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					                         THE SMALL BUSINESS
                                                                                                                 June 2003

                                                                                                              Vol. 22, No. 6




Focus Groups To Improve Usefulness Of Small Business Research
Acting to improve both the effec-         through their results, not on the          Small Business Advocate and on
tiveness and usefulness of the fed-       money spent on them,” he said.             the Advocacy website.)
eral government’s small business              The first regional focus group            After reviewing the listings in
research, the Office of Advocacy          took place in Chicago at DePaul            Advocacy’s Research Publications
held the first two regional research      University on May 16. Participants         2002, the participants found there
listening sessions in May. The            included representatives from              were many research studies they
forums gave the small business            DePaul, the Coleman Foundation,            were unaware of and strongly
academics and researchers in atten-       the Federal Reserve Bank of                urged Advocacy to do more to pro-
dance a chance to discuss the             Chicago, Northeastern Illinois             mote its research. Suggestions
process and results of Advocacy-          University, the University of              included greater Advocacy staff
sponsored small business research.        Chicago, and the University of             participation at academic and entre-
    “We are holding regional focus        Illinois at Chicago. All of the par-       preneurial conferences and partici-
groups so that our research prod-         ticipants had used Advocacy’s sta-         pation with textbook writers to
ucts adequately reflect the needs of      tistics in their research and presen-      make them aware of Advocacy’s
academics and policymakers,” said         tations. In particular, there was a        resources. “It is amazing to see
Dr. Chad Moutray, chief economist         consensus that Advocacy’s one-             textbooks being printed that still
for the Office of Advocacy. “We           page publication, “Small Business          cite flawed statistics such as the
want our reports and data to be an        by the Numbers,” is an excellent           startup failure rate,” said Dr. Jerry
integral part of academic research.       resource that deserves to be in the        Hills, professor at the Institute for
This fits with President Bush’s           hands of every student in the coun-        Entrepreneurial Studies of the
management goal of assessing the          try. (A tear-out version is featured       University of Illinois at Chicago.
effectiveness of our programs             in the May 2003 edition of The                           Continued on page 3

 In This Issue
 Message from the
 Chief Counsel
 Advocacy Debuts Regulatory
 Alerts Webpage . . . . . . . . . . . 3

 Research Notes
 New Advocacy Publications
 Feature Finance, Technology .2

 Economic News
 Economic Research Focus
 Groups Launched in Chicago .1
                                          Participants in the Chicago focus group (left to right): Chad Moutray of Advocacy;
 New RFQ Closes June 27 . . . .4          Harold Welsch, DePaul University; William Testa, Federal Reserve Bank of
                                          Chicago; Per Strömberg, University of Chicago; Gerald Hills, University of Illinois
                                          at Chicago; and Jianwen Liao, Northeastern Illinois University.
                                                                                The Small Business Advocate
Research Notes
                                                                                Editor Rebecca Krafft
Finance, Technology Featured in Latest                                          Managing Editor Rob Kleinsteuber
Advocacy Publications
                                                                                Contributing Editors John McDowell,
Advocacy has recently published        and consolidation through mergers        Rob Kleinsteuber, Chad Moutray
two new research reports.              and acquisitions in the banking          Production Assistant Darlene Moye-
   Bank Profitability. Assessing       industry will adversely affect           Mahmoud
the Profitability and Riskiness of     banks’ lending to small business.        The Small Business Advocate (ISSN
Small Business Lenders in the          The argument is that because of          1045-7658) is published monthly by the
                                                                                U.S. Small Business Administration’s
Banking Industry, by James Kolari      higher risk and larger administra-       Office of Advocacy and is distributed to
of Texas A&M University, con-          tive cost per dollar of loans            Small Business Administration field staff
cludes that banks that specialize in   involved in lending to small firms,      and members of the U.S. Congress. The
                                                                                Small Business Advocate is available
small business lending, including      large bank holding companies will        without charge from the Office of Advocacy,
large holding companies, show          find small business lending a less       U.S. Small Business Administration,
more return on equity than their       profitable operation.                    Mail Code 3114, Washington, DC 20416.
counterparts. This finding contra-        The report suggests that defining     Send address changes to: The Small
dicts the conventional wisdom that     profitability either as return on        Business Advocate, Mail Code 3114,
                                                                                U.S. Small Business Administration,
large bank holding companies find      equity or as return on assets deter-     Washington, DC 20416. Include your
small business lending a less prof-    mines whether small business             current address label.
itable operation.                      lenders are more profitable than         The Small Business Advocate online:
   “Conventional wisdom says that      other banks. Nonetheless, under          www.sba.gov/advo/news/
consolidation and deregulation in      either definition, the current con-      Electronic delivery of The Small Business
the banking industry could lead to     ventional wisdom that consolidated       Advocate is available by visiting
less small business lending,” said     banks will find small business lend-     www.sba.gov/advo/news/. Subscriber
                                                                                information will be kept confidential and
Thomas M. Sullivan, chief counsel      ing unprofitable does not hold up.       not used for any purpose except for
for advocacy. “But this report            Computer Use and the Self-            newsletter delivery. To discontinue print
shows that these trends don’t have     Employed. A new report by                delivery of The Small Business Advocate,
                                                                                send an email with your current mailing
to negatively affect that lending.     Advocacy economist Victoria              information to advocacy@sba.gov or call
That’s good news for small busi-       Williams, Self-Employment and            (202) 205-6533.
ness owners who may rely on small      Computer Usage, examines patterns
local banks for financing,” he said.   of computer ownership and usage                    Federal Recycling Program
   Small banks have traditionally      among the self-employed using the                  Printed on recycled paper.
been one of the major suppliers of     Census Bureau’s Current Population
credit to small businesses. Concerns   Survey: Internet and Computer Use
have grown that the deregulation       Supplement. The report describes           • The greatest concentrations of
                                       the demographics of self-employed       self-employed individuals with
 For More Information                  computer ownership, evaluates the       computers were found in retail
                                       factors that influence computer         trade; construction; and business
 Advocacy’s economist, Victoria        ownership, and describes the char-      services, including automobile and
 Williams, can be reached at           acteristics of self-employed indi-      repair services.
 (202) 205-6191, or by e-mail at       viduals who own computers.                 • A quarter of all capital expen-
 victoria.williams@sba.gov. Both          • Between 1998 and 2000, the         ditures by small and medium-sized
 reports are available on the          number of self-employed individuals     firms were spent on computer and
 Advocacy website at                   who owned personal computers grew       communications equipment.
 www.sba.gov/advo. Paper and           by 14 percent (from 9.2 million to
 microfiche copies of the banking      10.5 million), and the number with
 profitability report are available    Internet access grew by 50 percent.
 for purchase from the National           • In 2000, 73 percent of those
 Technical Information Service at      who accessed the Internet used a
 (800) 553-6847 or through the         regular or dial-up service.
 NTIS website at www.ntis.gov.            • Education is an important factor
 The NTIS order number is              in self-employment, computer own-
 PB2003-102400.                        ership, income, and Internet access.


The Small Business Advocate                          page 2                                                   June 2003
Message from the Chief Counsel
Advocacy Debuts a First Alert System for Regulations That Affect
Small Business
by Thomas M. Sullivan, Chief Counsel for Advocacy
The Office of Advocacy is always            call the Regulatory Alerts page.           Please let us know whether this
looking for new ways to be more             This page highlights notices of pro-    new tool is helpful to you. It won’t
creative and effective in voicing the       posed rulemaking that may signifi-      replace my staff’s direct outreach
concerns of small businesses to fed-        cantly affect small entities and con-   to small businesses. And Advocacy
eral policymakers. Since its found-         tains links to allow users to com-      won’t be issuing a comment letter
ing in 1976, Advocacy has pursued           ment directly on the proposals.         on every rule posted there. But for
its mission in two ways: by creat-                                                  starters, it is a way of letting us sift
ing research products that help law-           “Advocacy is constantly              through the reams of regulations
makers understand the contribution            working to make it easier             published daily and put them in a
of small businesses to the U.S.                 for small businesses’               format that is easy for small busi-
economy and through regulatory                                                      nesses to scan on a regular basis.
                                              comments to be heard by
experts who work to convince fed-                                                      The Regulatory Alerts page also
eral agencies to consider the impact          the federal agencies that             contains links to federal agencies,
of their rules on small businesses                   make rules.”                   national think tanks, and research
before those rules take effect.                                                     centers that are involved with regu-
    The Office of Advocacy takes its           As my staff discovers new regu-      latory issues. While not associated
direction from small business. My           latory proposals that may be of         with our office, these sites provide
staff is in regular contact with            concern to small businesses, we         valuable background, introductions
small business owners, state and            will post a link to the proposed rule   to a wide range of regulatory issue
local officials, and small business         on the Regulatory Alerts page,          areas, and analyses of specific
organizations to find out how pro-          along with contact information for      kinds of regulation.
posed federal regulations would             the Advocacy staff person tracking         You can reach the Regulatory
affect small businesses.                    the issue, and a link to comment on     Alerts page from our homepage,
    Advocacy is constantly working          the proposal. We encourage small        www.sba.gov/advo or bookmark the
to make it easier for small busi-           businesses to review the page regu-     page itself, www.sba.gov/advo/
nesses’ comments to be heard by             larly. If you file comments on a        laws/law_regalerts.html. Let us
the federal agencies that make              rule, we would appreciate receiving     know what you think.
rules. That is why Advocacy has             a copy of your comments to help us
launched a new webpage which we             monitor the proposal’s impacts.


Focus Group, from page 1                    regional focus group in                 mation on Advocacy’s economic
                                            Washington, D.C., on May 30.            research, visit www.sba.gov/
   The group identified seven top-          Participants included representa-       advo/research.
ics of interest for future small busi-      tives from the Congressional
ness research:                              Budget Office, George Mason
   • Administrative problems such                                                    Easier Access to
                                            University, Georgetown University,       Electronic Resources
as taxes and regulations,                   George Washington University, the
   • Angel capital financing,               University of Baltimore, and the         Access Advocacy Listservs from
   • Financial issues such as the dif-      University of Maryland. Other            a single address. Email notices
ficulty in obtaining external capital,      regional focus groups are in the         will supply a hotlink to the new
   • Industry clusters,                     planning stages.                         material, so your in-box won’t fill
   • Current challenges in the man-            The Office of Economic                up with large documents. At
ufacturing sector,                          Research will prepare an annual          http://web.sba.gov/list, check:
   • Macroeconomic factors that             report to document the findings of          • Advocacy Communications
affect small business (e.g., immi-          the regional focus groups. Feedback         • Advocacy Newsletter
gration), and                               provided by the participants will           • Advocacy Press
   • Health care.                           help guide Advocacy’s future                • Advocacy Research
   Dr. Moutray moderated a second           research strategies. For more infor-

The Small Business Advocate                               page 3                                               June 2003
New Research Topics Featured in Latest RFQ                                    are invited to submit proposals to
                                                                              obtain funds for research on small
Advocacy is seeking a new round        to help small firms considering
                                                                              business topics.
of research proposals via a request    entry into foreign markets.
for quotations (RFQ). Here are the        • State Procurement and Small
current topics.                        Business. GSA has proposed a rule       Obtaining a Bid
    • Distribution of the Cost of      that would open up the federal sup-     Package
Federal Regulations. This study        ply schedule to local governments.      Bid packages can be downloaded
will update two previous Advocacy      This study will explore the impact      from FedBizOpps (www.fedbi-
studies on the cost of federal regu-   of such a rule on small businesses.     zopps.gov). From the main page,
lations to small businesses. The          • Firm Size Dynamics of              select “find business opportuni-
most recent study found that firms     Industries. Industry life cycles are    ties.” Under “search by agency,”
with under 20 employees pay 56         often based on technology. This         select “Small Business Admini-
percent more per employee to com-      research would compare new,             stration,” and click “start
ply with federal rules than those      growing, and declining industries       search.” All open SBA contracts
with more than 500 employees.          from the perspective of business        will be displayed. Questions con-
    • Costs of Developing a Foreign    turnover and competition.               cerning the RFQ will be accept-
Market for a Small Business. Most         • Availability of Financing to       ed until June 20 and should be
small firms do not export because      Small Firms. The contractor will        directed to Billy Jenkins, con-
the costs of developing export mar-    use the Survey of Small Business        tracting officer, (202) 205-7077
kets far exceed the additional prof-   Finances to explore financing pat-      (phone); (202) 481-0487 (fax);
its derived from export promotion.     terns of minority- and women-           or billy.jenkins@sba.gov.The
This study will develop a better       owned firms and other topics.           completed proposal must be sub-
understanding of such costs and           • Graduate Research. Ph.D. can-      mitted by June 27, 2003.
may assist in developing programs      didates and other graduate students




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