5th Annual Rural Community Development Training Conference

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5th AnnualRural Community DevelopmentTraining
Conference
St. Louis, Missouri June 6, 2001
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Microenterprise Development Don Macke
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-Todays Focus-

• Why Entrepreneurship?
• Role of Microenterprises
• Resources
• Questions Discussion

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Rural Entrepreneurship InitiativeJune, 2001
Why Entrepreneurship?
WHY ENTREPRENEURSHIP?
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INSIGHT 1
Entrepreneurship and Economic Performance
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Global Entrepreneurship Monitor2000
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What is GEM 2000?

• Collaborative effort of the worlds best scholars
  in entrepreneurship to study the relationship
  between entrepreneurship and economic growth.
  
• Comparable assessment in 21 countries (compared
  to 10 in 1999).
  
• Based on a sample survey of the adult population,
  in-depth interviews with national experts on
  entrepreneurship in each country, and
  standardized secondary data.

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GEM 2000 Focuses on Three Questions

• Does the level of entrepreneurial activity vary
  between countries, and if so, by how much?
  
• Does the level of entrepreneurial activity affect
  a countrys rate of economic growth?
  
• What makes a country entrepreneurial?

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Finding One The level of entrepreneurship
differs significantly between countries.
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Finding Two Entrepreneurship is strongly
associated with economic growth?

• The level of entrepreneurial activity explains 70
  percent of the difference in economic growth
  among nations.
  
• All nations with high levels of entrepreneurial
  activity have above average rates of economic
  growth.
  
• Only a few nations that have above average rates
  of economic growth have low levels of
  entrepreneurship.

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INSIGHT 2

• Weaker Rural Economic Performance is Due in Part
  to Lower Levels of Entrepreneurial Activity?

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Question?

• Do Rural Americans have a propensity to be
  entrepreneurs?

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Answer! Yes No

• Rural Americans have E-Traits.
• Major Challenges Exist.
• Fewer Entrepreneurial Growth Companies.

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Question?

• Do Rural Americans Have the Knowledge and Skills
  Associated with Entrepreneurship?

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Answer! Yes No

• Strong Basic Skills.
• Weak Advanced Skills.
• Distance and Weak Support Infrastructure.

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Question?

• Are Rural Americans Succeeding as Entrepreneurs?

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Answer!

• Some.
• Fewer Than in Urban America.
• Barriers for Entrepreneurs.
• Entrepreneurs are Leaving.

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INSIGHT 3

• Increasing Entrepreneurship in Rural America is a
  Primary Strategy for Increasing Economic
  Performance and Prosperity.

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Increasing Rural Entrepreneurship
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Challenge!

• How Do Rural Areas Increase Entrepreneurship?

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Four Uniquely Rural E Challenges

• Market
• Isolation
• Culture
• Demographics

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Market Challenges

• Accessing Urban Markets.
• Necessary Services.
• Clustering.
• Transition Local to National.

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Isolation Challenges

• Less Isolation Today.
• Other Entrepreneurs.
• Perceiving Opportunities.

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Cultural Challenges

• Anti-Change.
• Success/Failure.
• Recognition/Awareness.
• Social Entrepreneurs.

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Demographic Challenges

• Education.
• Few 25-44 Males.
• Weaker Growth.
• Mature Old Economy Industries.
• Women and Minorities.

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ROLE OF MICROENTERPRISE DEVELOPMENT
Role of Microenterprise Development
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Rural America Working
Small Business Owners
Major Business Owner
Unemployed
Micro
Home Based
Salary Workers
Wage Workers
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Rural Entrepreneurs
Active
Survival
Lifestyle
Aspiring
Growth
Potential
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Support System

• Comprehensive
• Appropriate
• Effective
• Sustainable

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Nebraskas Story
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1980s -

• REAP
• Center for Rural Affairs

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1997-

• Nebraska
• Microenterprise
• Partnership
• Fund

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Intermediary

• Lending Capital
• Development Resources
• Training
• Performance

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Resources

• 450,000
• 1.2 Million
• 2.7x

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• NEON
• AEO

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• State
• Recognition
• Legislation

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Leveraged Stable State Resources

• 44 to 77
• Change

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Performance
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Lending

• 1998 - 743,000
• 2000 - 1,350,000
• 82

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Training

• 1998 1,019
• 2001 2,863
• 181

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Coverage

• Loans Training
• 1998 42 31
• 2000 49 79
• 17 155

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Job Creation

• 1,700 Jobs per Year

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Cost

• 1,573 per Loan

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Default

• 2.2 Rate

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Comparative Costs (Per Job)

• Micro 1,000
• CDBG 20,000
• Tax Abatement 50,000

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National Fund for Enterprise Development
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National
State
State
Local
Local
Local
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Strategies for Creating a Systems Approach
Entrepreneur Profiling and Resource Matching
Local/Regional/State Integrated System
Service Provider Networking
Top Down
One Stop Referral Tracking Service
Paper and Electronic Directory Resources
Service Provider Cross-Training
Market Support Assistance
Meaningful Connection
Education of the Importance of Networks
Enterprise Clusters
Enterprise Associations
Bottom Up
Internal
External
Support in Creating Clusters and Associations
Entrepreneur Networking
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Elements of a Rural Capital System
Capital Attraction
Rural Capital System
Venture Fund Connections
Rooted Venture Funds
Effective Use of Govt. Programs
NICs
Deal Development
Angel Networks
Micro Lending
Capital Literacy Education
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Rural Entrepreneurship Initiative
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For More Information. . . .

• Rural Entrepreneurship Initiative
  http//www.nebcommfound.org
  
• Rural Entrepreneurship Initiative
• Kauffman Foundation http//www.entreworld.org