Here's what the piece is about, in a quick snip:
Encouraging more Kentuckians to start up small businesses is a key feature of our state's post-tobacco economic development efforts. Successful small businesses pay taxes on their earnings, increase property values, and contribute a sense of vitality wherever they spring up. Helping these businesses start up, then grow and develop strong roots within their communities, takes a special focus.
[Some already have] experience as business owners. But what about the men and women who've always worked for someone else? How can someone make the move from employee to entrepreneur?
Being self-employed or becoming the boss of your own company with employees is a big change. Having a good idea for a new product or service isn't enough--you'll need a lot more to get your idea to the people who want it and will pay for it. Even if you're smart about your industry or know how to do something unique, you might not know how to think like a business manager, or how to make the right connections to money, or where to go to get other information vital to your success.
Fortunately, there are numerous entrepreneurial programs across Kentucky offering assistance... [including the Kentucky Entrepreneurial Coaches Institute].
And here's the part about KECI and some of the work I did w/ Rednour Properties:
The Kentucky Entrepreneurial Coaches Institute trains volunteer community leaders to help aspiring independent businessmen and women develop realistic plans and achieve their goals. This innovative program operated in 19 counties in northeastern Kentucky when it began in 2004. It has since been expanded to include more than 20 additional counties in south-central Kentucky in cooperation with The Center for Rural Development in Somerset.
Each year, a new group of coaches receives training that equips them to help beginning entrepreneurs fine-tune their business plans and get them ready to turn their ideas into reality. Each coach meets with three to six entrepreneurs eight to 10 times each year for face-to-face discussions; coaches are also available for phone conferences and e-mail conversations.
Johnathan Gay, director of Morehead State University's Innovation Center, learned the finer points of business coaching as a member of the first Kentucky Entrepreneurial Coaches Institute class in 2004-2005. Gay says, "Here at the MSU Innovation Center, many of our clients are developing businesses that are based on technology to try to grow a new economy in eastern Kentucky." Gay's clients are typically attempting to commercially develop some new form of technology, such as a new software program or invention, so he helps them find ways to protect such intellectual property.
In addition to his duties at Morehead, Gay continues to serve as an entrepreneurial coach. Although he frequently advises entrepreneurs with high-tech products and services, he also has time for more traditional business ventures.
In 2004, Ritchie Rednour of Clay City connected with Gay. "I was just a small-time real estate investor back then," Rednour recalls. "For several years, I'd owned some mobile homes and single-family homes that I rented to people, then I bought a multi-family unit. I decided I wanted to take things to the next level and grow my business."
Starting with 55 rental units and five employees in three counties, just five years later Rednour's business now includes 2,200 rental units and 72 employees in 21 counties.
Such rapid growth was not always easy or smooth, and Rednour credits the Coaches Institute with helping him stick to his plans. "A lot of folks have a false impression of what business is like," Rednour says. "They think you just rake in the money all the time, but it isn't that easy. It's important to have someone in your community who can give advice and provide moral support, that extra encouragement you need that will keep you going along. Some people give up just at the moment when they're poised for success, and the Coaches Institute helped me see that more than anybody." Instead of being discouraged, Rednour and Gay figured out ways to keep developing the business.
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17 comments:
Hi - thanks for this valuable resource especially for practitioners that are eager to learn about your successes and challenges.
My work has primarily been focused on helping low-wage, low-wealth individuals start and grow businesses - typically called microenterprises. I wonder if you folks would mind sharing your experiences in coaching these entrepreneurs. What seems to work best from a coaching standpoint? Thanks.
Jason:
I know my fellow coaches have had some experience. I would love to see them write some of them here. I'll see what I can drum up. In the meanwhile, how would you feel about blogging here? You could always cross post to your site.
Thanks.
Johanthan
Johnathan - over my morning coffee I read a very provocative and compelling argument against support for microenterprise development for start-ups, particularly low-wage and dislocated workers. The author maintains that "creating typical start-ups isn't the way to enhance economic growth and create jobs...Stop subsidizing the formation of the typical start-up and focus on the subset of businesses with growth potential. "
The Start-Ups We Don't Need: Are we encouraging the creation of too many low-productivity businesses?
http://www.american.com/archive/2009/entrepreneurship-the-start-ups-we-don2019t-need
In truth, thoughtful leaders in the microenterprise development industry have recognized the limitations of targeting the bulk of their resources on training, technical assistance and loans to start-ups and have begun to shift the empahsis to value-added services to help existing micro and very small businesses grow and expand, target sectors that are growing in their communities and offer larger loans. Not coincidentally, these organization have increased their visibility, attracted new stakeholders, and new funding.
In the next issue of All Things Microenterprise Development, we feature some industry leaders who have developed strong business growth services and are demonstrating results. To subscribe to this free e-newsletter, please go to Dear Colleagues: over my morning coffee I read a very provocative and compelling argument against support for microenterprise development for start-ups, particularly low-wage and dislocated workers. The author maintains that "creating typical start-ups isn't the way to enhance economic growth and create jobs...Stop subsidizing the formation of the typical start-up and focus on the subset of businesses with growth potential. "
The Start-Ups We Don't Need: Are we encouraging the creation of too many low-productivity businesses?
http://www.american.com/archive/2009/entrepreneurship-the-start-ups-we-don2019t-need
I recommend you share the article with your staff and Board of Directors and use it to stimulate a discussion. In truth, thoughtful leaders in the microenterprise development industry have recognized the limitations of targeting the bulk of their resources on training, technical assistance and loans to start-ups and have begun to shift the empahsis to value-added services to help existing micro and very small businesses grow and expand, target sectors that are growing in their communities and offer larger loans. Not coincidentally, these organization have increased their visibility, attracted new stakeholders, and new funding.
In the next issue of our free e-newsletter, All Things Microenterprise Development, we feature some industry leaders who have developed strong business growth services and are demonstrating results. To subscribe to this free e-newsletter, please go to http://friedmanassociates.net/newsletter.aspx
Jason:
This is something deserving of an entire post, but here's my quick hit:
I don't necessarily disagree with the American article. I think the key is creating quality entrepreneurs rather than focusing on something as generic as the numbers of enterprises created. If we make the latter our focus then we get bogged down in the numbers game. If we focus on the latter then we can divert our resources to the most capable and talented entrepreneurs whose business hold the most promise.
Thanks for the links... I'll certainly subscribe and promote in their own post.
Stay posted and thanks for the commentary.
Kim, a county extension agent in a rural community in N. KY and an inaugural fellow of the first KECI class, had a great response to the issue Jason poses:
Jonathon, this is a gut reaction, and I might think differently after thinking about it awhile, but I believe the key question is- are we helping businesses establish or are we helping people? My role as a coach, in some way just extends my responsibilities as an extension agent, that is, helping people help themselves. As an extension agent working with tobacco farmers, I make recommendations as to variety selection, pesticide use, budgeting, general management, etc. I don’t think my role in doing this is to help promote the tobacco industry; rather, I see myself helping farmers and farm families who choose to grow tobacco to use the production of this crop as a way to improve their income and ultimately, their quality of life, as THEY see it and define it. By the same token, while I believe small businesses are the way that rural communities can survive, it is ultimately the individual small business owner that we are helping. This individual may not want to become the next Entrepreneur of the Year. His (or her) personal mission may very well be to help his fellow man by providing competent auto mechanic service to neighbors within his community, using the knowledge and skills he has. He may not want to have to deal with employees and the related paperwork, and expanding to become the premier auto service company within a 10 county region may not be his idea of how to improve his quality of life. Should we discriminate against him because of this? I think not.
In Ron Hustedde’s article “What Every Elected Leader Needs to Know About Entrepreneurship,” he says that “lifestyle entrepreneurs” are one of three main categories of entrepreneurs, (the others being aspiring entrepreneurs- those that want to start a business but haven’t yet, and growth entrepreneurs- those that I think Friedman is talking about that we need to focus on.) I don’t think Ron puts a percentage on each, but likely this “lifestyle”group comprises a large percentage of the total. These are the “mom & pop” or main street businesses, that focus on employment for themselves and their families. They are essentially trading a salary from someone else for a salary that they are providing themselves. He says they are the core of this country’s economy and contribute to our quality of life. They are also doing it because they see it as the best way to improve their own quality of life. If we leave these folks behind in our efforts to assist those that might ultimately be the next Wal-Mart or Microsoft, not only are we not helping the bulk of businesses that might need our help, but we are lessening our calling to help improve life for our fellow man, by focusing on the business rather than the individual.
Kim:
I agree completely... we have to help all potential entrepreneurs to be the best they can be. Sometimes that might mean telling a potential entrepreneur to consider scaling things back or even avoiding an enterprise, but at the end of the day we have to help these folks be the best they possibly can.
I do think, from the standpoint of governments and even individuals we have to make a choice on how we're going to allocate resources. I think the question the author of the magazine in the American was making is that we've focused too much attention on just the creation of small to medium enterprises but that's not where the most bang for the buck is. Of course you and I as individuals can decide we don't care where the bang is, but governments, beholden ultimately to the political system, don't have that luxury.
I don't mean to waffle here, but I see the merits of both arguments and think the common ground is that from an economic development perspective what we ought to be focusing on are viable enterprises that have job growth potential. The author of the American (magazine) article is saying that too many SME's fail or don't produce lots of jobs, so don't the bulk of your focus on those. You seem to be making the argument that in the long run our society will be better if more people can care for themselves and be happy and financially independent. I don't see these things as mutually incompatible. It's all about a balanced porfolio.
Larrey, Ron, Gwenda... thoughts?
I finally had the opportunity to read Jason's link.
Maybe it's just me and my very rural perspective, but I think the article's basic premise is somewhat flawed.
"So how many jobs do new businesses create? Data from the Bureau of Labor Statistics show that 31,472,000 jobs were created in the United States in 2004. That year, 580,900 new firms with at least one employee were started, each of which had an average of 3.8 employees. Thus, in 2004, new firms created 2,207,420 jobs, or 7 percent of the total number of jobs created in that year."
My gut reaction is "so what?" That's 2 million jobs, 2 million workers off of unemployment, 2 million paying taxes, 2 million people doing what they enjoy and contributing back to their community financially and/or providing goods and services not locally available.
Not every entrepreneur expects, or even aspires, to make $100,000+ a year. The entrepeneurs I deal with on a regular basis through the Chamber of Commerce look at more than just the financial aspect of their businesses. There is are certain intangibles: independence, being the captain of their own ship, flexibility, self-confidence, being able to work close to home, etc.
To denigrate start-ups that are not aspiring to be mega-businesses, in my mind, somewhat delegates those entrepreneurs to some sort of second class status where they are not "real" entrepreneurs and small businesses.
I think the article was condescending and more than a little insulting.
But, I suppose, that might just be me.
Paula
I found Jason Friedman comments both interesting and challenging, part of me wants to agree with what he has to say but he may just be missing the point, or I may be way off base. From my prospective we as coaches have an obligation to the would-be entrepreneurs. In my opinion it is our responsibility to gently guide the entrepreneur in the right direction, be it to move forward or to help them realize their business goal is not achievable. Either way I feel we are providing a valuable service to the entrepreneur and to the community. The other point that he (Jason) may not realize is that all of our coaches to my knowledge are volunteers and the only burden to any resources other than our training occurs for the most part only after we in concert with the entrepreneur have decided to move forward with their project. If we as coaches honestly accept our responsibility and some times it is difficult and troubling, especially to me when we arrive to the point where the folks we are coaching decide that their project is only a pipe dream that has not been well thought out, and they have to leave their “baby” behind and move forward. But this is good; I have read that many successful entrepreneurs have experienced several failed attempts with other business ventures.
So what we/I try to do is provide as much help as possible including all of the resources available to us to encourage the successful launching of their business. Or try to save the entrepreneur time and money if his or her project looks like it cannot satisfy most of the criterion for a successful start-up. Therefore, I think Jason should consider what we are doing is actually saving the resources (that he is referring to) time and money.
Jim Brown
Class 05
Hi - I am glad the article was provocative. Let me clarify two points, as my intent may not have been clear. First, I am in agreement with Kim's point which others appear to agree on - "we're here to help people help themselves." That is the premise behind the microenterprise development movement in the U.S. Second, recognizing the high rate of business failure, and especially today when so many small businesses are struggling, many micro-practitioner organizations are putting more resources into coaching, consulting, workshops, etc. to help them weather the storm as opposed to basic entrepreneurial training for rookies.
Jason:
Thanks for spurring so much dialogue and commentary. I really like your point that we should put more effort into making these folks more competent.
OK, I suspect that I had a basic failure in communication with Jason, specifically in how he defines "microenterprises" and "micro-practitioner organizations". Jason, are you speaking of organizations that invest funds into start-ups? First question I get from many people looking for coaching is "I need money" and my response is "there's no free money". Instead, as a coach, I get my clients to examine, define and make a real plan for their business (and yes, their dream), and all the time do that without the expectation of "free money".
oops! Forgot my blogger name is "Big Sis".
Paula
Hi - in terms of "microenterprises" I use the standard definition of 5 or fewer employees and capital needs of under $35,000. Basically self-employed individuals. By practitioner organizations, I mean non-profits with a mission to help low-wealth individuals and communities start and grow small businesses. They provide some combination of entrepreneurial training and technical assistance and microloans. MACED in KY is a well-respected organization that works with micro as well as larger small businesses.
Paula - can I quote you for an article I will write on the Shane article in my newsletter? E-mail me at jason@friedmanassociates.net
Jason, give me a call at 606-798-2553.
This is a really great topic that can get out of control right out of the gate and I really believe that our gut reactions need to get tamped down so we can all get to the table together for all our best efforts.
Paula
The author of the “Startups We Don’t Need” article reflects the thinking of many state governments and universities that focus exclusively on the gazelles (high growth firms that generate a compounded annual return in the 15%- 20% range). I believe there are significant problems with such a focus:
1) this approach tends to concentrate on high tech where there’s the greatest potential for high pay-off. The consequence of such an approach tends to have an urban bias where high tech firms concentrate. Most rural communities are left in the cold.
2) the author assumes that we invest too much in micro-enterprise while the gazelles get little attention. I question whether the numbers back this up.
3) Can we conclude which startups will be high growth or modest growth? It’s often a guessing game. Who would have predicted that Kentucky Fried Chicken, Starbucks, Cabellas or Ben and Jerry’s would have expanded in their start-up days?
4) the author poses a false question of either/or. Do you support firms with high growth or do you support micro-enterprises? The question is absurd.
We need a systems approach to entrepreneurship. Richard Florida in his book about the creative class argues that innovative micro-enterprises make a community bubbly, alive and fun and that high growth entrepreneurs are attracted to places with artists and interesting people. These small firms add to a character of a city. We need these startups. They add to our quality of life. I intentionally patronize micro-firms because they tend to be more flexible, friendly and customer-oriented than the big chains.
5) We need to create enterprise opportunities and systems that are flexible for each community. We need to build entrepreneurial friendly climates where there’s a potential for all entrepreneurs to thrive and prosper – including survival entrepreneurs, lifestyle entrepreneurs, social (non-profit) entrepreneurs and gazelles. Malcolm Gladwell in his new book, Outliers, says innovators are the products of communities that let people learn from their failure and nurture free thinking. The Fellows in the Coaches Institute have laid some of the groundwork for such a climate. For example, Annette Walters and Melony Furby created an entrepreneurial class at a parochial school where the students created their own firms and later sold their products and reflected on what they learned. The Shims Contest challenged local people to find creative uses for a waste product. These efforts are part of generating a system where entrepreneurship is part of civic, social, educational, religious, and other dimensions of our lives.
6) Many micro-enterprises only get help in the startup phase but then they’re ignored when they think about expanding. The technical assistance providers don’t ask what these entrepreneurs need. A more holistic or systems approach would ask questions about expansion.
I could go on ad infinitum but it’s late and I need to move on to other things.
Thank You Ron! For saying everything I wanted said but didn’t know how.
I live in an extremely small community as a lot of coaches from my class do. Sometimes it isn’t easy to find what I “need” or maybe “want” for an educational program but they happen just the same.
Keeping up with the blog string made me think about my community and living here. These are some of my thoughts.
I don’t mind standing in line at Gilliam’s IGA because it means people are shopping local
It doesn’t bother me when JDB’s tire and service says “I can’t get to your car today, it might be next week” because it means business is good.
When my articles for the local paper are put off until next week, it’s alright because it means people are reading and using the local media.
The many calls I get about starting a business may not end in a coaching relationship but it is a teachable moment and it means people are thinking and I get the opportunity to give them information of where else they can go for information and help.
If a visit to the Dollar General ends in the items I want or need being sold out, it means people chose the smaller local store rather than going out of town to the larger conglomerate.
My children always take their friends to the local burger place. They want everyone to experience a “Percy” burger because not everyone gets the opportunity to visit Frosty Freeze the way they visit fast food chains.
Do we need more locally owned small businesses that just employ family and friends?
In my county where the total population is smaller than that of one building in other counties or cities, I say yes because denting our 10% unemployment is not as hard as denting the 10% unemployment of metropolitan areas.
I like going being able to return items if they need be without having a receipt and I enjoy the owner calling me by name and asking about my children.
How can anyone say we are not starting the next large corporation, after all, Apple started in the basement of a home.
And through this economic downfall, I haven’t heard one of the small businesses complain about needing a buyout nor have I heard that business is slow.
As one farmer and pipefitter gone entrepreneur says “we work hard to get to live here, but it’s worth every minute”.
Gwenda
Sorry about one or two words in this blurb. I meant “bailout” instead of “buyout”. I forgot to add one thought that makes me very proud of the small communities where we live. I’ve written lots of grants and bummed lots of money for programs. For the small local activities such as small conferences or meetings, its our small locally owned businesses that support us. I’ve never gotten large corporations to buy into small community events. When our local pharmacist who started his business on a backstreet in Sandy Hook, donates $500.00 to sponsor women to the women in ag state conference and says that 4-H is where he learned public speaking, it speaks highly of his dedication to community and the need for more businesses that will do the same.
Gwenda
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