Small business. Big impact.
Small businesses throughout Massachusetts and the nation are fueling today's economy with the help of the Small Business Development Center
By Tammy Griffin-Kumpey M.S.P.C. '06
Photos by Tammy Woodard M.A. '98
Business culture has changed. In an era of downsizing, losing industrial and blue-collar jobs to cheaper labor forces abroad, and big-business ethics gone awry, the ideal of “job security” is an antiquity comparable to dad's—or granddad's—gold retirement watch. Bygone are the days of working at the same company for life, secured with a fat pension at the end. In today's business culture, people need options. The Small Business Development Center at Clark provides them.
Supporting small businesses
In 1980 Congress established the Association of Small Business Development Centers, which was initiated by President Jimmy Carter to address a changing economy and support small businesses. The association offers small business owners, and business-owners-to-be, the most comprehensive, efficient and effective business assistance network in the nation. Today there are about 1,100 Small Business Development Centers (SBDC) on college campuses throughout the country, where expert staff and dedicated students provide experience, skills and fresh ideas to the clients that seek their help.
The SBDC at Clark—one of the first and among the top five busiest centers in the nation—is celebrating 25 years of service to small businesses throughout central Massachusetts and Metro West. That 's 25 years of helping new entrepreneurs realize their dream of business ownership and helping existing businesses remain competitive in the complex marketplace of an ever-changing global economy.
According to Laurence Marsh, regional director of the SBDC at Clark, small businesses are creating the majority of jobs in the 21 st century. Nationwide, small businesses account for over 50 percent of employment. In Massachusetts, 98 percent of companies are small businesses and these small businesses generate 75 percent of new job growth.
“SBDC 's work truly is a trigger point for economic development,” says Marsh.
Clark's SBDC consults with 800 to 1,000 businesses per year offering confidential counseling for start-up, early-stage, growing and troubled small businesses and emphasizes training and self-development leading to better managed, more self-sufficient and faster-growing companies. Last year alone, the center secured more than $20 million in financing for clients.
The SBDC, funded through federal and state grants, provides free one-on-one management and technical-assistance counseling, as well as low-cost educational training programs. Its clients can count on expert assistance with feasibility analysis, start-up guidance, market research, business-plan development, cash-flow management, access to capital, loan packaging, international trade, marketing and sales strategies, and a variety of specialized services.
“I like to think of Clark's SBDC as the campus's best kept secret,” says SBDC senior management consultant Paula Camara.
The center is no secret, however, to the more than 20,000 businesses that have benefited from its services. Since its inception, Clark's SBDC has provided over 110,000 hours of expert counseling to more than 17,000 clients; trained more than 5,000 business owners through 350 comprehensive training programs; secured over $148 million in financing; and impacted the creation of more than 4,000 new jobs and the retention of more than 2,500 .
“You almost cannot find a small business in central Mass. that hasn't been to the SBDC at some point,” says Camara. “ SBDC s are teaching clients best practices—when you leave us, you know how to do it. It's about empowering business owners.”
Today's business landscape
Marsh says a typical client is a highly educated, mid- to upper-level manager who has come in from industry. They find themselves with money and some, if not all, of the skills to run a business. “They've been downsized, taken a buyout or so-called bridge to retirement. Many of them have always dreamed of running their own business, ” he says.
“Think about the transition in Worcester over the last 15 years. We've basically lost our blue-collar jobs and we're struggling to try to find a direction,” says Marsh. “Some of the growth is in biotech, some in technical businesses, such as software developers. But a lot of the growth comes in ones and twos —our clients, the small businesses.”
Camara notes that the client base is getting younger and younger. “The kids coming out of college today are different,” she explains. “They want to start their own businesses, control their own futures. They want the self-satisfaction of creating something that 's their own and they're not afraid to take chances. And if they don't jump in right away, they're dreaming about it. They are not going to build a career the same way their fathers did. ”
“We truly make an enormous contribution to the central Massachusetts economy,” says Marsh. “Multiply this across the country and you can see that the SBDC' s role is big time.”
Partners in Education
The SBDC also collaborates with Clark's Graduate School of Management (GSOM) by linking M.B.A . students with the business community through consulting projects. It's a perfect match: Clark has students eager to apply newfound knowledge to a real-world situation; the SBDC has clients who provide the real-world situations.
The M.B.A . capstone course, Management Consulting Projects, provides GSOM students with a variety of hands-on projects at profit and nonprofit organizations in central Massachusetts and Boston. The popular course pairs teams of three to four second-year M.B.A. students with organizations as consultants-in-training. Working with guidance from Clark adjunct professors and SBDC counselors John Rainey and Michael Holbrook, and managers from the host organizations, the student teams analyze their assigned projects and recommend courses of action. Management, in turn, critically evaluates and responds to the students ' analysis and recommendations, in much the same manner that they respond to proposals from their own staff.
“The intent of the course is to give students some practical business experience,” explains Rainey, who says the partnership serves as an “incubator of experiential learning.”
GSOM students use all the general management skills ranging from finance, marketing, accounting, IT, and operations as they tackle 10 to 12 of these projects each year. The projects are treated just like a professional consulting assignment, and students sign confidentiality and code-of-ethics agreements. After meeting with the client to learn about the company and to discuss the specific project or issue, the teams draft a proposal itemizing what they will deliver to the client in the end.
“Of the many M.B.A. courses that I have taught over the last 15 years, this one is definitely the most challenging,” notes Holbrook, who enjoys seeing the students—most who hadn't worked together before—overcome uncertainties and transform into productive teams.
“These are graduating M.B.A. s and we expect them to be at the point where they can run the project on their own —we give them a project management guide and a lot of leeway,” says Rainey. “Students love it because it gives them that real-world business experience. The clients love it because they get anywhere from 400-800 hours of young, bright, energetic M.B.A. s at no cost.”
“Clark appreciates the SBDC 's work in support of the region's entrepreneurial community, and we're delighted that we've found a way to link that work to our mission of providing active-learning experiences for our students, ” says GSOM Dean Edward Ottensmeyer. “I've lost track of the number of times that I've heard from business owners who want to tell me about the great work done by our M.B.A. students.”
Assessing Needs
Last semester, the consulting team of M.B.A. students Altaf Hamid, Kunal Sood, Chaohui Zhang and Rajendra Bhute set out to help a manufacturing company choose an Enterprise Resource Planning (ERP) system—the company was considering three different software packages. At the first meeting, the students asked for the company 's needs assessment. The company didn't have one.
The scope of the project quickly changed as the team kicked into high gear to create one. They knew that they couldn 't effectively choose an ERP without fully understanding the company's needs.
According to Sood, an ERP integrates all the segments of a business into a centralized system that every employee can access. The company 's current system was no longer effective as the company had been experiencing high and prolonged growth.
The team interviewed employees across all the departments to determine individual needs and isolate specific problems and challenges. Typically an assessment like this would take six months to complete, but the team did it in four and still came up with recommendations. The work translated into almost 800 hours.
“The old system was adequate for operations, but it was not good for accounting, shipping or any of the other departments, ” explains Sood.
The goal was to find a system that would be effective for all the departments. The team sampled demonstrations from a variety of ERP companies, narrowing it to five systems that would best meet the company's needs. Interestingly enough, not one of these packages was on the manufacturer's original list.
Sood says the company estimated that it would've cost them about $100,000 for a private consultant.
“This was a valuable, amazing experience,” says Sood, who is from India. “I experienced an American work style. I used my knowledge in finance and accounting and operations, but also gained some knowledge outside the scope of my education. ERP systems are a hot thing these days, but were new to me.”
Green is on the money
The team of M.B.A. students Fabio Paniza, Kahlil Al-Hariri, Tien Vu, and Ying-Chi Chiu worked with a packaging company that wanted to be more environmentally friendly. The company already had a recycling program with one of its customers, a major computer manufacturer, where they reused about 15 percent of the packaging. This 15 percent came from the computer manufacturer's customers who shipped back their old computers in the boxes the new ones came in for a credit. The gain was twofold, the program saved both companies money, and it benefited the environment.
The company wanted to increase the reuse percentage from the 85 percent that was being trashed in the United States. The student team analyzed whether or not it made economic sense to recover other packaging for re-use. They reviewed all the costs of recovering the packaging, shipping back and forth, freight rates, percentage of damage, and what it would cost to make permanent packaging. They identified different scenarios and constraints and presented to the client and the client 's customer.
“We had to consider logistical costs,” explains Paniza. “We used a lot of statistics and analyzed data that we already had. We didn't want to lose money.”
The team estimated that the company could save between $150,000 and $600,000 just by having the shipping company bring back 35 to 40 percent of the packaging that the shipping company was already being paid to trash. “So why not pay the company to recover it instead,” says Paniza. “It's a very expressive number when you consider you don't have to invest anything more to do it.”
When the team determined its feasibility, they examined another option: to design more permanent packaging for a longer reuse life. Would the higher cost of the new packaging be worth it? According to Paniza, their analysis indicated that this project could realize gains in the second year; in five years, the savings could be between $2 and $5 million.
“We had all the data so we could measure the return and give them a real number,” says Paniza. “It's a very good project because they can be green, and save money.”
Efficiency overhaul
M.B.A. students Chen Kuo Yang, Atish Gupta, Yuan-Hong Fang and Zeeshan Javed '04 helped a parts distributor that wanted to improve profitability and efficiency. The team spent a month assessing the situation, isolated many inefficient processes, and made recommendations for increasing sales and improving customer service.
For one, the team found the ordering and delivery process was a significant problem. The sales people were taking orders from customers, and then leaving the phone station to pick up the item from the warehouse to deliver it to the shipping area. Different brands of parts were stored in different places, so parts could not quickly be picked up in one central location. Thus, new incoming calls were missed. The missed-call rate was very high, says Yang, and the phone system very old. Instead of putting customers on hold, the calls went straight to voice mail, but the sales staff was too busy to check messages and return calls.
A bottleneck in the shipping and delivery bay was another issue. The bay was difficult to access —trucks could not pull up to the door to be quickly loaded and unloaded, and shipping and delivery often happened at the same time. Furthermore, Yang explains, delivery drivers spent about an hour before each shift shuffling paperwork back and forth, sorting orders and planning delivery routes. Tracking was done manually rather than using a computer.
The students came up with over 20 recommendations to improve operations and marketing, including optimization software to run reports and plan delivery routes, an updated telephone system, and a more efficient shipping/receiving area as part of a future renovation project. Determining that the sales people “wore too many hats,” they recommended hiring order-pickers to get the parts from the warehouses to shipping, so sales staff could focus on incoming calls from customers. The distributor implemented eight of the recommendations before the students finished the project and hired Yang as an intern to implement others.
“This has been a great real-world experience,” says Yang. “The biggest take-away for me—strong leadership and good communication is very important.”
“It's a win for the students, it's a win for the client, it's a win for the SBDC, ” says Rainey. He says Clark's SBDC logs more hours than any other center in the country as it claims on average about 4,000 to 5,000 hours a year from the work of Clark's M.B.A. students.
“These students do really good projects—this is high quality work. We've had clients tell us that our students have done a better job than professional consulting firms. ”
To learn more about the Small Business Development Center at Clark, visit www.clarku.edu/offices/sbdc/
Innovation & Entrepreneurship
Clark M.B.A. students aren't the only ones gripped by an entrepreneurial spirit. After all, innovators come in all shapes and sizes. Some start and run their own businesses. Others enter classrooms, science labs or board rooms and shape the future. At Clark, undergraduates of any major can take part in the new Innovation & Entrepreneurship minor, founded by entrepreneur-in-residence George Gendron. To learn more about the program and what entrepreneurial endeavors inspire Clark undergraduate students, visit www.clarku.edu/ departments/ie/.
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Clarknews Spring 2007
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Fabio Paniza |
Chen Kuo Yang
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Kunal Sood
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