Archive for the ‘economic development’ Category

In the torrent of media about entrepreneurship, I’ve found a few shows that I really like. I like them enough to listen ongoing and to even buy a season or two!  Most of the podcasts are 45 minutes to an hour, I like to listen while doing chores at home.

First up: The Profit – a reality TV show about Marcus Lemonis, a successful CEO who now invests in small businesses and gets hands on to resolve issues.  He likes to focus on People, Process and Product.  In some cases I wonder why he bothered to buy into an existing business because he so completely transforms it, but I guess starting with a customer base is worth something.   I notice he tends to invest 200-700K in these businesses to make a difference. Re-branding is a big part of it; identifying and empowering high-performing employees is a theme; it also helps that he is building a conglomerate and can give the businesses access to prove-themselves-projects & media exposure. But it doesn’t always work, he’s done two different lighting companies, the first one didn’t seem to work out, I need to watch that episode; I saw the 2nd company which did (Hangout Lighting).  The current (5th) season is available via Hulu and you could watch it with a 1 month trial subscription. I have found prior seasons on Amazon Prime.

After watching a few episodes and thinking about my own experience, it seemed to me that the number of businesses he was investing in would quickly become unmanagable.  He figured that out already and did a show called The Partner to identify a business partner to help.  I haven’t watched that yet.

At a recent alumni function a fellow BGI/Pinchot/Presidio grad turned me on to a food financing newsletter and podcast out of Wisconsin called Edible Alpha – how to successfully grow food/beverage/agriculture companies with outside capital.  I’ve found the newsletter insightful and I enjoy the podcasts where entrepreneurs talk about their journies. The two I have listened to are small companies (<1M revenue).

I am a continuing fan of Open Book Management, which doesn’t have enough adherents yet in the Northwest that I’ve gotten to experience it directly.  Zingerman’s Deli, a restaurant, catering and more operation in Ann Arbor, Michigan, is a leading practitioner.  They have their own training wing: ZingTrain. I spoke to trainer there this week about the possibility of bringing their two day OBM training to Seattle (if you’re interested, contact me or comment on this page!). She pointed out that a quick exposure can be had on their website where they offer all kinds of free recorded webinars.   Elnian herself recorded the webinar on All About Open Book Management, and there’s a rich trove of other recordings about managing culture and performance.

Finally, let’s face it, what’s not to love about Planet Money?  Short, fun, fascinating.

I’ll add a postscript bonus – a  mindfulness podcast. I have come to like Dan Harris’s 10% Happier. He’s a media professional so he does a great job interviewing his guests, he seems to know his meditation spectrum well and he has great guests, from Robert Thurman who goes really deep on the roots of Vipassana to Catherine Price who talks about redefining your relationship with your phone.

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I’ve had the privilege of sitting in on a healthcare innovation class put together by the fabulous Emer Dooley for the University of Washington. The learnings from that class are a whole blog by itself. In talking about healthcare, a quick reference to its significance as an expense is that it’s the 2nd largest single expanse a company has, after payroll. The unpredictability & volatility of it as an expense for self-insured companies is a significant stress point for companies not used to being in the insurance business (The AOL “distressed baby” mishap being an extreme example) but the overall expense is so high that companies as small as 3,000 employees are going self-insured. Net, that means they keep the premiums, they take the risk on the expenses, and they pay an insurance company a small % to handle the administration & billing.

Now to that “single” biggest expense of payroll –if you look at a public financial statement it’s usually there as a lump sum. This is a great example of how financial statements are written for and by accountants. Payroll for small companies is often outsourced to a third party to make sure all the appropriate tax withholdings are done and passed on to the appropriate authorities at the right time. Larger companies may bring that back in as a department. For the company itself, it’s a big expense that happens on a single day, 2-3 times a month. Reconciliation of it is complex because employees can have all kinds of individual variations with deductions, vacations or leaves, new and departing employees. For the accounting department, payroll is a BIG deal. For managing cashflow, payroll is a BIG deal. It needs to be attended to as a thing.

But what a skilled executive/manager should know, is that payroll is not actually a thing in itself. If you’re looking at your expenses, it’s not helpful to look at “payroll”. It represents an agglomeration of many functions of a company – product creation, product validation, sales, distribution, marketing, customer relations. When you’re thinking about how your resources are currently allocated and might be better allocated, you want to think about those categories, and the people/energy going into them, and the effectiveness of those against expectations for their category. If you’re looking to invest more or make cuts, good management needs to focus on those areas of company function, not just on “payroll”.

This is reinforced for me as I listen to Zeynep Ton’s The Good Jobs Strategy. She talks about her work with retail chains facing falling sales and deciding to cut payroll, without doing the analysis to discover that the falling sales were due to poor customer service. Instead of improving profitability, they got into a vicious circle that resulted in store closings. She worked with Borders for 5 years and was able to show that in many cases, increasing payroll actually increased sales. The key there is, again, that payroll is not a thing – it’s a construct made for the accounting department to manage cashflow. What they were really tinkering with was customer service.

If you run one of the many small (and not so small) businesses managing on Quickbooks, congratulations to you if you’ve developed a habit of looking at your P&L on a monthly basis and comparing it to budget and re-projecting your cashflow. Most likely, you have a line item that’s “payroll”, or “wages”. You can start by at least breaking it into sub-categories: marketing, sales, production (hopefully you are already breaking out your direct labor so you can correctly calculate fixed costs vs variable costs), administration, distribution. Things like IT and professional services- if outsourced- will show up somewhere else. Then go ahead and let all the payroll taxes sit as a lump sum because they’re not really discretionary anyway. The key here is to look at your relative investment in the various functions of your business.

If you really want to look at your overall expenses that way, go ahead and move those payroll categories into the various sections of your P&L. Keep them as distinct line items so you can add them back together when you or your bookkeeper are doing bank reconciliation against that transfer to the payroll company. You can leave payroll taxes as a line item under administration or general – they’re less discretionary, they just vary with your payroll. For finer grain detail on the total cost of in-house vs outsourcing you’ll need to consider the payroll taxes. Then a quick glance down your P&L will help you see where the resources of your company go at a high level. Are you investing enough in marketing? Whether it’s outsourced or in-house, whether it’s labor or google ads, how much is it as a % of sales? Are you spending a significant amount on production or service? If that’s the business you’re in, I hope so. If it’s not translating into sales, you can start asking why.

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I recently did a quick consultation with a friend of a friend who is an independent personal service provider. She has a reasonable hourly rate, though it’s not clear every client pays that. She’s independent because she likes the schedule flexibility, but it does mean her schedule is often not full. Looking at past taxes, her annual gross income has been 50-55K annually. It’s below the the median wage of 64K, but well above the living wage of $26,600. Or is it?

The two common challenges for small providers are 1) bookkeeping and 2) marketing. She knew her business worked on a cashflow basis but was talking to me because some months cash was feeling a little tight. After pulling some numbers together, it became apparent that her monthly expenses are almost $2000/month with rent, internet, phone, website, licensing, continuing ed, insurance, credit card processing and taxes. Lots of those are expenses that don’t come out every month, but add up. They’re also largely fixed expenses. So really, that gets her down to just above living wage as a take home.

We talked about a few marketing strategies – how she might get more referrals or remind existing customers about her service and maybe sprucing up her waiting lobby (though that’s a capital investment). It turns out it’s tricky to relocate or sublet her specific space so it’s difficult to chip away at those fixed costs. One solution she employs is some of her clients pay in cash. That contributes to difficulty in understanding her real profitability. I notice in my own efforts to hire a housekeeper that the first two have asked that I pay them in cash. Is this one of the signs the economy is not working for everyone? That those who can, go informal? Looking at risks – did I mention health insurance? She has to pay her own health insurance and that is a big chunk of those monthly expenses. It’s a significant risk to a small payer and there’s little help for her at a living wage.

Thinking about the risks of healthcare got me thinking about the risk of a major health disruption. Medical issues are the number one cause of bankruptcy in the US. It’s also another way the relatively rich stay richer – property protections in bankruptcy. If you are a property owner, you can protect some of your property in bankruptcy, and thus some of your assets. If you are a renter, and you don’t own tangible property, you’ve got nothing that you can protect, so it strikes me it’s much more likely you’ll be forced into homelessness. In fact, when I google for data to support this, what I learn is that a bankruptcy on your record is one of the things that can come up in a tenant screening and affect your ability to get a lease!

Net – there is no net, not of the safety kind. My provider just has to have faith in the continuity of her business (her track record to date is reassuring). A little effort in presentation or marketing might literally pay off. We also need to hope Obamacare and eventually medicare stay there for her, and that she doesn’t have a major health crisis that impacts her ability to work.

My takeaway for individual service providers is that it’s important to break the habit of letting personal & business expenses blur together – a habit that the tax reporting on Sole Proprietorships supports. You need to separate your business from your personal expenses, and track true monthly costs. You need to add up all those periodic one-time costs and figure out a monthly amount so you know your bottom line and not get lulled into complacency by your top line.

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I recently got to work with a small manufacturer who had a multi-week work-in-progress period.  This small business was using quickbooks but growing quickly and so often managing more by the level of cash in the bank account than by budget.  While I was working with them, the business got the hang of looking at their COGS and their variable costs vs fixed costs and more of an accrual style of reporting.  They also shifted to more of a product distribution model which meant longer receivable delays and more planning. I realized that with that supposed “improvement” of business maturity there was a possible loss: that of deliberately funding the increase of inventory to support sales growth.

When operating on more of a cash basis, this business had to use current sales to cover the cost of future growth, because they had to buy inventory this month, and do labor this month, for product that would not be ready until next month (or later). They had started out with a direct-to-consumer model and so sales were entirely cash in the beginning.  Since anticipated future sales were higher, they had to figure out how to create that product with the cash they had on hand, because inventory providers were unwilling to provide credit for such a small startup.  As they grew as a business and we focused on looking at accrual accounting, it becomes apparent why separately tracking cashflow is so important – because in an accrual presentation, the cash needed to fund the higher investment for higher future sales becomes invisible, each month looks like it can cover itself.

I once had an angel fund investment go south and what we heard back was that somehow in the transition from cash to accrual accounting they had come up a significant amount of money short (maybe 1/3 of the round they had just raised).  A funder stepped in a provided it, but at sufficiently punitive terms that our investment became pretty insignificant. The CEO and CFO were replaced, of course, but I had always wondered how that could possibly happen.  Now it makes sense to me, that if they had done their financial modeling on an accrual basis and not attended to cashflow, they could have raised a bunch of money for growth and missed how much inventory they’d have to build to support that growth and how far ahead of sales they’d need the cash.  It’s also possible that they underestimated how long their cash-conversion-cycle would be:  that route from dollar invested in inputs, created into goods, shipped to distributors, sold to customer, and then easily 90 days from shipped-to-distributor until finally returned-to-company.

Another angel I know invested in a homey wood-toy company who got caught by that: the homey wood toys were manufactured in China and required a 6 week boat ride to get to US distribution.  Growing sales required also growing an even bigger cycle of toys in the manufacturing/distribution pipeline.

Net: although accrual style accounting is standard for a mature company, you lose important information if you don’t still also do a cash accounting.

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It’s a common frustration for small business owners that banks seem only willing to finance companies that don’t need it. It’s pretty standard that to get a bank loan a business has to have multiple consecutive quarters of profitability. That seemed pretty conservative to me, but after a couple years of working with bootstrap small businesses I’m beginning to see why that might be necessary protection.
Bootstrapped startup and young businesses are wonderfully creative in their ability to make-do. As a business grows and generates more resources, it doesn’t become profitable right away. Those early years of business growth end up steadily funding capacity building. As a business has more resources, those resources go not only into growth through marketing, or asset building with equipment and facilities, but professionalization where previously there’s been make-do.
Obvious and common sources of “hidden funding” are underpayment or non-payment of founders or early staff. Understaffing and working folks long but unsustainable hours is common. Family members might work in the business for free. When building financial models, staffing is one category where educated guesses can be made about what it should be to support a target level of business, and so this one is less hidden, but still difficult to assess.
Making do with word-of-mouth advertising can work when a business is small, but to grow into a fundable company it will need to move beyond personal social networks and be able to develop a clientele based on its marketing & sales reach. That costs more money and changes margins on sales. Upgrades of equipment and facilities are likely in search of more efficient process, or lower risk.
Professionalization where there is currently make-do is a more subtle version that requires more attention. Bookkeeping needs to be done by a bookkeeper, not Aunt Jane. Software and technology needs to be legally purchased with regular investments for backups, replacements and upgrades. Office furniture and facilities, if cobbled together from craigslist, is a very likely expenditure as a company becomes able to afford it. Rent may be subsidized by a supportive launching business or relative.
How much growing funds are dedicated to upgrades and improvements before they’re ready to be peeled off to fund additional financing is going to vary a little bit from company to company. Does this CEO feel pinched by their 2nd hand desk or do they take pride in their own thriftiness? Is their affordable tech support person a local gem or are they having to wait for more profitability to afford better service? It does seem impossible as an outsider to assess what remains as not-yet-funded internal capacity in any given company. Instead, insisting that a company generate cashflow for a sustained period is a very tangible measure of its ability, and that CEO’s willingness, to operate at a given internal capacity level.

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I’ve been deep in a small local biz (revenues < 500K annually) and it has given me a good view on some specifics of why small business is so difficult. I’ll put high on the list the challenge of not being able to afford full-time people. Instead, small business is a cobbling-together of part-time and volunteer labor. Volunteer labor is particularly important, I have yet to encounter a small business or startup that does not in some way utilize it: the founder working for no or low pay for starters! Usually a family member or good friend will pitch in, and frequently dedicated customers as well. I have yet to see any studies on this, and I was saddened to see KIRO try to make a fuss over the use of volunteer labor in a local NW business.  That business was able to go back and pay everyone minimum wage, but most businesses would not be able to. It’s part of what makes a local business connected to and accountable to the community.

The part-time labor is also a challenge. Coordinating tasks and turning things around get more complicated when the designer only works on Mondays and the Project Manager for a particular project only works on Tuesdays. There’s pretty much a minimum one-week turnaround to get anything done because it takes that long for all the relevant staff members to cycle through! Need to contact a small business? Try to have a little patience when they’re not online 24/7, and realize they probably don’t have all your info and transaction history in a database at their fingertips. We’ve been trained to expect that by larger companies.

Both an upside and a downside is that jobs really are about individuals and not pure roles. In this manufacturing business, labeling is not a bottleneck because of Josh, he’s a champ. However nobody else can label as fast as he can, so should we budget for a labeling machine or should we budget for a food processor? Credit is very personal at this level as well – a startup doesn’t have the history or credit for formal bank lending. Credit is the personal credit of the founder – in a formalized way through personal guarantees or personal assets, and in an informal way by getting favors from other vendors based on personal relationship – being able to delay a payment, or borrowing equipment, or negotiating a lease.

I’m really noticing how growing a business is about steadily reducing risks – growing to hire people full time so they’re more likely to be there for you when you need them; having buffer room in the budget so unexpected expenses hit the balance sheet and not the owner’s pocket; being able to experiment more on product or placement innovation; being able to sign more contracts and get preferred pricing. Those are the efficiencies of scale – it’s about negotiating power more than just about volume, and about focused attention and commitment from stakeholders & partners that reduces frictional costs.

One way to get past many of these things quickly is to raise a bunch of equity and start operating at a higher level, but food businesses tend to be low-margin and can’t promise a return on significant equity. The steady risk-mitigation of organic growth seems to be a necessary path.   Luni of the Fledge Accelerator refers to these as “earners” vs “burners”. Earners being the organic growth path, and burners being the quick equity and try to scale quickly path. A frustrating trend we’re starting to notice is that high-risk money is coming into the food/ag sector where the business models can’t justify it. In the 3-5 years it’s going to take to lose enough money that risk-takers stop flooding it in, those “burners” that get funded will distract partners and resources from the “earners” that could actually sustain and thereby starve them in the short term.   It’s yet another example of how our capital funding system is broken.

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I’m working with a small coffee shop on profitability and I’ve been working on managing inventory.  At MBA school we learn standard inventory management methods and how important it is to track, but it’s not so easy to implement where the dollar meets the register.   For starters, perpetual inventory with food is really challenging – we’d need a super detailed POS system which is expensive.  I’m starting to see why my banking school instructors said they think 50K is a minimum for starting a successful business.  Without technology your business can’t be very efficient, and you’re competing against businesses that do have technology.  It seems the only other option is to be such a small business that one person can track most of it in their own head and have really good intuition.

That leaves me with periodic inventory, which I don’t mind except that Quickbooks seems to handle it poorly.  So I’m currently in a bit of a chasm between what I’m able to do with Excel pivot tables and what we know how to do in Quickbooks.

I do see a purpose for the oft taught “reorder point” setting even in our small-inventory setting.  It would help us generate the weekly shopping list.  I’m also discovering an inventory challenge I didn’t learn about in business school – how to construct a minimum order.  As a very small business we are challenged to meet vendors minimum orders – in some cases to order at all, in other cases to get at least a first level price break.  For example:  as a coffee shop we order all our flavored syrups and some other products from a single vendor.  We’re running out of our most-used syrup so we need to make an order. Just ordering a case or two of that syrup doesn’t meet their minimum order, so what else should we order, and in what relative quantity?  I’d like to analyze the relative consumption of goods that we order from that vendor and construct an order to the minimum amount that matches our needs.  Anyone know of a quickbooks plugin (or other inventory package) that can do that?

Another challenge – like any good business we work to keep our inventory thin. Well, we don’t have to work too hard at it, we have neither the physical space nor budget to get too fat.  However it seems to be a fairly common occurrence (every other week maybe?) that some item we use is not in stock when we go to purchase it.  I’m learning that Cash & Carry seems to be a sort of discount supplier that will always have some variant of a product available, but it will vary: IE sometimes the napkins will be bleached and sometimes they’ll be recycled.  Ditto for the paper bags of the size we like.  That is a problem I’m sure larger businesses deal with as well, perhaps by padding inventory, or by getting big enough to have better relationships with their suppliers.

Another suffering of the very small business – data entry.  To track all this requires hours of typing in numbers from paper receipts.  Where’s the EDI interface for Cash & Carry or Costco?  No wonder so few business owners do it, but without it you’re missing a key advantage.  I’m beginning to think that broad support for data and analysis for small business owners would be a huge support for economic development.  It amazes me what a lock QuickBooks seems to have on the market.  Small suppliers don’t seem to offer much in the way of Electronic Data Interchange,  but I’m just beginning to look.

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I wrote this roundup of opportunities to supplement with finance-specific education for the social business types I know.  As I work to figure out where social investing meets social enterprise I’ve identified one key gap:  the skills taught for wealth/portfolio management are covered in CFA/CFP type courses and do not overlap AT ALL with banking.  Community Investing and Community Economic Development pools are all banking.  So a barrier to increasing community investing (take note, Social Investment Forum!) is that most wealth managers have no ability to assess the opportunity.  Calvert Community Investment Notes are the one intermediary I know of that links the two by building a pool of funds, doing the underwriting, and wrapping it up and selling the notes like traditional securities.   Otherwise, so far, Community Development Finance Institutions are restricted to Banks and a few daring foundations for funding.

Here’s my roundup:

CFA – Certified Financial Analyst

The best advice I’ve gotten on this one: if you want to help people with financial planning, become a CFP, if you want to create or evaluate financial products, become a CFA.  A CFA manages portfolios and analyzes stocks/bonds/funds to decide if they’re good investments.

Many traditional MBAs get a CFA in tandem with their MBA because of the overlap between an MBA accounting/finance curriculum and the CFA study program.  To become a CFA you have to study for and pass 3 tests.  You also have to work in the field.  The tests are offered every December and every June and the prep courses run about 18 weeks.  After reviewing several and asking advice I’m currently leaning towards Stalla.  Seattle U offers a Saturday course that starts in the fall, they use Schweser.  Seattle has a very active CFA society chapter with frequent lectures, a book club and some community service.  My experience to date is they have little to no SRI component or awareness.

CMA – Certified Management Accountant

A CMA is focused on the skills you want within a single firm to not just do tax reporting (CPA) but make management decisions about efficiency and profitability and controls.

This seems to be a 2nd tier certification – note that Stalla and Schweser have prep courses for the CPA but not the CMA.  A friend who had it said it’s more recognized on the East Coast than here.  There are local chapters  of the IMA (Institute of Management Accountants) in Bellevue and Seattle (and looks like they’re merging right now, so that could be good). It’s the Mt Rainier Chapter in Tacoma that makes me think “These people and what they do rock!”. OMG I had my mind blown at their “Excel Geeks Rejoice” meeting last March.  The CMA just switched from a 4-exam to a 2-exam system.

Banking & Financial Services

Banking  is a different animal than financial management – lending, loan pools, tracking the performance of a single company and estimating their ability to repay debt and pricing risk and then how does that impact the performance of your whole loan portfolio.   CFAs do wealth management but have no idea how to evaluate the risk/return of CDFIs, which as I noted above I’m finding is a barrier to more investment in community development financial institutions/loan funds.

Boston University has a graduate certificate in banking & finance.  I found it online, I have no idea how good it is, but it gives a sense of the topics covered and how they’re different than investment topics.

Community Development Finance

If you want to do community development or urban planning, there’s yet another financial world – that of tax credits and finance!   I’ve found a few different programs here.


NeighborWorks is a national organization focused on strengthening local community development programs with an emphasis on housing.  They have a number of certificate programs including “Housing Development Manager Certificate”, but also “Community Economic Development” and “Community and Neighborhood Revitalization”.   I attended one institute and took 2 of the 5 courses needed towards the “Community Economic Development” certification.  As someone with a strong math background I found them a little weak, but the perspective on what makes a main street work and how to support local businesses was still interesting.   In general NeighborWorks programs are geared towards nonprofit employees who are primarily community focused.     They’re also very East Coast focused – most of their training institutes are in Philly or DC, sometimes Dallas or Chicago. I lucked into one they had in Portland or I might not have bothered.

National Development Council

While I was in the NeighborWorks 2-day class, folks in that class spoke with intimidation (ooo, sounds good!) of a similar but more intense 5-day training course given by the National Development Council.

They offer certifications as an “Economic Development Finance Professional”, a “Housing Development Finance Professional”, and a “Rental Housing Development Finance Professional”.     For the Economic Development certificate they have four 5-day courses: Economic Development Finance, Business Credit Analysis, Real Estate Finance and The Art of Deal Structuring.   They also offer a revolving loan fund course, focused on how to be compliant with Community Development Block Grants.

Council of Development Finance Agencies

They offer a Development Finance Certified Professional designation: “The DFCP Program is designed to produce graduates with a comprehensive knowledge of development finance concepts, tools and applicability as well as a deep understanding of the entire development finance spectrum.”  Courses in tax increment finance, the New Markets Tax Credit program, bond financing, and revolving loan funds. They also don’t make it up to the northwest, San Diego is where I’ve thought I might go sometime.

Angel Investing/VC

You regular readers have probably already figured out that I think the hype and attention GREATLY outweighs the success/usefulness of angel investing.  I don’t think this is a good way to learn how to build sustainable businesses. But in the interest of completeness…

The Angel Capital Association is the national association of angel groups and so has good information on how to create/develop angel groups

The Kauffman Foundation developed and forked off a number of resources including a series of courses on angel investing (who got rich in the gold rush – was it the miners… or Levi’s?)  http://www.angelcapitaleducation.org/ I’ve taken a few and they offer good advice (step 1: you need to build a portfolio because so many individual deals will fail).

Another program that spun off is a kindof VC internship/Fellowship.  It seems mostly aimed at taking people with deep industry experience and bringing them into VC firms.  Read the bios of the current class to get a sense of who gets into this.  http://www.kauffmanfellows.org/fellowship.aspx

Philanthropy/Wealth Management

Rounding out my roundup of “how to understand money”  I’ll add these:

Institute for Private Investorshttps://www.memberlink.net/ twice a year they offer a week-long Wealth Management Program on how to manage your money & assorted pool of advisors.   Once with Wharton and once with Stanford (august).  10K for the course, but if you need it, you can afford it.  They have a bunch of ongoing stuff but focused around SF and NYC.

The Philanthropy Workshophttp://www.tpwwest.org/ a year long program with a series of retreats to help wealthy folks develop a focus/plan for effective philanthropy.

Conferences/Associations of potential interest

The Community Development Venture Capital Alliance http://www.cdvca.org/ has an annual conference that I found interesting (though it was in DC and so half the conference was about lobbying – I ran into that with AEO as well, I think now for conferences that move around I’d skip the DC incarnation if you’re there to learn.)  They have a book worth buying called the CDVCA Equity and Near-Equity Investment Primer.

Association of Enterprise Opportunity www.microenterpriseworks.org – while I mentioned it.  A trade association for microenterprise lenders and training organizations.    They have an interesting annual conference – lots of info about how to run your microenterprise nonprofit – managing loan pools, helping people with credit repair, financial literacy stuff, software platforms to manage your loan portfolios. that kind of stuff.

Opportunity Finance Networkhttp://www.opportunityfinance.net/ the trade association for Community Development Financial Institutions like Enterprise Cascadia or Community Capital Development.   They’re also an East-Coast focused org but in Nov. 2010 their conference will be in San Francisco!

Thanks to Alex Moore for suggesting I take this BGI-internal post and share it on my blog.  He’s a pretty fine blogger on these topics himself.

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Cheryl Sesnon at Washington CASH just passed on to me a new report done by an Evans School MPA Student for the Seattle Office of Economic Development : “ Using Small Business Technical Assistance to Preserve Diversity in Rainier Beach”.   Author Andrea Lehner does a great job of showing the disconnect between what happens at a community level in business and what happens at city and regional levels, as well as how much business opportunity and success is shaped by social networks.  In that report, she also captures why it’s particularly important to support minority-owned businesses:

“Research indicates that minority-owned small businesses are more likely to employ minorities and are more likely to provide goods and services for minorities that are ignored by the larger chains. In addition, there is indication that some minority-owned businesses do not move out of low income neighborhoods when they become more successful. Instead, they stay and continue to hire from that neighborhood, especially if there are other efforts to regenerate the area.”

Last fall I listened in on a webinar about a Kellogg Foundation funded initiative to develop Rural Entrepreneurship Development Systems.  One of the speakers was from North Carolina, where they took a top-down approach and tried to create a one-stop-shopping location for entrepreneurs in NC to identify resources near them.  I’ve been thinking I’d love to see something like that in Washington State.  Last year I tabled for Washington CASH at a small business assistance fair  held at Renton Technical College (The Renton Biz Fair) and I was fascinated by the array of services there – from government agencies to a program doing business assistance out of the Seattle School District, I think aimed at potential contract bidders.

Andrea’s paper does include a survey of Seattle area technical assistance providers on page 27, and that list strikes me as a good one for small and micro businesses.  She also notes that providers agree that there is little comprehensive information about how the various services combine to provide a coordinated spectrum.  Page 33 has a roundup of all the services and makes an assessment of their combined offerings as “Seattle’s Technical Assistance System”.

Looking beyond the Seattle area: earlier in the paper she references a conversation with someone at the Department of Commerce about survey work they did.  Turns out they’ve published it:  The Washington State Guide for Small Business, 2010 edition. However when I look at it, it’s much more at what I’d call a small business level, as opposed to the micro-business level that seems appropriate to Rainer Valley local businesses.

More appropriate is the  Washington State Microenterprise Association (WSMA) which I’m familiar with from my experience with Washington CASH.  Their member listing is a good assortment of service providers in the state who reach all the way down to microenterprise.

Andrea’s report concludes with a list of recommendations for the city.  The ones that resonate for me – creating a service provider roundtable to coordinate provision and having a 3rd party entry point to help entrepreneurs find the right set of services; focusing service provision on business owners as much as businesses;  and focusing evaluation on long-term outcomes (the holy grail!)  Great reading!

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