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Departing SBDC director has advice for entrepreneurs

Before he joined the Idaho Small Business Development Center in 1993, James Hogge flew fighter planes in the U.S. Air Force.

His last few years overseeing the office that helps small business has weathered the same kind of turbulence Hogge faced in the cockpit. While Idaho didn’t suffer the recession the rest of the country did and the 2001 downturn was just a blip, the latest recession hit Hogge’s clients hard.

The same hopeful entrepreneurs who had come through the door years before with plenty of ideas, plans and bank financing returned in 2008 with harrowing tales of departed customers and overdrawn accounts. Counselors at the SBDC went from helping well-financed clients launch their business plans to steering the same people through refinancing debt and protecting their personal assets.

It hurt to see business owners struggling. The SBDC is in the business of helping businesses grow, not seeing them shut down. The center, which operates with state and federal money, provides consulting, training and technical assistance to small businesses and entrepreneurs.

Boise’s SBDC, housed at Boise State University, handled more traffic in 2009 and 2010, the darkest years of the recession, than in any year before or since, Hogge said. That’s a good sign; it shows that when people need help, they go looking for it. SBDC alumni and other business owners kept the center busy with questions about reducing their business expenses and managing their debt.

Now that the economy appears to be recovering, Hogge wants them to keep asking those same questions. As he nears his retirement in January, he has some lessons to pass on, not only from the last five difficult years, but also from the whole tenure.

One: Go lean, even in good times. Resist the temptation to buy shiny, new equipment if the old equipment works fine. Some of the businesses Hogge worked with closely over the last several years actually did very well during the recession on their lower revenues. He thinks it’s because they had lowered their expenses, too. Also, many were in the manufacturing sector, he said, and the ones that were selling outside the United States fared particularly well. Plenty of foreign markets were still cranking along at full speed as the domestic economy faltered.

Another: Go lean when it comes to borrowing. Yes, everyone knew this before the recession hit, but it’s hard to say no when there’s so much money available. Many of the businesses that failed were leveraged to the hilt. Despite all the maxims about the wisdom of borrowing money to make money, Hogge said he now strongly believes that most successful businesses keep their debt low. That way, more money drops to the bottom line because there’s not as much going to debt service.

Banks are helping business owners hold to the second of Hogge’s recommendations; they’re not nearly as eager to lend money as they were in the heady days of 2005 and 2006.

As for the rest of it: The pain of watching the struggles of people the SBDC helped hasn’t diminished Hogge’s optimism about the self-starters he’s met over the years. In fact, he’s more hopeful than ever about Idaho’s economy, and about the entrepreneurs who get knocked down and pick themselves up again. They’re still coming into the SBDC with ideas and plans and energy.

Go out and find help, he says. It doesn’t have to be from the SBDC. Treasure Valley SCORE provides volunteer business mentors. Idaho Women’s Business Center, launched this year, offers mentoring and business counseling. And most professions have an association you can join; colleagues there are often an excellent source of advice.

From this network of business teachers and learners, Hogge expects to see Idaho’s next J.R. Simplot or Joe Albertson emerge soon, figuring out a lucrative path forward in our new and complex economic landscape.

Anne Wallace Allen is managing editor of the Idaho Business Review.

About Anne Wallace Allen

Anne Wallace Allen is the editor of the Idaho Business Review.