Microenterprise Development Boot Camp Webinar Series – Part I

What Does it Take to Build and Grow a Successful Microenterprise Development Program?

Presented by Jason Friedman, PrincipalFriedman Associates

Funded in part by U.S. Small Business Administration PRIME Program

Hosted by Oregon Microenterprise Network (OMEN)

Introductions & Webinar Instructions

Our Premise for Today

There is no better time for microenterprise development organizations to prove their value and worth to the communities they serve.

Why Now?

• The number one public policy priority today is on creating jobs and stabilizing and growing our local economies.

• Increased interest in microenterprise and microfinance (and CDFIs).

• The consequences of the recession create new market opportunities:

• Building the credit of the unbanked and underbanked

• Small businesses that could previously access commercial financing

Our Task Today

• Identify the steps for practitioners to assess their current programs in light of the economy and market opportunities and

• Take practical steps to strengthen and improve services, impact and organizational effectiveness.

• Let’s start by talking about your program strategy!

Microenterprise Development (MED) Program Goals?

Business Development

EmploymentCreation

Poverty Alleviation

Community Economic

Development

Empowerment

Building Strong Businesses: Your Mantra for Success and Sustainability

• Building strong businesses – that is the bottom line for your MED program.

• That must be the value proposition and competitive advantage for your organization.

• It’s what your stakeholders demand and must see in order to champion your mission and support your organization.

Step 1: Revisit or Reaffirm Your Mission and Vision

WHAT are you trying to accomplish and specifically for WHOM?

Self-Assessment Check Up

• Is our mission statement a clear reflection of our organization’s reason for existence which describes an enduring reality that reflects our values and purpose?

• Does our mission communicate the real difference that we are making every day in the lives of the people we serve?

• Is our vision inspiring, clear and specific?  Does it reflect a better world if we reach our vision? What we aspire to become or achieve?

Self-Assessment Check Up

• Is the mission statement is specific enough to provide a basis for developing goals and objectives?

• Is the mission reviewed and revised on a scheduled basis (e.g. annually) with input from key stakeholders as appropriate?

• Does the organization regularly assesses compatibility between programs and mission?

Examples

• ACCION USA: As a leader in U.S. microfinance, ACCION USA empowers low-to-moderate income business owners through access to capital and financial education. With economic opportunity, these entrepreneurs—often minorities and women—can build assets, better provide for their families, create employment and strengthen their communities.

• Justine Petersen: gives people opportunities to create new futures for themselves and their families by helping them become and stay homeowners, start and run successful businesses, access education, begin and manage personal savings programs.

Examples

• Rising Tide Capital: to assist struggling entrepreneurs and communities to build strong businesses that transform lives, strengthen families and create vibrant, sustainable neighborhoods. 

• Opportunity Fund: advances the economic well-being of working people by helping them earn, save, and invest in their future.

Step 2: Re-assessing Your Market

Is it time to re-assess our original assumptions about demand and target

markets?

Market Assessment

• Economic Environment – what are the trends?

• Government Environment – what’s the angle?

• Target Group Needs: what are the barriers and opportunities? How do they differ among target groups?

• Competition: collaboration and networks

• Market Niche: what can you do the best?

Self-Assessment Check Up

• Data gathering

• Focus Groups

• External Stakeholder Interviews

• Client Surveys

For Discussion

Has the current recession influenced you to re-think your mission and target

markets?

Step 3: Re-Assess and Affirm Your Program Strategy

Program Strategy Check Up

• Is your strategy customer-focused and market driven?

• Does it state the value clearly? Outcomes?

• Are your services selected based on your organization’s capacity to deliver them, instead of based on the priorities (goals and needs) of target client groups?

Core Program Services

• Orientation and Assessment

• Entrepreneurial training

• Business implementation and management support (generically called “TA”)

• Access to capital

• Access to Markets (ATM)

• Peer support/networks

• Asset development services: IDAs, financial education, credit building, etc.

Client Assessment: Picking the Winners?

• Experts say that 5-7% of the population have what it takes to successfully start and grow a small business.

• During an economic recession, ME provides economic opportunity to downsized and dislocated workers.

• But we also know that entrepreneurship is not for everyone.

Premise

• Clients need to earn their participation in your program!

• What process do you use to efficiently and effectively help individuals determine if entrepreneurship is right for them?

• What are your stated expectations of them? Of you?

• Do you model business behaviors?

Business Readiness: 3 Factors

• The quality of the business idea or vision – does the individual have a clear idea for a specific product or service to market? Is it viable given local market conditions? It is achievable given the individual’s level of resources and experience?

• His or her entrepreneurial traits and characteristics – does the individual have experience with business ownership or management? Does he/she have a passion for the business idea or product? Does he/she have experience in the industry in which the business is located?

Business Readiness: 3 Factors

• Personal readiness to engage in self-employment – • what does the individual’s credit history look like?

• How strong is the personal financial situation?

• How much does is needed to make to support his or her family?

• Is child care available?

• Does he/she, or a family member, have physical or mental health issues?

Orientation, Assessment and Screening

• Process to assess the “entrepreneurial-readiness” and personal readiness of aspiring entrepreneurs.

Orientation sessions or short courses

Individual assessments

Personal Interviews

Goal setting/action plan

Screening/Assessment Models

• Women's Initiative’s offers My Business Action Plan workshop which serves two functions:

• An orientation to the organization and its services; and

• A participant-driven self-assessment of their business idea and a facilitated process to develop the next steps to launching their enterprise.

RESOURCESCHALLENGES

BUSINESS READINESS STEPSPersonal

Industry Marketing Management

• ____________

• ____________

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BUSINESS GOALS

Business Idea:

1 YEAR FROM NOW

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NOW

3 YEARS FROM NOW

My Business Action PlanMy Business Action Planby___________________ on_______by___________________ on_______

STRENGTHS FEARS REWARDS

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• ____________

• ____________

• ____________

• ____________

• ____________

• ____________

• ____________

• ____________

• ____________

1.

2.

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Pre-Entrepreneurial Training

• Start Your Own Business – Short (1-4) sessions to help clients recognize and develop the personal and business skills needed to start a business. It provides an introduction to management, marketing and finances, and an idea feasibility and personal readiness assessment.

• Screens out individuals not personally ready to start a business or who do not have a solid idea, but provides strong value.

Entrepreneurial Training

Effective Training Meets 3 Basic Conditions

• Trainee should be facing an intense change situation which could either be a problem or opportunity.

• Trainee should be aware or recognize that the change is happening or will shortly happen.

• The trainee should be willing to seek help and be open to the possibility of learning a new skill in order to minimize the problem or capitalize on the opportunity.

Microenterprise Training

• Business Planning Class: Often 24-80 hours to help students create practical effective business plans.

• Addresses starting and growing a small business including feasibility, marketing, management, finance, taxes, and recordkeeping.

• Require that applicants must either be in business or plan to launch a business within three to six months after completing the class.

Entrepreneurial Training Curriculum Check Up

• Does it incorporate adult learning methodology?

• Is it grounded in real experiences faced by entrepreneurs?

• Is there a a “learning by doing” focus that emphasizes practice and achievement DURING the sessions.

• Is there ample opportunities for participants to be listened to, learn from each, to gain confidence through achievement, by design?

• Does it address include education on building credit and and personal effectiveness (communication skills, time management and goal setting)?

What Have We Learned About Core Training and Client Success?

• Completing a business plan is a challenge for clients. But completing one is associated with making progress on securing financing and having a positive business outcome.

• Program Implication: Training completion rates, business plan completion, class assignment completion and attendance rates are all intermediate indicators worth tracking as measures of training effectiveness.

• Accountability: define measurable learning objectives and make clear to clients and staff the specific evidence that will indicate when clients have achieved this learning.

Class Dismissed: What’s Next?

• The class is over – time to celebrate!

• What’s next?

• Post-training technical assistance!!

• HUH? YAWN!

What’s TA?

• We know that “on demand” TA doesn't work.

• Many of us have a problem getting emerging businesses to come back.

• Do you have a product(s) that is equally robust as your training program?

Their Challenge – Your Opportunity

• We know that many clients face barriers to the social and economic resources that are critical to business success including access to capital, networks, advice from experts and coaching.

• Our clients are often isolated and are looking for the support of a community as well as access to networks and markets.

• They need support to develop the critical thinking, analytical skills and organizational competencies necessary to grow and sustain their business.

A Framework for Supporting Business Growth

How Can We Support Growth?

OMEN Member – eDEv: (formerly Lane MicroBusiness)

Barriers to Resources

Business Concept Physical Resources

Markets Skills/Competencies

Barriers

Identifying Barriers and Providing Services in the Right Form

• Entrepreneurs will frequently identify the barriers they face as needs:

• know-how (“Picking an ideal business location”)

• know-who (“Mentor in the landscaping industry”)

• and know-why (“Should I hire an employee now?”)

• Entrepreneurs seek actionable solutions that are context-specific.

Some Barriers Frequently Occur at Different Business Life Stages

• Pre-venture—Developing a viable business concept, obtaining start-up resources, developing a business plan, etc.

• Survival— Acquiring customers, managing cash, developing procedures, etc.

• Existence— Developing internal controls, budgeting, delegating to employees, achieving profits, etc.

Methodically Addressing Barriers to Development and Growth

• Survey clients learning needs (barriers to resources).

• Aggregate learning needs by subject domains.• Offer “just in time” trainings and workshops that

meet general knowledge and skills needs.• Develop individual action plans to address

context-specific learning needs.• Measure and monitor results, making

adjustments as needed. • Repeat process to identify new barriers that

entrepreneurs face.

Examples of Business Support & Growth Strategies

Entrepreneurial Coaching

Mountain BizWorks Growth through Objectives (GO) Program

• Business owners who seek to move beyond the business planning stage enroll in the GO program.

• Initial assessment and a structured coaching program of up to 15 hours of one-on-one consultation over a three-month period.

• Coaching increases your ability to expand your business and to succeed in competitive environments.

• Business Developer helps to identify the most important issues related to business’s success.

Growth through Objectives (GO) Program

• Cultivated a group of 13-14 contractors – “cream of the crop” - $28/$40 hr.

• Assessment – financials, marketing and operations, etc.

• Fee: $250 for start-ups/$350 for advanced businesses

• Client action plan

Community Capital of Vermont

• Post-Loan Technical Assistance (PLTA) & Management Assistance Program (MAP)

• Borrower eligible to receive "post-loan" support during the term of the loan: at least 13 hours of consulting time worth no more than

$1,000 with a private consultant not to exceed $75; a $500 grant to pay for the cost of attending an eligible

business education workshop, trade show, or conference.  This grant can also be used to purchase membership in a trade association or chamber.

New: grants for up to $2,500 for a business; and $5,00 for informal or formal groups or networks of businesses.

Women's Initiative – SuccessLink

• In October 2006, Women’s Initiative launched its post-graduate program, SuccessLink.

• SuccessLink provides ongoing support to clients who have graduated from its 10-12 week business plan training course, Simple Steps/Paso a Paso.

• WI realized that existing businesses need guidance to move through the life cycle of their business – to take their businesses to the “next level.”

• Membership Model - $120.00/year

Success Link Services

• A How-to Guide for Business

• Learn how to use Facebook to promote your small business.

• Covers strategies small business owners are using to promote their businesses using Facebook.

• Hands-on workshop where you will set up and work with your new Facebook site.

Social Media

• Program started in 2006

• Based on Economic Gardening principles

• Support local businesses/give them tools to succeed

• Work with MDOs, SBDCs, CDCs, Econ Dev agencies,

• 200 business clients in 2008

• Interested in serving Oregon cluster/niches

ACCESS to Markets: MarketLink

Leveling the Playing Field

It’s About Access

• Utilize same market research principles and tools that Fortune 500 companies do

• Adapt them to demands and realities of small business with customized market research

• Localize based on their community

• Provide at no or low-cost to business

Example: Feasibility Study

• Client: is a pre-stage weatherization company looking to serve the Portland metro and participate in local incentives.

• Research: developed from secondary sources such as government information, articles, industry trade magazines, Census and interviews with people in the industry.

Research Included

• Competitive matrix listing certified firms by location/type of service offered

• Analysis of matrix (geographical opportunity ID vs. costs)

• Competition by specialty and their threats

• Economic factors

• Info on backlog and future growth drivers

• Strategic partnerships

• Analysis of Portland housing market (units, mix, age)

• DOE info on energy use by unit age

• Underserved markets and opportunities

• Marketing analysis

• Consumer sensitivities (price)

• Staffing/personnel/training issues

Survey Results

• Satisfactionqueries received an average rating of 4.4 (1 to 5,

where 5 is highly satisfied)• Database

70% of queries utilized MarketLink’s sales databaseof those, 94% used it for new sales generation

• Primary30% of queries utilized MarketLink’s primary databaseMajority use to develop business plan, loan app

Contact

• Oregon Microenterprise Network (OMEN)• Phone: 503-546-9913• Email: michael@oregon-microbiz.org• Web: www.oregon-microbiz.org

Asset Building

It’s All About Assets

• After years of research and practice, the sense is that ownership, not income, is the key to ending generations of poverty.

• Help people build – and then build on -- assets like homes, businesses and education. People with assets look to the future, have a stake in society and have footings for climbing out of poverty.

• Credit as an asset!

Credit Education/Credit Building

• Many MED programs help clients assess income, debt, credit history and financial goals and create a plan to overcome barriers to accessing affordable capital. 

• Financial Education Courses: Saving and Investing, Insurance Needs and Risk Management, and Consumer Rights and Responsibilities.

• Credit Builder Loans for individuals with “thin” credit files (lack of active lines of credit) and assists to establish a good line of credit on the individual’s credit report. 

• Credit Builder Loan

• Client Profile: More than 50% of 1,000 clients had no credit profile; Lots of payday loan debt

• Loan Amount: up to $2,500• Term: 24 months• Interest Rate: 10.25% -12.25%

Process: 1) Credit report review2) Confirm outstanding debt3) Complete Credit when Credit is Due course4) Receive loan up to $2,500 to pay off debt5) Build credit history and access business loans

For Next Week

We take good care of our clients.How do we take care of ourselves?

Topics

• Key Trends that Will Affect Your Organization

• Organizational Self-Assessment

• Fund Development – What is a Culture of Philanthropy?

• Getting the Message Out – Simple Steps

• The Role of Governance

• Measuring Success

Questions?

Friedman Associates

• We specialize in building sustainable nonprofit organizations that help low-wealth individuals & communities create jobs and small businesses. 

• Our consulting approach combines effective organizational development, fund development & strategic communication to ensure that your organization continues to thrive & grow.

Contact

Jason Friedman, PrincipalFriedman AssociatesOne Knollwood LaneIowa City, IA 52245319-341-3556jjfriedman7@msn.comwww.friedmanassociates.net