Transcript Small-Town Entrepreneurship: Best Practices & Practical Advice

Rural Entrepreneurship:
Best Practices & Practical
Advice
Chuck Palmer
Iowans for Social & Economic Development
Des Moines, IA
Iowans For Social & Economic Development:
Mission, Vision & History
Mission: To create opportunities for low and
moderate income Iowans to increase income and
achieve financial stability.
Vision: To see vibrant Iowa communities where all
families and individuals have the opportunity to
find financial stability and success.
ISED’s Work in Microenterprise
Development
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ISED Provides Comprehensive Small Business Education Courses & Technical
Assistance
 Business Plan Creation
 Financial Plan Analysis
 Market Research
 Viability Assessment
 Start-up Support
 Access to microenterprise resources
 Access to other asset building & supportive services
 Through our classes and supportive services:
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2,172 individuals have been assisted to start, expand, or strengthen their
businesses
5,995 clients have completed our microenterprise training
Over 10,000 of our clients have been involved in microenterprise program
classes
Over $11.3 million in business capital has been accessed
A Road Map to Rural Entrepreneurism
1. Microenterprise & how can it benefit your community
2. Characteristics of a Successful Entrepreneurial Community
3. Components of a Successful Microenterprise Development
Program
4. The Microenterprise Growth Continuum
5. Feasibility Studies & Business Plan Building
6. Challenges & Gaps
7. Overcoming Challenges & Gaps
8. Success in Practice: 9 Successful Community Intervention
Strategies
9. Now What: Building Your Own Successful Community
Strategy
What is Microenterprise?
 A small business that:
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Has 5 or fewer employees
Requires seed capital less than $35,000
 Often utilized as an economic development
strategy and has gained momentum as a
poverty alleviation strategy as well
What could microenterprise
development do for my community?
 A 2004 Aspen Institute study of 17 micro-
enterprise development organizations found
that their 560 microenterprises:
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Generated $43.8 million in revenues
Provided $6.8 million in income for owners
and also
Employed 648 full-time workers
Characteristics of a Successful
Entrepreneurial Community
 Demonstrates leadership and promotes successful role
models.
 Provides training and technical assistance at both the youth
and adult education levels… focus on financial literacy and
asset development.
 Develops community networks of support, mentoring, and
financial assistance… focus on improving access to a
broader marketplace.
 Fosters a culture that recognizes and values
entrepreneurship.
 Provides access to start-up capital.
 Supports & engages all dimensions of diversity
Components of a Successful
Microenterprise Development Program
 Training and Technical Assistance
 Credit and Access to Credit
 Access to Markets
 Economic Literacy and Asset
Development
Microenterprise Growth Continuum:
Women Economic Ventures (WEV) Program, CA
Feasibility: the Fundamental Five
How ready is your community?
 1. Market
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Feasibility
Who is the potential customer?
What is the customer’s profile (age, income, buying habits)?
What is the customer’s industry status?
What market volume will you need?
What will the market reaction be to your service or product?
How will you package and distribute your product(s) or
service(s)?
 2. Organizational
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Feasibility
What skills will the owner need?
How much time will the business demand?
What types of personnel will you need (quantity & skills needed)?
Are the personnel types that you are seeking readily available in
your community?
How will the business responsibilities be distributed across
personnel?
Feasibility: the Fundamental Five
How ready is your community?
 3. Technical
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Feasibility
Are there business locations that are available, cost effective and have
the right zoning/codes?
How will production of the product work?
Who will be the suppliers?
What is your business volume capability?
Do you have the availability of leasing commercial space?
What are the regulations that are associated with your product?
What insurance will you need & what are the costs of that insurance?
 4. Competitive
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Feasibility
What or who is your existing competition?
What is your competitive position?
What are the potential reactions of your competitors?
How great is the potential for new competition?
How can you differentiate yourself from your competition?
Feasibility continued…
 5. Financial Feasibility
 How much capital is needed (fixed costs, start-up costs & working
capital for 1-3 months)?
 How much capital does the owner have available?
 How much capital is available from private investors?
 How much capital remains that needs to be borrowed?
 What is the income and profit potential of the business?
 Basic Cash Flow
 Owner’s living Costs
 Loan Repayment
 Operating Costs
 Break-Even Analysis
Components of a Successful
Business Plan
Can your community support entrepreneurs in
understanding and developing these business components?
 Introduction
 Give a detailed description of the business and its goals
 Discuss ownership of the business and its legal structure
 List the skills and experience you bring to the business
 Discuss the advantages you and your business have over your
competitors
 Marketing
 Discuss the products and services that your company will offer
 Identify customer demand for your products and services
 Identify your market, it’s size and locations
 Explain how your products and services will be advertised and marketed
 Explain your pricing strategy
Components of a Successful
Business Plan…continued
 Financial Management
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Explain your source and the amount of initial capital
Develop a monthly operating budget for the first year
Develop an expected return on investment and monthly cash flow for the first year
Provide projected income statements, balance sheets for a two your period
Discuss your break-even point
Explain your personal balance sheet and method of compensation
Discuss who will maintain your accounting records and how they will be kept
Provide “what if” statements addressing alternative approaches to problems that may
develop
 Operations
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Explain how the business will be managed day-to-day
Discuss hiring, personnel procedures
Discuss insurance, lease, or rent agreements, and issues pertinent to your business
Account for the equipment necessary to produce goods or services
Account for production and delivery of products and services
Challenges Faced by Many Rural
Communities
 Geographically Isolated
 Changing Demographics
 Aging…people and places
 High Unemployment
 Low Wage Jobs
 Changing Economic Base
 Seasonal Employment
Key Entrepreneurial System Gaps
to Overcome
 Capital Gap
 Information and Knowledge Gaps
 Institutional Gaps for Training and Technical
Assistance
 Delivery and Coordination Gaps
 Cultural Gaps
Strategies to Overcome
Challenges & Gaps
 Engage youth and retirees
 Foster competitive creativity
 Utilize technology to expand capacity and broaden the
market
 Continue to build capacity in the community through
workshops, events and networking
 Seek out creative financing options (cooperative funding
models or charitable asset pools)
 Foster strategies that will engage minority populations in
the community and ensure an equal share of potential
prosperity to all community members
The Nebraska Center for Leadership
Development: A holistic approach
 Hometown Competitiveness is a project of the Heartland Center for
Leadership Development, the Nebraska Community Foundation, and the
Center for Rural Entrepreneurship. Their comprehensive approach
encourages communities to take action in four strategic areas.
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Leadership development: to strengthen the capacity of residents
to improve and sustain their community.
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Youth development: to support and enhance the idea of adults and
youth working together to create opportunities for youth to stay in
or return to the community.
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Developing charitable assets: to strengthen and sustain charitable
giving at the local level in order to build an endowment that will
sustain local civic institutions and create a new source of opportunity
capital for community economic development efforts.
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Entrepreneurial development: to identify and assess
entrepreneurial talent in the community and to devise an economic
development strategy to increase entrepreneurial business
development
MyEntreNet: Capacity building
through online strategies
In 2001, the University of Northern Iowa made a pilot
investment in rural economic vitality with the
development of an entrepreneurial development system.
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Goal: develop a sustainable model that connects
geographically isolated entrepreneurs to services and
people to become competitive in a global economy
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Provides a technological bridge & community capacity
building for entrepreneurs both in person and online.
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Based upon four key principles: Community Empowerment,
Business Assistance, Capitalization and Networking.
AUSA: Fostering Hispanic
entrepreneurship in rural communities
ACCION USA (AUSA) Hispanic Microloan Project
 With the support of the Northwest Area Foundation, AUSA is
helping diversify and strengthen the economies of rural
communities by providing credit and other financial services to
rapidly-growing rural Latino communities. AUSA’s service strategy
has three components:
1. Loans: AUSA will disburse microloans directly to self-employed residents of
these communities, using its Internet and telephone loan application
systems. Small business loans of $500 to $25,000 will be provided in
addition to $500 Credit Builder loans for low-to-moderate income
individuals who do not have a credit history.
2. Outreach and Marketing: AUSA will conduct grassroots outreach and
marketing activities to inform community residents of its services.
3. Capacity Building: AUSA will conduct a series of training activities with
local groups and organizations to enable them to help individuals access
their services and to continue with outreach activities to ensure continuity
beyond the timeline of the project.
Shop the Frontier
Non-profit rural marketplace on the Internet
 Shop the Frontier is a project of Stone
Soup, a nonprofit organization based in
Washington and serving the Pacific
Northwest.
 Mission: to create sustainable rural
economies by teaching the skills
necessary to thrive in the 21st century.
 Shop the Frontier is a project of Stone Soup, a nonprofit
organization based in Washington and serving the Pacific
Northwest.
 Their mission is to create sustainable rural economies by
teaching the skills necessary to thrive in the 21st century.
 http://www.shopthefrontier.com/VFstore/
5 More Examples of Successful Rural
Community Intervention Strategies
 Access e-Commerce Workshops
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Conducts workshops in seven communities to enhance business skills and
knowledge on the use of internet marketing and e-commerce to augment
business profitability.
 Crawford County Entrepreneur Development Network
 Identifies local entrepreneurs, identify local entrepreneurial needs and
organizes local training and networking meetings to assist entrepreneurs.
 Mount Pleasant Area Business Plan Competition
 Created an annual, locally sponsored business plan competition. Winners have
included an injection molding company, a bed and breakfast venture involving
a historical venue, and an upscale kennel and pet care business.
 Carroll County Entrepreneur Coaching and Mentoring Network
 Organizes local coaching and mentoring network to provide for training,
sharing ideas for solving problems related to entrepreneurship.
 Micro Enterprise Entrepreneur Workshops
 Conducts a series of training workshop for micro-enterprise entrepreneurs in
Red Oak, Villisca, and Mount Ayr, and one additional community at $2,500 per
community.
Now What?
1. Build Community Leadership
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Build Leadership
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Create a planning group made up of:
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A group from entrepreneurial support system
 Key Stakeholders
 People able to directly provide supportive
services
A group of potential entrepreneurs
Remember to include individuals that represent
all of the diverse populations in the community
2. Define Your Vision
 What is your goal or entrepreneurial vision of the
community?
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How do you envision the community to look in
five years?
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Make it realistic
Make it community-based
Make it holistic
3. Map Your Assets
 Asset Mapping
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Does your community have the continuum components?
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Do a “community feasibility study”
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What systems or services need to be in place to create an
entrepreneurial community?
Build a business plan
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Think of your community as a business
Can you make a community business plan containing all of the
necessary elements?
 Resource Availability
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Local
State
National
4. Do a SWOT
 Based on asset mapping, assess the following for
your community:
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Strengths
Weaknesses
Opportunities
Threats
Strategize to Close Gaps
& Overcome Challenges
 Use your Community Leadership Group
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Create a list of strategies to:
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Capitalize on Strengths
Overcome Weaknesses
Identify Opportunities and Plan to Utilize Them
Examine & Make a Plan to Minimize Threats
 Bundle and Integrate Asset Development Strategies
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Not individual programs, but a system approach
Earn It, Keep It, Grow It
“Just Start”
 Many rural communities have been successful in
this endeavor
 There are many resources available that can
support your efforts
 Be creative and build on your assets
 YOU can make it happen!
Chuck Palmer
President
ISED Ventures
[email protected]
515-283-0940