Busin

ess Ac

celera

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olkit Bethel Business

Accelerator:Assessment and Growth

Planning Toolkit

by

MARVIN AUSTIN, DIRECTOR OFBUSINESS DEVELOPMENT

EDWARD COLEMAN, VICEPRESIDENT OF COMMUNITYECONOMIC DEVELOPMENT

Bethel New LifeBethel New Life4950 W Thomas4950 W Thomas

Chicago, Illinois 60651Chicago, Illinois 60651773.473.7870773.473.7870

www.bethelnewlife.orgwww.bethelnewlife.orgwww.westsideforward.orgwww.westsideforward.org

Bethel Business Accelerator:Assessment and Growth Planning Toolkit

Bethel Business Accelerator:Assessment and Growth Planning Toolkit

by

MARVIN AUSTIN, DIRECTOR OF BUSINESS DEVELOPMENT

EDWARD COLEMAN, VICE PRESIDENT OF COMMUNITY ECONOMIC DEVELOPMENT

Bethel New LifeBethel New Life4950 W Thomas4950 W Thomas

Chicago, Illinois 60651Chicago, Illinois 60651773.473.7870773.473.7870

www.bethelnewlife.orgwww.bethelnewlife.orgwww.westsideforward.orgwww.westsideforward.org

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Bethel Business Accelerator:Assessment and Growth Planning Toolkit

In working with entrepreneurs in the NBDC Bethel Business Accelerator Program wehave found that the unique circumstances faced by urban and African Americanentrepreneurs must be considered fully and the results built into the support andgrowth strategies developed with the participant businesses. There are challengesrelated to the environment and conditions of the communities that theseentrepreneurs are working in (resource accessibility attributes), and there arechallenges related to the experience and skill level that many entrepreneurs bring totheir enterprise (entrepreneurial capacity attributes). Combined these challengesmake up the Urban Entrepreneurship Challenges. The West Side of Chicago is made up of five neighborhoods; Austin, East GarfieldPark, West Garfield Park, Humboldt Park and North Lawndale. It is a community ofalmost 225,000 people, primarily African American and Hispanic/Latino. The WestSide of Chicago has suffered from many years of economic and education resourcedisinvestment that has led to high unemployment, deteriorating housing stock, aneducation attainment gap, high crime rates and other social problems. These conditions create very challenging barriers for the entrepreneurs trying toestablish and grow businesses on the West Side of Chicago. The market andrevenue potential is restricted by high levels of poverty and by the perception that thecommunity is not safe for customers or workers. Many of the entrepreneurs also facepersonal and family challenges that impact their ability to be successful. Despite these challenges and obstacles, we believe that business growth can besupported with assistance that is customized to the needs of the individual businessand entrepreneur. The support must also be flexible and over a sufficient time periodto account for the unique challenges of urban entrepreneurship.

Our Assessment and Growth Planning Charts are designed to make an accurateassessment of the business and entrepreneurs’ growth capacity, and identify theurban entrepreneurship barriers that are most likely to be impediments to theirsuccess.

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CHARTS:

Business Resource Requirements

Resource Accessibility and Entrepreneurship Capacity Attributes

Urban Entrepreneurship Challenges

Stage of Enterprise Development

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Business Resource RequirementsThe Business Resource Requirement chart is a rating scale of the resourcesthat are required by all business. The required resources are grouped in fourareas:1. Business Concept2. Physical Resources3. Core Competencies and Skills4. Market-Related Resources

An honest and accurate assessment is made of the resources the business andentrepreneur possess, and those which need to be obtained. This assessmentsets the baseline for acceptance into the accelerator program.

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Resource Accessibility and Entrepreneurship Capacity The Resource Accessibility and Entrepreneurship Capacity Chart identifiesattributes of the community and entrepreneur that influence the supply of arequired resources or the ability to use a required resource. The attributes arerelevant to all entrepreneurs. The four attributes related to ResourceAccessibility are Availability, Visibility, Affordability and Transaction Barriers. Thefive Entrepreneurial Capacity attributes are Self-Awareness, Accountability,Emotional Ability to Cope, Capacity and Creativity. These attributes are particularly important in urban and African Americancommunities where the only access need is not just access to capital(Availability), the need also includes access to information (Visibility), the cost ofresources (Affordability), and cultural and perception differences (TransactionBarriers). The Entrepreneurial Capacity attributes assess the entrepreneur’s ability to usethe resources that exist. These attributes are personal characteristics such asknowing your strengths and limitations (Self-Awareness), taking responsibility forresolving problems (Accountability), confidence and patience (Emotional Abilityto Cope), ability to effectively use resources (Capacity), and the ability createinnovative solutions (Creativity).

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Urban Entrepreneurship Challenges

While the Resource Accessibility and Entrepreneurial Capacity Attributes impactall entrepreneurs, the overlay of the Urban Entrepreneurship Challengesidentifies challenges that disproportionately affect urban and African Americanbusinesses. A thorough and honest assessment of these challenges will allowfor a more in-depth assessment and understanding of the support needs of thebusiness and entrepreneur.

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The final Assessment and Growth Planning Chart is the Stage of EnterpriseDevelopment Chart. The Stage of Enterprise Development Chart tracks thedevelopment of the business enterprise as it grows and moves into higher growthstages. The six stages of business growth used in this chart, as developed byLichtenstein and Lyons, are:

Stage 0 – Pre-Venture: begins with an interest or desire to start a business; endswith emergence of an organization and an economic offering ready to be sold Stage 1 – Existence or Infancy: begins when the business is launched; endswhen the business reaches breakeven from sales Stage 2 – Early Growth: begins with breakeven from sales; ends with theestablishment of a sustainable business Stage 3 – Expansion or Sustained Growth: begins with healthy profits and clearindication of growth potential; ends with the company emerging as a growthbusinesses Stage 4 – Maturity: begins when the company has achieved advantages of sizeand stability; ends when the status quo is favored, even in the face of competition Stage 5 – Decline: begins when market share declines due to complacency andrisk avoidance; ends when the company is sold, closed or reinvents itself.

The majority of businesses that accelerator programs in communities like theWest Side of Chicago will work with will be in the first three stages of growth (Pre-Venture to Early Growth). Therefore, in the attached Enterprises StageDevelopment Chart, the interim steps of development have been included in eachstage. The interim steps allow the entrepreneur to set near-term milestones ofprogress and to identify priority development tasks that will lead to growth.

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Lessons LearnedLessons LearnedWorking with entrepreneurs in theBethel Business Accelerator welearned several very valuablelessons that will be applied in ouraccelerator program. They include:

The need for well-defined selectioncriteria that identifies businesseswith growth potential.Structured, customized and in-depth support to a smaller numberof businesses, as opposed to supportprovided to a larger group ofbusinesses.Stimulating business growth inurban and African Americancommunities will requireunderstanding of the uniquechallenges facing the businesses.

During the first year ofaccelerator activity, twenty-fivebusinesses were supported. Twostories of success include:

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SUCCESS STORY 2SUCCESS STORY 2A bean pie and fine foods producer with sales averaging several thousand dollarsa month, with a small, stable customer base among small religious, health foodand Afrocentric cultural stores is positioning the company for growth. The growthplan includes expanding production capacity in a new kitchen facility andmarketing the bean pies to major retailers such as Mariano’s and Whole Foods.An investment from a family member is required to finance the growth. Bethel’ssupport included connecting the business to a supplier diversity program andassisting in the evaluation of the investment offer. A growth plan has also beenprepared to guide the expected growth of the business.

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Conclusion The successful development of accelerator programs inurban and African American communities will require theability of the program to accurately diagnose the strengthsand weaknesses of the businesses and the entrepreneurs. Itwill also require the ability to understand, and account for, thechallenges that are unique and disproportionate in thesecommunities. An accurate diagnosis will lead to a betterprescription of support that will help to launch and grow moresuccessful businesses.

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Bates (2013) posit that a push/pulldynamic is changing the shape anddirection of minority business in urbaninner cities thereby challenginghistorical barriers (poverty, finance,education, racism) and offering newopportunities. Inside the inner city,many individuals who preferred workas employees face barriers limitingopportunities for wage work are oftenpushed into entrepreneurship (Bates& Robb, 2014). Alternatively, manyprefer owning their own businessventures and chose to give up paidemployment when attractiveopportunities became available; in thissense, they were pulled into businessownership.

For decades, national, state, and localgovernments have attemptedinnumerable interventions in an effortto revitalize the economies of theinner-city U.S.A, with only limitedsuccess. Those interventionstrategies have subscribed to one ortwo approaches. The first is an effortto attract outside investment frompublic and private enterprise. Thishas generally focused on initiatives toencourage major corporations tolocate facilities in the urban core tocreate jobs for local residents andprovide up-to-date services.

The second urban economicdevelopment strategy has been totarget local, community-basedinvestment and economic activity.This focus is centered on enterprisedevelopment, as opposed to majorcorporate attraction. This strategyincludes a host of programs that arecurrently favored by many. This listincludes enterprise andempowerment zones, micro-lendingprograms, minority businessdevelopment centers, incubators andbusiness accelerator programs.

THE URBAN INNER-CITYENTREPRENEUR

EXPERIENCE

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The majority of entrepreneurs who operate in an urban inner-city context face challenges, barriers and nuances that areunique to that environment. These barriers stem from theconditions regarding poverty, isolation, racism, training andcrime. Any enterprise development program that is used inthe urban context must employ practices that are specificallydesigned to mitigate these obstacles: to help the urbanentrepreneur hurdle them to get to the resources he/sheneeds. For this group, resource access can take the formof finance, human resources, knowledge capital, training, andeducation (G. A. Lichtenstein & Lyons, 2006; R. Lichtenstein,Alexander, Jinnett, & Ullman, 1997). This documenthighlighted five challenges derived from the research by Durr,Lyon & Lichtenstein (2000) commonly encountered by newentrepreneurs.

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The historical research suggest manyentrepreneurs lack generationalexperience, best practice knowledgeor formal academic knowledge ofbusiness practices (G. A. Lichtenstein& Lyons, 2006).

Urban inner-city entrepreneurs faceproblems indigenous to thegeography unlike suburban markets oraffluent areas. The urban inner cityrequires unique adaptation skills andapproach. By that fact alone the start-up may be deficient in the businessand technical skills necessary forinnovation, business formation, andbusiness development over the longterm. The list of needed skills citedby community universities, andaccelerators managers covers a widevariety of competencies: businessplanning, decision making, technicaland operational skills and generalbusiness acumen (Ryzhoinkov, 2014)(Klein, 2014) (Durr, Lyons, &Lichtenstein, 2000).

Other managers suggest that theproblem that enterprise developmentprograms must attempt to solve is thatsome minority entrepreneurs do notknow where to go for help indeveloping the skills needed orobtaining appropriate consultation.

Most of the minority-focusedprograms offer business & technicalassistance, in addition to consultationregarding their clients (SBA, MBDC,and Chamber of Commerce). Themajority of this assistance is providedfree of charge. Some is providedthrough training sessions and one-on-one counseling. One program utilizescorporate sponsors to cover the costof offering training. Several programshold regular meetings, seminars,workshops, and training programswhere accelerator clients areintroduced to subject matter experts.In other cases, the program takesadvantage of its proximity to a majoruniversity or Minority BusinessDevelopment Center by way ofpartnering to offer courses onentrepreneurial development (Durr, etal., 2000).

1. Lack of business and technical skills

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2. Relationship with Business Champions

There are business champions in the urban inner-cityproviding visible examples of organization success,community support and social responsibility.Perhaps, establishing a relationship with theseindividuals is a challenge however, not animpossibility. That said, this is one of the mostattractive features regarding the accelerator model;developing relationships, access to mentors andone-on-one consultation. Additionally, there are instances in which role modelsor mentors do exist but entrepreneurs are unawareof them. This constitutes a visibility obstacle thatrequires a third party or accelerator to intervene andlink the two parties together (Durr, et al., 2000). Minority business leaders are the essential ingredientto sustained economic success because they serveas a bridge between the corporate world and minoritygroups. As their experience and power increases,they will be strategically positioned to facilitatecorporations in partnering, collaborations andalliances with both a minority workforce and minoritysuppliers (T. Boston, 2005). Research reveals thatminority leaders are rarely selected to serve oncorporate boards where relationships and resourcesmight accelerate business growth and expansion.Despite this historical barrier, there are courageouscorporate organizations and non-profits willing topartner with inner-city entrepreneurs thereby creatinggreater opportunities for leadership and businessgrowth (T. Boston, 2005; T. D. Boston & Boston,2007).

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3. Reluctance to approach establishedsources of assistance

Some responding program managers, owners andpolitical leaders posit that many minorityentrepreneurs are not comfortable with approachingbusiness assistance sources (banks, governmentagencies, etc.) in the city. In some cases, this isdue to past experiences with these sources.Entrepreneurs feel that they lack the necessarycredibility to get the help they need. The reluctance,itself, stands as a transaction barrier to obtainingresources and may also stem from a variety oftransaction barriers including prejudices relating torace, educational status, and level of experience.Emotions may also be involved. Feelings of a lack ofcredibility suggest a self-awareness obstacle. Theurban inner-city accelerator programs can assist newstart-ups in overcoming these obstacles (Bates,1989) (Klein, 2014) (Durr, et al., 2000).

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4. Isolation

Despite social media and the abilityto remain visible on the internet,there still exist barriers. The isolationcondition serves to make it moredifficult to stay abreast of newdevelopments, access resources,and develop markets, and establishrelationships. The isolation scenarioembodies business concept,physical, core competencies/skills,confidence, and market resources.Isolation can yield a lack of visibilityand capability regarding new ideas,technologies and sources ofinformation. It can also makeresources less available and lessaffordable. Finally, isolation, itself, isa transaction barrier to theacquisition of resources in the fourcategories (Baird, Bowles, & Lall,2013) (Durr, et al., 2000).

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5. Difficulty in establishing markets and managing demand Urban inner city entrepreneurs (start-ups, seasoned owners) historically, havedifficulty developing markets for their goods or services, especially outside oftheir neighborhood communities. Many entrepreneurs do not have contacts andor city-wide vendor relationships necessary to gain product/service strategicadvantage. In most cases, it is difficult for urban entrepreneurs to becomesuppliers to majority-owned corporations because they cannot show the suppliertheir ability to scale, meet demand or remain sustainable long term (Durr, et al.,2000).

The major challenge to markets might be perceived as access and availability: themarketplace exists, but they are not available in sufficient quantity to minorityentrepreneurs, based upon the following barriers: certifications, license, businessacumen or strategic fit.

Dr. Thomas Boston, urban market specialist posits that public and private-sectororganizations will benefit from dependable suppliers who can demonstratemanagement capacity regarding major opportunities. These activities shouldfoster minority development programs that will contribute to the economicdevelopment agenda of government—revitalizing inner-city communities,expanding the tax base, and creating new jobs (T. Boston, 2005).

The five challenges mentioned above can be further categorized into two types:resource access and entrepreneurial capacity building (Sriram, Mersha, & Herron,2007) (Pfeffer & Salancik, 1978) (Durr, Lyons, & Lichtenstein, 2000). Resourceaccess or dependences obstacles impact resource supply, while entrepreneurialcapacity obstacles affect the entrepreneur’s own ability to acquire, processmarket dynamics and use essential resources (Pfeffer & Salancik, 1978).

Entrepreneurial capacity is related to skills development, market businessacumen, evidence based goals and measuring results. The challenges are neitherpositive nor negative as viewed by some however, its vital the new start-upeffectively make a decision. Their ultimate impact rests with each entrepreneur’sattitude toward, and response to the challenge (Bates, 1995; Bates & Robb,2014) (T. D. Boston & Boston, 2007).

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Table 1.1 summarizes the points mentioned in the literature review bypresenting the barriers and proposed practice to address them. Theresearch indicates these are options and resources available for thenew start- up especially during the accelerator process that can make adifference.

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Baird, R., Bowles, L., & Lall, S. (2013). Bridging the “Pioneer Gap”: The Role of Accelerators inLaunching High-Impact Enterprises. Aspen Network of Development Entrepreneurs and VillageCapital, 33.

Bates, T. (1989). SMALL BUSINESS VIABILITY IN THE URBAN GHETTO. [Article]. Journal ofRegional Science, 29(4), 625.

Boston, T. (2005). The New Agenda For Minority Business Development. Kauffman FoundationSmall Research Projects Research 1(1), 67. Retrieved from Social Science Research Networkwebsite:

Boston, T. D., & Boston, L. R. (2007). Secrets of gazelles: The differences between high-growth andlow-growth business owned by African American entrepreneurs. The ANNALS of the AmericanAcademy of Political and Social Science, 613(1), 108-130.

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Dempwolf, C., Auer, J., & D 'Ippolito, M. (2014). Innovation Accelerators: Defining CharateristicsAmong Start-up Assiance Organizations. College Park, MD: SBA Office of Advocacy.

Dey, E. L. (1997). Working with low survey response rates: The efficacy of weighting adjustments.Research in Higher Education, 38(2), 215-227.

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Bethel Business Accelerator:Assessment and Growth Planning Toolkit

by

MARVIN AUSTIN, DIRECTOR OF BUSINESS DEVELOPMENT

EDWARD COLEMAN, VICE PRESIDENT OF COMMUNITY ECONOMIC DEVELOPMENT

Bethel New LifeBethel New Life4950 W Thomas4950 W Thomas

Chicago, Illinois 60651Chicago, Illinois 60651773.473.7870773.473.7870

www.bethelnewlife.orgwww.bethelnewlife.orgwww.westsideforward.orgwww.westsideforward.org

Busin

ess Ac

celera

tor To

olkit Bethel Business

Accelerator:Assessment and Growth

Planning Toolkit

by

MARVIN AUSTIN, DIRECTOR OFBUSINESS DEVELOPMENT

EDWARD COLEMAN, VICEPRESIDENT OF COMMUNITYECONOMIC DEVELOPMENT

Bethel New LifeBethel New Life4950 W Thomas4950 W Thomas

Chicago, Illinois 60651Chicago, Illinois 60651773.473.7870773.473.7870

www.bethelnewlife.orgwww.bethelnewlife.orgwww.westsideforward.orgwww.westsideforward.org

Bethel Business Accelerator:Assessment and Growth Planning Toolkit