State of small business

Small business is a critical component of local economies, especially in rural communities. In small states, with lower per capita income, small business matters even more. Local civic support is driven by owners and entrepreneurs of small enterprises, who not only donate a larger percentage of their income to charity—but also keep it very local.

For every dollar a small business gives to philanthropy, 90 cents goes to hometown causes.

According to the Small Business Administration (SBA), there are nearly 30 million small businesses—one for every 10 Americans—employing 58 million workers, which is nearly half of the U.S. work force.

Looking at national maps, the one that shows population density per county looks like a film negative to the one that shows small business employment by county. As population density goes down, the percentage of people working in small businesses goes up.

Arkansas is no exception to that rule. We’re not only a natural for small business, but we also outperform the national averages in some choice statistics, like percentage of veteran-owned companies.

The SBA reports nearly a quarter-million small businesses in Arkansas, which account for nearly 500,000 jobs.

Economic indicators are pointing upward for businesses of all sizes. Since the 2016 election, the Wall Street Journal Dow Industrial average has set more than 90 record highs. Unemployment is low, interest rates are low, optimism is high. In fact, when the National Federation of Independent Business (NFIB) released its index of small-business optimism this week for December, the headline was “All Time Record in 2017.”

That’s pretty impressive news for a quarterly survey that’s been taking the temperature of small-business attitudes for 45 years. Consumer confidence has been in lockstep with the NFIB’s reporting, riding 17-year highs of late and currently at levels more than six times higher than in 2009.

Importantly, the SBA chart comparing business startups to exits has flipped since 2009. Data from 2016 show a strong, positive gap: more than 230,000 startups against 200,000 exits, with a net employment retention of more than 100,000 jobs. In 2009, exits outpaced startups by 10 percent, with a net job loss of 150,000 employees.

The tax-reform bill also portends well for small businesses, with the blessing of the NFIB (which panned the earlier version) and other business organizations and publications. It offers particular benefits for pass-through entities, which many small businesses are, where business income flows through directly to be reported on an individual’s personal tax return.

Opportunities appear to abound for small-business states in general, and in particular for Arkansas in one critical area.

The SBA’s mission since its creation in 1953 is to “aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.”

With higher poverty and lower income levels among the states, a disproportionate tax burden, and a landscape dominated with rural and sparsely populated areas, Arkansas ought to be the poster child for an organization devoted to helping people “start, build and grow” small businesses. Yet by the SBA’s own reporting admissions, Arkansas lags.

From its state entrepreneurial data, we ranked 43rd in SBA loans per 100,000 people in 2015. That’s a linear disparity with our population rank (25th), and even more skewed considering our positive small-business environment considerations.

There is a slight silver lining: We were second in the nation in growth of loans per 100,000 people from 2012-2015. And we were ranked seventh in the size of average SBA loan.

But amid all the optimism and consumer confidence of 2017, Arkansas saw a slight dip in SBA activity. Arkansas businesses received 337 loans in the SBA’s popular 7(a) program in fiscal 2017 totalling $191 million. Not only is that a drop in the national bucket of 62,470 loans and $25 billion, but it’s a dramatically smaller one than our representation in both number of small businesses and their employee rolls.

Our state’s share of SBA loans, calculated proportionately just on numbers, should be at least 60 percent higher. Factored for population, more than that.

In addition, the SBA loans approved in 2017 are down slightly from 2016 (363 loans and $221 million), and across both years a large portion of loans are made in more populous areas of the state, rather than lower-density areas with higher small-business employment rates.

This spells opportunity within our state borders for small businesses serving small communities.

Self-employed entrepreneurs are the engines to job creation here and across the country. Technology continues to spur new thinking, new ideas and new ways of doing almost everything, and the barriers to small business functionality are constantly falling away.

Maybe you’ve heard ads for outsourcing live receptionists to “delight customers” (callruby.com) or using your cell phones to “look like a national company” (grasshopper.com)?

The competitive tools for small business are more powerful—and more numerous and affordable—than ever. Coupled with real tax reform with a decidedly pro-small-business tilt, and an underserved SBA population, that makes Arkansas entrepreneurs well-positioned for 2018.

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Innovation green light

It doesn’t take a rocket scientist to see that the Trump administration’s education department will be quick to reward outside-the-box thinking. But it’s far from obvious to entrenched bureaucrats or legislators.

If Betsy DeVos is anything, she’s as anti-establishment as her boss (that’s why everyone in the education establishment opposed her). And yet, just like him, here she is.

And here we are:

In a prime position to seize an immense opportunity, if—admittedly an enormous “if”—our own state government leaders are adventuresome enough to live up to our old state nickname.

It’s been 13 years since the infamous Act 60 was pushed through our Legislature. It passed despite broad warning signs and red flags at the time from a state mirroring us in many ways (West Virginia), which was taking measure of its own consolidation failings 10 years after the fact.

In those ensuing years a lot has changed—politically, technologically, educationally.

Electorally we were among deep red states. Broadband penetration and all that it enables is reaching the most rural of areas. And nobody really disputes all the broken promises (lower costs, better test scores, etc.) of consolidation.

We took the “opportunity” motto off our license plates a long time ago, but it’s still spelled the same way.

If Education Secretary DeVos’ head could ever be turned by a powerful prospective pet project, it would be a well-planned blueprint for a statewide Rural Public School System. Not a patchwork approach that seeks to semi-urbanize schools out in the hinterlands. One that is specifically designed to maximize the unique characteristics of rural lifestyles with newly accessible modern learning technology.

Our population has been crying out for such a solution for decades. We’re nowhere near the most rural state, but still a decidedly rural one. Only 17 of our 75 counties are considered urban. Our economy is powered by agriculture.

But as recently as 2010, our state board of education bungled the chance to pioneer a distance-learning consolidation concept between Delight and Weiner. Both schools had high test scores, great graduation rates and tremendous community support, but also an enrollment figure below Act 60’s magically irrelevant number.

So naturally both had to be shut down.

Fortunately, many of the masterminds behind Act 60 have moved on from public service. The question is, has the failed mindset moved on as well?

Closed minds brought us nothing but closed schools, and barely moved any needles on student performance metrics. Open minds can launch us into the national limelight if we simply insist on innovative thinking for rural education from a totally rural perspective.

Samsung Electronics is repurposing 40-foot shipping containers into mobile classrooms for sub-Saharan countries to improve their education. Each serves up to 21 students, and is equipped with a 50-inch electronic board, Internet-enabled solar-powered notebooks, multifunction printers, Samsung Galaxy tablet computers and Wi-Fi cameras. A solar-panel roof generates nine hours of electricity a day, since many African communities have minimal power available, if any.

But our solution for remote rural communities continues to be rooted in 1960s-era busing of outlying students to expensive brick-and-mortar structures in larger population concentrations?

The enemy of innovation isn’t really backward thinking (which at least incorporates thought), it’s inertia. The need for better education ideas in rural communities isn’t new, but developments in broadband, smartphones and tablets, applications and programs, distance-learning, video-streaming and other connectivity and telecommunications products and services are.

Rural 12-year-olds today know more about technology than college grad students did a couple of generations ago.

In the not-too-distant past, the average kid in rural Arkansas had zero access to East or West Coast fashions, fads, shopping, trends, songs, menus or entertainment. All those divides, and more, have evaporated in the cyberspace revolution. The Coach bag that was once purchased exclusively on Fifth Avenue or Rodeo Drive can now arrive in Nowhere, USA, in two days from Amazon.

Likewise with access to the latest schooling techniques, concepts, teachers, technology partnerships and information content. The finest lectures and speakers on anything are available on YouTube.

The reason to not use a television series like Legends and Lies: Patriots to help teach students about American independence isn’t because “we’ve never done it like that.” It’s because those kinds of tools and technology never existed before.

And now that they are now proliferating, we must push our thinking to expand even faster.

We have some wonderful organizations across the state already in place—the Rural Community Alliance comes to my mind first, but there are also others—to serve as effective, enabling collaborators on a rural initiative needed not only here in Arkansas, but in other states from Montana to Maine.

Task forces too often produce neither task nor force, but maybe that’s a start, providing it comprises fresh, non-establishment minds. Even the best-intentioned capital-city thinking is simply incapable of grass-roots inventiveness on rural education.

Four out of 10 Arkansans live rural lives. As suddenly and surprisingly as last Nov. 8, those rural communities represent possibly the best laboratories for profound shifts in teaching.

Rural education is a national challenge. It’s carpe diem time, and Arkansas ought to be a natural.

Rural life matters

I had my first visit to Eudora on Saturday.

On the way down, I also got my first glimpse of the nation’s largest oxbow lake.

It had to be centuries ago when the Mississippi River diverted along a shorter eastward route, leaving the 22-mile crescent of land-locked water that would become Lake Chicot.

Chicot County is tucked into the southeast corner of Arkansas, with the muddy waters of Old Man River lapping at its eastern boundary and the Louisiana state line bordering the south.

That geography suggests a rich soil well-suited for crops, and the county is a perennial leader in cotton production.

Eudora’s population has dwindled census by census, but it still boasts more than 2,000 souls, and its own Grand Lake is a prime fishing destination.

I was surprised at all the water in the area, though it explained the nomenclature of the county seat and Lakeport Plantation (which I highly recommend to preservationists and lay tourists alike—it not only has antebellum beauty, scale and dimension, but is also a fascinating study in historical restoration techniques).

I also got to view and traverse the 1,378-foot cable-stayed bridge linking Lake Village and Greenville, Mississippi. Its soaring pyramidal profile—four-strand steel-cable fans connecting two concrete towers—gleams in contrast to the level, leafy farmland below.

It was the fourth-largest bridge of its type in North America when opened in 2010.

The occasion for my visit wasn’t sightseeing, however. The site of the annual meeting of the Rural Community Alliance (RCA) shifts every year, and this year the host town was Eudora, and there I joined more than 110 other local advocates for Arkansas’ small communities.

The RCA session was even more inspiring than the sights and tours.

Gathered in a restored building on Eudora’s Main Street, regular people from the organization’s 65 chapters across the state shared their accomplishments and ideas in support of a collective vision of giving rural Arkansans greater access to education and economic opportunity.

The Alliance organizes its chapters among four state quadrants, and at one point the large group broke out to brainstorm local planning initiatives by district groupings.

I grabbed some unshelled peanuts (many thanks to the Eudora hosts for some great snacks) and joined members of the Delta district who pulled tables into a U-shape.

The RCA district organizer led the input discussion, and one lady wrote consensus ideas down on giant sticky-note posters.

I was struck by the same stirring essence the colonists must have felt in their town-hall meetings when the Republic was new.

Here were no high-and-mighty politicians, no lavishly funded PACs or system-savvy lobbyists. No hidden agendas, no pretense or pandering for votes. These were real people with a heart for giving their time and energy in a deliberate and determined effort to make their small slice of America a better place to raise kids and earn a living.

In focus-group fashion, the four regional groups were abuzz with ideas to create more active, involved and prosperous local communities.

It was during this breakout discussion that one man made a galvanizing remark.

“Rural life matters,” he said, nodding his head with conviction at each word. That’s a concept all too often lost in general policymaking at the state capital, and across the country.

Nationally one in five Americans lives in a rural area, but here in Arkansas the figure is more than twice that (44 percent).

Moreover, rural living is becoming a calculated choice for more and more people who assess urban pros and cons and find the balance wanting.

Independent studies have confirmed the health benefits of country life, clean air and interacting with nature. The latest is from Stanford University, which built on earlier research demonstrating that people who sauntered through trees and grass were happier afterward, and sought to examine the neurological causes behind the positive mood shifts.

In the Stanford study, researchers identified improved mental states in participants who walked down a serene nature path, as opposed to those who strolled next to traffic.

The worry set for rural residents is different from urbanites as well. One recent survey listed crime as the number one issue of concern for city-dwellers, while rural populations are most concerned with jobs.

Rural life is also realizing transformations through technology. High-speed broadband penetration is connecting rural families to opportunities in medical, mercantile and educational situations that were impossible a decade ago.

Consequently, there’s never been a better time to be a rural community seeking to revitalize.

It’s an era in which imagination needs to be unfurled to the winds of innovation. Advances we don’t even know about yet will yield solutions—as long as people like those gathered in Eudora remain committed and vibrant.

That’s the dynamic driving the Rural Community Alliance’s growth (the number of local communities represented has increased by nearly 50 percent since 2009).

It’s easy to look at struggling rural areas and see only their problems.

On Saturday, I saw genuine, grass-roots government of, by and for the people at work. It gave me goosebumps in balmy July.