09/08/2011 05:19 pm ET Updated Oct 31, 2011

Small Businesses and Entrepreneurs: The Lifeline for a Healthy Economy

A combination of lingering recession, pressure from big box stores, and extreme weather has forced one independent family-owned plant nursery to shut its doors after 15 years. As a place where neighbors would gather, this is a tremendous loss for its local community.

One medical clinic franchise owner was looking to expand to address a growing demand for affordable healthcare, but since January six banks have rejected his loan requests. Discouraged by the bank process, the owner is now trying to secure capital from a private investor.

The current administration once again stressed the fact that the road to recovery must be led by small businesses and entrepreneurs, doubling Small Business Administration investment funds for small businesses over the next five years.

Why are small to medium-sized businesses (SMBs) like the medical clinic or the plant nursery important to our economy? It's because the best small firms become big -- spreading good ideas across the entire economy and creating lots of jobs through growth.

In spite of this conventional wisdom, the current lackluster economy combined with significant long-term concerns over the national debt, the uncertainty of tax increases and lack of access to working capital to expand one's business are currently undermining the entrepreneurial spirit.

Despite the current economic climate, we are well-positioned to get back on track to help SMBs bring the economic stability needed, as many believe they will be the source of new jobs to speed up the economic recovery.

Follow the Money

According to the Organization for Economic Co-operation and Development (OECD), the American economic environment is far friendlier than most, to smaller and newer companies.

Looking at the bigger picture, venture capital spending in America accounts for up to about 0.09 percent of the country's gross domestic product -- a higher percentage than any other country the O.E.C.D. examined except for Israel. This spending is vital in order to help SMBs, since venture capitalists and angel investors are known to be crucial elements in spurring the next wave of innovation.

This system works in two parts. First angel networks provide initial funding for newly established firms. Once these new companies prove their profitability, venture capitalists provide a different and greater portion of financing to help fledging firms reach profitability and contribute to the country's economic expansion at a faster pace. Unlike bank loans, funding from angel investors and venture capitalists comes with the expertise and networks that can help SMBs succeed.

Capturing those Big Opportunities When You're Small

Even without the cash to run big research operations, small and nimble start-ups have the incentive to use and understand how technologies can disrupt static and bloated industries.

Cloud computing, for instance, has advanced to the point where tools previously available only to large multinational conglomerates are now widely available, letting smaller companies unite remote workforces with collaboration in the cloud. With the high costs of commuting, one of the greatest benefits of the cloud is anytime, anywhere availability for the workforce. With the cloud, in-person meetings and routine business travel can be kept to a minimum, lowering overall operating costs - which represents a crucial savings for a small business.

Small business owners are also increasingly leading the adoption of non-PC devices such as smartphones and tablets, as on-the-go computing platforms. We are seeing small businesses go mobile to be more efficient in order to meet the demands of their markets with unprecedented reach and flexibility -- creating a situation where small businesses are able to realistically compete against large enterprises.

In fact, those adapting to the new way of conducting business on-the-go are bringing in double the revenue of those reluctant to adopt mobile technology as part of their day-to-day business practices. On average, mobile-fluent firms earn $10.8 million annually, compared with $5.7 million for mobile laggards, according to the survey conducted in early 2011, by The Business Journals

The Mentor: A Sounding Board

This economy has many small business owners shaken up. Every day they are faced with difficult decisions of paying a vendor or making that next mortgage payment -- creating a sense of isolation, that they are going it alone.

The pressures of business ownership can leave small business owners feeling overwhelmed. A mentor can be seem like a life raft during these uncertain times to help business owners stay focused.

A mentor can be someone who has successfully navigated the minefield of small business ownership. A mentor can provide advice, guidance, and even a pep talk now and again with lessons learned. Sometimes it's a matter of getting to know fellow, non-competing business owners, or seeking the free mentoring services of a professional association.

Every day new ventures are created. Some of these businesses will succeed, others will fall by the wayside. The U.S. Small Business Administration shows a consistent rate of well over 50 percent of small businesses fail within the first five years of doing business. Some may be on shaky ground at the start, but need to build the right foundation and obtain the right resources to grow -- and with perseverance and careful planning can prevail in the end.

In this fragile economy, businesses that find the financial, technical and mentoring necessary that will support their innovative ideas, products or services to succeed will be the survivors and will be in the best position to breathe new life to revive this economy.

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