Successful Practices in Retention, Business Technical Assistance and Growth Services

Presented byJason Friedman, Principal

Mel King InstituteRaising the Standard for Business Technical

Assistance: An Advanced Training Program for Technical Assistance Providers

MED Program Goals?

Business Development

EmploymentCreation

Poverty Alleviation

Community Economic

Development

Empowerment

Women Entrepreneurs of Baltimore, Inc.

“To build strong women-owned businesses that lifts up families and communities.”

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.

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.

Mission: Build Strong Businesses

• With our clients, the stakes are extremely high: self-employment may be the only option.

• They need to develop viable and sustainable businesses.

• Everything we do must be focused around that objective.

• Do you do that? Can you do that?

• Could you do it better?

Class Dismissed or Loan Closing: What’s Next?

• The class is over – time to celebrate!

• Successful loan closing

• What’s next?

• Post-training technical assistance!!

• HUH? YAWN!

Technical Assistance: The Black Hole of

Microenterprise Development

The Black Hole of Microenterprise Development

• 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?

Breakout Exercise

• As Business TA providers, what are your explicit goals? What is expected from your help?

• What is your organization's value proposition for technical assistance? – A value proposition is a clear statement of the

tangible results a customer gets from using your products or services. The more specific your value proposition is, the better.

• How do you communicate this to clients? When?

A Framework for Supporting Business Growth

How Can We Support Growth?

• Entrepreneurs require four types of resources:• Business concept• Physical resources• Skills and competencies• Markets

• At any time, entrepreneurs face barriers to acquiring them.

• Entrepreneurs must learn new skills to overcome these barriers.

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.

This Requires an Intentional Shift in Our Thinking about Cultivating and Supporting Entrepreneurs

MDO Leaders are Making the Intentional Shift and Asking...

• “What does it mean to support entrepreneurs through the start-up process and levels of growth.”

• “What programs, services, capacities do I need to pull that off?

Implications – Focus on Client Retention!

• Market Focus: Shift resources from start-up training to services for graduates and existing businesses. Focus 4/5 of your time and effort getting to know and serve the 1/5 of your clients that come back and who ultimately will give you the outcomes you need.

• Resources: will need to involve other resources, providers, business professionals.

• Case for Funding: Business Retention

Innovative Program Models to Build Strong Businesses

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 10 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:

• 13 hrs. of consulting time worth no more than $1,000 with a private consultant not to exceed $75/hr.; approved list of consultants.

• $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.

Rising Tide Capital: 100 Day Challenge

Post-training powerful accountability system in to achieve business goals.

Orientation and then group sessions every other week, with individual coaching sessions in the between-weeks.

Peer-coaching element in which people are paired with another member of the class and learn how to coach and be coached.

The culminating session involves a potluck dinner and individual presentations of people's businesses and what they had accomplished during the 100 day challenge.

100 Day Challenge

Start of the challenge each person has to identify a large life intention--the overall goal they were pursuing as entrepreneurs.

Then identify one major goal that they need to accomplish in order to move forward. Each week they identify 10 actions (“promises”) they will take towards their project and have to report each week on the status/results of their stated weekly actions.

Group projects outside of class--learn how to work in teams, plan out how to accomplish a common goal, and how to be accountable to others. Focus on leadership skills (time mgmt; project planning; public speaking; team work; accountability).

Using Technology to Support Entrepreneurs

Using the Web to Scale Mentoring Services for Microentrepreneurs

www.MicroMentor.org

What is MicroMentor?

• Web-based service connecting entrepreneurs with skilled business volunteers

• Increases access to industry-specific and technical expertise via mentoring

• Mentoring and volunteer engagement platform for microenterprise development organizations

How MicroMentor Helps Organizations

• Expand client services or scale existing mentoring services

• Efficiently engage skilled and corporate volunteers (cultivate long-term supporters)

• MicroMentor provides program training, staff support, and client data

How It Works: Barbara + BillBarbara, owner of a transcription services business,

enrolled and listed her mentoring request

How It Works: Barbara + BillBill, a business consultant, offered his help. Barbara

reviewed his profile and accepted. Contact info was exchanged and the match began.

How It Works: Barbara + Bill

• Communicated via email and phone for three months

• Created a marketing and business development plan

• Barbara now employs over 50 contractor typists and 5 staff

Results

Entrepreneurs:– 2,030 enrolled since 2006– 60% women | 43% minority | 50% low-income– All 50 states | Large #s in CA, OR, WA, NY,

TX Mentors:

– 1,560 enrolled since 2006– 13 years of management | 7 years of

ownership

Results

ResultsInitial Outcomes:

– 75% increase in median annual business revenues ($15,390)

– 87% business survival rate

– 52% business start rate

Your Organization on MicroMentorGroup pages to organize your participants

Your Organization on MicroMentorAccess reports and customize your messaging

Interested?

Samantha Mafchir, Affiliate Program Managersamantha@micromentor.org

Jeff Jones, Program Directorjeff@micromentor.org

www.micromentor.org | 503.465.4181

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

Membership Programs

Building a Community of Entrepreneurs

Why Membership Programs?

• Consumers are used to “bundling” services – cell phone plans, etc.

• Can enhance customer loyalty

• Provide a special, premium value, service

• Create a discount or volume purchase vehicle

• Generate unrestricted program revenue

Core Organizational Services

•Training •Foundations Business Planning Program

•Advanced Trainings

•Seminars

• Coaching•Growth through Objectives (GO) Coaching Program

•EDGE Coaching Program

• Small Business Loans

• Membership Services

Membership: Nuts and Bolts

• 3 hours coaching/year

• 3 hours/year professional referral services

• Discounts on trainings

• Access to loans

• Access to coaching programs (GO and EDGE)

• Membership directory

• Networking events

• Member center

Member Center

• Computer / printer / scanner access

• Digital camera

• Business library

• Projector / laptops

• Copy machine

• Meeting rooms

Membership: An Entry Way to Services

• Access to services

1) Foundations or Advanced Training

2) Membership

• Membership is required to access services beyond Foundations or an Advanced Training.

Costs

• Post Foundations Certification - $80

• Without Foundations – 2 options

– $12/month via ACH (~ 40% of members)

– $120 for full year

Objectives of Membership Program

• Started in late 1990s in response to client needs…

• Technology and space are expensive

• Access to other resources – empowering entrepreneurs through building community and networking

• …And as an income generation and client retention strategy.

Is it meeting its objectives?

Is Membership Meeting Client Needs?

Is Membership Satisfying Income Generation Needs?

Membership Program as a Client Retention Strategy

Membership Program as a Client Retention Strategy

Membership Program as a Client Retention Strategy

Contributing Factors to Membership Growth and Client Retention

• Re-branding in 2007 and new marketing efforts

• Increased awareness of professional referral services value

• Increase in press coverage since 2007

• Member spotlight

• Expanded loan activity (up to $50k in 2008)

• GO and EDGE coaching programs in 2006/2008

Lessons Learned

• Historical growth indicates a strong need for the program and clients’ willingness to pay

• Viable income generation strategy

• Clients from rural and sparsely populated areas are less likely to become members; key factor in successful membership program may be population of market area.

SuccessLink

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

Client Base

• Older than other clients, have lower incomes and lower rates of economic self-sufficiency and are more dependent on public assistance.

• More likely to have a disability, have less formal education and have more children on average.

• These clients also showed high entrepreneurial potential, as demonstrated by their high rates of business ownership (in comparison to WI client average) and relatively high earnings from self-employment before training.

Outcomes (random survey of 144 clients)

• Economic self-sufficiency– The self-sufficiency rate for these clients increases from 13% before training to 44%.

• Business growth – Most clients own a business, and they increase their average annual profits from $103 before training to $8,926.

• Build assets – Clients grow their average business equity nearly fifteenfold, from $425 before training to $6,703, and triple their total average non-business household income, from $9,118 before training to over $30,000.

• MarketLink provides entrepreneurs with access to sophisticated market research services that help them find and reach their desired customer base, tap into new markets and make informed business decisions by learning about trends within their respective industries.

• Industry & Trend Analyzer: Discover local and national trends impacting your business, competitive data and analysis of your industry

• Business Plan Development: Provides data on market size, distribution channels and opportunity

• Business Access: Find new customers from a database of 14 million US Businesses

• Consumer Access: Find new customers from a database of 210 million US consumers

Oregon Microenterprise Network: MarketLink (Access to Markets)

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

• Hired staff person with background

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: 503-546-9913Email: michael@oregon-microbiz.orgWeb: www.oregon-microbiz.org

Do You Promote Credit As an Asset?

Build Credit. Build Assets.Building Credit for Microentrepreneurs in Today's Economy

The mission of CBA is to help low and moderate income individuals currently served by non-traditional financial and asset building institutions build their credit and access conventional financing

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Financial System: Cut Two Ways

• 40% of US population have no score or a low credit score

– 15 percent of the U.S. population - between 35-50 million people – have no credit files or thin files and are “unscoreable.”

– 25 percent of the population have poor scores (lower than 650 FICO)

Low credit scores = “underbanked”

• 40% of US population are using alternative financial services (CFSI)

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Catch-22

Good Credit Scores Provide Access

BUT

Individuals, entrepreneurs and communities with low or poor traditional credit have few opportunities

to build credit

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Why Credit?

• Credit as a Business Asset

• Credit impacts entrepreneur access to:

– rental space/real estate

– auto purchases and car insurance

– hiring employees

– checking, savings, and investment accounts

– utilities and phones

Credit is an Asset

“Credit Score is an Asset”

People with a good credit rating will save approximately $250,000 in interest throughout their working lives

A homeowner will save more than $250,000 on a 30-year fixed $300,000 mortgage.

A car buyer will save up to $50 a month on a 36-month car loan.

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What is Credit Building?

X Credit Repair - help individuals remove information on the credit report they know to be true

? Credit Counseling - created to offer “debt management plans” as bankruptcy alternative

! Credit Education - general educational information around credit through websites, workshops, etc.

! Credit Coaching – goal-oriented relationship to offer strategies to change behavior so clients build and maintain credit and assets

! Credit Building - asset building products and services to help people create or improve their credit

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What’s in your score

35% -- payment histories on your credit accounts, with recent history weighted a bit more heavily than the distant past.

30% -- amount of debt you have outstanding with all creditors.

15% -- how long you’ve been a credit user (a longer history is better if you made timely payments).

10% -- very recent history, based on your efforts to obtain loans or credit lines in the past few months.

10% -- mix of credit you hold, including installment loans (like car loans), leases, mortgages, credit cards.

Traditional F

ICO

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Credit Builder 5-Step©

Step 1 : Rethink: Credit as an Asset Impart importance of good credit

Step 2 : Know the ScorePull a credit report – Financial Resume -- at every client intake

Step 3 : Get Good Stuff GoingBuild good behaviors and credit (don’t dwell first on “repairing” bad); Develop a credit builder loan productFocus on financial institution relationships and on-time payments

Step 4: Create a Credit Action PlanIntegrate credit into income, saving, asset and budget goal planning

Step 5: Delve Deep out of Debt Save first and then pay off debt

JP Credit Builder Loan(plus secured credit card)

Loan Amount: $150.00Interest Rate: Flat $30.00

Term: 12 monthsMonthly Payment: $15.00

• Ms. Clemons had $4,500 in unpaid collections and a $1,500 civil judgment. In July 2006, she had no good lines of credit. Her credit score was 457.

• In September 2006, she opened a Credit Builder Loan and a US Bank secured credit card. She made six on-time payments to each. In February 2007, she still had $6,000 in unpaid collections and civil judgment and her credit score is 557 - a 100 point increase.

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Accessing Credit Reports and Scores

Client Accesswww.annualcreditreport.com; www.myfico.com

Non-profit Access

CBA new partnership with TransUnion! ALL NONPROFITS can pull soft inquiry reports

Also:• Lenders can pull Hard Inquiry reports for underwriting• HUD Housing and Credit Counseling certified can pull soft inquiry

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Be Part of CBA!

CBA Reporter. Community lenders can provide borrower data through our unique partnerships with major credit bureaus.

CBA Access. Nonprofits organizations can pull credit reports for lending, credit education, and measuring outcome.

CBA Member.

– CBA Toolkit is an online resource to collect and share tools and best practices for asset-based credit building strategies.

– Webinars and Workshops as webinars and on-site trainings.

– Credit Impact Measure Tool credit reports as cost-effective, objective, longitudinal measure of economic self-sufficiency.

Building Strong Partnerships

Question?

Do you involve the business community in your operations and client services at every stage of the program?

Questions

• How many hours per week do you talk with business owners, other ED organizations, banks?

• Are you involved in your local chamber?• How many business owners/professionals

are in your office each week? • What % of your services involve outside

professionals?• What % of your time is spent connecting

clients to markets, suppliers?

Connections

• Your value to your clients is in how you can connect them to business opportunities.

• How well connected are you?

Business Connector Program: Women’s Initiative, San Francisco

• Mentors graduates in "speed-mentoring" sessions.

• A Connector requires a one hour time commitment usually involving three short 20-minute chats Share business expertise with new entrepreneurs at quarterly Connect events.

• Offer business seminars in your area of expertise — HR, record keeping, marketing, sales or cash management.

Action Plan for Building Strong Businesses• Update your strategic plan.

• Assess staff competencies.

• Talk to key stakeholders, partners and funders.

• Hold client focus groups.

• Identify potential connectors – mentors, resource providers.

• Be clear about the end goal and how you will measure success.