Strategy Building

Building on the assessment process you’ve completed, it is time to create an entrepreneurship development strategy for your community. Few communities, if any, have the resources and capacity to build a strategy that effectively serves all types of entrepreneurs. Your assessment helped you figure out who your entrepreneurs are and what types of entrepreneurs you should target in the initial stages of an entrepreneurship development system. Now we describe how you can tailor your development strategy to the types of entrepreneurs you are targeting. Let’s start by reviewing the concept of entrepreneurial talent.

Types of Entrepreneurial Talent

Previously we described the following types of entrepreneurial talent:

Type 1 – Limited Potential
Type 2 – Potential Entrepreneurs
Type 3 – Business Owners
Type 4 – Entrepreneurs
Type 5 – Civic Entrepreneurs

Now we want to focus on entrepreneurial talent in practice—the entrepreneurs present in your community who currently have (or could have) the potential to impact your local economy: potential entrepreneurs, business owners and entrepreneurs. (We’ll talk more about limited potential and civic entrepreneurs later.)

As you make decisions about what types of entrepreneurs to target with your development strategy, it is important to understand how long it may take to achieve impact and what the scale of that impact might be for each type of entrepreneurial talent. Here are some insights for each type.

Potential Entrepreneurs
Potential entrepreneurs are those who have some of the skills and the motivation to embark on venture creation, but they may not have yet taken the plunge. Included here are aspiring and start-up entrepreneurs who are actively engaged in planning for or starting their own businesses, along with those who are experiencing some frustration with the process. Young people who are “kicking the tires” of entrepreneurship through school or after-school programs may also have the motivation and commitment that places them in this category. In addition, there are the dreamers—those who have the spark of entrepreneurship but need someone to fan the flames.

Your assessment should have helped you identify some of these potential entrepreneurs in your community and, chances are, there are plenty of them. However, it will likely take time, and lots of it, to help these potential entrepreneurs achieve their ultimate goal of starting their own business. How long might it take to move a local potter, dreaming in her studio, from the dream of a Main Street art gallery to the reality of a grand opening? The task of cultivating dreams and helping an entrepreneur develop the skills needed to be successful doesn’t happen in weeks (or even months). Focusing on potential entrepreneurs is a long-term strategy, but one that will help to fill your community’s pipeline with entrepreneurs for the future. You are unlikely to see immediate and measurable outcomes that will help you gain community support for your efforts.

What about the scale of impact? This could range from limited—a few ventures providing employment for the entrepreneurs alone—to quite large if the support system is successful in helping potential entrepreneurs develop the skills and capture the resources needed to create new businesses.

Business Owners
As you worked through your community assessment, you may have had a conversation like this one:

Team Member #1: “What about Joe Sportingoods? What type of entrepreneur is Joe?”
Team Member #2: “I’m not sure Joe really is an entrepreneur. He’s been running his business the same way for years—just like his father did. Is that an entrepreneur?”

Most business owners are not entrepreneurs. They have found a comfortable way of doing business that works for them and they may have little need for or motivation to change. However, there are some business owners who may have strong entrepreneurial tendencies. Think about business owners in your community who are trying out new business models. Joe Sportingoods may be testing ways to tap regional markets through the Internet. The local pharmacist may be in the midst of transferring the business to her daughter who has innovative ideas about how to create a new type of pharmacy and reach new markets for compounded pharmaceuticals.

The trick with business owners is to try to understand what their motivations are and where they want to take their businesses. Then it is possible to target those who are true entrepreneurs—working on their business every day to identify and take advantage of new opportunities to improve and grow their ventures. Once you’ve found these entrepreneurial business owners, the time to achieve some level of impact may be shorter than if you targeted potential entrepreneurs. These entrepreneurs are already in business and have a set of resources and skills that the potential entrepreneurs may lack. The scale of impact may be modest, if these business owners improve but don’t grow their ventures—but it could be large for those who are actively interested in growing their businesses.

Entrepreneurs
The entrepreneurs in your community are those who are actively seeking new markets, developing new products or services, and exploring new ways of doing business. You will probably find far fewer entrepreneurs than you will business owners and most of those will be what we describe as “growth oriented.” These entrepreneurs are seeking to grow their businesses and are looking for opportunities and support to do just that. You may also have found some “serial entrepreneurs”—those who start and grow a business and then sell that business and start another one. Serial entrepreneurs use their expertise to create ventures but then seek out new opportunities to begin the process anew rather than staying with one venture for the long haul.

Rare in most rural communities are the entrepreneurial growth companies. These are the rapidly growing businesses (also called gazelles) that we frequently associate with entrepreneurs such as Bill Gates, Steve Jobs and Sam Walton. If you find them in your community, you should cultivate them not only for the potential impact on your economy, but also for their ability to serve as mentors or role models for the other entrepreneurs you are supporting.

Entrepreneurs may be fewer in number in your community, but they can have a short-term (perhaps immediate) and large impact on your economy. A growth-oriented business may create wealth for the entrepreneur, as well as jobs and wealth for the employees of the growing venture.

Opportunity vs. Necessity Entrepreneurs

Entrepreneurs may choose to create ventures because they see opportunities and are driven to exploit them. An entrepreneur in southeastern Kentucky created a business of adult day care facilities because the lack of quality care for elders in Appalachia was forcing children to leave their jobs to care for elderly parents, hurting everyone in the family. Other entrepreneurs create businesses out of necessity—self-employment or setting up a business becomes a way to stay in the region or make ends meet when times are tough. Laid off from a high-tech job, an entrepreneur turns to his love of blacksmithing to provide income and occupation, at least until the market for his high tech skills gets strong again. Why do you need to understand the difference? A necessity entrepreneur may have no interest in growth (and therefore support services) while the opportunity entrepreneur may be actively seeking growth and need all the support you can provide.

Finding the Sweet Spot

In any economic development activity, it’s important to aim for what we call the “sweet spot.” This is where the goals for economic development correspond to the assets available for economic development in such a way that a strategic focus emerges. In entrepreneurship development, we are looking for that place where the types of entrepreneurs in your community overlap with your development assets placed within the context of your community’s development goals. Sometimes a picture’s worth a thousand words—the graphic here illustrates the “sweet spot” for entrepreneurship development.

As you move forward with strategy development, it’s important to keep in mind this “ sweet spot.” For example, many rural communities in North Carolina and other southern states are searching for ways to help displaced textile mill workers get back to work, often by making their own jobs through entrepreneurship. These displaced workers form a large pool of potential entrepreneurs, and helping those in this pool create new ventures is a key development goal in many of these communities. While it may take time, some communities are committed to working, one potential entrepreneur at a time, to achieve this goal. Their strategy is to use entrepreneurship education assets, specifically REAL “how to start a business” classes offered at no cost through community colleges, coupled with the availability of micro loans through the North Carolina Rural Economic Development Center, to provide opportunities to a new generation of entrepreneurs.

Targeting Strategies to Entrepreneurial Type

Just as the skills, motivations and characteristics vary by type of entrepreneurs in any community, the strategies for supporting entrepreneurs will also vary by type. You need to develop a strategy that effectively serves the specific types of entrepreneurs that you have decided to target as part of your overall entrepreneurship development strategy. To illustrate how to target strategies, let’s focus on four specific types of entrepreneurs:

Aspiring and start-ups
Youth
Growth-oriented
Entrepreneurial growth companies

The real key is to understand what each type of entrepreneur needs and wants then implement strategies that give them that assistance and support.

Strategies for Aspiring and Start-Up Entrepreneurs
Aspiring and start-up entrepreneurs are early in the venture creation process. Aspiring entrepreneurs may still be researching and developing their business idea. They may even be testing it out in informal ways. Start-up entrepreneurs have made the decision to move forward and often have some plan for doing so. A common characteristic of both groups, however, is that they need help and support.

Aspiring entrepreneurs need guidance in assessing how good their idea really is. Will it meet a market test? Will someone pay for the good or service they want to offer? Is it really feasible for them to create this business? They need someone to ask the tough questions so that they can make an informed “go—no go” decision about starting a business.

Start-ups also need someone who can help them move from ideas to a solid game plan. They have already made a decision to start a business—now they need help making sure all the pieces are in place. Is the management team strong? Is there capital to start the venture? Are markets clearly identified and strategies for tapping them tested?

What strategies will meet the needs of these entrepreneurs? There are four basic approaches that are effective with these entrepreneurs:

Networking and mentoring
Microenterprise programs
Entrepreneurship training and business counseling programs
Facilitation and coaching

NETWORKING AND MENTORING. Entrepreneurial networks that serve aspiring and start-up entrepreneurs can be both formal and informal. Formal networks can have a wide range—from monthly forums sponsored by the chamber of commerce that offer an opportunity for entrepreneurs to meet their peers and share information about service providers, markets or frustrations about doing business—to the national model for an entrepreneurial network, the Council for Entrepreneurial Development.

However, networking doesn’t have to be this formal. In one small community, an effective network was created with a front porch and willing participants. When an entrepreneur moved back to his hometown to start his business, he was looking for opportunities to meet other entrepreneurs in town. So he offered refreshments and his front porch (or his hearth during winter months) on Friday afternoons to entrepreneurs in the community who wanted to meet and talk about their businesses. This informal network became a place for sharing problems, identifying opportunities, testing out new ideas and providing support to one another—meeting a vital need in this small town.

For both start-ups and aspiring entrepreneurs, having an opportunity to talk with other entrepreneurs who have “been there, done that” is a valuable experience. While this may occur in a network, mentoring programs can be effective in strategically linking an experienced entrepreneur with an aspiring or start-up entrepreneur. Mentoring can happen organically. For example, experienced Hispanic restaurant owners in Hendersonville, North Carolina, “adopted” new immigrants who were interested in starting restaurants or catering businesses to help them learn the ins and outs of the sector. Mentoring programs can also be established by creating a pool of experienced entrepreneurs who are willing to work with new entrepreneurs in sectors where they have expertise.

Council for Entrepreneurial Development

“By entrepreneurs, for entrepreneurs” is the motto of the nationally recognized Council for Entrepreneurial Development (CED) in the Research Triangle region of North Carolina. Established in 1984, CED is a private, nonprofit organization whose mission is to “identify, enable and promote high growth, high impact companies and accelerate the entrepreneurial culture of the Research Triangle region.” CED has 3,500 active members from over 1,000 companies, making it the largest entrepreneurial support organization in the country.

CED was founded by several business leaders in the region who wanted to create a network for entrepreneurs to share information and gain better access to services, including venture capital. Now, CED offers a wide range of programs to its
entrepreneur members, including:

FastTrac training programs
Innovators Workshop
Biotech, Infotech, Entrepreneur and Venture Conferences
Biotech, Tech and BIO Investor Forums
CFO Roundtable
Entrepreneurial Excellence Awards

All of these programs grew out of a stated need on the part of CED’s members. Programs are designed with input from entrepreneurs and support from CED staff. The key metric used by the staff to determine the value of their programs is, “was this the most valuable use of your time or would you have been better off spending the time working on your business?” This is an exacting standard, but it helps to keep CED focused on responding to and meeting the needs of entrepreneurs.

While CED’s region is not rural, the model has been replicated in other more rural parts of the state including western North Carolina (Blue Ridge Entrepreneurial Council) and the central Piedmont region (Piedmont Triad Entrepreneurial Network). To learn more about CED, go to www.cednc.org.

MICROENTERPRISE PROGRAMS. Microenterprise programs combine access to small amounts of capital with training in financial literacy and business development. Effective programs couple capital with training so that aspiring and start-up entrepreneurs have an opportunity to develop the business management skills needed to run a business at the same time as they get a loan to get the business off the ground. These programs are targeted to small entrepreneurs (less than five employees), usually the self-employed.

There are a number of microenterprise programs that can serve as models for your community. We share the stories of the Mountain Microenterprise Fund in western North Carolina and Nebraska’s REAP program to get you started.

Mountain Microenterprise Fund

In the mountains of western North Carolina, Mountain Microenterprise Fund (MMF), a nonprofit organization, provides training, business loans and one-on-one counseling to micro entrepreneurs. Started in 1989, MMF has worked with almost 1,800 entrepreneurs and MMF alumni are operating about 900 businesses in the region. MMF’s mission is to work with women, people of color, lower-income individuals, and rural people to help them realize their dreams of owning their own businesses. These businesses, in turn, help support the entrepreneurs, their families and their communities.

MMF’s business training course, “Foundations,” provides entrepreneurs with “how to” information on starting or expanding a business. Entrepreneurs can take the 10-week course, three hours per week, at locations throughout the region. In 2002, almost 400 people graduated from Foundations. Once an entrepreneur has completed the training program, she can apply for a business loan of up to $25,000. These micro loans help bridge the capital gap for entrepreneurs who have difficulty getting loans through traditional sources such as banks.

What’s innovative about MMF, however, is that they don’t stop with business training and loans. MMF keeps alumni engaged through a membership program that offers entrepreneurs access to additional resources and networking opportunities. MMF also operates a for-profit enterprise, Mountain Made, in Asheville, North Carolina, that provides a retail outlet for western North Carolina artisans, one third of whom are alumni of MMF’s Foundations program. As the staff at Mountain Made work with local artisans, they are able to identify their business development needs and, as appropriate, refer the artists to MMF for training, counseling or capital.

To learn more about Mountain Microenterprise, go to www.mtnmicro.org.

Nebraska’s REAP

In rural Nebraska, where the primary employment source is self-employment, and the dominant business type is microenterprise (five or fewer employees), access to core business development services is critical. The Rural Enterprise Assistance Project (REAP) is meeting this challenge. REAP, a program of the private, nonprofit Center for Rural Affairs, is a microenterprise development program that works with start-up and existing small businesses throughout rural Nebraska. REAP is the largest microenterprise development program in Nebraska, rural or urban.

REAP continues to evolve and currently offers small business management training, networking, technical assistance, small loans, and loan packaging services to businesses. REAP uses a “dual delivery” system, offering both group and individual service options. In addition, the REAP Women’s Business Center (WBC), the first in Nebraska, is reaching out to rural women entrepreneurs. The REAP WBC service center entered its fourth year in 2004. REAP uses business specialists located throughout the state to deliver WBC to other rural entrepreneurs. Since 1990, REAP has provided services to more than 4,000 micro entrepreneurs, including 274 peer loans with an average loan size of $1,706. In 1998, REAP piloted the Direct Loan Program and in early 2000, it became a permanent part of REAP’s loan services. The direct loan program makes individual loans of $1,000–$25,000 to entrepreneurs who have difficulty getting loans from any other sources.

One of REAP’s new initiatives is providing services to the Hispanic/Latino community in rural Nebraska. Using USDA Rural Business Enterprise Grant (RBEG) funds, REAP established a rural Hispanic business development project, the REAP Hispanic Rural Business Center without walls (RH-RBC), in 2004. The Center will be piloted in three rural communities with an ultimate goal of providing business development services to rural Hispanic entrepreneurs statewide.

To learn more about the REAP program, go to www.cfra.org/reap.

ENTREPRENEURSHIP TRAINING AND BUSINESS COUNSELING PROGRAMS. Aspiring and start-up entrepreneurs can often benefit from participation in training and counseling programs, either one-on-one or with other entrepreneurs. There are a number of well-tested “how to” training programs that take entrepreneurs through the process of starting their own businesses. While programs such as FastTrac and NxLevel are primarily for adult entrepreneurs, the Rural Entrepreneurship through Action Learning (REAL) curriculum serves youth as well as adults.

Counseling programs may be more appropriate for entrepreneurs who have already developed a business plan but need assistance with specific aspects of the business. For example, an entrepreneur might need help accessing export markets or understanding the licensing requirements for operating a commercial kitchen. These types of questions are best addressed through the services of a business counselor who works one-on-one with the entrepreneur.

Whatever training or counseling programs are used, you should keep several things in mind as you create your strategy:

Entrepreneurs need to be able to understand where to go to get these services so they don’t become frustrated as they try to get help.
Training and counseling programs should be user friendly. Aspiring and start-up entrepreneurs may still have their “day jobs” and need to be able to take a class or meet with a counselor in the evenings, on the weekends or even online.
You need to know enough about an entrepreneur and her skills so that you can steer her toward the training program or business counselor that can best meet her needs.
You need to remove barriers to participation so that as many entrepreneurs as possible can access these services. In response to the growing Hispanic population in North Carolina, REAL created Spanish REAL to meet the needs of this group of entrepreneurs.

The Spanish REAL Program

North Carolina REAL Enterprises has been providing entrepreneurship training in the state since the 1980s. Its programs are very well known and have served as models for effective entrepreneurship training around the world. By the 1990s, REAL’s basic training program (the REAL entrepreneurship class) was well established and was being utilized in a variety of settings and for a variety of populations. This period also coincided with a boom in Latino immigration into North Carolina. In fact, North Carolina’s Hispanic population grew 395% over the course of the 1990s and Latinos now account for nearly 5% of the state’s population. These new immigrants came to North Carolina in pursuit of opportunity and, for many, opportunity meant starting their own business.

While immigrants tend to start businesses at fast rates, they need the same help and assistance that others want before they start a new venture. But, in the case of new Latino immigrants, language proved to be a nearly insurmountable barrier. Since many spoke only Spanish, they could not access traditional programs offered in English. Recognizing this problem, NC REAL’s leaders quickly translated their basic course into Spanish and began training bilingual facilitators.

In 2004, the Spanish REAL curriculum was in great demand and was offered in 23 counties across the state. As Latinos become more integrated into the local business community and more become interested in entrepreneurship, this level of activity is certain to grow.

To learn more about Spanish REAL, go to www.ncreal.org.

FACILITATION AND COACHING. An intensive and effective approach to working with aspiring and start-up entrepreneurs involves facilitation and coaching. In these approaches, individual coaches or facilitators identify entrepreneurs within their communities and work one-on-one with the entrepreneurs to help them access the resources they need to make sound decisions about getting into business and to growing a successful business once they begin the journey.

The pioneer in the field of Enterprise Facilitation™ is Ernesto Sirolli. Other forms of facilitation and coaching, such as the Kentucky Entrepreneurial Coaches Institute, are also being used. All these approaches have some commonalities. They are generally simple to create and execute. Facilitators and coaches must learn how to ask the right questions and connect entrepreneurs to resources, both inside and outside the community. This approach works best with entrepreneurs who are just getting started, those aspiring and start-up entrepreneurs who can benefit from the moral support that coaches and facilitators can provide. In addition, the effectiveness of these approaches is dependent on the people selected as facilitators and coaches. The quality of the assistance is driven by the skills, commitment and motivation of these support providers.

Kentucky Entrepreneurial Coaches Institute

Started in 2003, the Kentucky Entrepreneurial Coaches Institute (KECI) was designed to identify and train community leaders from a 19-county region in northeastern Kentucky to be effective entrepreneurial coaches. The program was launched in the most tobacco-dependent region in the state, with funding from the Kentucky Agricultural Development Board using tobacco settlement funds. The program was created in response to research that identified gaps in the entrepreneurial support structure in the state. While Kentucky has service providers who can offer business counseling and other forms of assistance to entrepreneurs, there were few who served as coaches—listening, encouraging and connecting entrepreneurs to other entrepreneurs and specific types of technical assistance.

KECI provides volunteer community leaders with the skills they need to become effective coaches. In addition, the Institute is creating a network of coaches with strong personal connections so that they become a permanent part of the region’s entrepreneurial support infrastructure. The first group of 30 coaches will complete their 15-month training in November 2005 and the second group will begin their journey in September 2005. Once completed, there will be 60 competent coaches volunteering their time and talent to help entrepreneurs in the region.

The community leaders participating in KECI come from all walks of life. Many have close ties to agriculture and are active community leaders. Some bring business experience to the program. Most importantly, they all have a willingness to be creative and think outside the box and a strong commitment to helping their communities and region by nurturing entrepreneurs. The entrepreneurial coaches complement rather than compete with existing support providers. They are trained to ask tough questions, demand hard work and follow through by the entrepreneur and to network with local, regional and state service providers. They introduce entrepreneurs into the system of service providers rather than providing any direct assistance themselves.

To learn more about this innovative approach to entrepreneur support, go to www.uky.edu/Ag/KECI.

RIPPLES FROM THE ZAMBEZI

If you are interested in learning more about Enterprise Facilitation™, we highly recommend Ernesto Sirolli’s book, Ripples from the Zambezi. Ernesto shares stories from his journey developing the enterprise facilitation model. The stories from around the world will inspire your work with entrepreneurs in your community.

Strategies for Youth Entrepreneurs
The young people currently in your rural community may be your greatest resource for changing attitudes toward entrepreneurship and for creating new business ventures.
However, we need to engage these youth, provide them with the skills and knowledge they need to be successful and support them as they develop and grow their ventures. National surveys of young people find that while many want to start their own businesses, few feel they have the skills to do so. What can you do?

A first step is to engage the youth in your community. Invite groups of students from the schools who have an interest in starting their own businesses and talk to them. Discover their dreams. Find out what ideas they have and what they are working on. Ask them what they need to make their dreams a reality, and then work with them to make this happen!

The next step is to use existing programs and models to build support for youth entrepreneurs:

Networking can work for youth as well as for aspiring and start-up entrepreneurs by linking young entrepreneurs with experienced adult entrepreneurs who can mentor them.
Education programs such as REAL and the National Federation for the Teaching of Entrepreneurship’s BizTech can be brought to the schools and after-school programs in your community.
Microenterprise programs can target youth.
Business plan and other competitions can get youth engaged in putting their business ideas into a feasible plan. There are resources and model programs for you to consider as you develop your strategy.

Youth Entrepreneurship Partnership

The Youth Entrepreneur Partnership (YEP), a program of the Nelson Institute in Nebraska, started in 2000 as a collaboration among a number of agencies in a nine-county rural region. YEP addresses four main aspects of entrepreneurial development among rural students: awareness and education, mentoring and apprenticeship, business training and leadership development. Two main components of the program are a career fair and an entrepreneurship curriculum. In its fourth year, the career fair brings an estimated 300 to 400 students to the McCook Community College Campus during spring break. Entrepreneurs are available to visit one-on-one with young people interested in emulating them.

The entrepreneurial curriculum, “Buzz on Biz,” helps build skills by exposing young people to entrepreneurship as a viable career option. Started as an after-school activity for 10th through 12th graders, Buzz on Biz is now available during the school day in three rural Nebraska high schools. When the YEP program is fully implemented, students in 8th through 12th grades will have opportunities to learn about entrepreneurship in their communities. In addition to the career fair and the Buzz on Biz courses, YEP is developing an apprenticeship program. The apprenticeship component is also in the early stages of development. For this program, YEP has been chartered as an Explorer Post. This provides a leadership model for the students as well as mitigating potential liability issues.

Although in the early stages, YEP’s goal to involve more young people in rural entrepreneurship could bring big payoffs to rural communities in the future.

Strategies for Growth-Oriented Entrepreneurs
Growth-oriented entrepreneurs have already made the commitment to grow their ventures. These entrepreneurs are already in business, so they’ve gotten through those difficult discovery and start-up stages. They are motivated to grow, which often means developing a new product or cultivating a new market. Their support needs are moving from more general forms of assistance to very specific, targeted business information needs. To effectively support these growth-oriented entrepreneurs, our support services must focus on:

Customized assistance
Higher order assistance
Peer support and networking
Expanding/strengthening the management team

CUSTOMIZED ASSISTANCE. As the growth-oriented entrepreneur’s needs become more targeted and specific, the support we provide must evolve as well. A growth-oriented entrepreneur will not be well served by sitting through a 12-week class in how to start a business. Customized assistance is provided one-on-one in response to very specific questions from the entrepreneur. The service provider might provide market research to help the entrepreneur better understand a new market. A university textile lab might develop a prototype product for a manufacturing entrepreneur to market to prospective customers. This assistance is designed to respond to the needs of the entrepreneur as they actively grow the business.

Kentucky Highlands Investment Corporation

Kentucky Highlands Investment Corporation (KHIC) is an economic development organization that uses the tools of debt and equity capital to create jobs and wealth in a nine-county region of southeastern Kentucky. This “capital led” strategy has evolved, leading to the creation of a sustainable model for entrepreneurial development in one of the poorest rural regions in the country. KHIC was founded in 1968—one of the original community development corporations funded by the federal government.

Over time, KHIC has become what we call an “entrepreneurial support organization” (ESO), with some important lessons for those seeking to create specialized organizations to support entrepreneurship.

LESSON ONE. KHIC focuses on the entrepreneur and her needs, not the business. In addition to putting together a financing package that works best for the entrepreneur, KHIC also provides the assistance needed for success. This assistance may be as simple as identifying marketing support for the entrepreneur or as complex as having a KHIC staff person work side-by-side with the entrepreneur for a year to turn a struggling business around.
LESSON TWO. KHIC staff members are well qualified (many are entrepreneurs) and have a strong commitment to the region. Deep roots in the region help to keep staff focused on the mission of KHIC. They also work hard to help struggling entrepreneurs rather than simply writing off the investment.
LESSON THREE. KHIC is creative and aggressive in tapping grants, state and federal resources to support the overall mission. These funds help the organization provide sustainable assistance and financing to the region’s entrepreneurs.
LESSON FOUR. A single ESO is unlikely to have a major long-term impact in a region unless it partners with others to create a culture of entrepreneurship. KHIC’s success over time encouraged the development of other entrepreneurial support organizations and helped to create a more entrepreneurial region. These partnerships also allow each ESO to focus on those entrepreneurs they can support most effectively—KHIC works with existing entrepreneurs whose needs are more sophisticated while other organizations focus on micro entrepreneurs.

KHIC has a long history in its region and benefited from strong federal support in its early years. However, the lessons learned can be applied to your efforts to create effective support organizations for entrepreneurs in your communities.

To learn more about KHIC, go to www.khic.org. You can also read a more detailed case study of KHIC under Stories in this section.

HIGHER ORDER ASSISTANCE. General practice attorneys and business counselors may be qualified to help a start-up entrepreneur with legal or financial questions. However, as we begin to support growth-oriented entrepreneurs, higher order services may be required. The growth-oriented entrepreneur who is developing a new product may need a patent attorney. A rapidly growing entrepreneur may need the capital and expertise that a venture capitalist can provide. If these services are not available locally, we need to develop a network of external service providers, often in nearby urban areas that can be tapped to help these growth-oriented entrepreneurs.

PEER SUPPORT AND NETWORKING. Whether you target aspiring, start-up or growth-oriented entrepreneurs, the importance of peer support and networking doesn’t change. The sophistication of the network may increase as the entrepreneurs actively pursue new opportunities for growth. The “front porch network” may give rise to a more formalized network like the Council for Entrepreneurial Development.

Entrepreneurial League System®

Entrepreneurs are made, not born. This belief is at the heart of the Entrepreneurial League System® (ELS) developed by Tom Lyons and Gregg Lichtenstein. ELS is based on two assumptions: successful entrepreneurship requires a set of skills and no two entrepreneurs have the same skill set. Most importantly, an entrepreneur’s skill set can be developed over time, making ELS a model for human capital development rather than simply business development.

Using the baseball farm system as a model, ELS is organized into leagues, moving from Rookie to Single A, Double A, Triple A and the Major Leagues. Based on an assessment of their skills, entrepreneurs are placed into a league level and provided with assistance to develop their skills and enable them to move up through the system. Service providers are also organized into league levels, matching their services to the specific types of entrepreneurs they can most effectively help. For example, micro loan providers might work with Rookie and Single A entrepreneurs while venture capital investors might work with Major Leaguers.

The ELS system provides benefits to entrepreneurs, service providers and the community or region. For entrepreneurs, the system provides a very clear path to success—it is clear how to enter the system, what skills you need to develop and what resources are available to do so. For service providers, the system works because it directs entrepreneurs to the service providers who are best equipped to help them. And for the community or region, ELS offers an opportunity to support entrepreneurship at a scale that can truly transform the region.

So, how is ELS working on the ground? The most significant implementation of ELS is occurring in the Advantage Valley region of West Virginia. This multi-county region includes both urban and rural places, providing a good test for the ELS model. Advantage Valley began recruiting entrepreneurs in the fall of 2004 with a goal of having 48 entrepreneurs organized into Rookie, Single A, Double A and Triple A teams. Anecdotally, we know that ELS makes sense to entrepreneurs. Advantage Valley ELS has received significant foundation support to fully implement the model so keep a watch on West Virginia!

To learn more about ELS in West Virginia, go to www.advantagevalleyels.com.

EXPANDING/STRENGTHENING THE MANAGEMENT TEAM. An entrepreneur on her own may work fine in the early stages of starting a business. Growth-oriented entrepreneurs, however, often begin to face constraints on their ability to manage a growing enterprise. A part-time bookkeeper might work well for a start-up, but a growing venture may need a chief financial officer. The entrepreneur may be able to manage employees when the business is family run but a growing venture may need a human resources director. Building this new management team can often be a challenge for entrepreneurs. It’s hard to share power in an organization, especially one you have built from the ground up. However, it’s even harder to be successful without an experienced entrepreneurial team. These entrepreneurs need help recognizing their staffing needs and finding the right people to fill those needs. For example, Kentucky Highlands helped one of their entrepreneurs find a CFO, even to the point of conducting interviews and recommending candidates.

The more sophisticated needs of growth-oriented entrepreneurs require different entrepreneurship development strategies. Two models, HomeTown Competitiveness and Economic Gardening, offer different approaches to supporting growth entrepreneurs.

HomeTown Competitiveness

HomeTown Competitiveness (HTC) is a comprehensive approach to long-term rural community sustainability. This approach goes beyond the traditional tunnel vision of economic development. HTC helps the community focus on four interrelated strategies that depend on each other for ultimate success. The first and most important strategy is to build a skilled and increasingly inclusive leadership group with the capacity to improve and sustain the community. The second strategy is to engage and attract youth and young families. The third strategy is to act now to capture a portion of the wealth that will transfer between generations. And, the fourth strategy is to use the transferred wealth to energize and support entrepreneurs to build local businesses and create jobs.

The steps in the HTC process mirror what we’ve been talking about throughout this website—determining readiness, making the case, assessing your community, developing targeted strategies, and implementing your plans. Let’s focus here on how strategies were targeted to specific types of entrepreneurial talent in the HTC model.

HTC was piloted in 2002 in Ord, Nebraska, rural Valley County—population 5,000. Ord is rural by anyone’s definition, located over two hours from the nearest Interstate. While visiting entrepreneurs in Ord as part of the assessment process, the local leadership team discovered something remarkable—at least 10–15 entrepreneurs with growth potential and motivation! The team also identified a number of Main Street businesses that were grappling with (or soon would be) how to transfer their businesses to a new generation of entrepreneurs and keep the businesses in Valley County. This visitation process gave the leadership in Ord a target for strategy development—growth-oriented entrepreneurs and business transfers.

Armed with these targets, the leadership team began to develop strategies to help these entrepreneurs, including more customized assistance by service providers. In the years since HTC was piloted in Ord, a number of good things have happened. The town has a strategic set of goals for economic development and is focused on those entrepreneurs who can have a real impact on the local economy. Both youth and adults have participated in the new leadership program that is now institutionalized in the community. The goal of retaining at least 5% of future wealth transfer has been exceeded. Most importantly, the people of Ord are actively engaged in the process of revitalizing their community and are hopeful about the future.

You will find more information on the HTC model under Stories in this section.

Economic Gardening

The seeds of economic gardening were sown in Littleton, Colorado, in 1987. With a new director of economic development, Chris Gibbons, and several thousand laid off employees from the community’s major manufacturer, the city pioneered an alternative to the traditional economic development practice of hunting for new industry. City officials decided to grow their own jobs through entrepreneurship rather than trying to recruit jobs into the community. The approach was to build the economy from the inside by nurturing and growing entrepreneurs—the concept of economic gardening was born!

In Littleton, the focus of their economic gardening efforts is on high growth companies—those few companies that can really drive a local economy. Knowing that these companies do well in an environment where information and innovation flow freely, the city focuses on the following:

PROVIDING INFORMATION. Entrepreneurs located in Littleton have access to a wealth of information provided at no or limited cost by the city. An entrepreneur can have a marketing list developed or have an analyst produce a report on industry trends using any of the many databases or thousands of publications the city can access. Another entrepreneur may use Geographic Information Systems (GIS) software to map customer addresses. Access to information is vital for new entrepreneurs who may not have the resources to hire marketing experts or to develop the internal capacity to process such information. The city, in essence, becomes part of each entrepreneur’s team.
INVESTING IN INFRASTRUCTURE. Like most cities and towns, Littleton invests in basic physical infrastructure such as streets, sidewalks and water systems. As part of economic gardening, however, the city also invests in infrastructure that’s important to entrepreneurs—quality of life investments like recreation and open space, great schools and festivals. And, they invest in “intellectual infrastructure”—training programs, connections to higher education institutions and other means of keeping the skills of the community’s entrepreneurs sharp and their businesses competitive.
MAKING CONNECTIONS. Leaders in Littleton believe that entrepreneurs need to connect to other entrepreneurs to stay on the cutting edge. So, the city facilitates linkages to trade associations, other companies, universities and think tanks where entrepreneurs can network and be exposed to new forms of innovation.

Economic gardening provides an effective set of support services targeted to growth entrepreneurs in Littleton. Can it work as well in your rural community as it does in the city of Littleton? Remember, there’s no silver bullet! However, the concepts behind economic gardening—growing your own, targeting assistance to specific entrepreneurial types, and providing information, infrastructure and connections—can be applied in communities of all sizes.

For more information on economic gardening, go to www.littletongov.org/bia.

Strategies for Entrepreneurial Growth Companies
Entrepreneurial growth companies are fast growing and innovative. They have tapped into new markets, developed new products and are using new business models. They may be homegrown, like Cabela’s, or the entrepreneur may have come to rural America to be closer to family, natural amenities or a quieter lifestyle. Whatever the reason, entrepreneurial growth companies in your midst should be nurtured and supported, but in different ways.

Entrepreneurs operating these high growth companies often have the skills and the management team needed to grow the business. What they may require is support from the external environment:

Room to expand the business to a new and larger building or site.
Access to capital, both debt and equity, and the ability to develop a relationship with financial advisors in the community or region.
Quality workforce both in terms of employees and management with the skills required by the growing business.
Quality infrastructure, both traditional physical and high tech telecommunications infrastructure, as well as quality of life infrastructure, such as good schools, recreation facilities and natural areas.
Willingness on the part of the community to listen and respond to their needs so that issues can be resolved quickly and collaboratively.

These entrepreneurial growth companies are best served by the higher order support systems we described earlier.

Investing in Entrepreneurship Strategies

Now that we’ve described how to target strategies by entrepreneurial type, you might want to work through an exercise of investing in these alternative strategies. Using what you learned through the assessment and targeting process, use the Economic Development Investment Exercise under Tools in this section to begin to develop the set of programs that will make up your entrepreneurship development strategy. Use the team you put in place for the assessment process and work through this investment exercise. Try to come to consensus on where your dollars are best spent to achieve results.

Elements of Successful Practice

We like to say, “It’s the practice, not the form” when we talk about entrepreneurship development strategies. What we mean is that it matters less whether you choose to support growth-oriented entrepreneurs through an incubator strategy or through customized assistance at the Small Business Development Center. What really matters is how you put into practice the strategies you choose.

By observing successful entrepreneurship strategies since 1999, we’ve discovered the following elements of successful practice:

ENTREPRENEUR FOCUSED. The strategy focuses on the entrepreneur and what he needs to be successful. It is as much a human resource development challenge as it is about creating new ventures.
COMMUNITY BASED. Successful strategies have strong and broad support within the community. The community is committed to creating an entrepreneurial environment in which entrepreneurs can be nurtured and grow.
ASSET-BASED APPROACH. Strategies grow out of a thorough understanding of the assets available in the community to support entrepreneurs and an assessment of the types and needs of entrepreneurs.
STRATEGICALLY TARGETED. Recognizing that resources are limited, successful strategies target specific types of entrepreneurs based on the initial assessment and the development goals in the community.
ACCESS TO RESOURCES. The strategy builds on local assets but also taps external resources to provide the support that entrepreneurs need.
PROVISION OF THE BASICS. Successful programs insure that basic services, particularly networks, are provided to entrepreneurs.

Just as importantly, we have seen entrepreneurship strategies fail when they:

STRESS THE FORM OVER THE FUNCTION. Incubators that are little more than real estate developments will not provide the type of support needed to nurture entrepreneurs.
LACK OF FOCUS. Programs are not successful when they try to meet the needs of different types of entrepreneurs with standardized “one size fits all” programs.
LACK OF STAYING POWER AND RESOURCES. It takes time to support and nurture an entrepreneur. If support programs lack funding and resources, they are unlikely to be around to help the entrepreneur when the next crisis arises.
FAILURE TO CONSIDER THE NEED TO CHANGE THE CULTURE AND ENVIRONMENT. If we don’t work to create a supportive culture in rural America for entrepreneurs, support programs may well fail to achieve the desired outcomes.

Additional Resources

As part of the RUPRI Center’s training materials, we have developed an Entrepreneurial Pathways series. Each Pathway provides more detailed information on strategies that you can use to support aspiring and start-ups, growth-oriented, youth, and business transfers. You’ll find more information on the Entrepreneurial Pathways series under Tools in this section.

There are many sources of information on the strategies we’ve described in this chapter. To help you get started, we recommend the following:

For information on networking, check out Building Entrepreneurial Networks by the National Commission on Entrepreneurship. This publication includes case studies of some premier networking organizations including the Council for Entrepreneurial Development. You can find this publication under Supporting Materials in this section.

For information on microenterprise, the Association for Enterprise Opportunity is the trade association for microenterprise associations. They provide information and training that is very useful to both new and experienced organizations. www.microenterpriseworks.org

For information on incubators, the National Business Incubation Association is the trade association for organizations involved in business incubation. They offer training and information resources to their members. www.nbia.org

For information on youth entrepreneurship, the Consortium for Entrepreneurship Education (www.entre-ed.org), REAL Enterprises (www.realenterprises.org) and the National Foundation for Teaching Entrepreneurship (www.nfte.com) all provide information on curriculum, standards, and innovative programs to expose youth in your communities to entrepreneurship.

A good overall publication on rural entrepreneurship strategies is “Building New Economies in Rural America,” the proceedings from the Tools for Entrepreneurship Conference sponsored by the Appalachian Regional Commission. The publication is available online at http://www.arc.gov/index.do?nodeId=1135.

The Center has more resources and can provide additional assistance to you as you support entrepreneurs in your community. To access Center Resources, click on our logo.