The Inclusive Economy
Making Programs Pay for Themselves
By Lauren Williams on 05/14/2012 @ 04:30 PM
New Ways to Monetize Entrepreneur Services
Over the past couple years, SETI has worked with the Brooklyn Cooperative Federal Credit Union to help them develop a way to make their small business tax assistance program pay for itself by offering this service for a fee below market-rate. Countless other small business development organizations are exploring ways to improve the financial sustainability of their own business models as well. I got a glimpse into the strategies being used by microenterprise development organizations to do this at the Association for Enterprise Opportunity’s 2012 National Conference, The Power of Microbusiness two weeks ago.
I attended a session on “New Ways to Monetize Entrepreneurship Services,” where two high-performing microenterprise development organizations shared the creative ways they’ve identified to start generating more revenue. Angie Hawk-Maiden, President of the Appalachian Center for Economic Networks (ACEnet) shared a compelling story of the strategy she’s helped devise to raise the percentage of self-generated revenue at ACEnet from 25% in 2006 to 72% in 2012. ACEnet serves small business from 67 of Ohio’s 80 counties and some from other states as well; many of their clients are food manufacturers, so their expertise lies in developing the infrastructures and business strategies to help these microenterprises succeed. The strategies they employed to increase their self-generated revenue included offering more services in exchange for a fee:
- Technical assistance for business owners
- Infrastructure development
- Access to capital services
- Capacity building through product innovation, branding and adoption of technology
The technical assistance line of service they built includes working for loan funds with struggling business clients; ACEnet offers technical assistance to those business owners to create a win-win situation where loans can be salvaged and business owners can retain access to capital. They also deliver entrepreneurship for business owners through regional banks and universities. By consulting with other agencies, ACEnet has launched a new line of business around preparing economic assessments, value chain mapping and developing the infrastructures necessary for food production in other regions. The shared use of their incubator spaces and shared kitchens for food production have allowed them to drive their overhead costs down and encourage business owners to reinvest the savings they get from using communal spaces. ACEnet developed a group brand—“Food We Love”—to help their clients market collaboratively and more easily enter into specialty food producer markets. They also developed an incubator focused on wellness services, an easy fit for the region given the local market—many of the consumers buying their food producers’ products are interested in healthy, organic foods and holistic health services.
Another practitioner, Kathy Keeley from the Northeast Entrepreneur Fund, shared her story of a loan fund that underwent an extreme makeover—cutting staff and reorganizing programs—in order to survive in the midst of a recession and ultimately generate enough earned income to support at least 50% of its operations. Within three years, they reached this goal and grew the loan fund to their target amount—$5 million.
Naturally, the audience wanted to know they could reach the same level of self-sufficiency as these two outstanding organizations. Here’s their advice to the microenterprise field:
- It’s increasingly more challenging (nearly impossible) to get funding to support entrepreneurs in the “thinking” stage. Refer these very early stage entrepreneurs to SBDCs that have access to resources to support this type of activity.
- Other organizations seeking to generate more revenue have to make realistic projections about their costs, identify clear and realistic long-term goals, and get serious about downsizing if necessary.
- Always under-promise and over-deliver.
- Don’t continue programs that aren’t funded and always refuse grants that don’t cover 100% of your operating costs.
- Build your public value by communicating to your community what you have to offer, increase your organizational capacity and leverage political capacity where possible.
- Specialize, specialize, specialize! Don’t duplicate other organizations services, and if you see another organization duplicating yours, stop offering them.