Entrepreneurial system attracts $2 million grant
July 21st, 2005
An entrepreneurial development system that a University of Louisville urban and public affairs professor created and is helping implement in parts of West Virginia, Kentucky and Ohio has received a $2 million grant from the W.K. Kellogg Foundation.
The Advantage Valley Entrepreneurship Development System Collaborative was one of only six entities — out of 183 proposals — to receive a Kellogg grant. The grants are to be used to foster entrepreneurship across rural regions of the country.
Advantage Valley officials have been working for two years with Thomas S. Lyons, Fifth Third Bank professor of community development, to implement a system he developed with Gregg Lichtenstein, president of New Jersey-based consulting firm Collaborative Strategies, to improve and streamline the service provider network available to help entrepreneurs build successful businesses.
Lyons and Lichtenstein’s system, which they call the Entrepreneurial League System (ELS), is set up much like Major League Baseball’s farm system. The ELS gathers information from entrepreneurs to assess their skill levels when they first seek help. Entrepreneurs are assigned a score, which corresponds with one of four levels that mimic the levels of baseball’s farm system (Rookie, Class A, Class AA and Class AAA). Then they are matched with the appropriate service provider organizations that help entrepreneurs at their level. When entrepreneurs’ master a level of skills, they are “promoted” to the next level of services, which another organization may provide.
The ELS is based on 18 years of research by Lyons and Lichtenstein. The pair discovered that two obstacles sometimes prevented entrepreneurs from meeting their goals. First, business incubators and other enterprise-development service providers typically offered competing or fragmented services to entrepreneurs. Entrepreneurs received help, but were let go before they were ready to be on their own. Second, entrepreneurs weren’t aware of all the organizations that offered the assistance they needed to help them grow their businesses. Beyond that, some of the organizations were unaware of the others, which prevented them from being able to recommend the right service provider to meet entrepreneurs’ specific needs.
“The [ELS] was developed to support a collaboration of organizations in a region to reduce redundancy and competition among service providers and confusion among the entrepreneurs looking for help establishing their businesses,” Lyons said.
Lyons and Lichtenstein used a $350,000 grant from the Claude Worthington Benedum Foundation to establish the ELS for Advantage Valley. This process included:
- conducting an articulation study of the area to identify the organizations that help entrepreneurs and the types of services they provide to find any gaps in assistance;
- analyzing the data and developing a network of service providers to work closely together and understand each other’s missions and responsibilities;
- assessing the skill levels of entrepreneurs these organizations serve;
- creating “success teams” of nine to 12 entrepreneurs at the Rookie, Class A and Class AA levels.
Their analysis of entrepreneurial skill levels showed that no one had reached the AAA level, a situation that is not uncommon in rural areas, Lyons said.
“Entrepreneurs on success teams demonstrated the appropriate skill level and had a clearly stated goal of growth for their businesses,” Lyons said. “The purpose of a success team is to help those entrepreneurs learn how to take advantage of the technological and financial help offered by the service providers.”
Each success team has a coach who is selected through a competitive hiring process for her or his business experience and coaching expertise. The coach counsels team members individually and as a group.
In addition, Advantage Valley hired Mark Burdett, an entrepreneur who built a successful telecommunications business in the area, as general manager of the collaborative to help oversee and manage ELS implementation.
The Kellogg grant will build on the initial work in Advantage Valley. Advantage Valley will use the money, which will be distributed over three years, to establish more success teams, help identify untapped entrepreneurial talent, uncover business opportunities in the community that have not been commercialized, and create a full-scale database information management database system to help track entrepreneurs through the system, Lyons said.
“What we’ve discovered is that entrepreneurs classified as rookies and Class AAA often have funding sources that are readily available,” Lyons said. “It is the entrepreneurs in between that are often ignored. We are trying to lay the groundwork for a ‘pipeline’ of opportunities that are funded through the entire process of developing a viable business.”
“There is still much work to be done, but we believe that we can begin seeing solid results in another four to five years,” he said.
In addition to Advantage Valley, Lyons’ ELS has been used to help minority entrepreneur service providers in Louisville, minority-owned businesses in the garment industry in Johannesburg, South Africa, and university and private laboratory technology commercialization in the Johnstown, Penn., area.
