Benefits of Entrepreneurship as a Development Strategy

Supporting Entrepreneurs and Entrepreneurship

Conclusion

To contact the editor or send submissions, please contact
John Gruidl
Email: JJ-Gruidl@wiu.edu
Phone: 309.298.2984
Fax: 309.242.2142
Illinois Institute for Rural Affairs Western Illinois University
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Macomb, IL  61455

Communities across the nation are struggling to find viable economic development opportunities and have long relied on industrial recruitment to create businesses and jobs. This traditional community economic development strategy is becoming an increasingly difficult approach, given the exodus of manufacturing companies from the United States . Business retention and expansion is another strategy which fosters businesses and industries that are already located within a community to encourage them to stay and expand. Another promising approach is developing local entrepreneurs.

Entrepreneurial facilitation, the focus of this article, is a community-based method of addressing the needs and barriers facings local entrepreneurs. The objective of entrepreneurial facilitation is to encourage and retain a diverse and robust local entrepreneurial economy that leads to more opportunities for local residents. The purpose of this article is, first, to introduce readers to the concept of entrepreneurial facilitation, and second, to provide some guidelines on the advantages and disadvantages of different forms of entrepreneurial facilitation, namely Enterprise Facilitation© and Entrepreneurial Coaching.

Benefits of Entrepreneurship as a Development Strategy

In contrast to the industrial recruitment model, whereby communities try to attract firms from outside the area to locate in their communities, entrepreneurship relies on local resources for job creation and economic activity. Jobs created under this development method, although usually fewer in number, are typically more skilled than employment opportunities in large firms (Sharp et al., 2002). Tolbert et al. (2002) found that local communities are enhanced by small, locally owned businesses. Because they are embedded within the community, small businesses and community institutions improve socioeconomic well-being (higher income levels, and lower levels of income inequality, poverty and unemployment). Further, entrepreneurship engages a greater diversity of local leadership that frequently participates in local civic organizations (Sharp et al., 2002).

Thus, an entrepreneurial strategy has greater potential to build civil society and community sustainability. Entrepreneurship is particularly gaining popularity in rural America , as the loss of both traditional manufacturing and farming jobs is forcing many rural residents to either commute long distances for employment opportunities or to relocate to (sub)urban areas.

Supporting Entrepreneurs and Entrepreneurship

Traditional entrepreneurship support, including technical and management assistance, is driven by top-down programs, primarily through the U.S. Small Business Administration, including Service Corps of Retired Executives (SCORE), Small Business Development Centers (SBDC), and Small Business Institutes (SBI). These programs were initiated over three decades ago due to the recognized lack of, and need for, technical assistance services for small business owners. Technical assistance, or one-on-one counseling, is provided at the SBDC's and SCORE chapters. Counselors work with clients, guiding them through the process of developing a business plan with the focus being on the business idea or concept. While these programs involve local residents, they are restricted and driven by the nature of the federal funding.

It is increasingly recognized, particularly in rural communities, that there is a gap in support services to entrepreneurs that is not filled by technical assistance providers. Typically, because SBDCs must serve a large number of communities, they are unable to provide long term customized assistance to any individual entrepreneur or business owner. The long distances associated with traveling to SBDC offices and unfamiliarity with their procedures has limited their use by many entrepreneurs, particularly those in rural areas. Further, SCORE chapters are typically located in urban regions where there is a supply of retired and active business managers.

A growing body of research has identified the elements necessary for rural communities to support entrepreneurship. The Center for Rural Entrepreneurship has developed a typology of community support for entrepreneurship: Basic, Advanced, and High Performing Support (Macke, 2003). Having quality physical infrastructure, reasonable tax levels and community awareness of entrepreneurs are elements of communities with basic entrepreneurship support. In addition to the aforementioned characteristics, communities with advanced support provide entrepreneurial training classes, technical assistance, youth entrepreneurship programs and access to financial capital. Communities with high performing entrepreneurship support provide customized, one-on-one assistance to individual entrepreneurs in a community, or entrepreneurial facilitation (Macke,2003). Based on this framework, entrepreneurial facilitation, coupled with the other support features of the basic and advanced levels, represents the most advanced level of support for new businesses and business ideas in a community.

Unlike the federal programs, entrepreneurial facilitation programs are driven by community involvement in the planning and implementation process. External groups and agencies may provide funding, but play only an ancillary role in operating entrepreneurial facilitation programs. Under entrepreneurial facilitation, community leaders strive to create an entrepreneurial culture and assist entrepreneurs. A major difference between entrepreneurial facilitation and technical assistance, such as provided by the Small Business Development Centers, is that the focus is on the person rather than on the business idea. Facilitators are concerned with ensuring an appropriate person-business fit and assessing personal characteristics versus simply developing a business plan. Another important difference is the focus of facilitators on the development of a culture of entrepreneurship versus simply providing individual business assistance.

While these differences are important to recognize, it is also critical that entrepreneurial facilitators are aware of the complementarities between the two approaches. Technical assistance providers, such as Small Business Development Centers, can provide resources that facilitators cannot. This assistance might include technical knowledge of a specific industry, financial analysis tools, or templates for specific types of business plans. Entrepreneurial facilitators should take advantage of building a working relationship with other support providers and refer clients when appropriate for such services.