The Little Engine That Could (and Did)
Starting a business is one of the most intimidating and exhilarating experiences there is, but the risk is daunting: less than half of new businesses survive more than four years. Yet Americans are unflagging entrepreneurs, and the 25 million small businesses they run today produce 52 percent of the country’s GDP and create 60-70 percent of the country’s new jobs, according to Hector V. Barreto, the administrator of the Small Business Administration from 2001 to 2006. Clearly, small businesses are a force to be reckoned with.
There is no higher authority on that fact than Barreto. His book, The Engine of America: The Secrets to Small Business Success from Entrepreneurs Who Have Made It!, explores why some entrepreneurs achieve this most American of dreams, why some don’t, and how they all can create vibrant businesses.
The Principles of Success
The first half of The Engine of America focuses on common principles of entrepreneurial success, largely told by several successful entrepreneurs and experts in their own words. Here we find down-to-earth stories from people such as Linda Alvarado, who started one of the country’s most prominent construction companies; Tom Stemberg, founder of Staples; and Earl Graves, Sr., founder and publisher of Black Enterprise.
One of Barreto’s principles of success is early planning, and as he explains the various planning exercises and documents an entrepreneur should complete, he emphasizes that the intent is always the same: to force entrepreneurs to take an objective, critical look at their businesses and get a sense of direction.
Another of the book’s principles is that the entrepreneur must be aware that he doesn’t have all the answers. One mistake many businesspeople make, says Barreto, is that they just put their heads down and work as hard as they can instead of taking time to learn why things are happening. This is important because, says Barreto, “What it all comes down to is that new business owner, regardless of the type of business, being prepared to ask for help.”
A willingness to persevere in the face of adversity is also key, according to Barreto, who asserts that challenging conventional wisdom and not fearing mistakes are crucial factors as well. Barreto analyzes some tactical success principles, too, including making sure the product actually meets a need in the marketplace; hiring and delegating to people with complementary skills; and handling entrepreneurship’s inevitable potholes with levelheadedness.
Tools of Success
The second half of the book is devoted to the idea that government and big business actually want small businesses to survive and thrive. Barreto offers a nuts-and-bolts guide to obtaining advice, support, and even business from a variety of government and private-sector agencies. It’s especially meaningful that Barreto took the time to explain how a host of government and private-sector small-business programs work, such as the 8(a) Business Development Program, the Small Business Development Center Network, the Government-Wide Procurement Preference Goaling Program, and the SBA lending programs.
Barreto also takes particular care to demystify fund-raising activities that intimidate many entrepreneurs, and includes a primer on SBA loans, tips on how entrepreneurs should approach lenders when asking for money, and information on what lenders look for when evaluating borrowers. Interestingly, Barreto notes, companies such as Staples, FedEx, and America Online were all recipients of SBA-facilitated capital, and the default rates on SBA loans are not much higher than non-SBA loans.
Fueling the Engine
There are many books in the "what it takes to be a successful entrepreneur" realm, and within that realm, most books focus either on profiles of those who made it, or they focus on providing some kind of technical knowledge. Barreto’s “how I made it” stories (some of which are his own) are always inspirational, especially to timid, would-be entrepreneurs, but what makes The Engine of America stand out is that it takes the next step by providing real, action-based tools and resources that create cash and customers — and ultimately another American dream.