Knoxville Chamber Small Business Development ANNUAL REPORT July 1, 2010 through June 30, 2011
OVERVIEW OF KEY INDICATORS PROPEL Counseling 1. 144 face to face counseling sessions 2. 102 hours of assistance given directly to minority, woman, and veteran owned firms 3. Over 70 hours of support time given to our partners Propel Mentor/Protégé 1. 25 Mentor/Protégé teams created with one firm leaving the program. (Due to a buy-out) 2. Protégés began with a baseline of 94 jobs and increased that baseline to 140 which is a growth of 67% 3. Total economic impact of the teams is at $34,516,787 with direct economic impact measure at $21,155,244. 4. Program is being studied by professors at California Polytechnic State University’s Orfalea College of Business and Harvard respectively. The first analysis of the program will be presented to the Academy of Management Conference the Academy of Management August 12-16. AOM is the oldest and largest scholarly management association in the world.
Diversity Champions Taskforce 1. Created a definition of economic inclusion for east Tennessee. 2. Grew membership to 60 diversity officers and professionals. 3. Currently working on first annual “East Tennessee report on Economic Inclusion�.
\
Key Regional Statistics (Anderson, Blount, Knox, Loudon, Monroe, Roane) The above statistics set the baseline for the importance of small and minority owned business development. These sobering statistics give us justification for our efforts and are themselves a challenge and what we are ultimately accountable for. Issues of economic inclusion also affect the workplace. These themes affect the quality of life of East Tennessee as seen by the numbers below.
State of Minority Business Number of total employer firms by Region - 67,186 Minority Firms - 5,295 (7.8%) Veteran Owned Firms – 7,298 (10.8%) Women Owned Firms – 15,261 (22.7%) Gross receipts of all firms in Innovation Valley - $75,466,472,000 Minority Firms - $802,918,000 - 1.06% Woman Owned - $2,253,629,000 – 2.98% Veteran Owned - $3,223,334,000 - 4.27% Total - $6,279,881,000 – 8.32% State of Minority Employment 2007 Employment - 17,585 (12.42%) 2009 Employment - 16,006 (11.69%) 2007 Senior Level Managers – 159 (6.07%) 2009 Senior Level Managers – 99 (5.7%) 2007 Laborers – 3,099 (22.88%) 2009 Laborers – 1,871 (16.67%) *US Equal Opportunity Commission * US CENSUS BUREAU 2010
The Propel program provides small business one on one counseling to small businesses in the Innovation Valley region. The program is open to all of the 35,204 small businesses within the region with a concerned focus on women, minority, and veteran-owned firms. We provide assistance in visioning, market development, and making referrals to other business resource agencies and networks to aid the growth of these businesses. The Propel program administrates two other programs, Propel Mentor /ProtĂŠgĂŠ program and the Diversity Champions taskforce. Due to the impact that these programs have had in just two short years the program received the SBA Small Business Champion of the Year Award.
Total Counseling Sessions Held: 144 Total Hours Spent: 175 During the fiscal year we provide over 82 hours of counseling to women and minority owned business owners, 20 hours veteran owned firms. We logged over 70 hours of support to our agency partners and board memberships.
Board Memberships East Knoxville Business and Professional Association March of Dimes Sheriff Merit Council Workforce Connections Teachers Supply Depot
Supporting Agencies & Partners University of Tennessee Procurement Technical Assistance Center Alcoa African American Heritage Network East Tennessee Purchasing Association Martin Luther King Leadership Symposium Project Grad – Austin-East Urban League Black executive Exchange Program STEM Diversity Roundtable Volkswagen Minority Business Fair Tennessee Veterans Business Association B&W Y-12 Veterans Business Conference
The Knoxville Chamber of Commerce sees business to business mentoring as a function of local economic development. Based on this assumption we have opted to create a formal Mentor Protégé program. Our Mentors are gleaned from those members with high status which we call our “Premier Partners”. Our protégés are selected by a small committee who vets the applicants on three things: revenues, innovation, and market distinction. In our first 6 months of the program protégés landed over $5 million in new contracts. Since inception of the program in January of 2010 our protégés have maintained 94 employees and grown that number to 140. This is a growth of over 67% over their original baseline. Revenue growth for the same time period shows an increase of 39%. See the attached economic impact of our program for fiscal year July 1, 2010 through June 30, 2011. The program currently has 24 Mentor Protégé teams made up of 12 second year participants and 12 first year participants. Protégés commit to chamber membership for three years with the first two years as protégés and year three serving as mentors and giving assistance back to the program. We think that other organizations can follow this model as long as the 5 basic best practices for the program infrastructure exist. (Please see best practices section): We think this model can be duplicated at any organization with a mission to facilitate the growth of small business. We think the following 10 ideas can be
applied unilaterally between governmental and non-governmental mentor protégé programs: 1. 2. 3. 4.
Partner with local Chamber of Commerce. Size of protégé class should be limited to 10% of the mentor population. Protégés and Mentors should have personality test and or reviews. Protégés should be required to be in program for 3 years. Two years of mentorship and one year of giving back to the program. We follow the philosophy of Learn, Earn, and Return. In the third year we ask for high producing protégés to become mentors to replenish the pool. 5. Protégés should be required to attend monthly classes to learn technical back office items. We call our monthly classes a “street mba”. We utilize the industry leading SMLS (Strategic Management Learning System). 6. Networking socials for protégés and mentors should be done collectively and as separate groups. 7. Instruction on relationship building for both the mentors and protégés should be a part of the curriculum. 8. Mentors should be required to spend at least two hours a month with protégé 9. Partner with local media to highlight the program and do monthly profiles on the mentor protégé teams. 10.Reporting of revenues, objectives, contracts, and economic impact is critical to showing the ROI of the program. Companies can and do band together through mentorship without formal programs. This is done either through loose or non binding terms where there is a mutual benefit based on some ROI and or specific project or client. However we believe that a formal Mentor Protégé program allows for an organized way to share best practices and networks between companies. It allows for a formal pathway for firms to band together for mutual benefit while using the endorsements of others and their resources to allow for better due diligence. As companies band together on their own, large firms have the control. Smaller firms typically do not have the resources to provide the same level of due diligence. Formal mentor protégé programs allow for a standard of
interactions, ethics, respect, and learning that may not exist in totality with direct informal b to b interactions. The best examples of b to b mentoring outside of formal programs can be mutually beneficial. However, the successes of these ventures are difficult to track and the best ROI from those partnerships typically occur among family owned businesses that transfer from family to family. ROI also is evident when companies band through “teaming agreements” and “joint ventures”, however this is typically common when both firms are participating in federal government, municipal, and or minority based contracting where those arrangements are encouraged. These clusters of b to b bands tend to be seen when procurement opportunities require such. Outside the government and municipal world mentoring tends to be less defined. Our philosophy is that the mentor protégé arrangement through a CofC can operate with or without the influence of government contracting and can also be a feeder source to this world or an exit plan for government contractors wishing to grow their business in the commercial world. As it relates to the government sector and in cases where large domestic and global firms have goals to do business with small, minority, and veteran owned businesses the bands of companies working together is more prevalent as it is a requirement of the client. For example Volkswagen built its first plant in the United States in Chattanooga, Tennessee. As a part of its procurement goals, they set metrics for the percentage of their spend to go to small and minority owned businesses. In their communications with the business community they encouraged “teaming agreements” and “joint ventures”. As a result clusters of automotive and other suppliers have joined forces to bid on opportunities. Additionally Volkswagen fosters networking between “tier one” or primes with smaller companies. Mentoring is less formally conducted with Tier One suppliers and their subcontractors. However this mentorship is specific and narrowly focused on the specific job at hand. These relationships are most often temporary in nature and may not address other issues in the development of that small business. Based on our findings there are 5 key best practices:
1. Have a pool of Mentors who have the desire to Mentor. We follow the rule of 10%. If the pool of Mentors is 200 members and 10% of those should be able to be mined as Mentors. Which means you can have a class of 20 protégés. 2. The organization should have direct access to the mentors through their organization, i.e. the Mentors are members of your organization. Third party access of another organization’s members can be cumbersome and most organizations are very protective of their databases. If a third party is needed to access Mentors then we suggest partnering with a CofC. Generally CofC are the largest business based organization in a region or city. 3. Have a fulltime program administrator who has been an entrepreneur to facilitate the program. This person is the link between the mentors and protégés and drives the direction of the program, sets the proper expectations and tracks results. 4. Location of the program is important and a proper meeting space is needed to facilitate meetings, networking, and classroom instruction. The physical location should be a hub that is centrally located to other resources. We also encourage arming the mentors and protégé with the latest free or low cost video conferencing equipment. Currently we have found that we can video link our mentor, protégés, and other business resource partners for about $300 per participant annually. 5. Create a formal support network of partners from other business resource groups i.e., SCORE, SBDCs, college and universities, economic development agencies and the like.
Mentor Protégé (TOTAL) Economic Impact July 1, 2010 through June 30, 2011
Direct Jobs
=
156
Indirect Jobs
=
59
Induced Jobs
=
69
TOTAL JOBS
=
284
Direct Wages & Benefits
=
$ 6,093,347
Indirect Wages & Benefits
=
$ 1,942,509
Induced Wages & Benefits
=
$ 1,994,171
TOTAL WAGES & BENEFITS
=
$ 10,030,027
IV Region
Direct Economic Impact
=
$ 21,155,244
Indirect Economic Impact
=
$ 6,188,747
Induced Economic Impact
=
$ 7,172,796
TOTAL ECONOMIC IMPACT
=
$ 34,516,787
Innovation Valley Region includes: Anderson, Blount, Knox, Loudon, Monroe, and Roane Counties Source: IMPLAN Definitions: Direct – changes within the specific industry being analyzed. Indirect - changes within inter-industry purchases as they respond to the new demands of the directly-impacted industry. (These are the support industries/suppliers of the industry being analyzed.) Induced – reflect changes in spending from households as income increases or decreases due to the changes in production. (These are all of the other industries affected by the interaction of the industry being analyzed and its suppliers – examples include dry cleaners, restaurants, stores, etc.) Wages & Benefits – includes all wages, health & life insurance, retirement payments, and any other non-cash compensation paid to employees by employers. Economic Impact – the total value of production by an industry in an annual calendar year.
From July 1, 2010 through June 30, 2011 the Diversity Champions taskforce grew from a defunct committee to a group of over 60 diversity professionals representing over 35 companies. The taskforce created a definition of diversity that is applicable to all firms in East Tennessee. The group met monthly for the past year and has established the template for a comprehensive annual “Report on Inclusion in East Tennessee.� This report is scheduled for production during first quarter of 2012 and will be circulated through the Knoxville Business Journal.