Entrepreneurial Support Services Gap Analysis Report This Employment Ontario service is funded in part by the Government of Canada 1
Contents INTRODUCTION... 3 THE GAP ANALYSIS... 3 Purpose of Study... 3 Method and Data Selection... 3 Research Findings... 4 1. Findings: Various services available to entrepreneurs... 4 2. Findings: Diversity in Chatham-Kent Entrepreneurs... 8 3. Findings: There are innovative business ideas for 5 clusters... 8 4. Findings: Barriers to setting up small businesses... 9 5. Findings: Entrepreneurs are unaware of many services available... 10 6. Findings: There are gaps in services offered... 10 Recommendations and Potential Action Steps to Bridge Gaps... 122 CONCLUSION... 13 2
INTRODUCTION For the Chatham-Kent community, small business development can prove to be an effective alternative to relying on the mature industries. Entrepreneurship not only has the ability to create economic diversity, but if pursued, it can strengthen the economy by creating more jobs. In Chatham-Kent, there are services within the community that cater to the needs of entrepreneurs. The most common support programs are provided by the Chatham-Kent Small Business Centre and Community Futures Development Corporation of Chatham Kent. Despite the efforts of these programs, and the potential wave of entrepreneurship and innovation that currently exists, there is room for more entrepreneurs in the CK community. For many people, starting and maintaining a business seems like a daunting, risky and time consuming venture. For these reasons and more, they are hesitant to start their own businesses. As a response, the Chatham-Kent Workforce Planning Board has been working along with the two service providers to identify and understand the effectiveness of the services offered, the potential gaps in services, and ways to strengthen their programs. To achieve this, the Workforce Planning Board conducted a series of interviews and a focused discussion with existing entrepreneurs in the community. The gap analysis reflects the perspectives of the entrepreneurs who use small business services in Chatham-Kent. THE GAP ANALYSIS Purpose of Study The Chatham-Kent Workforce Planning Board partnered with the Small Business Centre and Community Futures Development Corporation to provide a gap analysis of their services to entrepreneurs in the community. The purpose of the study was to: 1. identify the main support services offered to the Chatham-Kent community 2. catalogue the services offered 3. determine awareness of services used 4. identify gaps in services 5. provide recommendations and potential action steps to bridge gaps 6. encourage and promote an entrepreneurial and innovative spirit in the community The review and analysis of the services has enabled the Workforce Planning Board to produce a rich, qualitative report. The following summarizes the key findings of the gap analysis: 1. There are support services available. 2. Entrepreneurs are not always aware of what support is available. 3. There are clear gaps in the support services offered. 4. Steps can be taken to improve, encourage and support a stronger entrepreneurial mindset in the Chatham-Kent Community. It is the hope that the findings and recommendations in this report will consolidate into further discussions about the gaps that exists in support programs. Method and Data Selection Service Providers In Chatham-Kent, there are two main providers of entrepreneurial services: The Chatham-Kent Small Business Centre (CKSBC) and Community Futures Development Corporation of Chatham Kent (CFDCCK). Both services were contacted in 2012 to confirm the types of services that they offered. 3
Entrepreneurial Interview Participants In 2012, Chatham-Kent Workforce Planning Board conducted the gap analysis of the services available to potential and existing entrepreneurs. A series of questions were developed based on the needs that were to be investigated. A questionnaire comprising of both closed and semi-structured questions for entrepreneurs served as the principle method for the study. It included questions about business owners background, company types, experience in business ownership, obstacles or barriers to setting up their business, and services used to develop businesses. A sample Entrepreneur Questionnaire has been attached as an appendix at the end of this report. Twenty three business owners were contacted and asked to provide input about the business start up process and the services used to establish them. CK Workforce Planning Board held 10 successful interviews with local entrepreneurs in Chatham, Blenheim, Thamesville, Dresden, Shrewsbury, Pain Court, and Wallaceburg. Interviews were held at the participants business locations; in cases where businesses did not have a physical location interviews took place at the Workforce Planning Board office. Each interview lasted for approximately 1 hour. Focus Group Participants In order to provide more depth to the gap analysis, a focus group session was conducted with 11 budding entrepreneurs, two of which were also interviewed. The focus group included entrepreneurs with businesses in Chatham, Blenheim, Wallaceburg, Dresden, Ridgetown and Duart. The session was also conducted with the Entrepreneur Questionnaire serving as the framework for more open ended questioning which would yield a complementary qualitative piece. The one hour session allowed the Planning Board to further explore the challenges that entrepreneurs face, and to encourage a discussion on clients recommendations for improving services. Research Findings The findings for this report are organized around the following topics: 1. There are a variety of services available to entrepreneurs. 2. The profile of entrepreneurs in Chatham-Kent is diverse. 3. Entrepreneurial opportunities pursued are representative of all five clusters identified by the Chatham-Kent Workforce Planning Board. 4. There are a number of barriers to setting up small businesses. 5. Entrepreneurs are not aware of all of the services available to them. 6. There are gaps in the system. 7. The system can be improved upon 1. Findings: Various services available to entrepreneurs A discussion with both the Chatham Kent Small Business Centre and Community Futures Development Corporation of Chatham Kent provided a solid and concise list of services that they offer. A summary is provided in Table 1 below. 4
Location 445 Grand Avenue West, Chatham, 245 Marlborough N Blenheim, ON Contact: Rosemarie Montgomery and/or Gary Shatz Carol Emery Phone: 519.351.7700 519.676.7775 Email: cksbc@chatham-kent.ca; garysc@chatham-kent.ca; rosemariem@chatham-kent.ca info@cfdcck.on.ca Website: http://www.chatham-kent.ca/smallbusinesscentre/pages/default.aspx http://cfdcck.on.ca/ Overview: Services Provided The Chatham-Kent Small Business Centre (CKSBC) provides support to start-up and small enterprises during their initial years of development and operation. ADVISORS: (Free) Complimentary one-on-one consultations to discuss your business and any specific issues or assistance you may require. Appointments are recommended. Guidance on licenses, permits, registration, regulations and other forms and documents required to start and build a business. Assistance registering a business name; Information on patenting, copyrighting or trade-marking your original idea Advice and support on preparing a business plan, to help you through any CFDC Chatham-Kent is a one-stop resource for one-on-one business planning, financing, coaching and counselling. CFDC Chatham-Kent serves the geographic area of Chatham-Kent, Ontario ADVISORS: (there is a fee attached to the service) Work one on one with advisors to review business plan. They offer suggestions, will challenge the research, but do not help with the plan. PROGRAMS: Some programs are delivered in house. The Ontario Self-Employment Benefit (OSEB) Program 5
roadblocks in the process or as a review before talking to lenders or investors. Business plan reviews Direction on marketing, promotion, obtaining financing, preparing a cash flow, and government programs and services that may be available. Research and support is also available for finding suppliers for the equipment and inventory you need. If you are eligible and currently unemployed, this is an opportunity to create a job for yourself by starting your own business. This OSEB program is administered in partnership with the Ministry of Training, Colleges and Universities (MTCU) and provides Employment Insurance (EI) income as well as Community Futures, one-on-one entrepreneurial counseling, networking & workshops during the start-up year of your business. RESOURCE CENTRE: (Free) Information and literature on government requirements, writing your business plan, business tax requirements, etc. You ll also have access to: Library reference materials Market research assistance Computer access including the Internet and a printer for business research SMALL BUSINESS MEMBERSHIP CLUB: ($75.00 per year) Display your business card in 6 municipal centres Share your success stories in the newspaper, etc. Other promotional activities (as they are available) Receive Small Business correspondence and FEE BASED SERVICES: Office services including photocopying, faxing, and printing are available for a nominal fee. Publications for sale Managing a Successful Business Start and Run...Series They also act as a broker of information for key programs: Loans: Small to Medium-sized Business (less than 500 employees) CFDCCK understands that small business has always experienced problems in obtaining financing. That s why lending programs have been developed that represent another borrowing option for small to medium-sized businesses in conjunction with traditional lenders. The South Ontario Fund for Innovation and Investment The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) has launched a new $20-million program through its Prosperity Initiative. This program will support high-growth, innovative Small and Medium-sized Enterprises (SMEs) in rural and urban communities by offering loans of usually $150,000 to $500,000 to support all aspects of growth challenges facing them. The loans are intended to help finance: Late stage commercialization; New product or service development; New applications or markets; or Development or implementation of new processes or technologies. 6
Incorporation Marketing Finance Importing/Exporting Legal Self-Counsel Press Start and Run: Start and Run a Home Cleaning Business Start and Run a Restaurant Business Start and Run a Desktop Publishing Business Start and Run a Retail Business Start and Run a Consulting Business Start and Run a Bed and Breakfast Start and Run a Coffee Bar Start and Run Tour Guiding Business Start and Run a Catering Business Subject to in-stock availability and special orders can be arranged based on demand. The SOFII loan funds will act as a catalyst for increased investment in and support for innovation and will be one element in the emerging climate of support for these highgrowth companies in Southern Ontario. Recruitment: Canada Summer Jobs Supporting Students: Serving Communities This program is focused on encouraging not-for-profit organizations, public sector employers and small businesses with 50 or fewer employees to create jobs that not only meet their needs, but also benefit students looking to gain work experience. It is a Government of Canada initiative that provides funding to help employers create summer job opportunities for students. It is designed to focus on local priorities, while achieving tangible results for both students and their communities. MENTORSHIPS Offered on a very limited basis due to lack of resources and time restraints. 7
2. Findings: Diversity in Chatham-Kent Entrepreneurs Most of the participants were born and raised in cities of Chatham-Kent including Chatham, Grand Pointe, Wallaceburg, Thamesville, Dresden, Blenheim and Duart. Natives from these areas continue to live there, and have either already established or have hopes to establish their businesses in their communities. Other participants were born in other parts of Canada, including Nova Scotia, Saskatchewan, British Columbia, Barrie, Ottawa and Windsor; or migrated from another country to the region of Chatham-Kent. When asked to explain their reasons for settling in Chatham- Kent, respondents agreed that they were encouraged by the social, homey climate that the region offers. They also felt that their current locations were prime spots for the type of businesses they wanted to establish. Table 2 shows the diversity in the native background of entrepreneurs. Table 2 Native Background of Participants 4 3 2 1 0 Participants who were interviewed and who took part in the focused discussion also differed in employment background. Many were previously employed for other companies and had decided to become their own boss. Others continue to work part-time while they develop their businesses. In general, participants pursued entrepreneurship for three reasons: It is an alternative to being employed by someone else. Starting a business was perceived as an alternative opportunity to earn in light of difficulties with hiring and unfavourable working conditions. One person reported the system isn t working. So I have to create my own system and benefit from it. I don t have the skills that employers seem to want. But I know I have skills. So I need to make them work for me. Pursuit of a passion or dream. Some participants felt that the opportunity to start a business was a response to a dream that they have wanted to fulfill. Self-Sufficiency. A few participants found that starting a business enabled them to work for themselves rather than for others. The opportunity to control one s future also reduces fears of job loss by other companies and strengthens job security. 3. Findings: There are innovative business ideas for 5 clusters The businesses created by the entrepreneurs surveyed can be classified as one of five categories, which were previously identified by the Chatham-Kent Workforce Planning Board. 8
Table 3 below provides an overview of the types of business ventures pursued. Table 3: Small Business Ideas Broken Down by Cluster Manufacturing Tourism and Recreation Value Added Agriculture Business Support Services Health Care Concrete Services (1) Taxidermy (1) Tourist Farm (1) Photo Service (2) PSW Firm (1) Scent making (1) T-Shirt Printing (1) Filmmaking (1) PC Repair (1) Motivation (1) Restaurants (2) Esthetics (2) Online Artistry (1) Online Assistance (1) Moving Company (1) Bicycle Trailers Visual artistry (1) 4. Findings: Barriers to setting up small businesses Findings indicated that there are perceived barriers that prevent or stunt business growth. Funding: The largest issue appears to be securing funds to start one s business. Entrepreneurs continue to struggle to find information about available and relevant funding for their business start-ups. Supply and Demand: Another concern is that the geographic scale of Chatham-Kent in comparison to other cities often affects demand for entrepreneurs specific products. Legal and political issues surrounding building permits and licenses also affect business growth. Work/Life Balance: Time constraints (e.g. balancing existing workloads and family) also prove to be barriers to the start-up process. Fears: Entrepreneurs also struggle with overcoming personal fears in starting up a business, especially if it was their first start-up. For many, there is fear of the unknown such as whether their products will remain in demand and whether they can attract the right clientele. Essentially, these fears sum up the uncertainty of having a successful business. Fears about the future of the businesses seem to reduce however, in cases where participants had previous experience in starting up a business. In such cases, those who had previous business experience expressed that they had high levels of confidence that their current businesses would thrive since they now had more information and experience in setting up businesses. One of the implications for these barriers is that they are likely to affect a person s willingness to start or run a business. In particular, if inexperienced entrepreneurs have difficulty finding information, they are likely to be at risk for giving up too soon. A recommended strategy 9
to address these concerns would entail providing mentorship support, partnership networking support and information on the areas that serve to be barriers to the business start-up process. 5. Findings: Entrepreneurs are unaware of many services available The research findings convey that entrepreneurs believe that the primary purpose of support organizations is to help them register their businesses. Service providers also help with marketing their products and with dealing with red tape matters. However, clients are only made aware of this kind of support if they ask about it. The findings also indicate that there is some awareness of support with the business plan. However, many find the process of writing this plan to be daunting. Only two entrepreneurs (out of 21 who participated) actually completed business plans; others did not think that the business plan was an important part of starting a business. Findings also show that entrepreneurs only use the services that they perceive are free, and are likely to ignore the ones that carry a cost since they cannot afford them. There are relevant implications for these findings. Those who use more support services reduce their fears about the business start-up process. In fact, in the study, entrepreneurs who used services other than business registration, (i.e. budgeting, marketing, etc) were more likely to feel confident in setting up their businesses. This is because they had adequate information for the start-up process. Participants who did not use these services are also the ones who reported that they had fears or concerns about start up. Still, in order to use entrepreneurial support services, there needs to be an awareness of what is available to them. Struggling entrepreneurs who are unaware of programs and workshops are likely to give up easily if their businesses do not appear to be succeeding. The recommended strategy will entail increasing service visibility to the public and profiling more free services. Customer Service When asked to comment on any issues experienced with service providers, all interviewees reported that they had not visited the centre often enough to experience any issues. In general, people found that support programs staff was helpful with what they were asked to help with and that they are doing their jobs. 6. Findings: There are gaps in services offered An analysis of these findings identifies gaps in support services for entrepreneurs in Chatham- Kent. These are explained below: Funding Many of the participants that were interviewed highlighted that one of their major stumbling blocks and deterrents to even the idea of starting a business is the lack of capital. It was reported in an interview that Individuals may have drive, but just not the small bit of funds to get them on their way. There is difficulty finding information for their specific business types. In some cases this is because of lack of membership to funding hubs or databases. In other cases, it is because of the geographic constraints that affect finding the right funds. That is, funders may exist outside of Chatham Kent but because of their locations, it is inconvenient for clients to reach them. Findings also show that entrepreneurs are looking for funding not only to start-up, but to help with business expansion and operation. Training/Learning Opportunities Those who are passionate about their businesses are interested in learning how to make them succeed. However, findings show that there have been few learning opportunities. The last learning opportunity advertised was a session on Business Tax preparation 2011. Entrepreneurs look forward to these opportunities as they help to build confidence when starting their businesses. 10
Networking opportunities Service providers advertise the necessity of networking (e.g. the Small Business Centre advertised We encourage small business owners like you to network and meet new contacts, promote your business, and exchange ideas ). However, there has been no formalized set up for networking. Findings show that entrepreneurs view networking as a key component to business development and growth. They are hungry to meet other entrepreneurs to establish potential partnerships and mentorship opportunities, to nurture ideas, and to encourage each other in general. Assistance with market research of products and services Some of the fears, concerns and barriers that entrepreneurs have revolve around the confidence to sell certain products and services offered. Especially for new entrepreneurs who are unfamiliar with market demands, understanding the market is important. While service providers outline the need to do this research in the business plan, entrepreneurs put forth that they are unaware of how to conduct such research independently. Assistance with legal and regulatory issues A stumbling block in the whole process of setting up a business appears to be with the legal and regulatory issues. Participants in this study found the legal paperwork involved in setting up and running a business to be overwhelming, and are quick to become frustrated and shy away from it if they do it on their own. Lack of awareness of scope of services available Findings show that potential entrepreneurs are not aware of the support that is available. As previously mentioned, they are only familiar with the basic services offered: registration and licensing of a business, and preparing the business plan. A lack of awareness of services offered greatly affects potential levels of success. Lack of awareness does not only (or necessarily) reflect an information gap, but as the study shows, it reflects the belief that there s nothing out there worth looking at. Otherwise they would have told me. Discussions with entrepreneurs also showed that although services are promoted on the internet and sometimes sent in emails, announcements about events are irregular and infrequent. Also, entrepreneurs who live in remote areas of the community may not have access to the internet at their locations. Availability of consultants Findings show that potential entrepreneurs sometimes have difficulty making appointments with consultants at their locations due to distance, and personal responsibilities. Inability to meet with consultants for needed advice may result in them lagging behind in their start-up phase, which may result in them quitting the process altogether. Identification of clients needs One unique gap identified was that entrepreneurs struggle with knowing what they need as they go through the start-up phase. First time business owners especially, are less likely to know what information they need than more seasoned entrepreneurs, and are more likely to identify specific needs based on their current position in the business process. I don t know what I will need until I need it, said one interviewee. The responses of some interviewees suggest that in the past, they only received assistance in areas in which they requested help. Entrepreneurs are looking to consultants to be their guides and to anticipate what is needed. One participant reported, I don t know what I need, so I don t know what to ask for. But I really need help with knowing what kind of resources I will need or at least someone to point me in the right direction. 11
Recommendations and Potential Action Steps to Bridge Gaps During the interviews and focused discussion, entrepreneurs were asked to identify ways that they thought could bridge the service gaps. The following recommendations reflect an analysis of their ideas and the overall discussions that took place. Gap 1- Implement Funding Awareness Strategy Recommendation Implement Funding Awareness Tools Action Steps Develop a user-friendly database of potential funders including Angel- Networks, Grants, Micro-Loan agencies and website links. Plan Networking events for potential funders and entrepreneurs Gap 2- Training /Learning Opportunities Recommendation Plan, Promote and Advertise More Events for Improving Business Skills Action Steps Provide workshops on writing the business plan Proposal writing for funding/filling out applications Marketing training (Social Media, Media Kit) Product development training Use of visual aid (presentations) for training Market workshops well in advance, at regular intervals Increase community awareness of these events Gap 3- Networking Opportunities Recommendation Plan Networking Events that Assist with Building Confidence Action Steps Mentorship Networking events Peer Support events Potential Partnership Networking events Gap 4-Assistance with Market Research on Products and Services Recommendation Collaborate with Organizations to Get Trending/Market Information Action Steps Work with Chatham-Kent Workforce Planning Board to identify Entrepreneurial labour trends in market Partner with other organizations to get information on trending products Send out easy reads on products and service trends that might interest clients and community. Gap 5- Assistance with Regulatory Issues Recommendation Provide a First Aid Kit on Potential Regulatory Issues Action Steps Create a distribute list on licences, permits that client will need on start-up, expansion and on continuation. Create a list/chart/ graphic aid on roadblocks that they are likely to encounter. Identify at least one avenue to overcome roadblocks. Gap 6- Unawareness of Services and Information Offered Recommendation Implement an Awareness Campaign/Strategy Action Steps Promote services in different media types (e.g social media, newspapers, telephone blasting) Improve library by adding updated, relevant and wider forms of information (i.e. videos, webinars, audiotapes and other formats) 12
More free services Gap 7- Consultants Availability Recommendation Be flexible Action Steps Have walk in clinic hours Hire more staff Gap 8- Identification of Clients Needs Recommendation Help clients to identify specific needs and help them to address it Action Steps Guidance from service providers (go beyond the books). Create standardized assessment tools and maps to identify position in the process and progress CONCLUSION During the process of developing this Gap Analysis Report, the Chatham Kent Workforce Planning Board has had the opportunity to hear from entrepreneurs of different ages, backgrounds and with different visions. We have also had the chance to better understand the services offered in the community that are specific to entrepreneurs. The findings of this study suggest that there are a plethora of services offered and that service providers are doing their best to help encourage a spirit of entrepreneurship and innovation. Additionally, the study identifies that there are gaps in the system and that there are areas for improvement. Many of these gaps are not major and therefore do not require significant improvement. Of the utmost importance is the need for service providers to establish frequent and regular communication with clients. Furthermore, the research from this study finds that if service providers were to examine the gaps identified in this report and the recommendations put forth, then they can potentially encourage and support a stronger entrepreneurial and innovative mindset in the Chatham-Kent Community. 13