Small businesses must embrace new technology Retaining work force remains a challenge

January 18, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Small businesses will forever encounter the same challenge to their survival: securing capital. But the degree of struggle this year is unknown as business owners wait and see how the economy will react in the new year.

In the worst-case scenario, the economy would slow, if not stagnate. And that could mean trouble for Maryland's small businesses, and in turn, the state.

Generally, small-business owners are upbeat about the new year. And they are aware that to stay competitive, they may need to embrace trends such as exporting goods and hiring from welfare rolls, and preparing to deal with the challenges, such as wisely investing in technology and retaining a work force.

O'Dette McDonald, of Guardian Home Health Care Inc. in Mount Vernon, said she's more realistic, than optimistic, about the economy.

"I'm in a heavy phase of planning now," said the president of the 2-year-old home medical supply company. "To stay in this industry, I have to change rapidly. I have to be strategic about the trends I consider."

Her biggest challenges in 1998 will be how to integrate the right technology in her business and how to hire "competent, reliable, trustworthy personnel," McDonald said.

It's imperative for small businesses to remain vital in 1998, as always, because they are the backbone of the local economy, experts said. Small enterprises in the state make up 98 percent of all businesses, creating most of the new jobs in Maryland.

According to the most recent available figures from the U.S. Small Business Administration, there were 283,932 businesses in Maryland in 1996 -- 119,249 of those had fewer than 500 employees, which is the agency's standard for a small business; 162,000 of those were one-person enterprises.

Seventy percent of companies in the state have fewer than 100 employees; 60 percent of those have fewer than 50 employees, according the the state Department of Business and Economic Development.

James T. Brady, the state's secretary of business and economic development, has a positive outlook. "The environment for small business is very good and is improving," he said.

He points to the personal income tax cut that is intended to aid small businesses in setting up shop. After the reduction is phased in, the new state rate will be 4.75 percent.

One of the priorities on this year's legislative agenda in the Maryland General Assembly, Brady said, are items to develop a quality work force through training programs. Those efforts will especially aid small businesses, he said, which are dealing with the same problem as all businesses -- finding a suitable work force.

McDonald said hiring more workers has become a concern as she looks to fill gaps in her business. "I have no choice but to bring people on slowly," she said, speaking of the dearth in workers around the state.

"There are a lot of questions about whether there are enough well-trained individuals in Maryland to supply the needs of small businesses," said Allan Stephenson, the SBA district director for Maryland.

"There are a lot of growing businesses in Maryland, and for them to meet their capacity, there must be a better educated worker," he said.

A source of workers may be readily available because of recent welfare-to-work initiatives under way around the state, said Sonia Stockton, the Baltimore region's executive director of the Small Business Development Center, which is managed by Towson University.

Hiring from welfare rolls could mean business tax credits of as much as $2,100 for each person hired.

But Jim Weidman, spokesman for the National Federation of Independent Businesses, the nation's largest small-business advocacy group representing more than 600,000 small enterprises, said welfare-to-work initiatives may not be the salvation small businesses expect.

"These businesses can't afford to just put bodies in jobs. They need someone with the basic skills of reading and math," he said. "Many people are on welfare in the first place because they are deemed unemployable."

Many of the nation's smaller enterprises, and those in Maryland are no exception, have five or fewer employees, Weidman says. "They are just not in the position to offer the training, day care or transportation services a former welfare recipient may need," he said.

Another issue facing small businesses is entering the international trade arena, according to Stephenson, of the SBA.

But the concept of going into foreign markets still hasn't been embraced by small businesses like it should, said James N. Graham, state director of Maryland's Small Business Development Center Network, a joint state and federal program that counsels small-business owners for free.

"There's a fear of other markets by small businesses," he said. "That may be wise for the moment because once a business gets into exporting, its a long-term commitment."

But Stockton is not a fan of small enterprises venturing into international trade. "Before a company can export, it must have a thriving business domestically," she said.

If companies aren't ready to enter the global marketplace directly, they should at least use the World Wide Web to their advantage, experts said. And it's a little more complicated than just setting up a home page.

"Small-business people think having a Web site means instant revenues," said Stockton. "That's not so."

Added Weidman, of the NFIB: "We have all of these major corporations with elaborate Web pages and are still trying to figure out how the heck they are going to use it."

The good news is that the bigger companies are less nimble and rely on brute strength and power to muscle out smaller businesses. "The reality is small businesses have the ability to be flexible and creative enough to satisfy customers better than the huge monolithes," said Skip Briggs, a small-business consultant with Growth Strategies in Severna Park.

He added: "There have never been more challenges for the small-business person, but never more opportunity."

Pub Date: 1/18/98

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