# Presentation: 492056

## 5th AnnualRural Community DevelopmentTraining Conference

***St. Louis, Missouri***
***June 6, 2001***

## Microenterprise Development

***Don Macke***

## -Today’s Focus-

**Why Entrepreneurship?**
**Role of Microenterprises**
**Resources**
**Questions & Discussion**

## Rural Entrepreneurship InitiativeJune, 2001

_**WHY ENTREPRENEURSHIP**_**?**

**Why Entrepreneurship?**

## INSIGHT #1

**Entrepreneurship**
**and**
**Economic Performance**

## Global Entrepreneurship Monitor2000

## What is GEM 2000?

- Collaborative effort of the world’s best scholars in entrepreneurship to study the relationship between entrepreneurship and economic growth.
- Comparable assessment in 21 countries (compared to 10 in 1999).
- Based on a sample survey of the adult population, in-depth interviews with national experts on entrepreneurship in each country, and standardized secondary data.

## GEM 2000 Focuses on Three Questions

- Does the level of entrepreneurial activity vary between countries, and if so, by how much?
- Does the level of entrepreneurial activity affect a country’s rate of economic growth?
- What makes a country entrepreneurial?

## Finding One:  The level of entrepreneurship differs significantly between countries.

## Finding Two:  Entrepreneurship is strongly associated with economic growth?

- The level of entrepreneurial activity explains 70 percent of the difference in economic growth among nations.
- All nations with high levels of entrepreneurial activity have above average rates of economic growth.
- Only a few nations that have above average rates of economic growth have low levels of entrepreneurship.

## INSIGHT #2

**Weaker Rural Economic Performance is Due in Part to Lower Levels of Entrepreneurial Activity?**

## Question?	

**Do Rural Americans have a propensity to be entrepreneurs?**

## Answer!  Yes & No

- Rural Americans have E-Traits.
- Major Challenges Exist.
- Fewer Entrepreneurial Growth Companies.

## Question?

**Do Rural Americans Have the Knowledge and Skills Associated with Entrepreneurship?**

## Answer!  Yes & No

- Strong Basic Skills.
- Weak Advanced Skills.
- Distance and Weak Support Infrastructure.

## Question?

**Are Rural Americans Succeeding as Entrepreneurs?**

## Answer!

- Some.
- Fewer Than in Urban America.
- Barriers for Entrepreneurs.
- Entrepreneurs are Leaving.

## INSIGHT #3

**Increasing Entrepreneurship in Rural America is a Primary Strategy for Increasing Economic Performance and Prosperity.**

## Increasing 

**Rural Entrepreneurship**

## Challenge!

**How Do Rural Areas Increase Entrepreneurship?**

## Four Uniquely Rural E Challenges:

**Market**
**Isolation**
**Culture**
**Demographics**

## Market Challenges

- Accessing Urban Markets.
- Necessary Services.
- Clustering.
- Transition – Local to National.

## Isolation Challenges

- Less Isolation Today.
- Other Entrepreneurs.
- Perceiving Opportunities.

## Cultural Challenges

- Anti-Change.
- Success/Failure.
- Recognition/Awareness.
- Social Entrepreneurs.

## Demographic Challenges

- Education.
- Few 25-44 Males.
- Weaker Growth.
- Mature Old Economy Industries.
- Women and Minorities.

## ROLE OF MICROENTERPRISE DEVELOPMENT

**Role of Microenterprise Development**

## Rural America Working

**Small Business Owners**

**Micro**

**Home Based**

**Unemployed**

**Major**
**Business**
**Owner**

**Salary Workers**

**Wage Workers**

## Rural Entrepreneurs

**Aspiring**

**Potential**

**Active**

**Survival**

**Lifestyle**

**Growth**

## Support System

- Comprehensive
- Appropriate
- Effective
- Sustainable

## Nebraska’s Story

## 1980s - 

**REAP**
**Center for Rural Affairs**

## 1997-

**Nebraska**
**Microenterprise**
**Partnership **
**Fund**

## Intermediary

- Lending Capital
- Development Resources
- Training
- Performance

## Resources

**$450,000**
**$1.2 Million**
**           ****2.7x**

## NEON

AEO

**AEO**

## State
Recognition
& Legislation

**Recognition**
**& Legislation**

## Leveraged & Stable State Resources

**44% to 77%**
**Change**

## Performance

## Lending 

**1998 - $743,000**
**2000 - $1,350,000**
**+82%**

## Training

**1998 – 1,019**
**2001 – 2,863**
**+181%**

## Coverage

**	****	****	****	**_**Loans**_**	**_**Training**_
**	****1998****	****	****   42****	****	****     31**
**	****2000****	****	****   49****	****              79**
**  ****	****	****	****	**** ****+17%****	****  +155%**

## Job Creation

**1,700 Jobs per Year**

## Cost

**$1,573 per Loan**

## Default

**2.2% Rate**

## Comparative Costs (Per Job)

**	****	****	****Micro****	****	****  $1,000**
**	****	****	****CDBG****	****	****$20,000**
**	****	****	****Tax Abatement****	****$50,000**

## National Fund for Enterprise Development

## National

**State**

**State**

**Local**

**Local**

**Local**

## Strategies for Creating a Systems Approach

**Top**
**Down**

**Bottom**
**Up**

**Entrepreneur **
**Profiling and**
**Resource**
**Matching**

**Service Provider**
**Networking**

**Local/Regional/State**
**Integrated System**

**Service Provider**
**Cross-Training**

**One Stop**
**Referral**
**Tracking**
**Service**

**Paper and Electronic**
**Directory Resources**

**Market**
**Support**
**Assistance**

**Meaningful**
**Connection**

**Enterprise**
**Clusters**

**Enterprise**
**Associations**

**Education **
**of the Importance**
**of Networks**

**Support in**
**Creating**
**Clusters and**
**Associations**

**Internal**

**External**

**Entrepreneur**
**Networking**

## Elements of a Rural Capital System

**Venture Fund Connections**

**Capital Attraction**

_**Rural Capital**_
_**System**_

**Rooted Venture Funds**

**Deal Development**

**Micro Lending**

**Angel Networks**

**NICs**

**Effective Use of **
**Govt. Programs**

**Capital Literacy Education**

## Rural Entrepreneurship Initiative

**Rural ****Entrepreneurship ****Initiative**

## For More Information. . . .

**Rural Entrepreneurship Initiative – **_[http://www.nebcommfound.org](http://www.nebcommfound.org/)_**       **
** “****Rural Entrepreneurship Initiative”**
**Kauffman Foundation – **_[http://www.entreworld.org](http://www.entreworld.org/)_
**    **