Q&A with ISBDC North Central Regional Director Alan Steele
Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Located in the Judd Leighton School of Business and Economics at Indiana University South Bend, the Indiana Small Business Development Center serves Elkhart, Fulton, Kosciusko, Marshall and St. Joseph counties.
The location is one of 10 providing high-quality business advising and education to local business owners and aspiring entrepreneurs across the state. In 2024, the center served more than 400 clients, supported about 1,600 jobs and saw about 100 new jobs created.
ISBDC North Central Regional Director Alan Steele spoke with Inside INdiana Business about the range of services the center offers, biggest industry trends for 2024 and potential for 2025.
This article has been edited for length and clarity.
What kind of services does the ISBDC offer?
Our core activity is providing confidential, no-cost business consulting. For an entrepreneur who comes in, who has a concept for a business and they’re trying to figure out how to launch, our engagement is around helping them with research, helping them to assess market potential, and making a judgment about the feasibility of that startup. Not only from an external perspective, but also looking at more internal issues, like how much capital is it going to take, and do you have access to it? For those people who are not yet in business, what we call a pre-venture client, a lot of it is helping them judge feasibility. And then if the indications are positive and they elect to move forward, then frequently it is facilitating a business plan process with them.
For the existing businesses that we work with, those engagements tend to be very situation specific. It might be an owner who’s starting to ponder retirement. It might be an owner who feels their business isn’t generating the amount of profit that maybe it should be, and so it could be helping them do some financial analysis to try and identify where the issue might be. We have access to benchmarking tools, so we have the ability to sit down with a business owner, go over their finances and compare them to the financial performance of similar companies.
We have a number of small businesses who have gotten established, but now they feel like they’ve hit a plateau. So in some cases, we work on marketing to try to continue growing the customer base in some way, it might be working with them on operational issues, maybe there’s some sort of bottleneck that is putting a limit on their capacity and limiting how many customers they can serve.
And what role do you think small businesses play in the South Bend-Elkhart region?
What is true nationally is true here, and that is small businesses are truly the engine of job creation. Fortunately in this region, we’ve had some big projects announced. We have a battery plant under construction. We have data centers under construction. So there are some big projects, and those have a big impact in terms of jobs. But if you look at the big picture and long term, particularly as large companies have embraced automation, or they have maybe moved production outside the U.S., it is the constant stream of new businesses forming and growing that is really creating jobs.
Interesting. So there were a lot of labor shortage conversations last year. How did that impact small business owners?
Honestly, we have not heard that so much this year. It’s something we heard a great deal, I would say 2019, 2020, 2021. It’s something that we’ve just not heard nearly as often in 2024. I can’t tell you exactly what the data says, but I can tell you anecdotally, based upon our experience working with people, it’s not something we’re hearing about to the level that we used to.
What were the trends that you noticed in 2024 regarding the challenges that small businesses in the region were facing?
For the past year and a half or so, maybe even two years, we’ve seen a higher interest rate environment. So in terms of small businesses that were seeking to borrow money, money is coming at a higher cost. Anecdotally, it seems like some of the lenders have also been scrutinizing deals really closely.
What are some of the top strategies for putting your best foot forward as a small business owner applying for a loan?
Usually when you’re approaching a lender, you’re going to provide a business plan, you’re going to provide some cash flow projections. So being really thorough in articulating the vision for the business and justifying the numbers that are in the projections. One of the ways that we’ve been able to be helpful with a number of those situations is utilizing some of the research tools and data tools that we have access to. If someone is putting together a business plan, and you can build in some data that helps demonstrate market potential or demonstrate that you know the client is participating in an industry that is actively growing. The more you can put data behind what you’re expressing in the plan, the more credible and impactful that plan is going to be.
And was there any industry that saw the most growth or decline in the region for this 2024?
We worked with more than 400 entrepreneurs and small businesses [in 2024], and as usual, it’s an incredibly diverse group. We have all kinds of industries represented. We have seen an increase in transportation related businesses, and that’s been in a couple of directions. We’ve seen more people getting into delivery-type businesses. We’ve seen a lot of people who have wanted to acquire a box truck or two, find routes and do deliveries. Based on conversations we’ve had with other folks in our state network, we seem to be seeing more of that in our region. I’ve also heard from some of our bankers in the region that they have gotten a lot of requests for truck loans this year. I don’t really have a good answer for what’s driving that, but apparently there are opportunities that these entrepreneurs are trying to respond to.
We always see a strong flow of service companies and 2024 was no different. So we’ve seen a lot of companies, particularly in household services or small business services. Things as general as janitorial services, or maybe a little bit more specialized, people who are doing pressure and steam cleaning, for example. That’s been a pretty active segment as well.
Steele speaks on some of the biggest trends the center saw in 2024.
For anybody looking to start a business in 2025, is there such a thing as over saturation of a particular industry?
The fact that a lot of competition is present isn’t necessarily a signal that you shouldn’t start. The presence of a lot of competition makes it very clear that you will have to do a really great job of differentiating yourself and giving people a reason to do business with you. If you’re entering a really crowded space that is not necessarily growing rapidly, getting established would probably mean taking some market share from some of the existing players. So you just need to be aware of the task in front of you and come up with really compelling reasons for people to come to you and compelling ways to differentiate yourself from the other competitors.
Does the center track how many businesses open and how many businesses close in a year?
We track the number that we have assisted in opening. For 2024, we’ve helped 31 new businesses launch in the five-county footprint that we serve.
On the other hand, closure is an interesting topic. There’s a statistic that’s been floating around the internet for a long time that says 90% of new businesses close within a year, and I can’t find any way to prove that that’s true. I can find a lot of data that suggests that is not true. The other thing that is sort of problematic about that is some of these businesses just decided to close. They decided to go do something else; that’s not failing. As we’re working with people, we are having the conversation about whether they’re going to keep the business operating or not. I certainly don’t think that we’ve had any more of those conversations than we typically do.
Something else I would identify as a trend is a lot of businesses changing ownership. There are a lot of small businesses that are owned by people who are starting to retire, and so they’re trying to figure out how to exit. In some cases they wind up selling to a competitor, or to a family member or an employee. But we have seen a lot of that kind of activity.
How does the center reach out to businesses in the region?
We’ve been at our current location at IU South Bend since 2015, but we’ve been in the community for much longer than that, dating back to the late 1980s. So we’ve had a presence, but we don’t do a lot of marketing. Most of the people who find us have been referred by someone else who’s worked with us, or they’ve been referred by their banker, their attorney or their accountant. They may have seen a member of our team speaking at an event in the community. So it’s really largely word of mouth and networking in terms of how people are finding us. We also get some referrals from the Secretary of State’s office. So when people go on to the IN Biz platform to form business entities, if they have particular types of questions, they’ll get referred to our network and one of our centers will get involved and provide assistance.
How does the number of small businesses launched in 2024 compare to 2023, and what specific metrics or indicators does the center use to measure the health of the small business ecosystem in the region?
I can only speak to the businesses we helped launch. I think the 31 that we have for 2024 is slightly up from 2023. But we’ve been in that range of 28 to 34 pretty consistently for the last few years.
For measurements, our metrics tend to be structured around our activities in the center. So we’re tracking how many people we serve. We’re tracking how many of those start businesses. We’re tracking how many jobs get created. We’re tracking capital transactions. So we’ve got good insight into the impact that we’re having with the people we’re working with. In terms of compiling a broader measure for the region, that’s not really part of our metric set.
You mentioned the number of jobs created as a metric. What was that for 2024?
We look at a couple of different things. We look at what we call “jobs supported,” which would be the total number of jobs in the companies that we work with. That number for 2024 is a little bit above 1,600. We also track how many new jobs are created by the businesses we’re working with. That number is right around 100.
We’ve worked with over 400 clients, but they’re not all in business. Roughly 55% of those are in business. The other 45% are aspiring entrepreneurs. There are people who have an idea that they’re hoping can turn into a business.
What are you looking forward to in 2025 with regards to small businesses?
We had an interest rate cut from the Treasury in December, and there’s anticipation that a couple of more cuts may follow. Hopefully that will assist in bringing down the cost of borrowing and help with some of that capital access. There are a couple of new programs coming on board in the region that are targeted toward making capital more accessible as well. There’s certainly been a lot of talk the last couple of years post-COVID, about challenges in the economy, inflation and concerns about cost of capital, but the entrepreneurs we’re working with are undeterred. They have a very positive spirit, there’s a lot of optimism and I think we are positioned to see a lot of positive outcomes in 2025.