Fall 1986 // Volume 24 // Number 3 // Feature Articles // 3FEA2

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Small Business: An Opportunity for Extension

Building partnerships for economic development.

William R. Bernhagen
Assistant Director of University of Wisconsin-Extension Small Business Development Center

Wesley T. Mott
Assistant Director of University of Wisconsin-Extension Small Business Development Center

The Small Business Community

The importance of small business to the U.S. economy has recently become abundantly clear. Congressional figures indicate that small business in America accounts for 97% of all businesses, 48% of business output, 43% of the nation's GNP, more than half of all American inventions and innovations, and 55% of all employment. Yet small businesses fail at an alarming rate. Two-thirds of all new starts fail before they are 5 years old, and 80% are extinct by the 10th year. Most experts attribute this disastrous situation to lack of management skills.

In 1978, the U.S. Small Business Administration designated the University of Wisconsin-Extension as the host institution of Wisconsin's Small Business Development Center (SBDC). Wisconsin became the nation's ninth SBDC and the first with a statewide delivery network. Today, there are over 40 SBDC states, and, at a time of cutbacks in many other areas, Congress has continued to strongly support this type of management help.

Serving small businesses has meant reaching out to a new clientele for UW-Extension. This venture has achieved impressive results, in large part because of new linkages and partnerships forged with the Wisconsin business community at virtually all levels.

Wisconsin Partnership Results

The Extension/business partnership in Wisconsin has resulted in a comprehensive program offering with a measurable impact. In 8 years, about 120,000 people have attended workshops and seminars, and 24,000 have received one-to-one business counseling. Fifty percent of our clients improved gross sales, 43% improved profits, 28% increased employment, and 65% improved efficiency. The University of Wisconsin-Extension SBDC program, moreover, has achieved a benefits-to-cost ratio (revenue compared to state funds spent on the program) of 7 to 1.

In addition to general management help, UWExtension has developed timely special programs in procurement (700 people attended our initial workshop in Milwaukee in March, 1984), technology transfer, international trade, invention evaluation, publications, tourism, business feasibility, and computers and data services. With close cooperation between University of Wisconsin System faculty, county-based staff, and local businesses, Extension has also been able to respond effectively to state emergencies. Redevelopment of the Barneveld, Wisconsin, business district became a top priority of Extension on June 9, 1984, the day after a tornado virtually destroyed the town.

Why Business Partnerships?

Extension was selected as the SBDC in Wisconsin because UW-Extension had developed business outreach programs as early as World War II. Building on UW-Extension's statewide delivery network, the SBDC program developed complementary privatesector partnerships for four major reasons:

  • Partnerships avoid wasteful duplication of effort by federal and state agencies and by private entities.
  • Linkages enable UW-Extension, in responding to client needs, to tap a wide range of services.
  • Partnerships enhance UW-Extension's ability to train other service providers, thus creating a multiplier effect.
  • Partnerships are cost effective and efficient because UW-Extension is able to select the most appropriate specialist to solve a given problem.

Partnership Roles

A variety of business partners play several crucial roles in UW-Extension's business programming.

  • Funding. The U.S: Small Business Administration (SBA), with a match from the State of Wisconsin, is the major funding source for the SBDC program. Other state and federal agencies have funded special programs and projects, as well as responded to client referrals for their own services. Policy Direction. The SBDC formulates policy with the advice of a Steering Committee of small businessowners representing a variety of businesstees and regions of the state.
  • Policy Direction. The SBDC formulates policy with the advice of a Steering Committee of small businessowners representing a variety of business types and regions of the state.
  • Service Delivery. UW-Extension educational counseling and programs are presented in large part by faculty at participating University of Wisconsin System campuses and by Extension faculty and specialists. Private-sector experts are often hired on an ad hoc basis to teach and counsel business clients, and many write fact sheets, newsletter articles, and other informational pieces for the UW-Extension SBDC as a public service. SBDC counselors, to complete the cycle, inform clients of the ongoing need for accounting and other professional services.
  • Program Development and Joint Sponsorship. Business associations regularly work with UW-Extension to develop ideas and program content. In some cases, UW-Extension faculty and staff with appropriate research experience have, in turn, performed studies that benefit the associations and the business community at large, while enhancing the researcher's professional development. One such example is a survey and study of the business community's expectations of business associations in Wisconsin, including currently available services and opportunities. Major business associations and other entities providing service to small business (such as SBA and the State Vocational, Technical and Adult Education System) regularly cosponsor major events like the Procurement Conference.
  • Coordinated Referral and Service. University of Wisconsin System schools and departments of agricultural economics and business, and comparable UW-Extension faculty and staff, make up a multitiered partnership of business expertise within the UW System. Extension has increasingly assigned county agents and multicounty area business agents with the responsibility of referring or counseling small business clients.

Problems and Opportunities

Awareness of the importance of small business t economic development shows no sign of abating. However, Extension planners in the small business area face continual funding uncertainty in the longrun. Changing state and federal priorities make long-range planning difficult.

Constant coordination and facilitation is also necessary to sustain Extension's new business partnerships. In Wisconsin, in fact, a UW-Extension specialist is responsible for external relations with business and professional associations. Extension, with its county-based delivery and referral network and its linkage to participating University of Wiscon sin campuses, is ideally suited for coordinating business partnerships.

Clearly, a growing need exists for Extension to build partnerships with the business community. In Wisconsin alone, this means an existing clientele of just over 100,000 small firms, with thousands of new ventures each year and, correspondingly, hundreds of individual dreams and investments destroyed for lack of management skills. Extension has delivery networks and resources that are needed. With the building of new business partnerships, Extension's impact can be significant.