Knoxville Chamber

Small Business Development

ANNUAL REPORT

July 1, 2010 through June 30, 2011

OVERVIEW OF KEY INDICATORS

PROPEL Counseling

1. 144 face to face counseling sessions

2. 102 hours of assistance given directly to minority, woman, and veteran

owned firms

3. Over 70 hours of support time given to our partners

Propel Mentor/Protégé

1. 25 Mentor/Protégé teams created with one firm leaving the program. (Due

to a buy-out)

2. Protégés began with a baseline of 94 jobs and increased that baseline to

140 which is a growth of 67%

3. Total economic impact of the teams is at $34,516,787 with direct economic

impact measure at $21,155,244.

4. Program is being studied by professors at California Polytechnic State

University’s Orfalea College of Business and Harvard respectively. The first

analysis of the program will be presented to the Academy of Management

Conference the Academy of Management August 12-16. AOM is the oldest

and largest scholarly management association in the world.

Diversity Champions Taskforce

1. Created a definition of economic inclusion for east Tennessee.

2. Grew membership to 60 diversity officers and professionals.

3. Currently working on first annual “East Tennessee report on Economic

Inclusion”.

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Key Regional Statistics (Anderson, Blount, Knox, Loudon, Monroe, Roane)

The above statistics set the baseline for the importance of small and minority owned business

development. These sobering statistics give us justification for our efforts and are themselves a

challenge and what we are ultimately accountable for. Issues of economic inclusion also affect

the workplace. These themes affect the quality of life of East Tennessee as seen by the

numbers below.

State of Minority Business

Number of total employer firms by Region - 67,186

Minority Firms - 5,295 (7.8%)

Veteran Owned Firms – 7,298 (10.8%)

Women Owned Firms – 15,261 (22.7%)

Gross receipts of all firms in Innovation Valley - $75,466,472,000

Minority Firms - $802,918,000 - 1.06%

Woman Owned - $2,253,629,000 – 2.98%

Veteran Owned - $3,223,334,000 - 4.27%

Total - $6,279,881,000 – 8.32%

State of Minority Employment

2007 Employment - 17,585 (12.42%)

2009 Employment - 16,006 (11.69%)

2007 Senior Level Managers – 159 (6.07%)

2009 Senior Level Managers – 99 (5.7%)

2007 Laborers – 3,099 (22.88%)

2009 Laborers – 1,871 (16.67%)

*US Equal Opportunity Commission * US CENSUS BUREAU 2010

The Propel program provides small business one on one counseling to small

businesses in the Innovation Valley region. The program is open to all of the

35,204 small businesses within the region with a concerned focus on women,

minority, and veteran-owned firms. We provide assistance in visioning, market

development, and making referrals to other business resource agencies and

networks to aid the growth of these businesses. The Propel program

administrates two other programs, Propel Mentor /Protégé program and the

Diversity Champions taskforce. Due to the impact that these programs have had

in just two short years the program received the SBA Small Business Champion of

the Year Award.

Total Counseling Sessions Held:

144

Total Hours Spent:

175

During the fiscal year we provide over 82 hours of counseling to women and

minority owned business owners, 20 hours veteran owned firms. We logged over

70 hours of support to our agency partners and board memberships.

Board Memberships

East Knoxville Business and Professional Association

March of Dimes

Sheriff Merit Council

Workforce Connections

Teachers Supply Depot

Supporting Agencies & Partners

University of Tennessee Procurement Technical Assistance Center

Alcoa African American Heritage Network

East Tennessee Purchasing Association

Martin Luther King Leadership Symposium

Project Grad – Austin-East

Urban League Black executive Exchange Program

STEM Diversity Roundtable

Volkswagen Minority Business Fair

Tennessee Veterans Business Association

B&W Y-12 Veterans Business Conference

The Knoxville Chamber of Commerce sees business to business mentoring as a

function of local economic development. Based on this assumption we have

opted to create a formal Mentor Protégé program. Our Mentors are gleaned from

those members with high status which we call our “Premier Partners”. Our

protégés are selected by a small committee who vets the applicants on three

things: revenues, innovation, and market distinction. In our first 6 months of the

program protégés landed over $5 million in new contracts. Since inception of the

program in January of 2010 our protégés have maintained 94 employees and

grown that number to 140. This is a growth of over 67% over their original

baseline. Revenue growth for the same time period shows an increase of 39%.

See the attached economic impact of our program for fiscal year July 1, 2010

through June 30, 2011. The program currently has 24 Mentor Protégé teams

made up of 12 second year participants and 12 first year participants. Protégés

commit to chamber membership for three years with the first two years as

protégés and year three serving as mentors and giving assistance back to the

program.

We think that other organizations can follow this model as long as the 5 basic best

practices for the program infrastructure exist. (Please see best practices section):

We think this model can be duplicated at any organization with a mission to

facilitate the growth of small business. We think the following 10 ideas can be

applied unilaterally between governmental and non-governmental mentor

protégé programs:

1. Partner with local Chamber of Commerce.

2. Size of protégé class should be limited to 10% of the mentor population.

3. Protégés and Mentors should have personality test and or reviews.

4. Protégés should be required to be in program for 3 years. Two years of

mentorship and one year of giving back to the program. We follow the

philosophy of Learn, Earn, and Return. In the third year we ask for high

producing protégés to become mentors to replenish the pool.

5. Protégés should be required to attend monthly classes to learn technical

back office items. We call our monthly classes a “street mba”. We utilize

the industry leading SMLS (Strategic Management Learning System).

6. Networking socials for protégés and mentors should be done collectively

and as separate groups.

7. Instruction on relationship building for both the mentors and protégés

should be a part of the curriculum.

8. Mentors should be required to spend at least two hours a month with

protégé

9. Partner with local media to highlight the program and do monthly profiles

on the mentor protégé teams.

10. Reporting of revenues, objectives, contracts, and economic impact is critical

to showing the ROI of the program.

Companies can and do band together through mentorship without formal

programs. This is done either through loose or non binding terms where there

is a mutual benefit based on some ROI and or specific project or client.

However we believe that a formal Mentor Protégé program allows for an

organized way to share best practices and networks between companies. It

allows for a formal pathway for firms to band together for mutual benefit

while using the endorsements of others and their resources to allow for better

due diligence. As companies band together on their own, large firms have the

control. Smaller firms typically do not have the resources to provide the same

level of due diligence. Formal mentor protégé programs allow for a standard of

interactions, ethics, respect, and learning that may not exist in totality with

direct informal b to b interactions. The best examples of b to b mentoring

outside of formal programs can be mutually beneficial. However, the successes

of these ventures are difficult to track and the best ROI from those

partnerships typically occur among family owned businesses that transfer from

family to family. ROI also is evident when companies band through “teaming

agreements” and “joint ventures”, however this is typically common when

both firms are participating in federal government, municipal, and or minority

based contracting where those arrangements are encouraged. These clusters

of b to b bands tend to be seen when procurement opportunities require such.

Outside the government and municipal world mentoring tends to be less

defined. Our philosophy is that the mentor protégé arrangement through a

CofC can operate with or without the influence of government contracting and

can also be a feeder source to this world or an exit plan for government

contractors wishing to grow their business in the commercial world.

As it relates to the government sector and in cases where large domestic and

global firms have goals to do business with small, minority, and veteran owned

businesses the bands of companies working together is more prevalent as it is a

requirement of the client. For example Volkswagen built its first plant in the

United States in Chattanooga, Tennessee. As a part of its procurement goals, they

set metrics for the percentage of their spend to go to small and minority owned

businesses. In their communications with the business community they

encouraged “teaming agreements” and “joint ventures”. As a result clusters of

automotive and other suppliers have joined forces to bid on opportunities.

Additionally Volkswagen fosters networking between “tier one” or primes with

smaller companies. Mentoring is less formally conducted with Tier One suppliers

and their subcontractors. However this mentorship is specific and narrowly

focused on the specific job at hand. These relationships are most often temporary

in nature and may not address other issues in the development of that small

business.

Based on our findings there are 5 key best practices:

1. Have a pool of Mentors who have the desire to Mentor. We follow the rule

of 10%. If the pool of Mentors is 200 members and 10% of those should be

able to be mined as Mentors. Which means you can have a class of 20

protégés.

2. The organization should have direct access to the mentors through their

organization, i.e. the Mentors are members of your organization. Third

party access of another organization’s members can be cumbersome and

most organizations are very protective of their databases. If a third party is

needed to access Mentors then we suggest partnering with a CofC.

Generally CofC are the largest business based organization in a region or

city.

3. Have a fulltime program administrator who has been an entrepreneur to

facilitate the program. This person is the link between the mentors and

protégés and drives the direction of the program, sets the proper

expectations and tracks results.

4. Location of the program is important and a proper meeting space is needed

to facilitate meetings, networking, and classroom instruction. The physical

location should be a hub that is centrally located to other resources. We

also encourage arming the mentors and protégé with the latest free or low

cost video conferencing equipment. Currently we have found that we can

video link our mentor, protégés, and other business resource partners for

about $300 per participant annually.

5. Create a formal support network of partners from other business resource

groups i.e., SCORE, SBDCs, college and universities, economic development

agencies and the like.

Mentor Protégé (TOTAL) Economic Impact IV Region

July 1, 2010 through June 30, 2011

Direct Jobs = 156

Indirect Jobs = 59

Induced Jobs = 69

TOTAL JOBS = 284

Direct Wages & Benefits = $ 6,093,347

Indirect Wages & Benefits = $ 1,942,509

Induced Wages & Benefits = $ 1,994,171

TOTAL WAGES & BENEFITS = $ 10,030,027

Direct Economic Impact = $ 21,155,244

Indirect Economic Impact = $ 6,188,747

Induced Economic Impact = $ 7,172,796

TOTAL ECONOMIC IMPACT = $ 34,516,787

Innovation Valley Region includes: Anderson, Blount, Knox, Loudon, Monroe, and

Roane Counties

Source: IMPLAN

Definitions:

Direct – changes within the specific industry being analyzed.

Indirect - changes within inter-industry purchases as they respond to the new

demands of the directly-impacted industry. (These are the support

industries/suppliers of the industry being analyzed.)

Induced – reflect changes in spending from households as income increases or

decreases due to the changes in production. (These are all of the other industries

affected by the interaction of the industry being analyzed and its suppliers –

examples include dry cleaners, restaurants, stores, etc.)

Wages & Benefits – includes all wages, health & life insurance, retirement

payments, and any other non-cash compensation paid to employees by employers.

Economic Impact – the total value of production by an industry in an annual

calendar year.

From July 1, 2010 through June 30, 2011 the Diversity Champions

taskforce grew from a defunct committee to a group of over 60

diversity professionals representing over 35 companies. The taskforce

created a definition of diversity that is applicable to all firms in East

Tennessee. The group met monthly for the past year and has

established the template for a comprehensive annual “Report on

Inclusion in East Tennessee.” This report is scheduled for production

during first quarter of 2012 and will be circulated through the Knoxville

Business Journal.