To say that small businesses are the backbone of New Jersey’s economy is probably an understatement. Despite a sluggish economy, New Jersey’s entrepreneurs and small businesses continue to thrive, creating new jobs and strengthening the local marketplace. In fact, New Jersey’s 820,000 small businesses employed 1.7 million people – or 50.1 percent of the private workforce – in 2013, and firms with fewer than 100 employees have provided jobs to some 617,000 workers.
“Small businesses are definitely the drivers of our economy in New Jersey,” asserts Stefanie Riehl, vice president of business resources for the New Jersey Business & Industry Association (NJBIA), noting that approximately 85 percent of the organization’s 20,000 member businesses are small businesses with fewer than 50 employees. Indeed, small businesses in New Jersey continue to play a vital role in job creation. According to Kellie LeDet, regional administrator for the Small Business Administration (SBA), of the more than 800,000 small businesses in the state, approximately 200,000 are currently providing employment.
“In New Jersey, startup small businesses really serve as a key engine for job creation,” explains Dr. James W. Hughes, professor and dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University and a nationally recognized academic expert on demographics, housing, and regional economics. Last year, the state saw very strong private-sector job growth. According to Hughes, New Jersey added more than 80,000 jobs. “Consumer markets may be getting stronger thanks to the extra income these small business jobs are creating,” he adds.
Part of the reason New Jersey can be such an appealing environment for small businesses is that the state’s geography is ideal for the small business owner. With easy access to major cities like New York and Philadelphia, along with other business hubs like Boston and Washington, DC, small business owners have the opportunity to tap into several prominent markets. “New Jersey’s easy access to major highways, rail systems, airports and ports give small businesses an advantage when it comes to moving goods into, out of and around the state,” LeDet says.
Hughes notes that New Jersey is one of the densest states in the country – it’s the only state with more than 1,000 people per square mile. “There are a lot of consumers really close together here, and that’s always positive for small businesses,” he says. The state also ranks second in the nation in terms of median household income, which lends itself to a strong consumer market for the small business owner.
Aside from the state’s geography and population, New Jersey is home to renowned academic institutions, which cultivate a talented workforce for small and large businesses alike. “Not every state is home to both an Ivy League institution like Princeton, and a public university that’s ranked among the best in the nation,” Riehl adds. LeDet notes that the state’s colleges and universities also encourage and support entrepreneurship, as well as the development of new technologies and innovation. “These factors are all extremely important to developing the next new wave of cutting-edge small businesses in New Jersey,” she says.
The state’s abundance of successful small businesses could also be credited to the availability of resources for both fledging entrepreneurs and startup small businesses, with organizations like the SBA and New Jersey Small Business Development Centers (NJSBDC) providing support and financial assistance every day. According to Deborah Smarth, COO and associate state director of the NJSBDC, small businesses generate 50 percent or more of all local employment, and the vast majority of businesses in the private sector fall into the small business category. “Historically, small businesses have been the ones creating or at least retaining the jobs in the economic marketplace, even in this post-recession economy … whether they’re Main Street ‘mom and pop’ businesses or high-tech entrepreneurs bringing new innovation and technology to the marketplace,” Smarth says. “They have come through time and time again as the engine and backbone of both the local and national economies.”
The SBA’s core offerings include a variety of loan programs that provide small business owners and start-ups with capital ranging from $5,000 to $5 million, along with a network of resources that provide no-cost business counseling and programs that help existing small business owners access contracting opportunities with the federal government. In the first seven months of fiscal year 2016, the SBA approved 976 loans for $474 million to small businesses in New Jersey, which have helped create 3,828 new jobs and retain another 5,285 jobs.
Of course, doing business in New Jersey doesn’t come without its fair share of challenges – taxes, in particular – which is why various state organizations help small businesses with proper tax planning and choosing the right legal structure to help mitigate some of these costs. The SBA instituted a Small Business Action Center to make it easier to register a company and gain easier access to licenses and permits, as well as other information needed to start or expand a small business in New Jersey. There are also state funding incentives to help small business owners through the New Jersey Economic Development Authority.
NJBIA is also following suit in its efforts to support small business owners. The organization recently introduced a telephone hotline through its NJBIA Member Action Center to address any business issues that members may be experiencing. The association is also forming a committee devoted entirely to small business owners. “When it comes to resources for small businesses, you name it, we have it … but we still wanted to get our boots on the ground so business owners could tell us what we’re doing right and offer some new ideas on how we can help them succeed,” Riehl explains. “Small business owners tend to juggle a lot of different roles, so we want to provide as many resources as we can to help make it easier for them to operate their business and continue growing right here in New Jersey.”
Organizations like the NJSBDC are also there to hold entrepreneurs’ hands and guide them through the challenges their businesses may face, from creating business plans and gaining access to capital to learning marketing strategies or building their websites. “There are always challenges for business owners – from having to continually adapt to an ever-changing marketplace to knowing how to survive in a struggling economy – so we help companies with everything from international trade to procurement contracts to accessing seed capital so they can bring their technology from the lab to the marketplace,” Smarth says.
President of Dover-based WisEngineering, LLC, Cheryl D. Hall is just one example of an entrepreneur who was able to take advantage of the SBA’s resources. Hall started her firm in 1998, and has since built a company that provides information technology, program and life cycle management, systems and software engineering, graphic development and concept facilitation/creative solutions.
“I was downsized from my job in the mid-1990s, and there was a moment when I had to ask myself the obvious question: ‘Now what am I going to do?’” she says.
Determined to fuel her entrepreneurial drive, she connected with the NJSBDC to take advantage of its seminars, counseling sessions and other resources. She also took advantage of the New Jersey Institute of Technology’s Procurement Technical Assistance Center (PTAC), which was her earliest introduction to the government procurement world. “As a marketplace and business environment, New Jersey is one of the most dynamic locations in the country. A high concentration of businesses needing technology and engineering support leads to great opportunity,” Hall asserts. “It’s fast-paced. It’s hungry. And if your business becomes a success, it’s because you’ve worked hard to earn it.”
In 2002, the company received SBA 8(a) certification, which gives small disadvantaged businesses easier access to federal contracting opportunities by providing them with both sole source and competitive bid contracts. Since graduating from the SBA’s 8(a) program in 2011, WisEngineering has gone on to win large contracts and is currently providing the full spectrum of training services and systems being deployed to American soldiers across the globe. “Throughout the company’s history, there were a number of resources that were made available to me that were absolutely critical to establishing and maturing my business,” she says. “Taking advantage of these services was the first concrete step I took to actualizing my dreams and starting the company.”
According to Smarth, last year the organization provided one-on-one management consulting and training for more than 10,600 small businesses and entrepreneurs. In 2015, the SBDCs helped with the creation of more than 500 new small businesses. “There are so many resources out there for businesses who take the time to do their homework and tap into the state’s resources, including grants and loan programs that aren’t always available through traditional lenders,” NJBIA’s Riehl adds.
Thomas Olsen, president of Lobster Life Systems of Lodi, also took advantage of resources available through the NJSBDC. A client of the NJSBDC at Bergen Community College, the company provides state-of-the-art equipment and supplies to operate a healthy aquatic system. Its customers include major supermarket chains, restaurants, gourmet shops, wholesalers and marine exhibitors throughout North America. With the center’s help, the business has experienced a 25 percent sales increase.
“Our one-on-one counseling sessions have been invaluable,” Olsen says. “The NJSBDC doesn’t tell us how to build our product, but instead assists us in the financial realm from marketing to budgeting.” The company is currently expanding its facility by an additional 2,100 square feet, is hiring another full-time technician, and has taken on an intern for the first time.
Al Izzi, the assistant director of NJSBDC at New Jersey City University, worked with small business owner Deidre McCarthy, founder of Advanced Built Structures, Inc., a leader in composite joist and decking floor systems and light gauge panelized wall construction, to develop pro-forma financials and retain a reputable CPA firm.
“I jumped into this business only knowing what I learned from textbooks, so when reality hit, I realized I needed to surround myself with experts … and that’s how I found the NJSBDC,” she says. “We were under-capitalized and I was scared to death about not having the money we’d need to fund contracts up front.” She worked with Izzi to compile the projections and financial information she would need to procure capital. “I thought it was going to be slam dunk, but as a business without a three-year history, we couldn’t get anything … not even so much as a line of credit,” she recalls.
Still, the company continued to grow, and then Superstorm Sandy hit … leading to financial losses totaling more than $600,000. The NJSBDC helped McCarthy submit a disaster loan application and the company ultimately received an SBA loan for $646,000 to keep suppliers current and cover payroll overtime that was required to meet contract deadlines. “That loan is probably the only reason why we’re still here,” she says.
Today, the company employs between 45 and 75 workers – depending on contracts – and has positioned itself as a leading manufacturer of pre-fabricated steel walls and joists in the Northeast. “I think entrepreneurs sometimes feel like they’ve done their homework and they know everything, so they don’t take the time to look at all the different resources that are available in New Jersey,” she says.
“There are many resources available that can give fledgling companies the proper guidance in starting a business in New Jersey,” LeDet concludes.