Entrepreneurship and Small Business as a Means to Self-Sufficiency

1. Entrepreneurship and Small Business as a Means to Self-Sufficiency Presented by: Donna R. Rockin, Director Illinois SBDC/Duman Microenterprise Center/JVS Chicago

2. Program Name • Small Business Development or Expansion • Center Name: Illinois Small Business Development Center at the Duman Microenterprise Center

3. Who are we? • The Duman Center was made possible through the generous gift from Louis Duman to the Centennial Campaign of the Jewish Federation for the JVS Endowment Foundation and a grant from the Illinois Department of Commerce and Economic Opportunity. • JVS is a 501 (c) (3) nonprofit organization, whose mission is to provide a wide range of employment and educational training services and career counseling that “empower all people in need to find fulfillment through work.” • The Illinois Small Business Development Center(SBDC) at the Duman Microenterprise Center provides one-on-one counseling at no charge for start-ups and pre-existing small businesses in the Chicago metropolitan area.

4. Who are we? • The Duman Center’s programs also provide, on a limited basis, start-up and expansion capital for area entrepreneurs via zero and low-interest small business loans. In 2007, the Duman Center began helping clients access and receive larger SBA-backed business loans as well. • The center offers entrepreneurial training, business assistance, mentoring, and access to capital. The center has been helping small business owners since 2001. • The Center partners with local banks, government agencies, business professionals, business schools, organizations, and the Jewish Federation of Metropolitan Chicago.

5. How many comprise the staff? • 2.67 full time equivalents (FTE’s) • 15 person volunteer Loan Approval Committee • Volunteers and mentors

6. Who are our clients? • Refugees and asylees • Immigrants • Divorced men and women, generally with children • Widows, widowers, generally with children • Veterans (make up about 9% of our clients) • Young adults: recent high school and college graduates with little or no assets • Over 41% are African American, nearly 54% are white, about 3% are Asian, and nearly 2% are Hispanic • Nearly 59% are men and 41% are women

7. How do we market ourselves? • Constant Contact e-News Bulletins • CAN-TV (Community Access Network TV) • Craig’s List • JVS Offices and all JVS Counselors • Libraries • Chambers of Commerce • Economic Development Centers • Banks • Other Small Business Development Centers • Word of mouth • Recognition from local media outlets

8. Who are our funding sources? • Private funders • Corporate foundations • Federal grants • State grants

9. What outcome measurements are built into the program? Economic Impact Survey – measures improvement in financial stability • Jobs Created • Jobs Retained • Access to Capital • Change in profits • Change is sales

10. What outcome measurements are built into the program? Amount of capital obtained Default rate -remarkably low given the un-bankability of the clients. • Combined overall access to over $700,000 in private capital and $585,000 in SBA capital. • Our private loan funds have only a 3% default rate which is a remarkable measure of financial stability that has been achieved by our clients.

11. What outcome measurements are built into the program? Down Home Loan Manager Client class surveys - service delivery is client centered. JVS Chicago has a terrific, top-notch research department that tabulates and analyzes all or our survey data. • Allows us to track and manage client loan payments so we can immediately call the client if we see a late loan payment and try to get the business back on track. • Data determines program topics regarding new classes and seminars • helps us determine new or revised curriculum • helps us assess client satisfaction • gather client feedback to improve service delivery

12. What outcome measurements are built into the program? Measurement of program success seen in the numerous grant goals that are met and/or have been exceeded • Exceeded the number of clients served individually. • Exceeded the number of classes taught and the number of clients attending classes. • Got superb ratings from questionnaires the state submits to our clients randomly.

13. Key statistics • Small businesses represent 99.7% of all employer firms and employ about 50% of all private sector employees. • Small businesses pay nearly 45% of the total U.S. private payroll and have generated 60-80% of the net new jobs annually over the last decade. • 52% of small businesses are home-based, while 2% are franchises. • 44% of new businesses survive at least 4 years, which appears to be the critical timeline for surviving long-term. After the fourth year, the rate of firm closings declines considerably. • The United States unemployment rate : 8.5% in March 2009 • The Illinois unemployment rate: 9.1% in March 2009 • Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007 www.sba.gov/advp/research/rs200tot.pdf and CHI Research, 2003 www.sba.gov/advo/research/rs225505.pdf Federal Procurement Data System; U.S. Dept. of Labor, Bureau of Labor Statistics. • Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007 www.sba.gov/advo/research/rs299tot.pdf and CHI Research, 2003 www.sba.gov/advo/research/rs225505.pdf :Federal Procurement Data System; U.S. Dept. of Labor, Bureau of Labor Statistics. • Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007 www.sba.gov/advo/research/rs299tot.pdf and CHI Research, 2003 www.sba.gov/advo/research/rs225505.pdf; Federal Procurement Data System; U.S. Dept. of Labor, Bureau of Labor Statistics. • Source: “Business Employment Dynamics Data: Survival and Longevity, II,: by Amy E. Knaup and Merissa C. Piazza, Monthly Labor Review, vol. 30, no.0 (Sept. 2007), pp.3-10l :Redefining Business Success: Distinguishing Between Closure and Failure: by Brian Headd, Small Business Economics, vol. 21, no. 1 (August 2003), pp. 51-61. • Source: U.S. Department of Labor website, http://www.bls.gov/lau/

14. Can Entrepreneurs and Small Business Owners still be viable even in a down economy? • Clients are carefully planning growth strategies, including thoughtfully adding new products or services that will be in demand • Small businesses can be incredibly more price competitive than other medium and large businesses because they have lower overhead, making their services highly attractive to other businesses. • Small business can respond much more quickly to changing economic conditions which is a huge plus in a struggling economy. As a comparison, think how quickly a tug boat can change its course versus a huge ocean freighter. • Client businesses are looking for more business-to-business services they can offer, looking for more wholesale accounts • Clients are offering attractive price points by bundling products and services, a la “meal deals,” and product/service combination sales.

15. Blockbuster Companies that started during a Recession Some classic companies More recent pioneers • General Electric • Fortune Magazine • Revlon Cosmetics • Hewlett-Packard • Sports Illustrated • Burger King • Hyatt Corporation • Trader Joe’s • LexisNexis • FedEx Corporation • Microsoft Corporation • Apple Computer • CNN (Cable News Network) • Cliff Bar • Skype (VOIP)

16. Two Key Points • Understanding the importance of pre and post-loan technical assistance to entrepreneurs. • How to help clients access capital or bootstrap their business growth.

17. Questions? • How can this model of self-employment be expanded to other low-income, at-risk populations? • How can we partner with other community resources to expand the range of services we provide to clients?

18. How to contact us? • Donna R. RockinIllinois SBDC/Duman Microenterprise CenterJVS Chicago216 W. Jackson Blvd., Suite 700Chicago, IL 60606-6921Phone: 312-673-3430Fax: 312-553-5544donnarockin@jvschicago.org • E-mail: sbdcdumancenter@jvschicago.org • Website: www.jvschicago.org/duman