The SBDC in the classroom: providing experiential learning opportunities at different entrepreneurial stages.

Knotts, Tami L.

INTRODUCTION

The United States Small Business Administration (SBA) is a federal agency that maintains and protects the interest of small businesses. The SBA's mission is to "help Americans start, build and grow businesses," and it relies on Small Business Development Centers (SBDCs) and other agencies to educate entrepreneurs about the business process (United States Small Business Administration). This educational focus for Small Business Development Centers generally applies to community members; however, this paper will demonstrate how SBDCs can help educate entrepreneurship students as well through experiential learning projects. While the projects described in this paper may seem similar to a Small Business Institute (SBI) program, no SBI resources or course materials were used to develop these experiential learning methods. Rather, all of these projects were created by the professor and refined through end-of-the-semester meetings with the SBDC Director to discuss each project's strengths and weaknesses.

Kolb (1984) defines experiential learning as "knowledge that results from the combination of grasping and transforming experience." Experiential learning improves student skills in the areas of time management, decision making, critical thinking, human relations, and communications (Warren 1997). In the entrepreneurship curriculum, experiential learning is common. Experiential applications in entrepreneurship include students writing business plans, launching venture startups, and conducting interviews of successful entrepreneurs (Solomon, Duffy and Tarabishy 2002).

The purpose of this paper is to show how entrepreneurship courses and the SBDC can work together to provide experiential learning opportunities for students and clients. This information is useful to both classroom instructors and SBDC officials because it provides a framework for coordinating experiential teaching methods with community outreach opportunities, resulting in enhanced learning and economic development. The paper provides some background information on experiential learning in entrepreneurship education and the role of Small Business Development Centers. Then it describes three class projects that provide students with firsthand knowledge of the entrepreneurial process-idea evaluation, business planning, and small business operations.

ENTREPRENEURSHIP EDUCATION

According to Solomon et al. (2002), entrepreneurship education is different from typical business education because experiential learning is a common classroom practice. Entrepreneurship students do not simply learn small business information; they use it by writing business plans, launching and managing venture startups, and providing consulting services to prospective business owners. Hawtrey (2007) contends that experiential learning is more engaging than traditional learning. Students cannot simply get by with classroom attendance; instead, they must apply concepts, solve problems, and make decisions for real-life situations.

Experiential activities not only enhance learning, but they also help students manage their time better, make more informed and thoughtful decisions, and improve their ability to communicate (Warren 1997). Referred to as "soft" skills, Peterson and Albertson (2006) agree that students can learn more about interpersonal relationships and problem-solving from an experiential exercise than they can from a classroom lecture.

For example, McCarthy and McCarthy (2006) found that business students preferred experiential learning techniques such as job shadowing over non-experiential ones such as business cases. And Hawtrey (2007) noted that students are no longer satisfied with straight lectures; they expect innovative teaching methods that emphasize communication quality over quantity. Through experiential learning, students can make the connection between their academic studies and real-world experiences because they have more control over the learning process.

SMALL BUSINESS DEVELOPMENT CENTERS

Small Business Development Centers (SBDCs) provide potential and existing entrepreneurs with individualized assistance related to venture startup and performance assessment. As part of a larger network, Small Business Development Centers must adhere to extensive reporting and paperwork requirements related to any services offered to the community. Basic SBDC services include business assistance in areas such as management, marketing, finance, operations, and technology for prospective and current business owners. Specialized services focus on international trade, procurement, venture capital, and rural development. SBDCs, which are typically located in colleges or universities, cater to local communities by developing special programs for economic development and offering educational seminars based on community needs (United States Small Business Administration).

Some Small Business Development Centers offer student consulting services for their clients, with topics ranging from business planning to logistics to human resources. At the Wharton SBDC, for example, undergraduate students assess business problems, conduct industry research, and present their findings (On the Job Learning). Temple University offers similar student consulting services at the graduate level (QS Top MBA), while Drexel University focuses on non-profit consulting by top undergraduate students (Business Consulting). While many colleges have projects like the ones described above, it is unclear how many of these universities utilize the SBDC to the extent described in this paper, with participation in multiple entrepreneurship courses at different stages of the entrepreneurial process.

This paper focuses on a regional Small Business Development Center, which serves the southwest corner of a Midwestern state by offering multiple training seminars for community members ranging from financial management to international trade. Although this SBDC is affiliated with a university, its primary educational focus has been on community members. In 2005, however, a partnership was formed between the Small Business Development Center and several entrepreneurship classes in the business college. This partnership emphasizes experiential learning by allowing students to work on real-life projects with SBDC clients and consultants. Each class project focuses on a different entrepreneurial activity such as idea evaluation, business planning, and small business operations.

EXPERIENTIAL LEARNING PROJECTS

This section describes three class projects that incorporate the SBDC and its resources into the entrepreneurship classroom--the Feasibility Project which assesses the potential of a business idea, the Business Plan Project which requires extensive research and preparation of a written business plan, and the SMART Project which evaluates the operations of an existing small business. The process for each project, the SBDC's role, and project problems and solutions are also explained.

Feasibility Project

The Feasibility Project is for juniors and seniors in a basic entrepreneurship class. It provides students with an experiential learning opportunity related to idea development. Student teams work with clients from the Small Business Development Center (SBDC) to evaluate their business idea and prepare a feasibility study. The Feasibility Project provides potential entrepreneurs with approximately 100 hours of research on critical business issues, ranging from market segmentation to capital equipment requirements to breakeven analysis. The Project helps students learn the evaluation process firsthand by requiring continuous research and reassessment of the client's idea. At the end of the semester, the student teams present their Feasibility Study to the client and make a "go or no go" recommendation based on their interpretation of the research findings.

The Feasibility Project consists of the Feasibility Study and Presentation. The eight parts of the Feasibility Study include the following: (1) Title Page, (2) Business Overview, (3) Marketing Assessment, (4) Operations/Management Assessment, (5) Financial Assessment, (6) Feasibility Decision, (7) Appendices, and (8) References. Students are assigned a major part (e.g.-2, 3, 4, or 5), and then they coordinate their information to complete the study. For the Feasibility Presentation, the students have 45 minutes to present their information to the client and justify their feasibility recommendation.

The Feasibility Project, which was implemented in Spring 2005, helps students gain practical knowledge of the entrepreneurial process. Since 2005, 280 students and 34 clients have been involved in the Feasibility Project. Each client has two teams working on their business idea, with teams varying in size from 4 to 5 members. The clients' business ideas have ranged from simple ones (e.g.-teahouse and doggy daycare) to more complex ones (e.g.-indoor water park and multi-entertainment complex). About 60 percent of the business ideas have been deemed not feasible by the students, while the other 40 percent have received positive feedback and the research needed to pursue their business opportunity.

Process

Prior to the start of each semester, the professor and SBDC officials select the most appropriate candidates for the Feasibility Project based on the following criteria: validity of business idea, passion for business idea, investment funds, availability for student meetings, willingness to respond to student questions in a timely manner, and openness to student suggestions. From there, the SBDC notifies the clients about their selection, and the professor has the students sign a confidentiality and professionalism agreement, which explains their responsibilities as a business consultant. During the semester, students meet with the clients 4-5 times, conduct primary and secondary research, report their research hours to the SBDC, submit rough drafts of the Feasibility Study for professor review, and schedule group meetings to prepare and practice the Feasibility Presentation. At the end of the semester, the student teams present their feasibility recommendation to the client and SBDC officials to answer questions about their research methods and reasoning.

SBDC's Role

The SBDC's role in the Feasibility Project begins with their solicitation of participants. Through their business planning course, they identify aspiring entrepreneurs who would benefit from the project, inform them of the requirements, and assist the professor in selecting the most appropriate candidates. The SBDC also assigns a graduate assistant (GA) to the Feasibility Project to oversee student/client relations, coordinate meetings, and answer client questions. This graduate assistant, an MBA student, has either a marketing or finance background and works specifically for the SBDC. Additional GA duties include teaching students how to report their consulting hours, providing reminders about client meetings, and helping students conduct market research reports. Other SBDC assistance includes answering research questions for students, providing access to online research databases and startup entrepreneurship manuals, monitoring client satisfaction with student progress during the semester, and offering follow-up support for clients participating in the Feasibility Project. This follow-up support includes helping clients interpret the proforma financial statements, prepare bank loan requests, and reassess feasibility recommendations. The SBDC Director and consultants also attend each Feasibility Presentation and question the students about their research methods and rationale. These questions typically lead to a class discussion that becomes a learning opportunity for the students.

Problems and Solutions

No classroom project is without problems, and the Feasibility Project is no different. Two recurring issues that require attention are the lack of proofreading by students and the lack of participation by clients (see Table 1 comments below). Multiple solutions for the proofreading issue have been implemented. First, two rough drafts of each section of the Feasibility Study are required prior to the students submitting their final version. With the professor being able to view the student's work twice, it increases the quality of the final submission. Second, the students are required to submit their final version electronically to the professor several days before their presentation. This gives the professor time to review the final version, check for major errors, and make corrections before it is presented to the client. Third, students receive a point deduction for mistakes related to a lack of proofreading (e.g.--spelling, grammar, formatting, etc.). The number of errors has decreased since these policies were implemented.

Lack of participation by clients refers to their slow response time to student questions and their loss of interest in the project due to personal reasons or the belief that their idea may be unfeasible. This client-related issue has been addressed in multiple ways. Specific criteria guide the client selection process in an effort to ensure high-quality participants, and the SBDC GA stays in contact with clients on a regular basis to keep them informed. In addition, the clients are required to attend the SBDC's business planning course and pay a small fee for participating in the Feasibility Project, both of which create a financial commitment on their part. Even with these policies in place, proper client selection is the most challenging part of the Feasibility Project.

Results

Results from the Feasibility Project include three new startups, the continuance and expansion of two existing business, and the launch of an e-business within the next year. The success of the Feasibility Project cannot be measured by economic development alone. Positive feedback regarding the learning process is a better indicator of educational achievement. A sample of student and client comments regarding the Feasibility Project are listed below in Table 1.

Business Plan Project

The Business Plan Project is for seniors in a new venture management class that focuses on business planning, which is a standard requirement in most entrepreneurship curricula. Because the class size is limited, students can write their own individual plans and receive extensive feedback throughout the semester. In this class, students develop a business idea, submit it to the professor and class for feedback, and prepare a complete business plan based on the revised version of their idea. The major parts of the business plan include an industry analysis, products/services plan, marketing plan, operations plan, management plan, and financial plan.

Process

As part of the class, students participate in an internal business plan competition. To prepare for the competition, students complete an Idea Assessment assignment early in the semester that requires them to determine whether their idea is a valid market opportunity. Once their business opportunity is identified, students make an Elevator Pitch to their classmates about the opportunity. Students then spend the majority of the semester conducting primary and secondary research, submitting rough drafts of different sections for professor review, and preparing their business plan presentation. At the end of the semester, students present their business plan to a panel of judges, consisting of community experts (e.g.-marketing directors, bank executives, etc.) and SBDC consultants, to determine the best business opportunity. The judges provide each student with verbal and written comments about their presentation and business plan, and the top two plans from the class receive prize money and are eligible to represent the university in an external business plan competition.

SBDC's Role

For the Business Plan Project, the SBDC allows students to use their Resource Library and assists them with market and financial research. SBDC consultants also serve as judges for the internal business plan competition. They spend approximately two hours reviewing, correcting, and scoring each plan. The SBDC Director and consultants attend each business plan presentation and ask the students challenging questions that require them to demonstrate their knowledge and understanding of each business area. After the semester is over, the SBDC offers post-class assistance to students who want to strengthen their business plan and prepare it for external review. Problems and Solutions. Because the Business Plan Project does not involve clients, the problems associated with this project are different in nature (see Table 2 comments below). The first problem relates to the number of students in the class. By allowing students to write individual business plans, the professor can quickly become overwhelmed with numerous questions and requests for meetings. Limiting class sizes and/or allowing students who do not have a strong business idea to assist other students with their business plan research are both viable solutions. The second problem for the Business Plan Project deals with student enthusiasm about the competition. While winning is enough motivation for some students, the idea of receiving prize money is a better motivator. Having local businesses sponsor the business plan competition is an appropriate way to solicit financial support and involvement from the community. It also sends a signal to the students that the competition is important and that their business plans must be quality material in order to win. Results. Over the last two years, 30 students have participated in the business plan competition. Two students have started their businesses, two more have launched a modified version of their original ideas, and one will start up this summer. These business ideas range from property management and law firms to art supply websites and landscaping services. Last year was the first time that seed money was awarded to the first and second place business plans. Both student entrepreneurs who received initial funding are finishing their degrees and plan on starting their businesses after graduation.

Table 2 below lists some of the student comments that have been given about the Business Plan Project. While the project is a lot of work for the students, they enjoy developing their own idea into a potential business opportunity rather than working on a textbook case.

SMART Project

The SMART Project is for graduating seniors and graduate students in a practicum class that focuses on small business operations. The SMART (Strategic Management Assessment Review Tool) is based on criteria from the Malcolm Baldrige Quality Award. The SMART was created to provide SBDCs with a tool for assessing the operations of existing business clients and to teach them how different business processes are linked to quality improvement (SMART).

In this class, students use the SMART to provide a current entrepreneur/SBDC client with an evaluation of key business processes. The project provides an existing business owner with over 75 hours of in-depth analysis of their key operations with strengths, opportunities, and recommendations identified. The SMART Project helps students understand the day-to-day operations, challenges, and growth opportunities that small firms face on a regular basis. At the end of the semester, the student groups present their findings to the client along with an action plan that outlines specific steps that should be taken to improve their business.

The SMART Project, which began in Spring 2008, consists of the SMART Report and Presentation. The six categories of the SMART Report include the following: (1) Customer and Market Focus, (2) Strategic Planning, (3) Process Management, (4) Human Resource Focus, (5) Information and Analysis, and (6) Leadership. Student teams interview the client using a set of prearranged questions for each category and then determine strengths, opportunities, and recommendations based on the client's responses. For the SMART Presentation, each student team has 45 minutes (not including the Q&A period) to present their information and recommendations for improvement to the client.

Process

Before the semester begins, the professor and SBDC officials select the most appropriate business for the SMART Project based on the following criteria: amount and type of business assistance needed, willingness to share information with students, openness to student suggestions, and availability of personnel for student questioning. Once a business is selected, the SBDC notifies the owner, and the professor has the students sign a confidentiality and professionalism agreement, which explains their responsibilities as a business consultant. During the semester, students conduct four interviews at the client's place of business, set up additional meetings with key employees, analyze interview responses, submit rough drafts of each section of the SMART Report for professor review, and report their research hours to the SBDC. The students also schedule regular meetings with the professor and the SBDC consultants to discuss the strengths and weaknesses for each SMART category. At the end of the semester, the student teams present an action plan to the client that lists the most critical recommendations for improvement, along with a process for implementation.

SBDC's Role

The SBDC's role in the SMART Project is similar to their participation in the Feasibility Project. SBDC consultants identify an existing client that needs assistance in multiple areas and informs them of the project's time commitment and informational requirements. For the SMART Project, it is imperative that the client allow on-site visits by the students and be truthful when answering any interview questions. The SBDC helps ensure this by suggesting which business owners will work well with the students and be a good fit for the Project. An SBDC graduate assistant is also available to help students report their consulting hours properly and to coordinate meetings.

The most important assistance that the SBDC provides for the SMART Project is an assigned consultant. The consultant manages the relationship with the existing business owner while the professor manages the classroom. Prior to the first meeting between the students and the client, the consultant interviews the business owner to find out his/her expectations for the project and to get an in-depth look at the business. Throughout the semester, the consultant communicates with the client to determine their satisfaction with the project's progress. The consultant also meets with the students to discuss their findings related to the business and reviews their rough drafts. The assigned consultant attends each SMART Presentation to hear the project recommendations and to make sure that the client understands what the students are suggesting.

Problems and Solutions

As with the Feasibility Project, two of the most common problems for the SMART Project focus on student proofreading and client participation (see Table 3 comments below). For the proofreading problem, the same policies--multiple rough drafts, early final version, and point deductions--are in place to resolve this issue. A second problem for the SMART Project has to do with the mentality of existing business owners. Since the SMART clients are already in business, it seems more difficult for them to accept the recommendations provided by the students. While the clients hear what the students are saying and may even agree with the basic idea, they usually find reasons why the business may not be able to implement the recommendation. Perhaps the clients believe that no one knows the strengths and weaknesses of their business better than themselves. As a solution to this problem, the students attempt to sell the recommendations portion of the SMART Report to the clients as if it were their idea. In other words, the students refer to comments that the clients made during the interview process which indicated the need for the recommended changes. This method helps the clients see that the necessary changes are not just perceived by the students but by them as well.

Results

The classroom results associated with the SMART Project are limited due to its recent implementation. While most of the student comments (see Table 3) are positive, the business results are not yet known.

CONCLUDING REMARKS

The SBDC can be a classroom resource for entrepreneurship courses. This paper describes three projects that involve the SBDC in the learning process. Each project is related to a different level of entrepreneurial activity, which gives students the opportunity to not only learn about entrepreneurship but to actually apply it through real-life scenarios. With the Small Business Development Center present in the classroom, students have the opportunity to experience entrepreneurship firsthand and engage in processes related to idea evaluation, business planning, and operations assessment.

Prior to the SBDC's involvement in these classes, only a few business students at the university even knew that it existed. Now students understand the SBDC's role in the community and benefit from their involvement in the classroom. Through the three class projects described in this paper, students receive firsthand knowledge of the entrepreneurial process and feedback regarding their own business ideas. As Senge (1990) suggested, students tend to learn entrepreneurship best when they experience it not just hear about it, and student comments regarding these three projects support that notion. For both the Feasibility Project and SMART Project, students also enhance their resume by providing small business consulting services to SBDC clients.

From both the Feasibility and SMART projects, the Small Business Development Center benefits from about 100 hours of student research time, which are reported as consulting hours. Both projects also increase the SBDC's exposure and value among students, new and existing clients, and the community. New ventures that start up as a result of the Feasibility Project lead to economic development in the community, and according to at least one SBDC Director, this type of impact is a critical measure of success for any Small Business Development Center.

The three projects described in this paper-related to feasibility, business planning, and small business operations-have positive outcomes for students and the Small Business Development Center. Involving the SBDC in the classroom can provide students with more experiences and resources than a textbook, and it can provide potential and existing SBDC clients with market research that is difficult to find or too expensive.

LIMITATIONS AND FUTURE RESEARCH

While this paper examines the advantages of involving the SBDC in the classroom, it is important to note that none of these benefits are possible without a positive working relationship between the professor and the SBDC Director. In addition, no classroom project is without problems, especially when dealing with two different sets of expectations-SBDC clients versus college students. This paper focuses on only the most common problems encountered with each project. Finally, the professor's role in each project is not described in detail. The intended focus of this paper is how the SBDC's involvement, rather than the professor's involvement, enhances student knowledge of the entrepreneurial process through three experiential learning projects.

Future research needs to measure the level of learning that occurs for the student and the entrepreneur during this experiential process. A simple pre-test and post-test could capture entrepreneurial knowledge prior to and after each project in order to determine the project's effect on the participants. This measurement would also allow the researchers to track which projects benefit entrepreneurial learning the most and at which stage SBDC involvement seems to have the greatest impact for students and clients. Even without this information, however, it is clear that from an educational perspective, this type of learning is invaluable because students get to act like an entrepreneur without incurring any risks, and potential or existing entrepreneurs get information at little to no cost.

ACKNOWLEDGMENT

The author would like to thank Rayanna Anderson, SBDC Director, for her assistance in the development and implementation of the projects described in this paper. Her knowledge and input increased student learning and led to numerous project improvements.

REFERENCES

Business Consulting (n.d.) Retrieved August 9, 2008, from Drexel University LeBow College of Business, http://www.lebow.drexel.edu/Prospects/Undergraduate/DUing/index.php.

Hawtrey, K. (2007). Using experiential learning techniques. Journal of Economic Education, 38, 143-152.

Kolb, D. A. (1984). Experiential learning: Experience as the source of learning and development. New Jersey: PrenticeHall.

McCarthy, P. R. & H. M. McCarthy (2006). Why case studies are not enough: Integrating experiential learning into business curricula. Journal of Education for Business, 81, 201-204.

On the Job Learning: Consulting for Wharton's Small Business Development Center (n.d.) Retrieved August 9, 2008 from http://whartonugrad.typepad.com/ugrad_division/2009/02/ on-the-job- learning-consulting-for-whartonssmall-business-development-center.html.

Peterson, R. M. & D. E. Albertson (2006). Running a micro business in marketing class: Experiential learning right out of the gate. Marketing Education Review, 16, 105-109.

QS Top MBA Business School Profiles: The Fox School of Business and Management, Temple University (n.d.) Retrieved August 9, 2008, from http://www.topmba.com/mba_programs/business_school_profiles/profile/article/ temple_university_the_fox_school_of_business_and_management.

Senge, P. (1990). The fifth discipline: The art and practice of the learning organization. New York: Doubleday.

SMART: Strategic Management Assessment Review Tool (n.d.) Retrieved August 9, 2008, from http://www.missouribusiness.net/consulting/smart.asp.

Solomon, G. T., S. Duffy., & A. Tarabishy (2002). The state of entrepreneurship education in the United States: A nationwide survey and analysis. International Journal of Entrepreneurship Education, 1, 65-86.

United States Small Business Administration: Office of Small Business Development Centers Entrepreneurial Development (n.d.) Retrieved August 9, 2008, from http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html.

Warren, R. G. (1997). Engaging students in active learning. About Campus, 2, 16-20.

Wink, C. (2008). Advice is cheap at business schools. Philadelphia Business Journal, Retrieved August 9, 2008, from http://philadelphia.bizjournals.com/philadelphia/stories/ 2008/03/17/focus5.html.

Tami L. Knotts, Bridgewater State College

Table 1: Feasibility Project Comments

Student Comments

* I learned more relevant information from this project than any
other single project that I have ever done in my life.

* I enjoyed how hands-on this was. I feel like it really
exemplified what it is like to start up a business only we didn't
have to take any risk.

* I learned more about human behavior in this class than I ever
could in any psychology class!

* I liked how the study encompassed all aspects of business.
Although this is a management class, we had to do aspects of
marketing, operations, and finance.

* I liked the project because I can put on my resume that I helped
produce a feasibility study.

* The part of the feasibility study I liked was the research part.

* I think a screening process is needed for the entrepreneurs to
avoid situations where they are unreliable. Our client did not even
attend the presentation!

* I would suggest that if clients are going to seek the help of
students and the SBDC that they should sign something saying that
they will show up for meetings and the presentation or at least
explain why they won't be able to attend.

Client Comments

* Great way to get research completed when you don't have the time
or resources.

* All the information we received was so valuable. It wasn't
something that we could have done on our own in the amount of time
the students had.

* You can't get this much data and research at this price anywhere
else.

* This is an excellent project for everyone involved. It not only
engages the students in real life scenarios but also keeps the
client engaged in his/her idea.

* Some of their information was not correctly worded.

* Students procrastinated on some details. More attention to detail
(for example, proper writing) on their part would have made the
project better.

Table 2: Business Plan Project Comments

Student Comments

* The most beneficial class for me has been new venture management.
I was able to write a business plan for my idea. This really helped
me understand the detail and planning that goes into starting a
business and running it for a long time.

* This class not only helped me realize that I wanted to go into my
family business but helped me develop a real business plan that I
will be putting into action!

* This class has given me the proper tools and knowledge to run my
future business, as well as a great jumpstart. I feel very
confident that I will succeed in my entrepreneurial quest.

* Writing a business plan is a lot of work, but I learned that it
takes hard work to make a business successful. Thank you!

* I liked having the chance to win money from the BP competition
even though I didn't get any!

* This was my favorite class because I didn't have to work in a
group. I got to write my own business plan.

Table 3: SMART Project Comments

Student Comments

* I liked how this project took a professional approach at
analyzing a business. It really makes me feel that I have a better
understanding of how to look at a company and make critical
decisions.

* I feel like I actually got a realistic application of the built
up knowledge that I've learned.

* This was definitely a beneficial project. I enjoyed the class and
project, and I know it will definitely help prepare me for the
future and my business endeavors.

* I really liked working with a real client. He was really
interested in what we had to say and was open-minded to our
suggestions.

* It seemed like the client didn't agree with our suggestions
during the presentation.

* Our client didn't tell us everything we needed to know in order
to make the best recommendations. I thought he could have helped us
more.

Client Comments

* The students made me think about issues that I had ignored for
years (e.g.--succession planning).

* While I didn't agree with every recommendation, I appreciated the
students' genuine concern for my business.

* Some of the groups did a better job writing their report. I felt
this showed that some students took the project more seriously than
others. All of them did a really good job on their presentations.

* I enjoyed helping the students understand how a real small
business works.