Anyone Can Get Uncle Sam's Small Business Advice. Maybe That's Not a Good Thing

If you want to start or expand a small business, all you need to get help from the Small Business Administration is transportation to one of its network of Small Businesses Development Centers. As the SBA puts it, "Assistance from an SBDC is available to anyone interested in beginning a small business for the first time or improving or expanding an existing small business, who cannot afford the services of a private consultant."

Actually, you don't even need transportation, because the SBA offers online business education to anyone who wants it. But is offering help to every small business and would-be entrepreneur the best method to advance the public goals of encouraging small business growth and hiring? It may be the American way, but it may not be the smart way.

According to new research from University of Warwick scholars in the United Kingdom, supplying intensive help to a small group -- 7 to 10 percent of businesses -- is more effective than lending a little bit of help to everybody. In the UK, the researchers note, a government program called Business Links has two kinds of support. One is a non-intensive track that provides information and advice to essentially anybody who asks. The other is more intensive and involves a diagnostic process and multiple interactions over time. The setup was good for trying to figure out which approach worked best.

The researchers found that different models produced significantly different outcomes. And the one that emphasized depth over breadth worked best. "The implication is that intensive assistance should perhaps be available to no more than 7 to 10 percent of client firms and where additional resources are available these should be used to deepen the assistance provided rather than extend intensive assistance to a wider group of firms," the researchers wrote. As an example of a more intensive tool, the researchers cited mentoring programs.

That all sounds great, but somebody has to pick who gets intensive help and who doesn't. And some research suggests that governments are not great at picking winners. An examination of government-sponsored venture capital programs in a working paper from the National Bureau of Economic Research found that ventures that received a large proportion of their funding from government-sponsored VCs underperformed those primarily backed by private financiers.

So should you look into getting more -- or any -- help from government sources? Another UK study, this one published in Environment and Planning, found that growth-oriented firms were the most likely to take advantage of government-supported advisory services. If you want to expand a small business, it turns out, you take all the help you can get. That's probably good advice no matter where it comes from.

Mark Henricks is an Austin, Texas, freelance journalist whose reporting on business, technology and other topics has appeared in The New York Times, The Wall Street Journal, Entrepreneur, and other leading publications. Learn more about him at The Article Authority. Follow him on Twitter @bizmyths.

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