BR MicroCapital: Coaches and capital for small, local entrepreneurs
Seated around a conference room table in Sage Hall one Monday night, five MBA students iron out the wrinkles in an innovative program that promises to boost the local economy, one small step at a time, and takes business school instruction out of the classroom and into the community Cornell calls home.
These are the men and women responsible for launching BR MicroCapital (BRM), a lending and advisory services effort, led by Johnson School students, that targets small-scale entrepreneurs in Ithaca and Tompkins County. It is one component of the Entrepreneurship@Johnson Startup Suite that also includes BR Ventures, a venture-capital organization; BR Incubator, a project-based advisory service for startups; and BR Legal, the legal arm offered in conjunction with the Cornell Law School.
The discussion this night touches on topics ranging from client recruitment and potential loan agreements to an update on the pairing of student coaches with business owners seeking a helping hand.
"This represents the possibilities of bringing the resources of Cornell and the community together to make an impact on the under-served, under-developed businesses and individuals in Ithaca," says Mike Pezone, MBA '09, BRM's director of operations.
Pezone credits Jeff Fuchs, MBA ’08, with conceiving the program in 2007 and recruiting members of the current staff. He explains that the program, which debuted in January, targets self-employed individuals who have been in business for at least six months and demonstrate an interest in outside support.
BRM's primary push is to offer client entrepreneurs the coaching services of first-year students, who provide one-on-one guidance geared to their specific needs. Andrea Findley, MBA '09, director of BRM's client support services, explains that participants typically receive marketing tips, advice on expanding a product line or increasing the work staff, and a customized business plan. "Client relations are as important as providing money to these individuals," she says. "Often, clients have access to capital, but they need guidance on strategy."
For those requiring a cash infusion to jump-start a promising venture, Ithaca's Alternatives Federal Credit Union (Alternatives) provides loans of up to $5,000. BRM participants, who raised $10,000 in seed money, manage the loan fund, along with a matching donation from the credit union and an additional $4,000 from the Johnson School's Sustainable Global Enterprise program.
Client recruitment focuses on those who earn less than 75 percent of the Tompkins County median income ($40,000 for a one-person household), and who have difficulty obtaining loans.
As of March, a handful of clients representing a cross section of small businesses had been accepted into BRM, including a landscaping operation, a transcription service, and a shop owner. As might be expected in Ithaca, the growing numbers of green-oriented businesses and organic farmers have also shown interest.. With a little luck and a lot of hard work, as many as 15 clients will be served within 18 months of the program's inception.
Among those already reaping the benefits of BRM is Mark Clookey, owner of Greener Gardening, a one-man business that helps city residents make the most of their small patches of tillable earth through sustainable living practices such as raising food crops, composting waste, and retaining rainwater.
"I've learned a lot working with my coach, [first-year MBA student] Harlan Blynn," Clookey says. "He doesn't have all the answers, but he challenges me and provides a second set of eyes to examine the business. "It's great to have the expertise of Cornell MBA students available to help with marketing strategies and determining the value of my services. He keeps me focused."
The student directors view BRM as an extension of their previous work with entrepreneurs in the U.S. and the developing world. For Findley, that includes nine years of microfinance experience in Latin America, assisting poor rural women through the Grameen Bank. The bank, established in Bangladesh to provide loans to entrepreneurs in the developing world, has gained international acclaim.
Pezone served in the Peace Corps, concentrating on microfinance in the Philippines before attending the Johnson School. "Together this group has 20 years of experience in international development," Pezone says. "And we'll probably head that way after graduation."
Kandea Mosley, MBA '09, director of marketing for BRM, was an AmeriCorps Vista volunteer in Ithaca and later worked at the Cornell Public Service Center, helping local public schools design programs for disadvantaged students. "BRM enables me to work with the contacts I have established in Ithaca over the years," she says. "I strongly believe the university should be involved in community development and this is a good way to do that. It helps create value in the community."
Taryn Goodman, MBA '09, BRM's director of community partnerships, is of the same mind. "It appeals to me to take an active role in the community," she says. "I graduated [undergraduate] from Cornell, but didn't have much contact with the off-campus community; now I can do something."
"We may not have all the answers, but we can guide clients to solutions available in Ithaca; they just need to know where to look," she says.
Those words are music to the ears of the folks who run Alternatives, a financial institution with a reputation for giving a leg up to moderate- and low-income entrepreneurs. "These students are showing a commitment to the businesses in the BRM program, which is also commitment to the Ithaca community," says Carl Graham, director of community relations and development at the credit union.
He cites coaching as the critical component in helping small enterprises reach the next level. "They may need financial help, but money without knowledge can be a hindrance if it isn’t spent wisely," he says. For BRM participants this means one-on-one interaction with business owners, and serving as a hub of information on resources available to startups.
Graham is confident the program will gain a foothold in Ithaca, noting that BRM's pioneers designed the program to be sustainable by ensuring that second-year students enlist first-years to take over the program's reins. Operations director Pezone concurs, saying, "We are only here for a short time, so we are making sure that future students get involved early on in their MBA studies."
At the same time, success for clients would mean increased sales, more jobs, and a stronger business foundation, he says. And that, in turn, could establish a template for similar efforts at other business schools and credit unions. "It's a great opportunity for certified community development financial institutions like us," Graham says, "because it ties in with what we are already doing."
As they get BRM up and running, the program's five principal players are bullish about its potential. "This is a tremendous learning opportunity," says Ryan Kelley, finance director. "We are working on actual microfinance cases and impacting the livelihood of our clients. There is a sense of urgency to do this right."
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