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SMALL BUSINESS

A source of assistance for entrepreneurs needs some help

Three dozen small-business development centers in California are threatened by budget cuts and scrambling to find new funding sources.

March 22, 2010|By Cyndia Zwahlen
  • Linda Ikeda, founder of Jumpstarter Bodyfuel in Long Beach, relied on a small-business development center for advice on writing a business plan, cutting costs and marketing her energy bars.
Linda Ikeda, founder of Jumpstarter Bodyfuel in Long Beach, relied on a… (Allen J. Schaben / Los Angeles…)

Linda Ikeda started her energy-bar business in Long Beach two years ago, hand-mixing, baking and packaging the oat, spice and fruit blends for her Jumpstarter Bodyfuel snacks.

She is a sole proprietor, but Ikeda said she had the advantage of working with Phil Glover, a business consultant from the small-business development center at Long Beach City College. He met with Ikeda monthly for more than a year, giving her free advice on how to write a business plan, cut production costs and sell her bars to Whole Foods Market stores and other businesses.

"It has been eye-opening," said Ikeda, one of the 17,481 people last year who used the free consulting services offered by three dozen small-business development centers across California, which are now threatened by budget cuts.

Ikeda has been able to expand her small business and hire two part-time workers. She said she sells about $3,000 worth of cranberry, chocolate raisin and other high-fiber flavors of her bars each month to Whole Foods, It's a Grind coffeehouses and other places. The business is not yet breaking even, but it is getting close, Ikeda said.

"She's gone from a start-up to a going concern because of her tenacity and diligence," Glover said. Like many consultants at the centers, he works there part time and is a small-business owner himself.

The centers are funded by the Small Business Administration, the state and other sources. But like their clients, each center is scrambling to find enough money in these tough economic times.

Two Southern California centers closed last year because they ran out of money. And the rest face new troubles. For the first time, the centers have been dropped from the budget of the California Community Colleges Chancellor's Office, which has provided the several million dollars annually for years.

Vice Chancellor Jose Millan blamed a tight state budget as well as a disagreement over who controls the centers and the roughly $12 million they get from the SBA. As an alternative, he wants to set up six business entrepreneurship centers, including two in Southern California, that would serve more as networking resources for groups that work with small businesses.

Meanwhile, the existing centers and a statewide network they have formed are seeking to raise enough money to operate after June 30.

Center directors say that small businesses need the centers' one-on-one assistance more than ever.

"It seems like exactly the wrong program to cut," said Steve Tannehill, director of the center at College of the Canyons in Santa Clarita.

Despite less funding, his center and the 11 others in Southern California helped create 35% more small-business jobs last year than in 2008: 1,374 compared with 1,017.

Clients also said they boosted sales by $43.1 million in 2009 with the centers' help, according to data released by the California centers last week.

If the centers can't raise enough money and in-kind services, such as free office space, to match the federal money, they risk losing it.

Kristin Johnson, chairwoman of the recently formed California network of centers, is looking for ways to replace the lost state money.

She is exploring new relationships with several state agencies and the California State University chancellor's office.

Despite the centers' financial problems, small-business owners say they just want somewhere to go for help starting or running their ventures.

Ikeda, for example, was back at the Long Beach center this month to talk to her consultant about how to take her business to the next level. She wants to attract investors and work on qualifying for a loan. Ikeda wants the money to buy machinery to keep up with her growing volume. She's counting on her consultant to help her overcome this latest hurdle.

Keeping up with the changing skills she's needed to start, operate and now expand a business, she said, "seems like a never-ending problem."

smallbiz@latimes.com

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