I had the opportunity yesterday to participate in a Senate Committee on Small Business and Entrepreneurship hearing on reauthorization of SCORE. SCORE, which originally stood for the Service Corps of Retired Executives, is a national volunteer network of current and former business leaders who provide coaching and mentoring services to small businesses. SCORE is a key part of the Small Business Administration’s technical assistance programs, and the hearing examined future funding and rules governing SCORE activities. SCORE is involved in some big and exciting changes. They have introduced a new modeling counseling program as well as a formal certification program for counselors. They are also rolling out a new system-wide information technology upgrade. So, good things appear to be in the works.
My testimony, which focused on how SCORE counselors are especially important in rural America, is posted below. The hearing operated via a Roundtable format, which allows for real discussion as opposed to canned presentations. In this format, short statements can be provided for the record, but the hearing operates as a more open forum. This is clearly the way to go if Senators and Members of Congress really want to dig in on the issues as opposed to grandstanding for the cameras—a big if, perhaps.
My statement is below:
Statement of Erik R. Pages, Ph.D.
President, EntreWorks Consulting
Senior Fellow, RUPRI Center for Rural Entrepreneurship
U.S. Senate Committee on Small Business and Entrepreneurship“Reauthorization of SCORE: Discussion and Recommendations for Volunteer-Based Small Business Assistance”
March 8, 2011
Chair Landrieu, Ranking Member Snowe, and members of the Committee, thank you for the opportunity to appear before your Roundtable examining issues related to reauthorization of the SCORE program. My name is Erik R. Pages, and I am President of EntreWorks Consulting (www.entreworks.net), an economic development consulting firm based in Arlington, Virginia. Today, I am here on behalf of the Rural Policy Research Institute’s (RUPRI) Center for Rural Entrepreneurship (www.energizingentrepreneurs.org). In my role at the Center, and in my own firm’s consulting practice, I have worked to design, implement, and evaluate rural entrepreneurship initiatives across the US.
The State of Rural Entrepreneurship
As the Committee examines the reauthorization of both SCORE and the entire Small Business Administration, we encourage Senators to examine these programs with recognition of the unique challenges—and opportunities—facing rural entrepreneurs. Rural regions are among the nation’s most entrepreneurial. Many analyses note that the prevalence of self-employment and firm ownership is much higher in rural regions than in other parts of the country. In many ways, rural entrepreneurs are no different from their urban or suburban counterparts. They face the same challenges with accessing capital, marketing, business planning, and the many other issues that SCORE and other technical assistance programs seek to address. Rural entrepreneurs face these basic business development challenges, but their path to success is further complicated by several other factors. At the most basic level, rural entrepreneurs face longer distance to markets, and lack a sizable customer base close to home. Perhaps an even bigger challenge comes from the fact that rural regions often lack the size and capability to be home to large networks of local entrepreneurs or to a wide range of sophisticated business support services. These support mechanisms have been shown to be a critical ingredient to entrepreneurial success. While an entrepreneur can succeed anywhere, he or she is more likely to be successful when engaged in a network of peers, mentors, and sophisticated business service providers.
Our research on effective rural entrepreneurship development efforts across the US yields two important conclusions: 1) Comprehensive programs are essential and 2) Soft factors matter. Strengthening rural regions and nurturing rural entrepreneurs requires a whole mix of support tools. Traditional programs that support capital access or infrastructure development are important foundations, but they are insufficient. Rural communities must also nurture an entrepreneurial culture where local residents are encouraged and supported in their efforts to start and grow new ventures. They also need access to customized technical assistance, peer networks, and coaching/mentoring resources. Examples of effective programs that promote this mix include Kentucky’s Mountain Association for Economic Development, North Carolina’s Rural Economic Development Center, South Dakota’s Dakota Rising program, and Minnesota’s Northeast Entrepreneur Fund.
The Importance of Federal Support Efforts
Developing this comprehensive mix of services can prove to be a major challenge in many rural regions. These communities lack the resources and the market (i.e., the number of actual or potential entrepreneurs) to develop all of needed services and programs that we see in programs such as those being promoted via the White House’s new Start Up America Partnership initiative. Many of these programs, such as Ohio’s Jumpstart Inc., have been developed thanks to large foundation and business investments. Rural regions do tap into these resources, but the scale of funding is often smaller. As such, Federal programs, such as those funded by SBA and other agencies, are a critical building blocks in rural entrepreneurial development systems.
SCORE and other SBA programs are particularly important for rural entrepreneurs as they are the primary local source of coaching, mentoring, and advisory services in many regions. Federal programs continue to provide a critical capacity-building function in rural communities. For many rural entrepreneurs, they are the first place to seek help and support. Moreover, SCORE and the SBDC programs are among the few resources for coaching and mentoring. Other business development needs, such as capital access assistance, can often be accessed from local economic development agencies. But, few of these agencies provide more hands-on technical assistance and mentoring support targeted to small businesses and entrepreneurs.
Where SCORE Fits In
Because these technical assistance services are so critical to rural entrepreneurs, we were pleased to see that the President’s FY 2012 budget proposal contains $7 million in funding for SCORE. This is an important recognition of SCORE’s critical support for small business development. We also applaud SCORE and its leadership for many of their current initiatives that should be especially helpful for rural entrepreneurs who are often located at some distance from the service providers who could be of assistance. A prominent example is SCORE’s ongoing efforts to put more materials on-line and to deliver programming and training tools via new social media.
As the Committee assesses the future of SCORE and of other SBA programs, we encourage you to work with the program leaders and managers as they seek to further expand the range of services and support they provide to entrepreneurs in rural America.
Thank you for the opportunity to share these insights. I look forward to further discussions.