Rural Entrepreneurship: Best Practices & Practical Advice

1. Rural Entrepreneurship: Best Practices & Practical Advice Chuck Palmer Iowans for Social & Economic Development Des Moines, IA

2. Iowans For Social & Economic Development: Mission, Vision & History Mission: To create opportunities for low and moderate income Iowans to increase income and achieve financial stability. Vision: To see vibrant Iowa communities where all families and individuals have the opportunity to find financial stability and success.

3. ISED’s Work in Microenterprise Development • ISED Provides Comprehensive Small Business Education Courses & Technical Assistance • Business Plan Creation • Financial Plan Analysis • Market Research • Viability Assessment • Start-up Support • Access to microenterprise resources • Access to other asset building & supportive services • Through our classes and supportive services: • 2,172 individuals have been assisted to start, expand, or strengthen their businesses • 5,995 clients have completed our microenterprise training • Over 10,000 of our clients have been involved in microenterprise program classes • Over $11.3 million in business capital has been accessed

4. A Road Map to Rural Entrepreneurism • Microenterprise & how can it benefit your community • Characteristics of a Successful Entrepreneurial Community • Components of a Successful Microenterprise Development Program • The Microenterprise Growth Continuum • Feasibility Studies & Business Plan Building • Challenges & Gaps • Overcoming Challenges & Gaps • Success in Practice: 9 Successful Community Intervention Strategies • Now What: Building Your Own Successful Community Strategy

5. What is Microenterprise? • A small business that: • Has 5 or fewer employees • Requires seed capital less than $35,000 • Often utilized as an economic development strategy and has gained momentum as a poverty alleviation strategy as well

6. What could microenterprise development do for my community? • A 2004 Aspen Institute study of 17 micro-enterprise development organizations found that their 560 microenterprises: • Generated $43.8 million in revenues • Provided $6.8 million in income for owners and also • Employed 648 full-time workers

7. Characteristics of a Successful Entrepreneurial Community • Demonstrates leadership and promotes successful role models. • Provides training and technical assistance at both the youth and adult education levels… focus on financial literacy and asset development. • Develops community networks of support, mentoring, and financial assistance… focus on improving access to a broader marketplace. • Fosters a culture that recognizes and values entrepreneurship. • Provides access to start-up capital. • Supports & engages all dimensions of diversity

8. Components of a Successful Microenterprise Development Program • Training and Technical Assistance • Credit and Access to Credit • Access to Markets • Economic Literacy and Asset Development

9. Microenterprise Growth Continuum:Women Economic Ventures (WEV) Program, CA

10. Feasibility: the Fundamental FiveHow ready is your community? • 1. Market Feasibility • Who is the potential customer? • What is the customer’s profile (age, income, buying habits)? • What is the customer’s industry status? • What market volume will you need? • What will the market reaction be to your service or product? • How will you package and distribute your product(s) or service(s)? • 2. Organizational Feasibility • What skills will the owner need? • How much time will the business demand? • What types of personnel will you need (quantity & skills needed)? • Are the personnel types that you are seeking readily available in your community? • How will the business responsibilities be distributed across personnel?

11. Feasibility: the Fundamental FiveHow ready is your community? • 3. Technical Feasibility • Are there business locations that are available, cost effective and have the right zoning/codes? • How will production of the product work? • Who will be the suppliers? • What is your business volume capability? • Do you have the availability of leasing commercial space? • What are the regulations that are associated with your product? • What insurance will you need & what are the costs of that insurance? • 4. Competitive Feasibility • What or who is your existing competition? • What is your competitive position? • What are the potential reactions of your competitors? • How great is the potential for new competition? • How can you differentiate yourself from your competition?

12. Feasibility continued… • 5. Financial Feasibility • How much capital is needed (fixed costs, start-up costs & working capital for 1-3 months)? • How much capital does the owner have available? • How much capital is available from private investors? • How much capital remains that needs to be borrowed? • What is the income and profit potential of the business? • Basic Cash Flow • Owner’s living Costs • Loan Repayment • Operating Costs • Break-Even Analysis

13. Components of a Successful Business Plan Can your community support entrepreneurs in understanding and developing these business components? • Introduction • Give a detailed description of the business and its goals • Discuss ownership of the business and its legal structure • List the skills and experience you bring to the business • Discuss the advantages you and your business have over your competitors • Marketing • Discuss the products and services that your company will offer • Identify customer demand for your products and services • Identify your market, it’s size and locations • Explain how your products and services will be advertised and marketed • Explain your pricing strategy

14. Components of a Successful Business Plan…continued • Financial Management • Explain your source and the amount of initial capital • Develop a monthly operating budget for the first year • Develop an expected return on investment and monthly cash flow for the first year • Provide projected income statements, balance sheets for a two your period • Discuss your break-even point • Explain your personal balance sheet and method of compensation • Discuss who will maintain your accounting records and how they will be kept • Provide “what if” statements addressing alternative approaches to problems that may develop • Operations • Explain how the business will be managed day-to-day • Discuss hiring, personnel procedures • Discuss insurance, lease, or rent agreements, and issues pertinent to your business • Account for the equipment necessary to produce goods or services • Account for production and delivery of products and services

15. Challenges Faced by Many Rural Communities • Geographically Isolated • Changing Demographics • Aging…people and places • High Unemployment • Low Wage Jobs • Changing Economic Base • Seasonal Employment

16. Key Entrepreneurial System Gaps to Overcome • Capital Gap • Information and Knowledge Gaps • Institutional Gaps for Training and Technical Assistance • Delivery and Coordination Gaps • Cultural Gaps

17. Strategies to Overcome Challenges & Gaps • Engage youth and retirees • Foster competitive creativity • Utilize technology to expand capacity and broaden the market • Continue to build capacity in the community through workshops, events and networking • Seek out creative financing options (cooperative funding models or charitable asset pools) • Foster strategies that will engage minority populations in the community and ensure an equal share of potential prosperity to all community members

18. The Nebraska Center for Leadership Development: A holistic approach • Hometown Competitivenessis a project of the Heartland Center for Leadership Development, the Nebraska Community Foundation, and the Center for Rural Entrepreneurship. Their comprehensive approach encourages communities to take action in four strategic areas. • Leadership development:to strengthen the capacity of residents to improve and sustain their community. • Youth development:to support and enhance the idea of adults and youth working together to create opportunities for youth to stay in or return to the community. • Developing charitable assets:to strengthen and sustain charitable giving at the local level in order to build an endowment that will sustain local civic institutions and create a new source of opportunity capital for community economic development efforts. • Entrepreneurial development:to identify and assess entrepreneurial talent in the community and to devise an economic development strategy to increase entrepreneurial business development

19. MyEntreNet: Capacity building through online strategies In 2001, the University of Northern Iowa made a pilot investment in rural economic vitality with the development of an entrepreneurial development system. • Goal: develop a sustainable model that connects geographically isolated entrepreneurs to services and people to become competitive in a global economy • Provides a technological bridge & community capacity building for entrepreneurs both in person and online. • Based upon four key principles: Community Empowerment, Business Assistance, Capitalization and Networking.

20. AUSA: Fostering Hispanic entrepreneurship in rural communities ACCION USA (AUSA) Hispanic Microloan Project • With the support of the Northwest Area Foundation, AUSA is helping diversify and strengthen the economies of rural communities by providing credit and other financial services to rapidly-growing rural Latino communities. AUSA’s service strategy has three components: 1. Loans: AUSA will disburse microloans directly to self-employed residents of these communities, using its Internet and telephone loan application systems. Small business loans of $500 to $25,000 will be provided in addition to $500 Credit Builder loans for low-to-moderate income individuals who do not have a credit history. 2. Outreach and Marketing: AUSA will conduct grassroots outreach and marketing activities to inform community residents of its services. 3. Capacity Building: AUSA will conduct a series of training activities with local groups and organizations to enable them to help individuals access their services and to continue with outreach activities to ensure continuity beyond the timeline of the project.

21. Shop the FrontierNon-profit rural marketplace on the Internet • Shop the Frontier is a project of Stone Soup, a nonprofit organization based in Washington and serving the Pacific Northwest. • Mission: to create sustainable rural economies by teaching the skills necessary to thrive in the 21st century. • Shop the Frontier is a project of Stone Soup, a nonprofit organization based in Washington and serving the Pacific Northwest. • Their mission is to create sustainable rural economies by teaching the skills necessary to thrive in the 21st century. • http://www.shopthefrontier.com/VFstore/

22. 5 More Examples of Successful Rural Community Intervention Strategies • Access e-Commerce Workshops • Conducts workshops in seven communities to enhance business skills and knowledge on the use of internet marketing and e-commerce to augment business profitability. • Crawford County Entrepreneur Development Network • Identifies local entrepreneurs, identify local entrepreneurial needs and organizes local training and networking meetings to assist entrepreneurs. • Mount Pleasant Area Business Plan Competition • Created an annual, locally sponsored business plan competition. Winners have included an injection molding company, a bed and breakfast venture involving a historical venue, and an upscale kennel and pet care business. • Carroll County Entrepreneur Coaching and Mentoring Network • Organizes local coaching and mentoring network to provide for training, sharing ideas for solving problems related to entrepreneurship. • Micro Enterprise Entrepreneur Workshops • Conducts a series of training workshop for micro-enterprise entrepreneurs in Red Oak, Villisca, and Mount Ayr, and one additional community at $2,500 per community.

23. Now What? 1. Build Community Leadership • Build Leadership • Create a planning group made up of: • A group from entrepreneurial support system • Key Stakeholders • People able to directly provide supportive services • A group of potential entrepreneurs • Remember to include individuals that represent all of the diverse populations in the community

24. 2. Define Your Vision • What is your goal or entrepreneurial vision of the community? • How do you envision the community to look in five years? • Make it realistic • Make it community-based • Make it holistic

25. 3. Map Your Assets • Asset Mapping • Does your community have the continuum components? • Do a “community feasibility study” • What systems or services need to be in place to create an entrepreneurial community? • Build a business plan • Think of your community as a business • Can you make a community business plan containing all of the necessary elements? • Resource Availability • Local • State • National

26. 4. Do a SWOT • Based on asset mapping, assess the following for your community: • Strengths • Weaknesses • Opportunities • Threats

27. Strategize to Close Gaps & Overcome Challenges • Use your Community Leadership Group • Create a list of strategies to: • Capitalize on Strengths • Overcome Weaknesses • Identify Opportunities and Plan to Utilize Them • Examine & Make a Plan to Minimize Threats • Bundle and Integrate Asset Development Strategies • Not individual programs, but a system approach • Earn It, Keep It, Grow It

28. “Just Start” • Many rural communities have been successful in this endeavor • There are many resources available that can support your efforts • Be creative and build on your assets • YOU can make it happen!

29. Chuck Palmer President ISED Ventures cpalmer@ised.org 515-283-0940