[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
SUPPORTING AMERICA'S STARTUPS: REVIEW OF SBA ENTREPRENEURIAL
DEVELOPMENT PROGRAMS
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
FEBRUARY 27, 2019
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-006
Available via the GPO Website: www.govinfo.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
35-071 WASHINGTON : 2019
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
ANDY KIM, New Jersey
SHARICE DAVIDS, Kansas
JARED GOLDEN, Maine
JASON CROW, Colorado
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
VACANT
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TRENT KELLY, Mississippi
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
Adam Minehardt, Majority Staff Director
Melissa Jung, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Nydia Velazquez............................................. 1
Hon. Steve Chabot................................................ 2
WITNESSES
Mr. Charles Rowe, President & CEO, America's Small Business
Development Centers, Arlington, VA............................. 4
Ms. Corinne Hodges, CEO, Association of Women's Business Centers,
Washington, DC................................................. 6
Mr. W. Kenneth Yancey, Jr., CEO, SCORE Association, Herndon, VA.. 8
Ms. Cherylynn Sagester, Veterans Business Outreach Center Program
Director, Old Dominion University, Norfolk, VA................. 9
APPENDIX
Prepared Statements:
Hon. Jim Hagedorn............................................ 28
Mr. Charles Rowe, President & CEO, America's Small Business
Development Centers, Arlington, VA......................... 29
Ms. Corinne Hodges, CEO, Association of Women's Business
Centers, Washington, DC.................................... 37
Mr. W. Kenneth Yancey, Jr., CEO, SCORE Association, Herndon,
VA......................................................... 46
Ms. Cherylynn Sagester, Veterans Business Outreach Center
Program Director, Old Dominion University, Norfolk, VA..... 62
Questions and Answers for the Record:
Question from Hon. Brad Schneider to Ms. Corinne Hodges and
Answer from Ms. Corinne Hodges............................. 65
Question from Hon. Brad Schneider to Ms. Cherylynn Sagester
and Answer from Ms. Cherylynn Sagester..................... 67
Additional Material for the Record:
None.
SUPPORTING AMERICA'S STARTUPS: REVIEW OF SBA ENTREPRENEURIAL
DEVELOPMENT PROGRAMS
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WEDNESDAY, FEBRUARY 27, 2019
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:08 a.m., in Room
2360, Rayburn House Office Building. Hon. Nydia Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Finkenauer, Kim,
Davids, Golden, Crow, Veasey, Evans, Schneider, Espaillat,
Delgado, Houlahan, Chabot, Balderson, Hern, Stauber, Spano, and
Joyce.
Chairwoman VELAZQUEZ. Good morning. The committee will come
to order.
It is a pleasure to have all of you testifying before our
committee this morning. I applaud you for your leadership on
behalf of America's small businesses.
America's 30 million small businesses are the cornerstones
of our communities. When a Main Street business succeeds, not
only do hard-earned dollars get reinvested back into our
neighborhoods, we also see robust job creation and innovation.
But we all know that launching a small business is no task
for the faint of heart. When it comes to turning a great idea
into a thriving business, unfortunately, many entrepreneurs
face a series of challenges.
To break down these barriers, the SBA fosters a robust
entrepreneurial ecosystem, one that offers free or low-cost
counseling and training to entrepreneurs across the country.
Whether it is helping to create a business plan, navigate the
procurement process, market a new product, or identify trade
opportunities, the SBA, through its resource partners, offers a
wide range of services to help small businesses succeed.
The SBA relies on four main partners to deliver these
services--Small Business Development Centers, or SBDCs; Women's
Business Centers, or WBCs; SCORE; and Veterans Business
Outreach Centers, or VBOCs. Today, we are fortunate to be
joined by their leaders.
Entrepreneurial development initiatives are proven to be a
great return on investment. Studies have shown that aspiring
entrepreneurs and small business owners who receive counseling
and training are able to increase sales and create more jobs.
They are even proven to be more viable in the long term with
those receiving 3 or more hours of counseling having higher 1-
year survival rates.
Every year, SBA's resource partners assist more than one
million entrepreneurs, creating roughly 80,000 jobs. And for
every dollar invested between 2012 and 2017, SBDCs returned $5
in revenues to federal and state governments.
But, behind these numbers are very real experiences of
hardworking entrepreneurs. Let me share with you the story of
DogSpot, a woman-owned small business in Brooklyn, New York.
Chelsea Brownridge was reluctant to take her high-energy
terrier for a walk when she ran errands in Brooklyn. Realizing
that other dog owners must face similar challenges, Chelsea got
to work on developing a state-of-the-art doghouse for pet
owners to safely and comfortably house their pets while
shopping.
For advice and assistance, Chelsea turned to the Brooklyn
Small Business Development Center, which helped her secure $3.2
million in capital and hire 10 employees. Now, she is preparing
to expand DogSpot to more cities nationwide.
At today's hearing, I hope to hear similar success stories.
However, I am also eager to learn more about what must be
improved.
While I commend each one of you for collectively serving
over a million entrepreneurs per year, there are still more
than 28 million small businesses that are not utilizing these
services. Today, I would like to learn what more can be done to
raise awareness for SBA counseling and training programs to
ensure we are reaching as many entrepreneurs as possible. I
also have concerns over the administration's past proposals to
significantly reduce funding for these programs. Fortunately,
there was a bicameral, bipartisan push this year to restore the
proposed cuts. Providing robust levels of funding for these
programs is essential to their success.
Having said that, we must also ensure that taxpayer
resources are being used wisely and to the maximum effect. That
is why this committee has long pushed for clearer metrics and
accountability. I would also like to hear our panelists
thoughts on ways we can better measure the results of these
valuable counseling and training programs.
Small businesses are the backbone of the American economy,
and we should provide our entrepreneurs with the critical
resources they need to succeed. I am eager to hear ideas today
on how we can improve SBA's entrepreneurial development
programs and better serve America's innovators.
With that, I thank each of the witnesses for joining us
today and look forward to your testimony.
I would now like to yield to the Ranking Member, Mr.
Chabot, for his opening statement.
Mr. CHABOT. Thank you, Madam Chairwoman. And I apologize
for running a little bit late there. I was in Foreign Affairs
and our former Secretary of State, Madeline Albright, and I was
the next questioner and I had been there an hour, so again, I
apologize for anything, my phone going off.
Time and again, this Committee has lauded the importance of
small businesses to the American economy. The impact that over
30 million small firms has on our nation simply cannot be
overestimated. Given the vital nature of small businesses
providing resources that help entrepreneurs and small business
owners succeed must be a priority. The Small Business
Administration's, or SBA's, Entrepreneurial Development
programs provide those important resources.
The SBA Entrepreneurial Development programs include Small
Business Development Centers, or SBDCs; the Service Corps of
Retired Executives, or SCORE; Women's Business Centers, or
WBCs; and Veterans Business Outreach Centers, or VBOCs.
These programs provide small business owners and
entrepreneurs with technical and managerial training related to
creating, running, and scaling a small business. While
collectively these programs have provided business training and
counseling to more than 1.5 million individuals in Fiscal Year
2017, each SBA Entrepreneurial Development Program is tasked
with offering a unique and tailored curriculum.
The SBDC program is the largest and highest funded
Entrepreneurial Development Program, with nearly 1,000
locations all across this country, and provides a broad range
of business counseling and training aimed at meeting the needs
of both startup entrepreneurs and existing small business
owners.
While SBDCs focus on counseling and training, SCORE is
tasked with providing mentorship. With roughly 800 locations
nationally and over 11,000 volunteer mentors, SCORE seeks to
pair entrepreneurs or business owners with a SCORE mentor who
can offer specific and tailored business guidance.
The WBC program provides business training and counseling
specifically tailored to meet the needs of women entrepreneurs,
often proving long-term training courses on nights and weekends
at their 100 plus locations.
Finally, VBOCs are responsible for providing
entrepreneurial resources and transition assistance to our
nation's veterans through both 20 center locations and other
military locations throughout the country.
Each of these Entrepreneurial Development programs plays a
specific role in ensuring that our nation's small business
owners have the resources they need to be successful.
Today's hearing will allow us to the opportunity to learn
more about these programs and how they serve America's
entrepreneurs, while allowing us to ask appropriate questions,
what is working and what needs to be improved within these
programs.
I look forward to hearing from our witnesses and having a
productive conversation.
And again, I thank you, Madam Chairwoman, and I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
And if committee members have an opening statement
prepared, we would ask that they be submitted for the record.
I would like to take a minute to explain the timing rules.
Each witness gets 5 minutes to testify and the members get 5
minutes for questioning. There is a lighting system to assist
you. The green light will be on when you begin, and the yellow
light comes on when you have 1 minute remaining. The red light
comes on when you are out of time, and we ask that you stay
within the timeframe to the best of your ability.
I would now like to introduce our witnesses.
Our first witness is Mr. Charles `` Tee'' Rowe. Mr. ``
Tee'' Rowe is the president and CEO of America's SBDC, the
association representing Small Business Development Centers. He
joined America's SBDC in 2009 after serving at the Small
Business Administration, first as the Assistant General Counsel
for Legislation and Regulation, and then as the Associate
Administrator for Congressional Administrative Affairs. Prior
to that Mr. Rowe was a Counsel here at the House Small Business
Committee for 6 years, as always welcome.
Our second witness is Ms. Corinne Hodges. Ms. Hodges is the
CEO of the Association of Women's Business Centers. Prior to
joining the association in January 2019, Ms. Hodges led the
public relations team for Kia Motors Manufacturing in Georgia.
She is also an experienced small business owner. Ms. Hodges
helped at her mother's woman-owned trucking company in
Michigan, and also ran her own advertising and public relations
agency. Welcome.
Our third witness today is Mr. Kenneth Yancey. Mr. Yancey
is the Chief Executive Officer at SCORE where he has led the
nation's largest network of volunteer expert business mentors
for more than 25 years. Before taking the leadership position
at SCORE, Mr. Yancey was the Executive Director of the National
Business Association. Recognized as one of the leading experts
on small business, Mr. Yancey is a frequent contributor of many
radio and television shows on the topics of entrepreneurship,
small business trends, and volunteerism. Welcome.
And now I will yield to the Ranking Member, Mr. Chabot, to
introduce our final witness.
Mr. CHABOT. Thank you, Madam Chair.
I would like to introduce today's final witness, Ms.
Cherylynn Sagester. Am I pronouncing that correctly? Thank you.
Ms. Sagester serves as the Director of the Veterans Business
Outreach Center at Old Dominion University. The Old Dominion
VBOC provides eligible veterans from Virginia, Delaware,
Pennsylvania, and West Virginia with entrepreneurial training
and counseling as a part of the University's Institute for
Innovation and Entrepreneurship. Prior to joining the Old
Dominion VBOC, Ms. Sagester had roughly 2 decades of experience
in business and economic development within both the public,
private, and nonprofit sectors, and we thank you for joining us
this morning.
I yield back.
Chairwoman VELAZQUEZ. And now we recognize Mr. Rowe for 5
minutes.
STATEMENTS OF CHARLES ROWE, PRESIDENT AND CEO, AMERICA'S SMALL
BUSINESS DEVELOPMENT CENTERS; CORINNE HODGES, CEO, ASSOCIATION
OF WOMEN'S BUSINESS CENTERS; KEN YANCEY, CEO, SCORE
ASSOCIATION; CHERYLYNN SAGESTER, VETERANS BUSINESS OUTREACH
CENTER PROGRAM DIRECTOR, OLD DOMINION UNIVERSITY
STATEMENT OF CHARLES ROWE
Mr. ROWE. Thank you, Chairwoman Velazquez, Ranking Member
Chabot, members of the Committee. Thank you for inviting me to
testify on behalf of America's Small Business Development
Centers.
For 40 years, SBDCs have been providing services to small
business owners, focusing on one-on-one advising to improve
their businesses.
As Mr. Chabot said, we have a network of over 975 locations
with 4,000 dedicated professionals who assist hundreds of
thousands of small businesses nationwide.
We operate primarily through colleges and universities, and
the SBDC hosts manage the networks and subcenters and provide
matching funds.
We serve small businesses at all stages. The mix is about
60/40, 60 percent existing, 40 percent startup. Forty-five
percent of our clients are women, 10 percent are veterans, 33
percent are minorities. And yearly, we provide over 1.5 million
hours of counseling and training to over 500,000 small
businesses.
From 2012 to 2018, SBDCs helped their clients obtain over
$30 billion in capital, increase sales by $40 billion, and
create over 538,000 jobs.
Our services tend to be a little more in-depth and varied,
so what I would like to highlight is some of the services, but
more particularly, how we focus on them.
Every SBDC undergoes accreditation, a week-long examination
with a rigorous self-study, interviews, and written reports.
The process is based on the NIST/Malcolm Baldridge quality
standards.
A key component is the needs assessment. The SBDC focuses
on the client's needs locally and the local economy, ensuring
service relevance. As a result, SBDCs offer both specialized
services and general business assistance.
For veterans, we prioritize assistance. We have specialized
programs in states with large veteran populations to assist
with pre and post deployment needs, and as well, we participate
in Boots to Business and other transition assistance programs.
Our outreach to underserved communities is also a
significant priority. Our members support targeted outreach,
covering everything from MB certification to business quarter
revitalization.
And we are mandated to cover entire states, so our
initiatives reach rural needs as well. Our Texas SBDC hosts an
annual rural conference, and our Alabama SBDC has a real strong
collaboration with USDA.
And we have over 500 certified export assistance counselors
partnering with the Census Bureau to provide export training,
and in many states the SBDC is a key component of the state's
export program.
And we are integral in disaster response and often the
first on the scene to set up business recovery centers with
FEMA and SBA. In Florida, for example, SBDC is a primary
disaster responder for the state.
We also 3 years ago started offering cybersecurity
training. Small business owners lacked information and skills,
so SBDCs developed assessment tools, training programs, and
enhanced their cyber skills and ensured that small contractors
are current on Federal cybersecurity requirements.
And along the lines of procurement, 29 of the 94 PTACs are
supported by SBDCs, offering in-depth assistance to small
businesses navigating Federal procurement. Other SBDCs offer
more introductory courses on contracting and help with
certifications.
Recently, we began collecting new SBA metrics. This year
will be a baseline year, and our hope is that this will be a
larger discussion on best ways to help small business.
America's SBDCs do not believe in a one size fits all
approach. Our networks have different resources and needs, and
what we want to be sure is that the focus is on measures that
reflect small business success.
I just want to sum up here and say I talked about all the
things we do, but the most important thing we do is work with
all of our colleagues here at the table and the PTACs. We refer
clients back and forth regularly because none of us can be all
things to all small businesses.
And with that in mind, I am just finally going to say we
strongly support the idea of reauthorizing the Entrepreneurial
Development Programs. I, in my written testimony, outlined a
number of areas for consideration and I look forward to your
questions on that. I think it is time for a full conversation
on the services and all of our commitments.
Thank you very much.
Chairwoman VELAZQUEZ. Thank you, Mr. Rowe.
And now, Ms. Hodges, you are recognized for 5 minutes.
STATEMENT OF CORINNE HODGES
Ms. HODGES. Chairwoman Velazquez, Ranking Member Chabot,
and distinguished members of the Committee, good morning, and
thank you so much for convening today's hearing.
My name is Corinne Hodges, and I serve as the CEO of the
Association of Women's Business Centers.
Our organization supports the network of WBCs by providing
programming and advocacy to improve services to women
entrepreneurs. I am honored to be here today, and I am joined
by our board who is behind me.
The WBC program is a public-private partnership with over
30 years of success in providing long-term training,
counseling, mentoring, and access to capital to women
entrepreneurs across the country.
What began as four demonstration sites in 1988 is now a
network of 114 centers with more than 150 locations nationwide.
In no small part, thanks to this Committee for your effort
there and support. In that time, WBCs have served more than 2
million women entrepreneurs leading to the creation and
expansion of tens of thousands of new businesses and jobs.
In Fiscal Year 2017, we reached 148,000 entrepreneurs,
ranging from startups seeking capital to established businesses
exploring new markets. Each year we help to secure hundreds of
millions of dollars in financing, assisting in winning
government and corporate contracts, and support the hiring of
thousands of new employees.
According to the SBA's 2015 report, the most recently
released, 96 percent of WBC clients reported revenue growth
totaling a staggering $658 million. This led to one in 10
businesses hiring at least one new employee, creating nearly
25,000 jobs.
WBCs also play a significant role in fueling the growth of
minority-owned businesses. Forty-five percent of clients in
2016 were minorities, which required many centers to adapt.
Today, 64 percent of WBCs provide programming in two or more
languages, and nationally services are provided in more than 35
languages.
Each WBC is unique, designing program and delivery models
with their communities in mind. At the Brooklyn Women's
Business Center where fashion and beauty knowledge was in
demand, counselors created training to meet the needs within
that industry. They brought in beauty experts, celebrity
stylists, and even intellectual property attorneys to help
protect their clients' creations. They now plan to purchase
sewing machines and offer classes on site for those interested
in creating fashion prototypes or textile manufacturing.
Our services are distinctly different from other resource
partners due in large part to the unique challenges facing
women business owners. Our clients consistently say they come
to WBCs not just for business education and consulting, but for
supportive environment that helps build self-efficacy through
addressing four critical issues--competence, confidence,
capital, and connection. The result is real economic impact
felt by the client and their community.
Janay Brower, a WBC client in Michigan, owns an upcycling
manufacturing company called Public Thread. It was with the
support of other business women that she moved this business
out of her kitchen and into a commercial manufacturing space.
As she puts it, women are uniquely positioned to see the long-
term benefits to communities rather than just the short-term
financial goals.
Evaluation data from WBC programs indicate that women like
Janay who receive business assistance from their programs build
larger businesses, create more jobs, and have significantly
higher survivor rates than the national average.
Women's Economic Ventures in California boasts an 80
percent survival rate after 5 years for its clients, far above
the national average of 50 percent. Moreover, more than 40
percent of their clients have employees compared to the
national average of only 12 percent of all woman-owned firms.
In Chicago, the Women's Business Development Center created
the Developing Your Childcare business course,
professionalizing dozens of home-based businesses in low-income
communities.
Finally, and perhaps most critically, the WBC program has
proven to be a good investment of taxpayer dollars. Private
sector fund-raising enhanced by the visibility of the SBA
partnership helps to match Federal dollars more than three to
one. For every one Federal dollar invested in the program, the
WBC program returns $46 to the economy.
And yet, we are not realizing our full potential. We need
policymakers to strengthen and modernize the WBC program,
expanding our proven impact to communities across the country.
We urge Congress to raise a 30-year-old arbitrary cap that
prevents our best centers from expanding and remove outdated
requirements that divert resources from counseling to back
office bureaucracy. A key inefficiency that comes to mind
actually provides a disincentive for centers to raise
additional nonfederal funds.
The upward trajectory of the program is also deserving of
more Federal funding. Ensuring adequate resources is a key
component to continuing the growth of the WBC program and
women's entrepreneurship more broadly.
Unfortunately, resources for the program have not grown in
parallel to the more than 50 percent increase in centers over
the last 15 years, so we urge congressional action to improve
data collection in order to quantify just how much growth is
happening.
The challenges facing women entrepreneurs persist as must
the commitment of Congress to advancing these priorities.
Thank you for the opportunity to testify, and I am open to
your questions.
Chairwoman VELAZQUEZ. Thank you, Ms. Hodges.
And now, Mr. Yancey, you are recognized for 5 minutes.
STATEMENT OF KEN YANCEY
Mr. YANCEY. Chairman Velazquez, Ranking Member Chabot,
members of the Committee, my name is Ken Yancey, and I am the
CEO at SCORE. Thank you for the opportunity to offer testimony
to the Committee regarding SCORE's programs, services, and
plans for the future. We appreciate being on the witness panel
with our friends and partners from the SBDC, Women's Business
Centers, and the VBOCs, and we also want to thank our founding
partner, who 55 years ago established our organization and
continues to be that primary partner, the SBA.
Fiscal Year 2018 was another effective year for SCORE as
measured by client volume, impact, and client engagement. In
Fiscal Year 2018, SCORE helped clients to create more than
32,000 new small businesses, and 136,000 total jobs. Our cost
to create a job is $81. The cost to create a business is $340.
This efficiency in creating jobs and businesses provides a
tremendous return on all Federal dollars invested in SCORE. In
Fiscal Year 2018 alone, SCORE clients returned an estimated $47
in new tax revenue to the Federal treasury for every dollar
appropriated to SCORE.
Through an annual survey completed by
PricewaterhouseCoopers, SCORE has measured client engagement
for nearly a decade. In Fiscal Year 2018, SCORE client
engagement, a measure similar to client satisfaction, was 4.29
on a 5-point scale, a significant increase from the previous
year.
We are proud of the work our volunteers do with clients,
and this improvement continues to show that our volunteer
onboarding, certification, and training do work.
Last year, we began the implementation of SCORE's Vision
2025, a futures initiative intended to ensure our relevancy for
the next 50 years. Vision 2025 guides decision and
organizational development within SCORE.
As an organization, we must continue our ongoing cultural
transformation by operating with a one SCORE mindset in which
headquarters, chapters, volunteers, and the SCORE foundation
work together to achieve the goals of increased focus on
clients, quality, accountability, and growth.
Examples of our one SCORE approach include the
standardization of all chapter websites resulting in greater
web traffic, consistent messaging and branding, and increased
client services.
SCORE is developing a new salesforce-based CRM system that
will be deployed in Fiscal Year 2020. The system will make it
easier for both volunteers and clients to do business with
SCORE, and it is mobile friendly, allowing both to engage with
SCORE via their handheld device.
SCORE has centralized social media in 270 chapters.
Participating chapters saw an 8.9 percent increase in services,
triple that of nonpilot chapters.
SCORE is centralizing all accounting and finance systems
nationwide. Centralizing accounting functions will reduce the
administrative burden at the chapter level, allowing our
leaders to focus more on client needs. It also allows chapters
to continue to have control over their funds, and importantly,
reduces risk at the organizational level.
SCORE standardized volunteer onboarding and volunteer
training, resulting in greater consistency of services,
improved quality, and greater client impact.
One of SCORE's most important initiatives is diversity and
inclusion. SCORE is committed to improving the diversity of
both clients and volunteers and ensuring that SCORE is
intentionally inclusive at every level of the organization. In
2017, a National Inclusion Task Force was formed to drive
strategic cultural change throughout SCORE. By year's end, all
volunteer leaders have been trained in sessions across the
country and online inclusivity training is now mandatory
annually for all of our volunteers.
We have improved from 22 percent women and minority
volunteers in 2012 to 31 percent in 2018. Client diversity has
improved as well. This, however, is not good enough. We
continue to aggressively address these challenges. Our goal is
to effectively serve all people with respect, dignity, and
professionalism regardless of their adjective.
To help SCORE achieve its goal to better serve its goals
our clients and achieve all that our volunteers are capable of,
we respectfully request an authorization and appropriation of
$13.5 million in Fiscal Year 2020. We also request a 3-year
authorization of $13.5 million in 2020, $13.5 million in 2021,
and $15.5 million in 2022. I would also encourage the Committee
to support and invest in the other resource partners who are
here who are part of the entrepreneurial fabric of all
communities where we serve and outstanding partners in those
communities as well.
Thank you very much for the opportunity to testify today,
and I look forward to any questions.
Chairwoman VELAZQUEZ. Thank you.
Ms. Sagester, you are now recognized for 5 minutes.
STATEMENT OF CHERYLYNN SAGESTER
Ms. SAGESTER. Good morning. And I want to thank Chairwoman
Velazquez, and Ranking Member, Mr. Chabot, for this opportunity
to speak before you this morning, as well as I am honored to
join our other major resource partners that serve small
businesses in our country.
There is no better time to be a startup entrepreneur in the
U.S. than at this moment. The financial conditions are
certainly favorable, as well as the economic outlook for the
future; not to mention the traditional negative and/or
skeptical mindset regarding entrepreneurship is a thing of the
past. Entrepreneurship is currently thought of not only in a
positive light, but is considered the `` thing to do,''
especially if you are a millennial or a veteran. And if that is
the case, it is thought of as the way to achieve autonomy,
success, and independent wealth.
Furthermore, research conducted after each major war since
post-WWII tells us veteran entrepreneurship significantly
increases after each major war, and the Iraq and Afghanistan
war is no different. Research has also shown veterans make the
best entrepreneurs, as they acquire skills and character that
are conducive to what is required for entrepreneurial success.
An example of those character traits are as follows: we have an
excellent work ethic, we have a sound understanding of the need
for a plan and the necessity to follow the plan, veterans are
risk-adverse, and failure is not an option, among other traits.
In addition, these new veterans are the most educated and
technologically advanced service members than any before them.
When considering this, combined with the previously mentioned
character traits gained by military service, you have a sector
of the population that is prime for taking on entrepreneurship
and thereby, control over their future.
On the other hand, startups have many challenges, as any
form of entrepreneurship does. In particular, a startup is
immediately challenged when it comes to startup capital. A
startup is like any small business. Funding is the biggest
obstacle to confront, along with lack of experience or
knowledge as an entrepreneur. With that said, the following
statistics provide validity to what is observed in the startup
and entrepreneurial community. Approximately 50 percent of
small businesses fail in the first 4 years, with the leading
cause being incompetence and lack of managerial experience at
30 percent, and 82 percent of the businesses fail due to cash
flow deficiency.
As the U.S. Small Business Administration's Office of
Veterans Business Development, we are a premier entrepreneurial
development program. As the Veteran Business Outreach Centers
located across the U.S., and there are 22 of us, with each
center responsible for a geographic region that covers multiple
states. For example, the center that I oversee as the director
of Region III includes the states of Virginia and West
Virginia. We are located at Old Dominion University Veterans
Business Outreach Center, as part of the university's Institute
for Innovation and Entrepreneurship. This center is located
approximately 5.2 miles from the Naval Station Norfolk, the
largest naval base in the world, who transitions out over
10,000 sailors each year, and for the last 6 years it has done
this and continues to do so as our estimates show.
With the last few minutes of my time I would like to focus
on the three requirements that we have as VBOCs. Number one is
military transition. And that includes military spouses as
well. And a part of that military transition program is one of
the best known entrepreneurial programs I have ever seen in my
career, and that is a program called Boots to Business. Boots
to Business is a 2-day intense introduction to entrepreneurship
that our transitioning service members go through. It is
delivered on an installation of which they are transitioning
out, and it is one of three tracks that they are given.
I look forward to the opportunity to speak more about Boots
to Business. I look forward to the opportunity to talk about
military spouses, as well as economic disadvantaged areas of
the states that we cover and how it is that we are able to
achieve our requirements. Military transition outreach and
other trainings, as well as business counseling, which is the
magic. That is where the magic happens.
And I thank this Committee and all guests for this
opportunity.
Chairwoman VELAZQUEZ. Thank you, Ms. Sagester.
And now I will recognize myself for 5 minutes.
One of my top priorities for this Congress is to, of
course, review and update and modernize the entrepreneurial
development programs. So I am giving you this opportunity, each
one of you, to tell me in your view what is working, what is
working well, and what needs to be improved.
Mr. Rowe?
Mr. ROWE. I think the programs here at the table are
working quite well. We try very hard to work together. We are
all limited by resources, I think, at a certain level.
Sometimes the biggest problem we face is kind of a lack of
clear guidance. It is sort of like we are all on a team
together. We have got goals set for ourselves but nobody has
told us what the big goal is at the end. It is sort of like we
are all there playing football but nobody is talking about the
Super Bowl. And to me that is what are we trying to get to, all
of us and the SBA, an endgame for small business in this
country? And there is just not a clear vision.
Chairwoman VELAZQUEZ. Thank you.
Ms. Hodges?
Ms. HODGES. I would agree with Mr. Rowe. I speak for the
WBC program and it does work well. Indeed, we surpass or exceed
the targets that SBA sets for us so we see the program as very
successful.
What is not working for us is just the outdated statute
that you mentioned. Reauthorization for us means, hopefully,
increased appropriations that specifically would lift the cap
per center, which is a 30-year-old cap, and also allow
additional funding for us to have more centers. Also, we would
entertain the idea and support the idea of accreditation that
would most likely be modeled after the SBDCS.
Chairwoman VELAZQUEZ. Thank you.
Mr. Yancey?
Mr. YANCEY. I know that the SBA is working hard at all
levels on additional transparency. It is good to know as Tee
said who is doing what and what the end goal is. I also know
that the SBA is working to update and upgrade their
technological systems. That would be valuable and useful for
us. We do our own measurement as you heard. It is important to
us. It provides far more information than just impact. We use
it to manage, and we would not want to at any point lose that
opportunity to do that on our own.
Chairwoman VELAZQUEZ. Thank you.
Ms. Sagester?
Ms. SAGESTER. I can say I absolutely agree with Tee. All of
us resource partners, we appreciate the value that we all bring
to the small business owner and the entrepreneur and
collaborate quite often. As a matter of fact, in our suite we
have a VBOC, we have a Women's Business Center, and we have a
PTAC, Procurement Technical Assistance Center, which we are
constantly collaborating. So I think that is going really well.
I think we, personally, our center has experienced great
success with also our SBA district office in Richmond for
Virginia and work extremely well with the two district offices
in the state of West Virginia. And not to mention, our
headquarters here in D.C. with the OVBD is very supportive.
Where I would like to see some action, that would be very
similar as well to my colleagues, and that is the
appropriations. We are covering multi states that require
extensive travel and expenses. And what keeps me awake at
night, is serving those that are not in my immediate area. And
so with additional appropriations and consideration for the
mission that we have, that is where I think we could have a
greater impact.
Chairwoman VELAZQUEZ. Thank you.
As you know, the SBA now is moving towards outcome-based
measures, like unique clients served and new business starts
from the output-based data. So do you believe these goals
better measure the quality of services that you provide?
Tee?
Mr. ROWE. They can, but I think there are problems with all
of them. If you look at new business starts, unless that is a
longitudinal view, you know, more than a 1 year snapshot, you
do not know whether you have created a good business or a
business that is going to fail in 6 months.
Chairwoman VELAZQUEZ. So is SBA working with you in
establishing these goals? What type of input, feedback are you
providing, all of you?
Mr. ROWE. Well, we have had a few meetings with SBA. I
would like to establish this as an ongoing collaborative effort
to negotiate what our goals are nationally and individually
amongst the networks because they are all changing.
Chairwoman VELAZQUEZ. Okay. So I am sorry but I would like
to hear from the other centers' programs.
Ms. Hodges, what is your take on this new development?
Ms. HODGES. Sure. It is still very new, this move toward
capturing the unique clients versus total clients served. That
is a more fair number. It is a better number. Where we lack is
in some of the access to the data collected. We are working on
that, and SBA is committed to that as well and we are glad for
that. We encourage all of the partners at the table, SBA, and
Congress, to continue to prioritize this fact, this matter.
Chairwoman VELAZQUEZ. Mr. Yancey?
Mr. YANCEY. The information that we have been asked to
collect is information we had previously collected. I am not
sure that in a vacuum it tells the best story. We like to ask a
question at SCORE, did SCORE help you? Seventy-seven percent of
the clients say we did. You might not have started a business.
We might have helped you understand you were not quite ready
and what was next, so there are metrics in value beyond just
the creation of a job and the creation of a business.
Chairwoman VELAZQUEZ. Okay. Ms. Sagester?
Ms. SAGESTER. One of the difficult metrics to acquire is
how many businesses are successful and how long have they been
in business. It is very difficult to get these clients to
report to us. We have tried surveys, phone calls, letters,
everything. Once they get off the ground and they are growing
and running, they say they are too busy to get back to us. That
is a metric that we need to figure out, how can we better
measure the successes?
Chairwoman VELAZQUEZ. Thank you. My time has expired and
now I yield to the Ranking Member for 5 minutes.
Mr. CHABOT. Thank you, Madam Chair.
And the first question will be to all the panelists. I will
start with you, Tee.
In the current economic environment, unemployment being so
low, a lot of small businesses, and I hear this back in my
district all the time when I tour various small businesses
there, they are struggling to find qualified people. In what
way does your particular program assist small businesses who
are facing the problem that they just cannot find good people?
And a lot of times I hear, well, they need to show up for work
consistently and pass a drug test and those kind of things. And
unfortunately, there are a lot of folks that that is not the
case with.
So Mr. Rowe?
Mr. ROWE. Well, what most SBDCs work on is assisting the
clients with managing a new workforce. But what we hear
constantly from them is that there is a lack of workforce
development with the exception in some of the skilled union
trades. And really what they need is help developing
apprenticeship programs that can help the vast majority of
small businesses and service industries, et cetera, to build a
workforce.
Mr. CHABOT. Okay. Thank you.
Ms. Hodges?
Ms. HODGES. Workforce development, obviously, is a critical
need in the country nationwide. For any business who is
suffering from the ability to attract and recruit the qualified
and talented workforce that they need, they would benefit from
the long-term training opportunities that we provide in our
centers. It is really I think something unique in our program,
the ability for us to build that relationship and provide the
long-term training because these solutions are not easy and
they are not quick.
Mr. CHABOT. Thank you.
Mr. Yancey?
Mr. YANCEY. Similar to our colleagues, we would bring in
volunteers with HR experience, particularly in recruiting. Help
clients to package their opportunity differently and maybe
better than competing organizations. Talk about training that
could occur for a new employee. Opportunities that could occur
and help them compete better and be more prepared in a really
difficult environment where there is truly a war for talent
right now.
Mr. CHABOT. Thank you.
Ms. Sagester?
Ms. SAGESTER. In our area we have the VEC, the Veteran
Employment Center, and we are the veteran partner for them. And
so many times what happens is veterans, of course, also make
great employees. They show up for work. They have a good work
ethic. So we are working with the VEC and we are providing
training on site. We have a new center there in Norfolk and we
are providing employment training right on site. I think what
we are looking at, too, across the country is we need to better
train folks for the jobs that are available now, especially in
the trades because we do not want to lose those.
Mr. CHABOT. Thank you very much.
Mr. Rowe, let me go to you again. Your testimony noted that
SBDCs are often located at colleges and universities. Other
than being located there, in other ways, what ways does the
host institution and the SBDC work together other than being at
the same place?
Mr. ROWE. We actually have a lot of resources from the
business schools where we use the student body, the professors,
to bring new management concepts out to our small business
owners. Also, there is a huge science and technical component
where we work with SBIR applicants regularly to help make sure
that there is a broad array of small businesses accessing those
R&D dollars.
Mr. CHABOT. Thank you very much.
Ms. Hodges, in your testimony you highlighted the
importance of Women's Business Centers serving economically
disadvantaged and underserved populations. How do your centers
specifically target that demographic?
Ms. HODGES. I will not say that this is how we target the
demographic, but they are best served by providing not only the
counseling, the competence factor and confidence, but access to
capital is so critical. In fact, I think our program represents
the majority of the microenterprise lenders in the room. And
this access to capital is just not available to a lot of these
entrepreneurs in any other way. If it were not for these
microenterprise lenders which comprise 40 percent of our
centers, quite honestly, these entrepreneurs would not have
access to it at all.
Mr. CHABOT. Okay. I am almost at an end, so rather than ask
a question I will just tell you, Mr. Yancey, I have had an
opportunity to speak at various gatherings of SCORE and meet
with them on occasion, and I now you all do a tremendous amount
of good for a whole lot of folks so I will just leave it there.
Thank you. And I bet you agree with that.
Mr. YANCEY. Yes, sir.
Mr. CHABOT. Okay. Very good. Thank you.
I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
And now I recognize the Chairwoman of the Subcommittee on
Rural Development, Agriculture Trade, and Entrepreneurship from
Iowa, Ms. Finkenauer for 5 minutes.
Ms. FINKENAUER. Thank you, Madam Chair.
I really appreciate you all being here today. You all do
incredible work and I am very grateful for your service and
everything that you do.
So I have to tell you, so I am from Iowa, one. It is about
a fourth of the state of Iowa. So we have got kind of three
bigger cities and then the rest is pretty rural with some
smaller towns. And despite the weather lately, my favorite
thing, obviously, a part of this job is getting to go back and
have my work periods and getting to meet with folks all over
the district. And this last work period, so last week, I had a
great opportunity to go visit University of Northern Iowa, and
their business community service program, and also a small
business in one of our smaller towns, Maquoketa, called
Precision Metal Works. And at the university it was great to
get to visit them. I have done it multiple times, but again,
this was one of the first times really focusing on their
business center. And they are doing a great job. I mean, they
are housing the Small Business Development Center along with
other programs all under one roof where you are helping small
businesses, entrepreneurs, even helping governments with
marketing, new business incubation, and even help with
regulatory compliance.
And then Precision Metal Works, it is a great business
model. They have been in Maquoketa since the 1980s, and on top
of their regular business, which is helping with commercial
washers, they also work a lot with some of our other folks in
the state and across the country who come in and say I have a
great idea for this. Can you manufacture it for me? And see
what we do here. And I have been hearing great stories from
what they have been able to do, but unfortunately, even though
we see this in my district and it is happening, I mean, the
data according to the Office of Advocacy is just showing that,
you know, rural self-employment since 1988 to 2016 has fallen
like 20 percent. And then on top of it we are also lacking more
youth entrepreneurs as well.
So this really is to Mr. Rowe and anybody else who wants to
jump in on it. I am very curious of all your takes on it. But
what are some of the bigger challenges that rural entrepreneurs
are facing? And then what are some of the efforts that you are
taking to ensure that rural small businesses are receiving the
technical assistance they require to build a robust,
sustainable business? And is marketing a part of that suite?
Because that was one of the things that really stuck out to me
with talking to Precision Metal Works with some of the folks
they are working with. They have got great products they are
developing, yet the next step, that marketing part, you know,
they have fallen behind on. And so, and it helps them if that
small business they are helping does well. So I am trying to
figure out what more can we be doing? And are we missing
anything?
Mr. ROWE. Well, one of the bigger problems we see and we
face with our clients in rural areas is simply a lack of
broadband and a lack of internet access that really helps them.
You cannot reach the world now the way you used to. You have
got to be internet savvy, but you have also got to be able to
get serious broadband access.
Now, SBDCs are located at colleges and universities, but
they tend to be just like isolated islands of broadband. And
building that infrastructure is a huge issue. And I know that
my folks have talked to you about this. I have talked with Mr.
Kelly about it. That is probably a key focus for us, how can we
get more broadband to our clients to get their products to the
world?
Ms. FINKENAUER. Thank you.
Ms. Hodges?
Ms. HODGES. Thank you.
It is an ongoing challenge, but I think we can also, in
addition to the comments Mr. Rowe made, we can be innovative.
And some of our centers have done just that. For example, in
Oklahoma, one of our centers bought buses outfitted with
entrepreneurial labs and drove to the clients across the state.
And in Nebraska, we actually do not have a brick and mortar
center location; rather, those resources are used to deploy the
counselors and the resources all across the state. So again,
going to the rural areas to serve. And then sounding like a
broken record, more resources, you know, appropriate would also
help support that greater infrastructure needed.
Ms. FINKENAUER. Great. Thank you.
Mr. Yancey?
Mr. YANCEY. I do not have a lot to add. I think the
broadband issue is a real challenge. Our desire is to serve
communities using web-based technologies that allow us to do
that, and where broadband is not available, our ability to
serve without bricks and mortar is very, very limited. We do
circuit rides, not exactly like buses and things, but we do try
and get out. But the broadband piece is important. And it is
very expensive to do that, so the funding available for that
purpose would be helpful as well.
Ms. FINKENAUER. Thank you.
And Ms. Sagester, I am sorry. I know my time has expired,
but thank you so much for being here, all of you. And Madam
Chair, I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back.
And now we recognize the gentleman from Ohio, Mr.
Balderson, Ranking Member of the Subcommittee on Innovation and
Workforce Development for 5 minutes.
Mr. BALDERSON. Thank you, Madam Chair. And thank you also
to the Committee.
My dear colleague, Mr. Chabot, kind of jumped on my
question for you, Mr. Rowe, but it was quite a coincidence this
morning. I have gotten pretty savvy here on my phone. I even
highlighted it. But I am reading the newspaper at 6:30 this
morning, the Plymouth Dispatch, which is my district big
newspaper, and it was a study that has been done, and this
organization does it every year annually for small businesses.
And 56.9 percent of the companies identified finding qualified
workers as their biggest issue and their biggest challenge to
doing business and finding those qualified workers. This has
been the top issue for them the last 5 years during this
survey. So I thought that was pretty interesting this morning
for me to come across that at 6:30, 6:35, and to see this.
So my question, Mr. Rowe is, you know, as the Ranking
Member on the Subcommittee for Innovation and Workforce
Development, this is something I am very passionate about. Are
there any ideas out there that the SBDCs and the 17:32:09xxx
program, that they can give us suggestions with or any
conclusion on that of what support we can do?
Mr. ROWE. Well, I have actually been privileged to be
tasked to work with a working group at the Department of Labor
on what they call industry recognized apprenticeship programs.
And essentially what we are trying to do is find a way to
formalize the apprenticeship programs in a variety of
industries outside of the skilled trades, the registered
apprenticeship programs that you find at DOL and expand the
ability to get workforce. And I think I see my role on that as,
yes, we have so many clients out there who could use this. What
we need to do is develop those accredited programs to train
these folks.
Mr. BALDERSON. Thank you.
Ms. Sagester, I apologize. My question to you would be my
office met yesterday with a group from the American Legion and
had, you know, some of the issues that they were discussing was
problems that many veterans have lack of access to skilled
training programs that would help them transition into the
workforce.
My question is, is there anything out there more that we
could do to help address this problem? You do not have to go
through a whole list of things.
Ms. SAGESTER. As I had been mentioning with regard to
veteran employment, we are partnering as well with, like I
said, the Virginia Employment Commission. And there are many
veterans who have trades to be a good small business owner. So
what we are seeing a lot of and we are promoting is helping
them find employment so that they can support themselves and
their families and then help and assist them on the side to
start preparing themselves for small business ownership. And we
have got several that are in that program right now. And
therefore, it helps solve some of the labor problem's and the
veterans' issues, as well as their future. But as far as our
center also goes, we do a lot of in-house training. A lot on
business itself. You know, life skills. They have a hard time
converting their military vita into a resume. It is very
difficult for them and they do not even see the similarities.
So we are providing support with that as well.
Mr. BALDERSON. Okay. I do want to add, and I would love to
work with your organization on something like this, but in the
state of Ohio, in the state legislature where I serve, we get a
bill for veterans for CDL license. A veteran coming back in and
having done that job in the military service and having that
ability to do that and taking away a lot of the, I guess I will
use the word `` red tape'' or bureaucracy to get that license
back again, and that has been a big tap that has been filled. I
should not say `` big'' but it has been filled a little bit.
And that is something I would like to see us do at the Federal
level.
Ms. SAGESTER. We had a similar program such as that at
Tidewater Community College in Virginia Beach. And it works
extremely well. We have the same similar program with regard to
military firefighters and security officers. So it is a great
transition.
Mr. BALDERSON. I look forward to working with you.
And Madam Chair, I yield back the remaining time.
Ms. SAGESTER. I would welcome the opportunity, sir.
Mr. BALDERSON. Thank you.
Chairwoman VELAZQUEZ. The gentleman yields back.
And now the gentleman from Maine, Mr. Golden, Chairman of
the Subcommittee on Contracting and Infrastructure is
recognized for 5 minutes.
Mr. GOLDEN. Thank you, Madam Chair.
Ms. Sagester, I think I will kind of go where it sounded
like you might have been talking a little bit about something
that is top of mind for you, which is how do you reach out to
those people that are far away from your center. And just to
give you a sense of why I share that concern with you, Virginia
has an awful lot of veterans, which is a great thing. And Maine
does not have as many, but when we look at the per capita
statistics it is about one in 10. And that is even stronger out
in rural Maine, in the district that I represent, a much higher
per capita percentage. Yet, our closest center, similar to
yours, is in Rhode Island, three states away. So I think we
agree that more centers would be better if there were enough
funding for that.
But what is the appropriate ratio in your opinion around
the country?
Ms. SAGESTER. With regard to?
Mr. GOLDEN. Number of centers?
Ms. SAGESTER. Number of centers.
Mr. GOLDEN. To region or----
Ms. SAGESTER. Well, we have 22 centers as I was saying. And
a great deal of where those 22 centers are located depends on
what organizations apply and respond to the proposal to have a
center. That is where a great of it really is if they do not--
if the SBA does not receive any proposals from a certain area,
then that area kind of misses out. So it is something that you
could encourage in your area, is for organizations to apply
when the opportunity is there on grants.gov.
But I would like to just say real quickly, with regard to
the economic disadvantaged rural areas that we have, that is
what keeps me awake at night. I want to make sure that all the
constituents that we are responsible for have access to our
resources if at all possible. So we have now been able for the
last year--it took me 4 years to be able to get there--but we
now offer all of our trainings are webinars. And we promote
that. But the challenge we are having is getting the word out
to those rural areas that this resource is available. That is
one of the areas that we really, I think need to focus on is
how can we better market all of our resources and all of our
partners. So I am personally going to West Virginia next month,
and I will be there for a week doing just that. And I am also
traveling to some of our disadvantaged areas here in Virginia,
such as Wise County. And we are working with the American
Legion out there to do some outreach. That is very, very, very
important because we cannot help them if they do not know we
are here and have the information to dial in for those webinars
and go to the website and listen to podcasts or so on and so
forth.
Mr. GOLDEN. Thank you very much for that.
That brings me to another point which coming off district
week traveling all over a very large rural area I have talked
to no shortage of small business owners in the last week and in
the past couple of months. And look, we often ask, you know,
are you aware of these programs, each of the ones that you all
run, and about SBA in particular. And often, it is not the
first thing that small business owners are thinking about in
rural Maine. So I have got to put a plug in there to this
Committee, let us pick up the marketing and make sure that it
is out there. Obviously, Maine's region should be looking to
put in an application for a center in Maine. Rhode Island is
like a life's time away from rural Maine. So that is just not
good enough.
And when it comes to this issue of reaching out on the
internet, I mean, broadband sounds great. What we often hear
people in Maine saying is we will just take faster internet
because it is practically dial up in many regions.
If I could, Mr. Rowe, just a question for you. Sitting in a
community recent, this issue of workforce cane up. And there
were many different industries sitting around the table, a lot
of small business. And while they did not have necessarily all
the same types of work requirements, there were some shared
factors in terms of the needs that are lacking in the community
and our workforce. And so we had about 20 different business
owners sitting, as well as Chamber of Commerce and municipal
leaders trying to get at this issue of how do we establish some
kind of training program to get workers in here. What would be
the proper way for them to interface with someone like SBDC?
Can they come to you as a group? Can the whole community come
to you and work with you?
Mr. ROWE. Sure.
Mr. GOLDEN. Okay.
Mr. ROWE. Absolutely, sir.
Mr. GOLDEN. Very good. So they do not have to pick one
business to lead?
Mr. ROWE. No.
Mr. GOLDEN. They could actually reach out to you as an
entire municipality?
Mr. ROWE. No. Mark Delisle at USM is our state director and
I am sure he would be happy to hear from them.
Mr. GOLDEN. Thank you.
Chairwoman VELAZQUEZ. The gentleman yields back.
And now we recognize Mr. Joyce from Pennsylvania, Ranking
Member of the Subcommittee on Rural Development, Agriculture,
Entrepreneurship, and Trade for 5 minutes.
Mr. JOYCE. Thank you. And thank you for being here today
because what you bring to us is so important.
Mr. Rowe, you talked about the lack of internet
capabilities. I am from South Central Pennsylvania, from
Gettysburg out to where Flight 93 went down. Even as we travel
we lose our navigation systems. We know that broadband is very
limited in these areas. I think that each one of you would be
able to more effectively do your jobs with a better broadband
system, particularly when facing rural areas. I think we
recognize that as a Committee. I think that we are all aware
that there could be improvements made in that.
I am going to turn this question around because I think
each one of you bring a different skillset to the table. And
you do have the abilities to communicate with each other.
Mr. Rowe, your group is incredible. They bring so much to
my district. So when you are setting up a program, how do you
interface with the other people at the table? How do you let
people know that WBC, which is so important on so many
different levels, might bring a different flavor if we will use
that term, a different angle to the entire equation? How do you
all as a group communicate with each other? How do you present
to the different communities that you address? Because you have
different skillsets. You have different tools in your tool
belts. We are impressed by that. How do you get that out to the
people?
Mr. ROWE. Well, I wish I could say there was some, you
know, uniform book that we have on this. We have got 63
networks and I cannot remember how many chapters that Ken has.
It is really a very individualized thing. It is the investment
that our folks make to know about the SCORE chapter in their
area or the Women's Business Center or the VBOC, which
hopefully is not three states away. And be able to recognize
our own faults. And that is the big thing. When we do our self-
assessments and our needs assessments, it is very clear we can
only cover so many things. So we need to lean on each other,
and it may be the SBDC in Phoenix sending someone to a SCORE
counselor in Las Vegas, Nevada, because they know that there is
an expert there. But it has been a very organic sort of
communication system for all of us.
Mr. JOYCE. Do we need more than that? Do each one of your
websites need to access each other so that someone, if they are
not seeing the information that is best provided to their
specific problems, that they can go back to WBC or they can go
back to SCORE. Is that something that is worth considering?
Mr. ROWE. Yeah, I think it would be fabulous if within our
networks we could essentially search and say, okay, we need
someone who is an expert on X.
Mr. JOYCE. Military issues. And this is how you click on
this tab and get to this point. That is my question for you.
Ms. Sagester, do you think that that would work as well
from your side?
Ms. SAGESTER. I think it is excellent. What we are in the
process of doing is adding our resource partners, their links
from our website directly to theirs so that when clients or
prospective clients go to our website they can also under
resources just click SCORE and go straight to either the
national but right now local SCORE chapters. But again, you
know, we wished, just so the Committee knows, that we want a
VBOC in every state. That should be our goal, absolutely,
because as Tee was saying, we hope that the VBOC is not three
states away. Okay? But we, also at our center, one of the other
ways that we reach out and use our resource partners and
collaborate, is through bringing them in as subject matter
expert's (SMEs) on our trainings. SCORE is vital. SBDCs are
vital. Women's Business Centers. They come in as a subject
matter expert and they will teach a module or whatever, and
then they have full access to that audience as well. And so
then the clients start to see us not as individual silos but
they have an entire team that is on their side.
Mr. JOYCE. And that entire team has to be commended. Thank
you for being here today. I defer my time back.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
And now I recognize Ms. Houlahan from Pennsylvania for 5
minutes.
Ms. HOULAHAN. Thank you, Madam Chairwoman. Thank you to the
Committee for coming.
I am a woman. I am a veteran. I am an entrepreneur. And so
I sort of fit into all of your buckets, and I really appreciate
everything that you have done. I also really appreciated Mr.
Yancey's testimony that talked a little bit about
implementation of CRMs and ERPs. And you guys have hall been
talking about data and the importance of measuring and metrics.
My question is sort of turning the business back onto the
business of your businesses. I appreciate that each of you are
asking for different resources to be allocated to one another,
but my question is has there been any form of collaboration--
this gets to the person's question before me--on use of systems
to make sure that when you implement something like Salesforce
that you maybe have a different instance across every one of
your organizations and that you are kind of using best
practices and the ways that you have learned to measure your
successes amongst each other. And I think that there may be an
enormous amount of overlap on each of your CRMs that you could
maybe benefit from if that was something that you could fold
into. So that is one of my questions.
Mr. YANCEY. We have at SCORE collaborated with SBA and over
the years in meetings with other resource partners to talk
about what was appropriate to measure and how to measure it. We
never really talked about systems that would talk to one
another. When we do transmit data we are working on it being a
very simple process. All of the resource partners would have
access through our website to volunteers, to counselors,
skills, whatever it happens to be. In terms of the CRM, that
has been private only because there is data and other things.
We would be happy to share what we have done, how we have done
it, the architecture behind it, what we used for our initial
business requirements analysis, et cetera. We will share that
with the world.
Ms. HOULAHAN. I just think there would be so much synergy
and so much opportunity to save money----
Mr. YANCEY. There very well may be.
Ms. HOULAHAN.--between the four organizations.
Mr. YANCEY. Very well may be.
Ms. HOULAHAN. And that is sort of my first question.
The other question is you touched a little bit on diversity
and inclusion initiatives and I understand that that is really
important. But are you guys as entrepreneurial kind of igniters
also talking about corporate social responsibility initiatives
at all? Has that become a thing that you also are talking to
your entrepreneurs about?
Ms. SAGESTER. With regard to that I would say the answer is
yes, but I would like to just back up a second on the previous.
Ms. HOULAHAN. Of course.
Ms. SAGESTER. The Women's Business Center uses a different
database than we do. We use Neossera. And it just so happens
that the PTAC also uses Neossera. However, we are all
individual as Mr. Yancey was saying. We are not able to share
based on client privilege----
Ms. HOULAHAN. It is more on architecture that I am asking
about. It is kind of more on sort of best practices and metrics
and measures that it just seems like there has got to be a
whole lot going on there where we could save resources and you
guys could be collaborating on that. And maybe there is some
sort of an additional initiative that might be necessary to do
that.
Ms. SAGESTER. And there may be some sort of initiative that
the Committee could bring to light with regard to the SBA. And
maybe that is a conversation that needs to be had and there
could be a way to find that out.
With regard to corporate responsibility, are you referring
to, ma'am, such as social entrepreneurship?
Ms. HOULAHAN. Exactly. Exactly.
Ms. SAGESTER. Okay. I just wanted to make sure we were on
the same page.
Ms. HOULAHAN. Absolutely. There is not a business that we
start that we do not talk about social entrepreneurship and how
important it is to the business that the business owner and the
business shows that they are committed to the community at
large. And we have had great success. You know, at first the
entrepreneur is usually kind of like what are you really
talking about? So we had that conversation. And it is also
about making meaning. Guy Kawasaki said if you start a business
to make money and you do not make meaning, not only will you
not make meaning, you will not make money. But if you make
meaning, you will make meaning and you will make money. So it
has got to not always be about you. It has got to be about that
community oneness.
Is there any obligation on the part of folks who access
your resources that they consider that? You know, that they at
least have gone through the training of it in terms of the
resources that they are accessing so that they have the
conversation? We are at least obliging them to sit and listen
to the importance of meaning and money?
Ms. SAGESTER. Well, at this point it is left up to the
individual business advisor, but my team knows that we are a
center that is going to promote social entrepreneurship. And we
only have two. I had a third advisor just join us on a part-
time basis, but that is a very important piece of what we bring
to the table. Has there been any official across the board with
all the VBOCs? There has not been but you gave me a great idea
so that when we have our conference this year I am happy to
lead the charge and offering a training within that area.
Ms. HOULAHAN. Thank you. And I know I am out of time and I
yield back to the Chairwoman. Thank you so much for your
testimony.
Chairwoman VELAZQUEZ. The gentlelady's time has expired.
And now we recognize Mr. Antonio Delgado from New York for
5 minutes.
Mr. DELGADO. Thank you, Chairwoman. Thank each and every
one of you for coming. And I am sorry if my question has
already been asked.
Last week for me was my first in-district work week. I
spent a lot of time in my district, which is Update New York,
Hudson Valley, Catskills area, actually one of the more rural
districts in the country. And the district, at the town halls I
came across a lot of individuals, self-employed business owners
who had a lot of questions about economic growth and economic
opportunity. I think we have about 24,000 self-employed
individuals in New York 19. And so my question is, what can we
do to help these self-employed business owners access the
capital they need to expand and grow their businesses? So can
you talk about any work that each of you do with community
financial development institutions and small business
investment companies that specifically help rural folks who are
self-employed?
Ms. SAGESTER. I would like to address that by saying that
education and training is one of the best areas to help them to
understand their small business accounting because most of them
have never had even a small business accounting class. They
would not know a balance sheet from a scorecard. So, it is the
education and training and the managerial training and
experience that we bring to the table that helps them to see
where they are and where they need to go to be able to be ready
not only to launch their business, but it could be to grow. So
they do not know what the five Cs are. They do not know what a
bail team is. The training is really crucial. It is key, and we
are constantly doing that with a program we call Business Plan
Boot Camp when we help them with their market analysis and get
started and prepare their plan. We also do twice a year a small
business finance course, and that to me is the most vital
piece, is educating these want-to-be startups as well as the
entrepreneur and the small business owner that is growing.
Mr. DELGADO. Can I just ask a follow up to that? When you
say that there is a lack of education or training, is this
something that has been consistent through your time in this
space or have you seen a drop in the level of information or
one's own ability to have the knowledge base to do what you are
speaking of?
Ms. SAGESTER. I would say it has been consistent.
Mr. DELGADO. Any reason why that would be the case?
Ms. SAGESTER. Well, most people do not take accounting when
they are in high school or college unless they are going to be
a CPA or it is required or mandatory for their program. And
some people do not even know how to balance a checkbook because
hardly anyone writes checks anymore. So sometimes things are
just the way they are. And so we try to help them to understand
basic small business accounting before they can go on and
really grasp the finance piece, because there is a learning
curve there with how do I go from small business accounting to
actually; how does that equate to me acquiring capital and
financing my own business? So it is just if they have never
done it, it is just something like if you tried to teach, if
you said I want you to go be a gourmet chef, but you are
someone who has not even ever boiled water before how would you
do that?
Mr. DELGADO. Right. I have boiled water.
Ms. SAGESTER. I have a feeling you have.
Mr. DELGADO. Just one more follow up. The Boot Camp piece.
Are there pieces of the curriculum that are designed or
different depending on the types of community? So whether it is
a rural community versus an urban community, are there
different techniques or is it all just more of a sort of basic
line understanding of startup as opposed to the needs you might
have for particular geographies?
Ms. SAGESTER. That is a good question by the way. There is
the basic and then we, for example, we teach basic QuickBooks,
but then for those that have been in business for a little
while, then they have graduated up and they need training on
intermediate QuickBooks. That is one example is say I am in a
rural area and I have not really had much access to resources.
What is going to happen is we are going to try to help bring
that client up to speed. It means they are going to get more
attention and handheld. We hold a lot of hands at the VBOC. So
a lot more attention one-on-one, not just the general classroom
setting, until we get them to where they feel comfortable in
starting and launching and growing their business. So, it does
vary depending on their individual needs.
Mr. DELGADO. Great. Thank you.
Chairwoman VELAZQUEZ. The gentleman----
Mr. DELGADO. I yield back my time.
Chairwoman VELAZQUEZ. Thank you. He yields back.
I would like to go into a second round of questions.
Well, I would like to share with you, and I know that you
are all aware about these powerful numbers. In 2018, the State
of the Woman-Owned Business Report shows how the number of
woman-owned businesses went from 402,000 in 1972 to 12.3
million in 2018, and revenues increased from $8.1 billion to
$1.8 trillion. Those are powerful numbers. And we all know that
you serve close to one million businesses and we all know the
return of that technical assistance. We have 29 to 30 million
businesses, so there is so much potential if we could market
those services and we could do better outreach. I do not know
how can we tackle that because so many times people have come
before our committee and said that they did not know about the
existence of Women Business Development Centers or the Small
Business Development Centers or Veterans Business Centers. And
that question was asked before, but that is an area that we
need to really think about, how can we expand our marketing
tools to reach those underserved businesses that are not
getting the kind of assistance that they need?
Mr. Yancey?
Mr. YANCEY. We have been very aggressive with what we have
done in social media. And we had a social media audit in the
last 4 or 5 months and it says that we outperform standard
nonprofits by a factor of about 10. We even looked at small
for-profit organizations and find that we outperform. There is
a point that you get to, even in social media, where your
ability to grow is dependent on your ability to invest. And the
things that we need to do, we boost stories. We do buy ad words
regularly. We work really hard to find partners that will carry
our message for us that are active in the space. And you have
seen the list. That is a really good way to do it.
Having said that, marketing campaigns are expensive, and
they have to be consistent. They have to be long-term in order
to create awareness that people will act on. You know, in an
environment like we are in with funding like we have, it is
difficult. Our goal quickly is to be 1 degree of separation
from our client. So if they ask anybody in the entrepreneurship
arena, how do they get help, that person will think of SCORE.
So we are working hard within that network to make sure there
is awareness.
Chairwoman VELAZQUEZ. So part of the mission, for example,
of the Women Business Centers is to expand into underserved
communities. What are you doing about that?
Ms. HODGES. Well, I think the problem is even more dramatic
than you characterized because you accounted only for the
businesses that have already started. But what about the
clients out there who want to start a business and do not know
where to turn? And so I think it is a severe challenge.
Reaching those socially and economically disadvantaged
populations, it is part of our mission. And providing the
services in these creative ways, crafting them specific to the
communities in which they serve, help answer that question. And
so each community is distinct. The way that we pull together
the resources, the partners that are at the table here and
others all come to bear. But I think it is worth repeating the
fact that the access to capital is just a critical component.
Chairwoman VELAZQUEZ. And in terms of new centers, could
you explain the process that SBA uses to determine new centers,
particularly in underserved communities?
Ms. HODGES. No, Madam Chairwoman, I am not privy to their
internal process to select locations. We are in conversations
though about the future. I do not know what that looks like but
I would hope that it would be strategic. I hope that we would
not only be looking at communities where there is just a
geographic absence of centers, but also where there is already
service happening in a potential host organization with
resources to serve. We should be able to entertain
applications, I believe, for grants in those areas as well.
Chairwoman VELAZQUEZ. Mr. Rowe, any comments on that?
Mr. ROWE. Well, just to follow on to what Ken says, every
year, and this year it is March 20th, we have SBDC Day and we
manage to trend up on Twitter to five, which is an amazing
outreach. The problem is trying to stay up there without either
being incredibly offensive or something is just almost
impossible for us. And so I think one of the things that would
be very helpful, something I have discussed with my membership,
is it would be great if SBA would invest in public service
announcements regarding small business development. You know,
all of these resources, I went to the, Ad Council, for the
television PSAs. Sadly, the buy-in is nearly $4 million. So
that is out of reach for any of us. But collaboratively from
the agency that would be a huge marketing tool.
Chairwoman VELAZQUEZ. The gentleman is recognized, Mr.
Chabot, for 5 minutes.
Mr. CHABOT. Thank you, Madam Chair. I probably will not
take up the whole 5 minutes, but I come around with a second
question to you two folks, but not to you two folks. I said how
great you were, Mr. Yancey, but let me ask you a question.
How does SCORE go about recruiting the wide variety of
mentors it takes to match the unique entrepreneurs that are out
there?
Mr. YANCEY. Recruiting is an activity these days that
occurs not just at the chapter level but also at the national
level. Our website is the number two source of new volunteers
today. Our chapters look to make sure that they maintain an
array of skills at the chapter that meets the needs of the
community, and today, we are very focused on our need to be
more diverse and better at serving all of the communities where
we are located. I think our challenge, and Ms. Velazquez has
been kind enough to point it out over the years, we still need
to do more to better reflect the communities that we serve from
a race/ethnicity standpoint. And we are committed to that and
we are working on that and we have made progress. And not good
enough but we are working at it.
Mr. CHABOT. All right. Thank you very much.
And then finally, Ms. Sagester, my colleague from Ohio, Mr.
Balderson got into this somewhat, but I will get a little
different angle. Veterans often possess a unique skillset that
they have acquired during their time in the military. In what
ways do VBOCs tailor their curriculum to best utilize those
skills and make sure we are able to get those veterans to
either go through your program either to start up a company
themselves or to become employed by one of them or to grow an
existing company or whatever?
Ms. SAGESTER. Well, one of the ways, the best way that we
have found to do that is that one-on-one initial assessment. We
do a one-on-one initial assessment where we are looking at the
service member's background. Like, what as their MOS when they
were in-service. In other words, their military operation
specialty. What experience do they have that is on the civilian
side of their life? What experiences do they have? And then as
well as like what goals they want to achieve, because we have
to be able to marry where they are and what experience they
have and talents to what their goal is. So that again, is part
of where the magic happens is that one-on-one, face to face. We
are sitting down, we are rolling our sleeves up, and we are
starting from scratch and we are going to make this happen. So
that assessment is crucial for that first step as to where we
take the client to the second step. And Boots to Business
oftentimes is the first step because they are transitioning
out. And that is the first time we touch them. We call it a
touch. We first meet them. And then they are invited for that
assessment, the initial one-on-one and we go from there. But
that is how we assess.
Mr. CHABOT. Thank you.
And I will just conclude by I had somebody in my office.
This was some years back. They were from, I believe, the
American Trucking Institute, and they were talking about how we
had a lot of our young men and women were coming back from
Afghanistan, Iraq, et cetera, and they were driving multi-ton
vehicles over there but at that point the unemployment rate was
not as low as it is now, so it is tougher to get jobs. And
their point was that a lot of these folk were underage to get
their chauffeurs driving to drive the big rigs, so we needed to
do something to change it. I know we were looking into that for
a long time but some of those folks, as you know, they are not
necessarily just employees of a trucking company, but they can
become entrepreneurs, you know, and get a loan and own one of
these big rigs and go around. A lot of them are independent
agents. So I think we need to take all those things into
consideration.
Ms. SAGESTER. Absolutely. And those truckers make great
logistician's.
Mr. CHABOT. Right.
Ms. SAGESTER. Small businesses. They really do. But you are
exactly right.
Mr. CHABOT. And at that time I think they said that there
was an underserved need of about 100,000 drivers all over the
country so we need to do a better job to get all those folks
together.
And thank again all of you. I thought this was a very good
hearing. So I yield back.
Chairwoman VELAZQUEZ. Thank you.
Let me take this opportunity to thank all of you. Your
insightful information and recommendations have been very
important and enlightening.
Entrepreneurship is the backbone of our nation's economy
helping individuals pursue their dreams and become financially
self-sufficient. SBA's counseling and training programs are
critical to their success. This hearing has been very
informative and your insights are valuable. As we move forward
with legislation to modernize these programs, it will be
important to ensure that you have the resources you need to
provide the counseling and training to America's small
business.
I would ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered.
And if there is no further business to come before the
committee, we are adjourned. Thank you.
[Whereupon, at 12:36 p.m., the Committee was adjourned.]
A P P E N D I X
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