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Small Business Technical Assistance: Helping
Businesses Grow
Executive Summary
This report is the work of a task force formed out of three regional
California technical assistance forums sponsored in 1998 by the California
Reinvestment Committee (CRC) and the Community Affairs unit of the Federal
Reserve Bank of San Francisco. Bankers and economic development professionals
attended these forums to improve ways in which financial institutions
and technical assistance providers could jointly expand access to management
training and credit for small businesses, which make up a large part of
California's business sector. Forum participants agreed that attracting
resources to the technical assistance industry, which provides services
essential to the success of many small businesses, would require a task
force be formed to identify high-quality products and services.
According to the California Trade and Commerce Agency, half of all employment
in California is in small business. Further, ninety-eight percent of all
California businesses are small businesses and, over the last several
years, more new jobs were created in small businesses than in large businesses.
The Agency reports that in 1997, more than 6.9 million workers were employed
in business establishments with fewer than 100 workers. Clearly, small
businesses drive America's economic engine and sustain the families of
their owners and the neighborhoods in which they reside. Unfortunately,
statistics show small businesses fail at a faster rate than larger ones.
California's smallest enterprises exhibit the same needs as larger ones,
often with greater intensity and less power to resolve problems. Small
businesses require capital, management support, mentoring and guidance,
community-oriented financing options, and the power conferred by merchant
and trade associations. They need these services at rates they can afford,
and tailored to the specific needs of their size, growth rate, culture,
and business type. When they get such support, they are as likely to prosper
as larger ventures. When they do not, they are more likely to fail.
For more than a decade, technical assistance providers have been an almost
invisible force helping small businesses to expand and fulfill their goals.
The goal of this report is to support the continued expansion of the technical
assistance industry and thereby strengthen small businesses and community
economic development. The value of technical assistance is to build healthy
businesses that result in better internal management and use of financial
and human capital for businesses, and to increase employment in local
neighborhoods. Technical assistance can dramatically improve the success
of small businesses in low-income communities where capital is particularly
scarce.
The goal of this report is to offer guidelines that can be useful to
community organizations, business owners, financial institutions, and
philanthropic foundations in identifying key aspects of technical assistance
provision and organizational capacity. This report defines technical assistance
providers as those organizations that provide appropriate business resources
to entrepreneurs to start, stabilize and grow successful businesses. The
technical assistance industry, for purposes of this report, includes only
nonprofit, community-based organizations.
This report views technical assistance from a customer perspective by
examining components of technical assistance plus products and services
businesses need, and also from an organizational perspective by determining
those performance measures that effectively address small business needs.
These perspectives are intended to help in determining the most positive
characteristics of proficient technical assistance providers and to help
ensure technical assistance services are delivered appropriately to diverse
business owners.
Few technical assistance providers offer all products and services described
in this report and so small businesses usually rely on collaborations
of regional organizations to meet their technical assistance needs. Technical
assistance provider products and services generally include the following:
- Business readiness assessments ð Introductory management courses
- Business management training
- Consulting and counseling ð Networking and mentoring
- Loan packaging
- Resource and referral
The structure of technical assistance organizations can affect the success
of service delivery, especially since this delivery needs to be appropriate
to and successful for small business clients. Technical assistance provider
structural considerations include geographic, linguistic, and cultural
accessibility. Technical assistance provider organizational capacity should
include the following:
- Clear goals and targeted outcomes
- Appropriate client services ð Staff expertise
- Client feedback ð Evaluation of qualitative and quantitative impact
- Up-to-date technology
- Accountability to clients and stakeholders
Organizations that offer some or all of these services and that are structured
such that they can meet the needs of small businesses in their communities
can help to increase opportunities for economic expansion in low-income
communities and communities of color. In many communities, nonprofit technical
assistance providers are already responding to local small business and
community needs. Those that are successful and those striving to be successful
need resources from public entities, financial institutions, philanthropic
foundations and individuals to reach their goals. In return, strong and
capable technical assistance providers can provide a more stable, growing
business community that can exert a strong positive influence on surrounding
neighborhoods and can provide measurable returns on investments.
- This report makes recommendations for strengthening the technical
assistance industry which include the following:
- Frequent referrals of potential clients between financial institutions
and technical assistance providers.
- Identification of resources needed and the availability of these resources.
- Increased volunteer participation by funders in technical assistance
provider activities.
- Creation of innovative loan products tailored to the needs of technical
assistance provider clients.
- Trade association assistance in providing training and in identifying
and teaching about best practices.
Sustainable Economic Development - Developing Effective
Partnerships Between Banks and Technical Assistance Providers
Helping Small Businesses Grow - Core Competencies of the
Nonprofit Technical Assistance Industry
Directory of Small Business Technical Assistance Providers
in California (May 1999)
If you have questions or comments, send a message to Community
Affairs.
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