, what you see right now is people are banking on optimistic customers and growing businesses, and we're going to need to get places in a hurry.
WHITFIELD: All right. Andy and Hector, stick around, we're taking your calls and e-mails out there next on DOLLAR $IGNS. Of course, you can still send your questions inform dollarsigns@cnn.com or call in. That number is 1-800-807-2620. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back to DOLLAR $IGNS. We're looking at how you can start a small business and make it grow in 2004. Hector Barreto is with the U.S. Small Business Administration, and Andy Birol is an entrepreneurial consultant.
Good to see you both again. Glad you stuck around. We've encouraged people to call and send their e-mails. We've got our first caller.
Timothy in North Carolina, what's your question?
CALLER: My question is I have a window washing business. I was wondering, on a limited budget, as much as I have, what would be the most cost-effective way of me advertising my business?
BIROL: I would say right off the bat the most cost effective way for you to advertise your business are to find the businesses for whom having clear windows and clean windows is absolutely critical. Simply walking around and asking people if they need their windows cleaned is probably the first and most likely way.
The best way from there, I would say, would be to look at people for whom the need to get recurring cleanliness, where there's a standard that has to be met. When you can find people like that, I would start to profile them on the basis of what they look like in terms of their industries and their needs and actually go out and probably do direct mail and some e-mail to them.
WHITFIELD: Hector, let me ask you. I've heard some suggestions even come to people starting out their small business that perhaps they want to think about providing a service for free, to just kind of get the word out, or even hand out their products, et cetera. You know, obviously, when you're in the service industry, it may be a little bit tougher to do that.
But do you see that might be a prudent approach for a small business or someone just starting out to kind of get the word out on their product? BARRETO: You know, in the beginning of a small business, you need to meet as many people as you can. And you need to really enroll them as what your distinct competitive advantage is, what makes your business so special. And one of the best ways to do that is reach out and do the special offers that Andy talked about.
Also, I want to encourage folks to take advantage of the Service Corp of Retired Executives. That's a program the SBA sponsors. We have over 12,000 senior executives that have been almost in every industry that can really help provide free advice to these small business owners, these budding start-ups that we're talking about.
WHITFIELD: That's a great point, because I was going to ask you about that. You start out, you kind of need some help. You don't want to be out there on your own. It's good to know there's coaching along the way that can be provided to you. For free, right?
BARETTO: That's right.
WHITFIELD: We've got our first e-mail question. This coming from Brenda in Ohio.
"I'm a new business owner and have heard of small business grants. However, I'm unable to locate any information on how to obtain a grant. Can you please advise where and how to get this information?"
Hector, that's right up your alley.
BARRETO: Exactly. The SBA doesn't do grants, per se, to small businesses. We primarily do the loans and the technical assistance. And we can help facilitate contract opportunities. But there are many different grant programs all across the United States. We run into them all the time, sometimes those are hosted by the local city or the county, and so she might want to check into that.
In fact, if you need information on those types of programs that are more localized, please contact your local SBA district office. And if you don't know where that office is, you can call us at 1-800-U- ASKSBA, and we'll help you find it.
WHITFIELD: And I guess you have a web site, as well, right?
BARRETO: That's right, SBA.gov. You know, Fredricka, we get a million small persons visit that website every single week. There's a lot of great information and great services on that web site.
WHITFIELD: SBA.gov. All right.
Greg from California is on the line with us. What's your question?
CALLER: I'm a small business owner located in California, and I noticed that three years ago -- I've been in business since '97. And three years ago I noticed that capital is available, and I really didn't need it because business was doing really well then. But now in 2003/2004, I notice the banks are not as liberal, and they're more inclined to want to loan you money -- like on your home and give you an equity line of credit. I don't necessarily want to risk my future of my home and tie that to my business.
I was wondering what is the best way to get credit lines for a small business owner? Take us up to the next level?
BARRETO: Sure. Well, let me first tell you I'm from California. That's where I had my small business for years. Things have changed. The banks are much more receptive to doing small business loans. We work with every major bank in the United States. In fact, this last year, we broke a record. We did more small business loans than we ever have in the 50 years before hand.
I hope that you'll give that a try. SBA guaranteed loans. You can access those, again, from the district offices or from the web site that we talked about. We have six district offices in California, and we can help you. So I think what you're seeing is that the environment is changing and I think those banks are willing to take a second look at the business. I hope you'll reach out and get some assistance from the SBA on that.
BIROL: Fredricka, I'd like to make a point about capital in general here. I think sometimes people are worrying too much about trying to get money and should be spending more time trying to delight their customers.
We've had interest rates just about at zero the last few years. Frankly, with money being almost free, it's more of an opportunity, if you can just get your customers to buy from you, let them finance your growth. Make offers to them to get them to come back. Yes, you need money to start and maintain a business, but it's so much better if you can get your customers to pay you that money than if you have to borrow it.
WHITFIELD: Good point. Steven in Maryland is on the line with a question.
CALLER: Hello?
WHITFIELD: Hello. Are you Steve? You got a question for us?
CALLER: My name is Jeff. I'm from Georgia.
WHITFIELD: OK, Jeff in Georgia, we'll take your question.
CALLER: My question is I've been a small business owner now for three years. And I bought a new truck this year. And, I was told that I'd be able to write that -- the whole amount of it off because it was like $32,000 truck. I was just wondering is that true?
BARRETO: Sure, one of the things that you might be referring to is the jobs and growth package that was passed last year. This was the proposal that the president put out, and a lot of the benefits of that jobs and growth package really accrued to small businesses. One of those benefits was the quadrupling of the business deduction from $25,000, where it was before, up to $100,000. Now, everybody's situation is different, so I ask you to please reach out to your tax adviser so he can advise you of whether or not you'll be able to write off the truck.
But I can tell you that a lot of small businesses have made purchases over the last few months to take advantage of that business deduction. And that's something that we really believe has stimulated the economy and helped a lot of these small businesses really take it to the next level.
BIROL: Jeff, one of the things I'd suggest you also look at is how much are you utilizing that truck? Are you able to -- are you getting at least 40 hours of a week out of the truck? It seems like, instead of spending as much energy on trying to figure out how to get the financial benefit from it, if you can find a way to make sure you're getting to use it as much as possible, and then you're increasing the prices you charge people when you're using it. Your business is going to grow, and you'll have the kind of income and revenue you'll need to take advantage of these tax laws.
WHITFIELD: And I understand, Andy and Hector, the federal government is starting to reevaluate that law, given the fact that there are an awful lot of people who have taken advantage of that condition. And they've gone out and gotten Hummers and other pretty pricey cars, just to meet that $100,000 ceiling, and they may not be using it really for their small businesses?
BARETTO: Well, a lot of small businesses are also using it for heavy equipment and machines. That's what we're seeing a lot of the benefit of that tax deduction. Now, some businesses that use their vehicle a lot, people in the real estate industry, people in the construction industry, obviously, that is a very important asset and tool for their business.
But we'd like to make some of these tax relief that we accomplished over the last year permanent because we think that that environment has really stimulated the economy and helped a lot of small businesses.
WHITFIELD: All right, guys. Stick around. We're continuing to take more calls and e-mails right after the break.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back to DOLLAR $IGNS.
Do you know that small mom and pop operations in the U.S. employ more than 57 million workers in all? We're talking about ways you can join them with your own small business. The U.S. Small Business Administration's Hector Barreto, and business consultant Andy Birol, are taking your questions.
We've got another e-mail question for you guys. This from Philip, from New Hampshire, who says: "I've done some preliminary work in trying to find a franchise. I've come across several web sites that provide a service that claim will find and match me with a franchise. Any tips on how to select a service that will do this? How do these services work?"
Andy?
BIROL: Yes. I suggest, Philip, that you take a hard look at what I like to call your best and highest use. What have you been valued for doing in the past? What have you been paid for doing? What do you like doing? And then find a franchise that is similar to that as possible.
But, you know, before you go off and buy that franchise, I'd like to suggest to you, and I'd like to suggest to everybody business owner out there that at this point in time in the economy, if you're willing to go out and make one more sale, develop one new product, or go after one new opportunity to help your existing customers, it's a ripe time. And it's a very exciting time to go out there and start your own business.
Call it a franchise or call it your own business, or even if you have one already in line, this is a great time to put some confidence behind your dreams and really go out there and grab some more of what really is out there. There's a lot of money in the economy. Interest rates are still low. Unemployment is still not maxed out. You can hire people, grow your business, get more customers, and the time has never been better.
WHITFIELD: Hector, we're running out of time, but I want to get you in as well. We've got another e-mail to get in. This one from Shea in Florida, who says:
"Where's the best way to find minority funding? And is there any minority coaching or mentorship programs available?"
I know you already touched on the mentoring.
BARRETO: Sure.
Well, last year we were up 38 percent to our minority small businesses. So, I agree with Andy, it's a great time to get all the help that you'll need. You can reach out to the SBA in Florida. We've got great offices there and we can help you get access to the capital you need for your business.
WHITFIELD: One more point on the franchises before I let you all go. You talk about looking for the right franchise that has a product that you believe in, a service that you believe in, so you can be the best promoter for it. When you do finally find that place, do you approach them and say, I've got the perfect location, or has that work already been done? Andy?
BIROL: I think the location is really relevant, where you are looking for people who are making more or less impulse decisions. Where you're really in a small business, and you really want to get people to get to know you as a brand. It's probably more a function of how you have really put yourself, as Hector said, how you've differentiated yourself. And how you've really made yourself better.
I've just made 100 articles available on my site, if folks would like to get them at no cost to help them.
WHITFIELD: Hector, your last encouraging words to get us all started?
BARRETO: I think I agree with Andy. The environment is perfect. I'm motivated. Andy is a great cheerleader for small business, and I hope that all the people that are interested in starting a small business or growing a small business will get some of the help they need.
WHITFIELD: OK, Hector Barreto -- oops! Sorry we lost you there. The camera lost. And Andy Birol, thanks very much to the both of you for joining us. Really appreciate it.
BIROL: You're welcome, Fredricka.
WHITFIELD: That's all we have time for.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
