May 2021: A costly knowledge gap for many small business entrepreneurs
Financial Literacy: A Costly Knowledge Gap for Many Small Business Entrepreneurs
During the past year, Women’s Business Development Center, a Foundation grantee, administered over $225 million in emergency grants to over 8000 local small businesses. One of the organization’s key lessons learned was that a significant number of business owners in low and moderate-income neighborhoods lack the financial literacy required to access capital or apply for grants and loans.
Some entrepreneurs operate without a business license, never filed with the secretary of state, or don’t have a designated bank account. Others are hindered by unfiled taxes, poor cash management, or incomplete record-keeping. These insufficiencies can be harmful, if not terminal, during critical times. Businesses need solid accounting in order to evaluate a new opportunity, borrow money to grow, or if it hits a crisis as many did in 2020. Both new and experienced business owners often prioritize making products, marketing, and sales while spending less time on properly accounting for financial transactions and managing financial resources.
“When you say financial literacy, many business owners immediately think of taxes, city fees, permits, and licensing,” says Tina James of Greater Southwest Development Corporation, which supports entrepreneurs in the Chicago Lawn neighborhood. “It doesn’t mean profits versus revenue. Even the definition of expenses is not commonly understood.”
“I remember when I went to my accountant,” said Erika Gonzalez, a former restaurant owner who created Greater Southwest’s Basic Financials for Business course. “They said ‘This is your balance sheet. This is the money you owe for this and this and this.’ The words weren’t getting inside my head. They were sliding off to the side. They were talking to me in another language.”
In Analysis of Entrepreneurship Training Curricula in Chicago Community Organizations, Coleman Foundation Chair of Entrepreneurship at DePaul University Dr. Maija Renko led a team which evaluated 16 entrepreneurship training programs across Chicago’s low and moderate-income neighborhoods. The November 2020 study notes the strengths and content of these programs, and recommends improvements.
The study highlights the widespread prevalence of financial content in the programs, revealing that most of the courses either featured or focused solely on financial management topics like budgeting, understanding financial statements, and analyzing cash flow. While community-based entrepreneurship training organizations are working to fill the knowledge gap, many entrepreneurs are unaware of the programs or their own need for them.
The Coleman Foundation provided funding to Greater Southwest to establish its Chicago Lawn Business Academy and to develop and market a four-session Basic Financials for Business course, which is offered in both English and Spanish. Through 90-minute workshops, participants learn hands-on how to develop a cost of labor grid, an inventory management system, a product pricing worksheet, and a profit and loss statement. Funding both the program and outreach to entrepreneurs is a difference-maker.
Outreach to entrepreneurs is about building trust and relationships according to James. “We have the whole team here (at Greater Southwest) getting the word out because everyone has different relationships. We can leverage what we know about the business owner’s goals. For example, if we know that they want to redo the interior of their store or succeed the business to their son, we’ll say, look, in order for you to achieve this specific dream, you need to understand X or Y and have Z documentation. And we think you should start with these financial classes.” The Basic Financials for Business class at Greater Southwest currently has a waiting list of 50.
Despite the availability of programs like Greater Southwest, many small business owners are not aware of the value of financial literacy or haven’t made it a priority, leaving critical grant and loan money on the table. This is not just a problem for Black, Latinx, or women-owned small businesses and the communities they serve, but it impacts our entire regional economy.
South Side clinic provides COVID-19 vaccine to Chicago residents hardest hit by pandemic
In partnership with the City of Chicago, the University of Chicago Medicine launched a temporary vaccine clinic on March 26th with philanthropic support from the Coleman Foundation and other donors. Together, they helped to secure 16,000 vaccine doses to be distributed to Chicago Family Health Center, a community-based center that provides affordable, comprehensive healthcare to underserved communities on Chicago’s South Side, including Roseland and Washington Heights.
“We are grateful to each of these donors for their contribution, which helps us to ensure the COVID-19 vaccine is available to Chicago’s Black and Latinx communities that have been disproportionately impacted by the pandemic,” said Brenda Battle, RN, BSN, MBA, Senior Vice President for Community Health Transformation and Chief Diversity, Equity and Inclusion Officer at UChicago Medicine.
Established under Protect Chicago Plus, a targeted vaccine distribution program, the clinic at Woodson Regional Library offers the vaccine at no cost to Roseland and Washington Heights residents ages 18 or older. Unlike other vaccination sites, Protect Chicago Plus sites can vaccinate any adult who lives within the neighborhood, regardless of their age or if they have high-risk medical conditions.
Philanthropic funding is allowing UChicago Medicine to provide clinical support, including nurses, medical assistants, community health workers, and clerical staff. Funds also support necessary supplies and technology, as well as community outreach, including ads on the radio and in local newspapers to ensure community members are aware of the launch of the clinic and know how to access it.
