Success Stories from the First Year of Money Smart for Small Business
Small businesses are vital to creating jobs, innovating and growing the U.S. economy, but many business owners and entrepreneurs lack the money-management skills they need to effectively operate their companies. That’s why in April 2012, the FDIC and U.S. Small Business Administration (SBA) partnered to create the Money Smart for Small Business (MSSB), an instructor-led curriculum with information on recordkeeping, financial management and other basic skills. And to mark the first anniversary of MSSB, Money Smart News is featuring some early successes under the new program.
We start with the MSSB Training Alliance, which includes financial institutions, SBA resource partners (Small Business Development Centers, Women Business Centers, SCORE), city and county economic development offices, Community Development Financial Institutions and others engaged in economic development. Through the Alliance and other outreach, these partners conduct and market the training in their communities.
As part of the program, quarterly “Town Hall” conference calls for Training Alliance partners offer opportunities to share best practices and brainstorm solutions to challenges. At the first Town Hall call in January of 2013, Eleanor Clayborn, a Microenterprise Coordinator at Sacred Heart Southern Missions in Holly Springs, Mississippi, shared her experiences delivering MSSB training as part of the nonprofit organization’s Economic Alternatives program for small business ventures in the economically disadvantaged communities in North-Central Mississippi. She noted that MSSB was offered once a week, from October 1 through November 5, 2012, to residents who found out about the classes from advertisements in the local newspaper, flyers posted in the community, and a letter mailed to everyone in the Sacred Heart Southern Missions’ database.
Two aspiring entrepreneurs and three small business owners attended. Clayborn noted that as a result of the MSSB training, Ayla, a small business owner, now has a better relationship with her bank, including a checking account for her home renovation and construction business, and she is more aware of the importance of maintaining records. In addition, Phyllis, an aspiring entrepreneur, is in the process of completing a feasibility plan for her laundromat. And Ollie, also an aspiring entrepreneur, has completed the formation of her printing and copying shop as well as the Mississippi sales tax application. Clayborn noted that Ollie also plans to come back to the Economic Alternatives program to “allow us to help nurture her business, assist in drafting a business plan, devise marketing strategies, and help her understand her business before taking on debt.”
Clayborn also reported that all the attendees were excited about the class and had perfect attendance. The session received positive feedback on the class evaluation form, with one attendee writing, “Please have a Part 2 SBA Class. Thank you!!!”
From Los Angeles, California, Esther Wee,Senior Vice President and CRA (Community Reinvestment Act) Officer with Cathay Bank, reported to the FDIC that the bank co-hosted Money Smart for Small Business classes with Chinatown Service Center (CSC), a local community-based organization that is part of the Asian Pacific Islander Small Business Program and an SBA Women Business Center. The first challenge? CSC’s small business program works with current and prospective business owners whose primary language is Chinese, as they are first-generation immigrants. “So the bank joined with Chinatown Service Center to take on the additional challenge of translating into and teaching in Chinese,” Wee said.
Joyce Chan of Chinatown Service Center (at podium), Esther Wee of Cathay Bank of Los Angeles (center-speaking), and other Cathay Bank employees teamed up to teach Money Smart for Small Business classes in Chinese to local entrepreneurs in March 2013.
A team of 10 officers from Cathay Bank, along with Joyce Chan and Kerry Situ, Business Counselors of the CSC, started by translating the Money Smart PowerPoint presentations into Mandarin. Then on two Saturdays in March 2013 they taught the curriculum, in Mandarin, to 20 attendees.
Based on participants' evaluations of the training, Chan concluded that MSSB is a “solid introductory course” for prospective entrepreneurs. “We found that it is an option for those interested in this topic but unable to commit to the SBA's intensive 28-hour Entrepreneurial Training Program (ETP),” she added. “Eight of the 20 class attendees immediately signed up for the regular ETP to further their studies.”
CSC’s Chan and Situ said they appreciated Cathay Bank not only sponsoring the Money Smart training, but also providing volunteer banker instructors. “We are looking to include MSSB as part of our regular business training from now on,” added Chan.
Wee said the bank participants also benefited.“The volunteers did a great job and taught well, and the attendees gave positive feedback,” she said. “We all enjoyed the experience and are looking forward to doing more MSSB sessions in both English and Chinese.”
Building on the success of these classes, Cathay Bank provided a $15,000 grant to the Latino Business Chamber of Greater Los Angeles to conduct MSSB classes, and bank staff will be involved with the delivery of this training as well.
What lessons can all financial educators learn from these successes teaching small business? Money Smart News interviewed Luke Reynolds, Chief of the FDIC’s Outreach and Program Development Section, for suggestions. They are:
Consider bringing in experts in complex areas to be guest instructors. For example, he pointed out that a Certified Public Accountant and an insurance specialist taught some of the classes at Cathay Bank in Los Angeles.
Use Money Smart for Small Business as a tool for bank partnerships with community organizations. “While financial institutions can provide speakers and other support for workshops, nonprofits often work with clients, including small business owners, who can benefit from a banking relationship,” Reynolds said. “For everyone involved, MSSB classes can be an on-ramp into the financial system for prospective entrepreneurs, and we encourage banks and nonprofits to explore those opportunities.”
Think of MSSB as a supplement, not a replacement, for traditional entrepreneurship training. “MSSB is not intended to replace small business courses from the SBA and other sources, which are often offered for multiple weeks and are extremely valuable in providing a deep, nuts-and-bolts understanding of how to effectively operate a business,” Reynolds stressed. “Instead, our FDIC course is intended to provide an introduction to these topics, with a particular focus on the banking and financial pieces.”