Customer Reviews

The Engine of America: The Secrets to Small Business Success From Entrepreneurs Who Have Made It!

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In E-Myth Mastery, Michael Gerber cites some chilling statistics: "Of the 1 million U.S. small businesses started this year [2005], more than 80% of them will be out of business within 5 years and 96% will have closed their doors before their 10th birthday." Most of these business failures will receive little (if any) media attention which tends to be limited to much larger corporations. It is also worth noting that in 2001, 257 public companies (with a total of $258 billion in assets) declared bankruptcy. In 2002, another 67 did so. Go back even further to the 43 companies which Peters and Waterman quite properly praised in In Search of Excellence (1982). Most no longer qualify according to the criteria by which they were selected...and several do not exist at all.

I mention all this by way of suggesting how difficult it is, especially for small businesses, to succeed. Hence the importance of sources of assistance provided by the Small Business Administration that Hector Barreto headed for five years while leading the SBA's $60-billion support system for entrepreneurs. The subtitle of his book correctly indicates that he shares in it "secrets to small business success from entrepreneurs who have made it!" Barreto points out that, at the time he wrote his book, there were 25 million small businesses in the United States and they produced 52% of the gross domestic product of the U.S. economy. "Small businesses represent over 50 percent of the employee payrolls in the economy, and somewhere between 60 percent and 70 percent of the new jobs our economy produces annually. We are simply losing too many of the newly started businesses each year. It is damaging to the economy and to its long-term growth." That is why no many governmental agencies (at the federal, state, and local levels) and so many large corporations are committing substantial resources to help more small businesses succeed.

After reviewing his life "in and around small businesses" in the first chapter, Barrett shifts his attention to a series of seven "Principles of Success" in Part II (Chapters 2-8) and then discusses various "tools for success" in Part III (Chapters 9-12). The final part offers a summation of what he calls the "ABCs of Success," followed by his heartfelt reassurance to entrepreneurs that they can, indeed will succeed. Alas, a high percentage of them do not (especially starting a business for the first time) and the reasons vary from one situation to the next, of course, but the most common include:

Not knowing what they do not know (but think they know)
Not knowing how to use technology effectively
Often unaware of the regulations or potential restrictions they will face
Failing to comply with the restrictions and/or accommodate the restrictions

As Barreto explains his book, the SBA attempts to "arm" small business owners with the tools to address these and other problem areas by providing various programs that address "(1) access to capital, (2) technical assistance/entrepreneurial development, [and] (3) procurement/contracting. Small businesses are usually challenged in all of these areas: They don't have enough money; they don't have enough customers; and they don't know what they don't know. These deficiencies sum up why so many small business start-ups fail." I especially appreciate his personal accounts of real-world situations in which he and his SBA associates worked with specific entrepreneurs and their companies. He identifies them by name and examines the challenges that each one faced. Those who are planning to start a new business for the first time or have only recently done so, as well as those who now head a small business beyond the start-up phase, will especially appreciate the wealth of information available to them concerning sources of support in various forms. (For example, Barreto explains where to get help at 73 Web sites from organizations such as SCORE and the Small Business Development Centers.) They will also learn a great deal about errors in judgment to avoid, and, how to recover from such errors, once made.

Each of the "oak trees" on Fortune magazine's annual list of the largest companies was once an "acorn" and all of them are now challenged to contend with much smaller competitors. This is precisely what Jack Welch had in mind when, during a GE annual meeting, he explained why he admires entrepreneurial companies: "For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy."

Barreto reveals himself to be a relentless optimist even as he knows better than most others do that the mortality rate of start-ups remains high, and, that those small businesses that do succeed face more severe competition now than ever before, not only between and among themselves but also, as Welch's comments suggest, from the largest corporations that develop many of the same strengths (e.g. speed, flexibility, and resilience) that had been competitive advantages for small businesses in the past. I share Barreto's hope that his book will help to increase the "horsepower" and "fuel efficiency" of an "engine" so essential to the American economy.

Those who share my high regard for this book are urged to check out Bo Burlingham's Small Giants: Companies That Choose to Be Great Instead of Big, any of Jason Jennings' books (notably Less Is More and Think Big, Act Small), Founders at Work which consists of Jessica Livingston's interviews of 30 men and women who share their "stories" about the early days of the start-ups they founded, and Steven Feinberg's The Advantage-Makers: How Exceptional Leaders Win by Creating Opportunities Others Don't.

There are two kinds of books to read if you're thinking about starting a small business. There are the books that tell you, step-by-step, how to proceed. And there are the books that offer you insight, wisdom and ideas.

The Engine of America is in the latter group and it's an excellent example of the genre. The author is Hector Barreto who grew up in small businesses, ran some of his own and wound up as the Administrator of the Small Business Administration.

There's lots of good advice here. Some of it comes from entrepreneurs you've heard of. Fred Smith of FedEx and Tom Stemberg of Staples are two examples. A lot of it is embedded in the stories of entrepreneurs you've probably never heard of.

One example is Linda Alvarado who was one of the few women to found a construction company and make a success of it. She's now part owner of the Colorado Rockies. There's Thanh Quoc Lam and Earl Graves and Mitchell Rubinson, all people I'd never heard of until picking up this book.

And there were Steve and Lori Leveen. I'd never heard of them either, though I've bought things from their company, Levenger, for years.

Barreto mixes the entrepreneurs' stories with his own story and the story of his family's various businesses. He blends in advice from others, a financial planner here, an academic there.

The result is a well-written book that's loaded with excellent advice and helpful examples. It's also structured sensibly.

In section one, you're introduced to the author and his family and his reasons for writing the book. Section two is about the principles of success, things like "Plan, don't just wing it" and advice on finding a niche and surviving the inevitable mistakes and nasty surprises.

In section three, the author offers up "Tools for Success." For me this was the weakest part of the book. There's a bit too much about how the government and big business want to help you and not enough about how they often seem to hide it well.

As is usual for books written by Small Business Administration people, the SBA sources of information and help are described and hyped far out of proportion to their usefulness to small business owners I know. But even so, there's a good list of available government programs here that will be helpful to many small business owners.

The Tools section has several good chapters. One is on overcoming intimidation. And, there's some good, clear advice in the chapter on "Demystifying Capital."

The Summing Up section has a wonderful chapter on the "ABC's of Success." It's a little hokey, but it's good. You may be tempted to skip right there. Resist that temptation. There are too many good stories and too much you can learn from reading the book through.

The Engine of America: The Secrets to Small Business Success from Entrepreneurs Who Have Made It! was written by former Administrator of the US Small Business Administration, Hector V. Barreto. I found Barreto's book inspiring and full of useful information. With the stories of some of the most successful small-business entrepreneurs, he teaches the keys to successfully start up a company or grow an existing one.

The Engine of America gives a lot of the same advice that you hear all the time about running and starting a business. Therefore, it is a great book for someone just starting out. Additionally, the advice, although repetitive for those entrepreneurs who have been in business a while, is given in a way that keeps you entertained. Stories of successful entrepreneurs remind us that anything can be done, and help us keep an optimistic point of view.

Barreto gives sound advice about studying to learn what you need to know and planning your business venture to increase likelihood of success. Then he addresses the need to take risks, but to take calculated risks rather than just a shot in the dark. One aspect of business I don't think of a lot is employees. I am far from that point, but Barreto addresses how to share your vision with your employees and how the people around you are a critical key to your success.

A large portion of The Engine of America is dedicated to specific tools for success that every entrepreneur can benefit from. From how to contact SCORE for free advice from successful businesspeople to how the Small Business Administration (SBA) can help you obtain financing to what government programs are available to small businesses. From his insider's point of view, Barreto helps unlock the mysterious process of dealing with government organizations and programs.

Overall, I really enjoyed this book. It's an easy read, but it contains a wealth of useful information. I especially enjoyed the quoted advice from successful entrepreneurs such as Earl Graves, founder and publisher of Black Enterprise magazine, and Tom Stemberg, founder of Staples.

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Cat Cromar
www.astartuplife.com/category/book-reviews

I enjoyed the book. Barreto's insights were fantastic and it gained a lot from the stories and experiences told.