The economic conditions of the area, which are characterized by the lack of business opportunities and credit support, triggered the need to establish a business assistance center to support economic development. For instance, according to the incubator manager, the experience in this part of the country is that 75% of all starting businesses fail within five years of operation. A number of these cases were used to point out the need for assistance and prevent this situation from happening. Further, most people were not able to afford professional help and were getting off to a bad start. Concurrently, there was not commercial space available to showcase regional products and crafts and to stimulate economic development or entrepreneurial interest. The result was an incubator without walls which includes a program to foster entrepreneurship and help business owners survive the initial stages of operation. The focus is on quality business education and services.
The goal is to establish clusters of buildings (i.e., a business incubator and retail village) which would serve the needs of entrepreneurs at different stages of their business ventures. Thus, there were plans to expand the business incubator to make more space available for in-house clients. Funds to support these plans come from internal tribal sources. In-house clients will be expected to pay below-market rent prices during the first year of operation and gradually increase payment during years two and three until they reach fair market prices and the time to move out. The ultimate goal of the program is to help economic development across the board by supporting existing and new businesses through business development and job creation strategies.
The first step in the plan of action was to hire a manager with business and financing expertise. Even though the current manager does not have a Native American background, he is well-accepted in the community. The manager has a background in accounting and had taught at the community college level for six years. His experience covered finance and management and included a diverse background in both private and educational settings. His perspective was that "if you are straight with your clients, give them the good news and bad news, are honest with them, and deal with them fairly and respectfully, you receive their backing."
The second strategy included a search of working business incubation and development center models to establish a comprehensive plan of action. The manager toured several incubators and development centers around the nation to get a sense of effective working strategies. He found that the majority of business incubators provided space on a low-rent basis but did not provide a comprehensive approach to education and training, nor a combination with a financing component. Some incubators did have funding opportunities, but the complexity of the format (e.g., county or state programs) was not appealing to the manager. After touring and reviewing various modes of operation, it was decided to establish a comprehensive plan and an assistance center focusing on services rather than just space at low cost.
The third strategy was to develop a comprehensive plan of action to support economic development efforts. The plan of action the manager proposed was a three-phase model to meet the identified needs. The first phase was business training through what the center calls a "14-week Greenhouse Program." This is a small business management course that addresses issues that would face someone wanting to start and operate a small business. Topics include bookkeeping, tax compliance, budgeting, and money management. The second phase was to develop a working strategy including the development of a resource center, business incubation opportunities, and a grant program modeled after the Small Business Administration's. Under this approach, entrepreneurs would have a choice of incubation operation to start a business, business assistance only, and/or access to information and credit opportunities. The third phase included the development of plans to build a retail village to provide an outlet for local businesses. This building complex was designed to have a Native American motif built around a restaurant, gas station, and a cluster of retail shops for the local artisans, all tied into a village concept. The business development department of the community was to cover a portion of this venture to promote economic growth.
The plan of action also included a review of extant models and operations to adopt and adapt the best practices to local needs. "You don't have to re-create the wheel over and over again when you try to implement these programs," the manager said. An example of the system is a graduate of the program who used the SBDC to take the "Greenhouse Program," get a business loan, and move from a home operation to a commercial space at the retail village. The key feature of the working strategies was the commitment of the community to fully fund and make this program work. Concurrently, there appeared to be a sense of community due to the size of the setting and the nature of the tribal approach behind this program. The center does not have a board of directors, but feedback is produced through a monthly breakfast meeting with the area Business Association. This association is represented by local business owners who act as an informal steering committee.
Using the Business Association as the springboard, the fourth strategy was to establish a network to provide a forum for individuals in business. Monthly breakfast meetings have been successful and attract between 25-30 people each time. This is an opportunity for entrepreneurs to voice their concerns and face challenges as a group. Reflecting upon these meetings, the manager indicated this is probably one of the most effective ideas implemented in collaboration with the Business Association.
Participant clients are charged $150 for the 14-week training program and do not have to be in the incubator to sign up. The program is open to all individuals who are interested in being self-employed. Upon graduation from the 14-week program, technical support is provided to those interested in starting up a business. In-house clients have 24-hour access to the center facilities. Some clients use the SBDC to do their paperwork but spend most of the day doing business outside so they have a fully functioning office without worrying about having to be there. Individuals working under this arrangement are called member businesses. Presently, there are only two businesses located physically at the SBDC all the time. The majority of the clients are member businesses who come and go when they need to. There are no fees for membership nor any charges for consulting or support services unless clients want to do some heavy mailing, in which case clients are charged postage. To support free access to these services, the SBDC relies solely on tribal funding. Services are advertised through radio stations belonging to the tribe, a local newspaper, and program flyers. Overall, this coverage is enough to inform potential clients of opportunities offered by the center.
Curriculum materials were drawn from extant materials and adapted to the needs and circumstances of the local clients; they include standard topics such as cash flow, inventory, personnel problems, and so forth. The program itself was modified to be sensitive to the tribal culture, but the goal was to provide education and training opportunities to be able to function effectively both on and off the reservation. Some of the curriculum materials were developed by the manager, and include a manual which provides basic practical information to manage a business. The manual is organized in three sections for training and actual practice purposes: Section A is cash receipts, Section B is cash payments, and Section C combines sections A and B to provide a monthly income statement. This manual system can be used to keep track of day-to-day operations and for tax purposes.
The second component of the training program involves developing a business idea into an actual business operation. The vehicle for this component is the development of a business plan which includes a market and financial assessment to evaluate its feasibility. A requirement for graduation is to have a fully functioning business plan that can be readily implemented. Participants are encouraged to use their business plan as a model to explore other business ventures.
The first program lasted 25 weeks and served to gauge the effectiveness of various approaches and the commitment of local individuals interested in business. Some of the activities were somewhat redundant, and the overall length was reduced to 14 weeks. However, the length of the program is flexible to accommodate individual needs.
The instructional approach is based on standard lectures, but the class size is usually small, limited to 15 participants. Further, instructors are sensitive about the culture, and the majority of them have experience with tribal issues. Thus, they are able to relate to contextual circumstances and applications of curricular activities drawing from tribal perspectives. However, the manager believed most business issues are universal and apply across ethnic groups. "Cash flow problems, personnel problems, management problems, those are pretty much the same. Now, why you have those problems may be different, but you still have the same problems," he said. The criteria to recruit instructors include previous work experience with the tribe, practical experience on topic of interest, and good presentation skills.
Other educational opportunities include a monthly workshop with topics based on demand which is taught at night. The goal is to provide classes based on need to encourage people to use SBDC facilities and services. Another opportunity is provided in the form of a 12-month business management course delivered through monthly sessions for people already in business. Some of the topics include the understanding of entrepreneurship, business resources, personnel training, marketing, merchandising, selling, customer relations, record keeping, and tax compliance. This course addresses in-depth, practical issues as a continuation of the 14-week Greenhouse Program.
Given the traditional environment of the tribal culture, women face some barriers typical of rural communities. The center manager reported the majority of the local businesses are male-oriented organizations. However, he added, there were female entrepreneurs taking advantage of SBDC services that were breaking the mold in the area. So far, the few women who have established business ventures in the community have been well-received and are doing well.
Some of the Greenhouse Program graduates have established business ventures to sell products and services. In a number of instances, the SBDC manager acted as a mentor to guide and assist graduates during the early stages of their business operation. The opportunities presented for entrepreneurial development to fill market gaps both in products and services are limited by the lack of funding sources in the area. The manager contended that "no matter how much training you had, no matter how much support you got, if you don't have any money to work with you are not going anywhere." Thus, the tribe established an in-house business loan and grant program to supplement any state and federal programs available in the area.
Once entrepreneurs become proficient in business management practices, there are opportunities for expansion. Thus, the SBDC was designed to provide a combination of specific and broad services to prepare entrepreneurs to move somewhere else or expand their business ventures. In this context, the business plan appears to be of key importance in developing entrepreneurial understanding of both business opportunities and the practical implications of starting up or expanding a business.
The college president's arrival from a Southern state brought a vision for economic development based on developing partnerships between agencies, the community, and the college. The college president felt that a rural community's survival depends on expanding and developing small businesses through a utilization of the community college as the resource for pulling together the necessary partners. He also believed the SBDC could foster ideas for economic development in the rural setting. The college president began his approach by involving the college staff in the development of a concept for economic development for the rural setting. Following this development, the community and various partners were approached for their involvement. Out of this planning emerged a small business development approach that was to be comprehensive in services, offering a small business assistance service, a college curriculum based on developing a business, an adult extension service to small businesses, and an incubator center for new potential business start-ups. All these services are now in place and operating through the community college.
The initial objective of the program, which turned out to be unrealistic, was to have students who were going to work for a company upon graduation instead go out and start their own business. Later, the program developed a more entrepreneurial philosophy with a focus on support services to new business ventures. Hence, the center's mission is to provide assistance to young and promising companies to optimize expansion opportunities and minimize threatened losses. To carry out this mission, a partnership based on a business assistance team has been developed through the Economic Development and Innovation Center of the college and the state's SBDC. The SBDC is a center that offers business assistance to small businesses in the area.
The center also offers courses to college students on starting new businesses; workshops and seminars for interested individuals who have started a small business or are interested in the same; and facilities for housing new business start-ups. The various services provided by the center are done so by the City Economic Development Office, the college's Innovation Center, SBDC, and the Vocational Division. These three entities work cooperatively through one office located at the college.
The business incubator provides small businesses with one-on-one services such as needs assessments, business planning, market research, marketing strategy, financial statements, cash flow analysis, and other business-related services. These services are provided through consulting and/or courses provided by the college. The services provided by the business incubator include clerical support; business consulting; management consulting; and office equipment such as computers, telephones, copy machines, and a fax machine. To join the business incubator, each prospective firm (1) must consider hiring a person for its business from a low to moderate income family, and (2) must have a business idea with potential to create jobs and bring outside dollars into the area. If the prospective firm is in the retail or service business, it must not compete with other firms already in incubation. In addition, firms should provide evidence of need in order to take advantage of the low rates for commercial space at the business incubator.
Incubator clients spoke about their reasons for seeking space in the business incubator, including the opportunity to hire students for temporary work at a lower pay scale than in the regular market or nearby cities. These students were usually involved in business courses and understood the processes involved in small business operations. Further, in-house clients were motivated by the availability of clerical and counseling services, commercial facilities and reasonable rent, and the training program. Low rental fees appeared to be the primary feature attracting small businesses into incubation, especially if there was no commercial space available in the community or the market rental prices were too high.
Another aspect of the college is the Business Management Center. Here the community may come in to the center and obtain help on various aspects of their business. The college assigns a student or two to work with the business on the specific technical problem. This service provides an effective partnership between the community and the college. Students benefit from temporary and part-time employment opportunities, in addition to exposure to a variety of business environments and operations. Entrepreneurs benefit from an available pool of temporary qualified labor and counseling services, while the college is able to provide practical experiences to students and assistance to entrepreneurs.
The interaction between the college instructors and the incubator clients is both formal and informal. If help is needed by an incubator client with a technical problem, the business development office contacts the faculty resource person to help resolve the technical problem. Students might also be assigned to work with the incubator client on an issue that had been discussed with a faculty member during the informal session. The incubator coordinator is kept informed about the activities between the incubator client and the faculty so that faculty and students maintain a balanced schedule.
Finally, an international emphasis has been developed through cooperation with the U.S. Department of Commerce, International Trade Administration (ITA). The college has been designated by ITA to serve the central portion of the state. The services include resources the college has on international trade, as well as consulting services for the clients interested in entering and pursuing an international business venture.
Students enrolled in the entrepreneurship program or in business courses can also obtain credits through a co-op or internship program. In fact, there appears to be a strong emphasis on this portion of the program. Co-op and intern students must set up four work-related goals for the co-op experience, and then write a comprehensive report on these goals. On-the-job visits are made with the participant students by the college staff to supervise their progress and provide necessary feedback. Further, the college offers a course for business planning that is based on projects that students are working on; this course can be taken more than once. Students are also required to develop a business plan as part of the course of study, with the instructor serving more as a consultant than as a lecturer. Credit hours are based on the number of projects students complete within the class relative to their business plan.
A computer program on how to develop a business plan is available to students and contains all the basic components of a plan, including management, finance, and marketing. Students are able to work with individuals in the community who use the SBDC to help them develop a plan or a business idea. The students in turn may earn credit through the co-op or internship program for this effort.
A critical aspect of running any business is to keep track of changes in the market, and this is doubly hard for a small business operator who is fulfilling more than one role in the day-to-day operations. SBDC provides a resource center for personal counseling and consulting to help clients with keeping track of market changes and to deal with pressing management issues as well. By providing a business center, along with a business incubator, the college can use its entrepreneurs and company managers as guest lecturers in courses that focus on business and entrepreneurship. They can participate in the formal courses or in the seminars that are offered by bringing practical experiences to the classroom and offering hands-on opportunities for students should they decide to participate in co-op or internship activities.
This entrepreneurship program creatively and effectively serves a rural setting. This success model was fostered by a philosophy developed by the college president to improve the economy of this rural community by getting involved in comprehensive development efforts. In addition, working partnerships have developed with government entities, providing mutual benefits by drawing from one another's resources and staff to serve the community.
The NBDC began as a college project involving private and public entities in the community to fund its activities. The local independent school system rented the building to the college for a dollar a year for three years. After the third year, the college purchased the building for $100,000. The manager observes that this was "really a community effort since the chambers and the banks have all pledged dollars to us as well as the school and the city. Originally, state legislation called for the start up of 11 incubators, though only four are currently in operation. The lack of financial support was the main reason for discontinuing activities in other incubators. Financial sources come from state lottery funds and fundraising activities. To this end, the incubator manager notes that the incubator is "not integral [to any state program] by any way, shape, or form. We're just providing a source for economic development and awareness to the communities and a service. But somewhere down the line I would say that if the dollars dry up, we're going to be totally funded by gifts. Because the dollars are not there; the legislative dollars aren't there for this college."
To provide consulting services, the center works closely with the Small Business Administration (SBA) to use the professional services of their consultants and case workers. Further, to encourage business start-ups, a small fund was established for this purpose. This program is called SELF, Self Employment Loan Program, and it provides up to $5,000 to each business starting up. Even though this is a small amount, the NBDC manager says, "that's a little program to help them get started, and we try to work with them as much as we can in terms of giving them some space at the center for meetings." Clients are charged $4 per square foot of office space. Office equipment is included with the rental fee. Computer equipment and a small business library are also available for clients. Clients receive clerical support and consulting services, if needed. NBDC provides these support services as a shared package which costs $100 per month and includes a set number of copies and faxes, telephone calls, and clerical time. NBDC staff pick up and deliver mail for Federal Express and UPS service and answer the phone for in-house and external clients.
In 1994, about 29 clients had graduated and moved to different locations in the community. Three of them had gone out of business, and a few others had moved out of state. Initially, NBDC focused on mentoring services to help new start-ups survive early stages of business development. Presently, clients are more mature, and they do not need mentoring services as much as they need professional consultant services. For instance, an entrepreneur observed, "[NBDC] staff know some accountants and attorneys who can help you with your business. My colleagues here also know people on the outside who will work with you like the bankers who may be more in tune to small businesspeople." One of the areas where clients need more help is in bookkeeping, the manager indicated, and this is an area where improvements need to be made in terms of services provided. In this context, mentoring services are provided by incubator staff only to clients who need them (i.e., entrepreneurs in early stages of business development) because they know how people are doing in all aspects of their business. For instance, some clients have worked for corporate America for some years and are more experienced, while others had to learn these skills the hard way.
NBDC staff recommend that clients take a business course or write a business plan prior to joining the center to learn about maintaining books. Presently, there are no set guidelines for graduation. As the manager explains, "We're very informal, and people just kind of move out and move in. We don't have a very structured graduation policy. We found that that is not fair to some little companies. In contrast, other companies in six months or less may not need us any longer because the dollars are flowing in, and they need to expand in a larger space." Generally, though, clients stay between two and half to three years. During their stay in the incubator, clients speak about the synergistic value of the experience. This is also an environment that lends itself to networking to find out about business connections and marketing opportunities.
In terms of education and training services, NBDC's manager serves as an outreach coordinator for the entire district. The objective is to work with local coordinators to develop and arrange for informal and formal business-related classes.
In the program, clients are asked to work on budgets, formulate a business plan, and conduct market research before they set up any kind of business. In this regard, the education and training component is an informal consulting service provided on an individual basis. Staff go through various key areas they feel the clients need to be successful as entrepreneurs in any kind of business. The formal component is provided as a pre-business session where the staff cover basic business and management aspects of running a company. The manager meets with prospective clients to ensure that they have financing and a business plan. The manager also researches the need for the product or service.
Workshops are arranged with the participation of prominent speakers and independent consultants who are willing to donate their time or co-sponsor education and training activities. NBDC charges a minimal fee for the classes to generate some money. The emphasis of these courses is on market research, marketing plans, business plans, financing, and legal aspects. These courses are offered periodically during the year, and a certificate is awarded to participants completing a coherent series of courses.
In regard to the delivery format of courses, entrepreneurs indicated they appreciate practical learning experiences to which they can relate their own situation. The delivery of the business courses requires participants to develop a business plan, detail it step by step, and then go over actual examples to show clients what it is like to perform real-life business tasks.
Based on their previous and present experiences, an entrepreneur suggested that a course of study on entrepreneurship offered at the community college should have the following five elements:
One, how to research, whether you think you have a viable product or service. The second one would be if you think you know how to determine where and who your market is. The third one would just be basically how to set up books and keep accounting and government records. And the fourth one would be to develop the overall business plan which really encompasses the other three. And the fifth one would be a psychological one to really talk to [students] about reasonable expectations.
Gender perspectives on entrepreneurship indicated different values on business opportunities. For instance, a male client expressed that a "successful entrepreneur is somebody that has enough money to live and enjoys what he's doing." A female colleague, on the other hand, views business ownership from a family-centered perspective: "One who has to have the support from her family if there is a family. That can be a real detriment because if you don't have support from significant others you may be under real stress. My family is first in my priority list." The perspectives of female entrepreneurs on being a minority in the business world focus on the ability to develop a flexible schedule to allow raising a family while accomplishing personal goals at the same time. Other clients identified several limitations in starting up businesses, including lack of money, difficulty identifying the needs of customers, lack of organizational skills, inability to establish communication, and ignorance about legal aspects of business.
Opportunities to foster entrepreneurship for both men and women have been evenly split over the years at this community, according to the NBDC manager, though she indicated that over the past few years there have been more women looking for business opportunities. However, she points out that in some instances, being white and male may be a disadvantage for entrepreneurs. She explained that, "If you are white and male, there aren't any programs for you. But if you are a minority or a woman, there are programs that at least you can tap into."