Creating Systems for Entrepreneur Support (cont.)

(Support systems are) . . . opaque and too complicated for entrepreneurs. While public officials and service providers understand the differences between, say, a Small Business Center and a Small Business Technology Development Center and the services they offer, entrepreneurs do not. Nor should we expect entrepreneurs to understand these differences. Thus, when an entrepreneur seeks assistance and is referred to “some other office,” her typical response is intense frustration.

These problems emerge because most service providers focus – correctly – on market niches. Small business development centers (SBDCs) focus on growth businesses, the cooperative extension service focuses on agriculture, and microloan programs provide more general support to new entrepreneurs. While there are efficiencies that arise from this specialized approach, the system’s specialization often gets lost in translation to the entrepreneur. Most entrepreneurs simply want help. They do not care which agency or program provides it.

These challenges of fragmentation are not new to economic development professionals. The traditional solution has been to create a “one-stop shop,” where a whole host of services for small business can be accessed in one place. These one-stop shops can exist in physical space. For example, many incubators also house service providers like an SBDC or local SCORE office. More common is the virtual one-stop shop, a web-based information clearinghouse. Excellent examples include Minnesota Rural Partners’ BizPathways (www.bizpathways.org), and Georgia’s Entrepreneur and Small Business Network (www.georgia.org/esbd).

Creating a one-stop shop should be viewed as a first step, not the end of the process. Such sites offer user-friendly access to information, but they still require significant knowledge from the aspiring entrepreneur or business owner. Can the business owner find the right services and support that will “fix” his current problems? Research shows that many entrepreneurs cannot leap this hurdle. In many cases, they face difficulties simply identifying their own business challenges. For example, they may recognize that business is slowing, but may not know whether the slowdown is caused by marketing, financial or operational challenges. A more sophisticated diagnosis of the issues is needed. Then, a quality menu of support options can be developed.

From one-stop shop to no wrong door

This type of sophisticated business diagnosis system does not really exist today for most entrepreneurs. High-growth technology businesses can receive such support from venture investors and others, but most entrepreneurs make do with one-size-fits-all programs for training, financing, and the like. In practice, this means that business owners often receive the services that are available instead of the services that are needed. For example, a potential high-growth business may be referred to a loan program even though it really needs some form of equity financing.

A reformed systems approach is needed. At the outset, the system should offer an entry-level package of services that entrepreneurs receive no matter where they enter the system. The system would be defined by the concept of “no wrong door.” Every part of a region’s small business support network should provide an initial assessment of the entrepreneur’s skills and needs and identification of the best place for the entrepreneur to receive services to address those needs. This new system would move the burden of understanding how best to access support services from the entrepreneur to the system itself. Upon completion of this initial diagnosis, more specialized services can be delivered.

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