A new way of looking at small business development emerged over the past two years through a multi-year grant program funded by the Department of Health and Human Services (HHS). Supporting the Economic Expansion of Diverse Suppliers or SEEDS began at VCC in 2009. The program offered an opportunity to pilot a new approach to accelerating growth for small, woman and minority owned businesses in the state of Virginia. Successful results have confirmed the design of the program and prompted VCC to create a sustained line-of-business offering, Small Business Advisory Services.
The pilot project was built around a key issue identified through interviews with owners of small firms and procurement managers of local Fortune 500 companies. VCC partnered with students from the Masters of Urban and Regional Planning program at VCU who conducted the interviews. The study findings identified a few interesting points. First, many business development organizations target and serve start-ups and micro-entrepreneurs. The “larger” small businesses—those with established revenue and a mature operating history—are overlooked. These businesses are successful to a point, but many stop growing.
“We really came to appreciate the results of the interviews because we felt they showed us a particularly robust niche that had been previously overlooked,” offered Jennifer Pierce, VCC Vice President of Advisory Services and the grant project manager. “Good studies design good pilots and we proceeded confidently toward our program design.”
The pilot focus became clear. Address this problem: Minority and woman-owned firms with $2 million to $5 million in annual revenues get “stuck” and are unable to grow to the next level.
Further, the research offered some instruction on how to proceed. Subject companies needed better service to address their specific needs with an emphasis on building human capital and business management skills. The pilot designated a goal of 45 new jobs for low-income individuals as a specific outcome.
Fast forward two years to find VCC’s Jennifer Pierce and Ian Robinson reporting on the pilot’s results and impacts at a recent Board of Directors’ meeting. The team provided 1,100 hours of technical assistance over three years. Thirty-nine percent of those hours were dedicated to Financial Management skills. Human resources followed as the second most frequently addressed technical topic at 27 percent.
Jobs created offered the most dramatic news: 134 with approximately 60% of those positions filled by individuals qualifying as low-income under HUD guidelines.
Additional outcomes demonstrate the program’s effectiveness. In 2010, participating minority-owned firms averaged $2.8 million in revenue compared to the Virginia average of $1.1 million for minority-owned firms. Further, 41 percent of new hires were previously unemployed—an important statistic in today’s challenging hiring climate. Finally, under the topic of building competitive living wages, the new positions offered an average starting wage of $14.60 per hour just slightly below the average overall wage $16.75 per hour for employees of Virginia firms. Seventy-seven percent of the new positions offered health and sixty percent provided retirement benefits.
All of these figures point toward significant progress. VCC’s CEO and President Jane Henderson found additional cause for celebration. “One of the most compelling results I noticed relates to the cost per job,” added Henderson. “Our program costs slightly over $4,000 per job created compared to $4,800 through state-run programs and over $7,000 for federal programs. These numbers clearly validate the VCC approach.”
The Small Business Advisory Services program will continue and expand in order to serve an additional 15 firms and to create 100 new jobs in the coming year. SEEDS has surely entered a next generation of elevated impact and focus. Contact Jennifer Pierce or Ian Robinson at VCC to learn more about our Small Business Advisory Services, (804) 344-5484 or email@example.com or firstname.lastname@example.org.