Chicago’s small businesses have been hit hard by COVID-19, with minority-owned businesses most at risk, according to a UChicago Inclusive Economy Lab survey. Anthos Training Clubs on 53rd Street in Hyde Park is one example: After a few months of the pandemic, revenue at Anthos, which provides personalized training services, was down 87 percent. “It was very scary,” said Shaka Mitchell, co-owner and company director.
The team at UChicago’s Polsky Center for Entrepreneurship and Innovation heard many entrepreneurs echo Mitchell’s fear. Minority business owners’ systemic lack of access to resources, including business education and relationships with bankers, results in unequal access to the capital that can help them weather economic challenges and grow their companies.
In response, the center teamed with the Office of Community Engagement’s UChicago Local economic inclusion initiative, Chicago Community Loan Fund, GN Bank, and Seaway Bank, a South Side bank that’s a division of Self-Help Federal Credit Union, to develop a course to help position business owners to apply for loans and access other sources of capital.
Seaway’s president, Daryl Newell, said that the Polsky Small Business Financial Fundamentals pilot was born from two of Seaway’s and Polsky’s common goals: helping neighborhood business owners on the South and West sides grow and benefit their communities, and coming together to support businesses offering amenities that help residents have a good quality of life.
The free, nine-week course for minority-owned, women-owned, or veteran-owned small businesses launched April 1 with a mission to support entrepreneurs who provide those amenities. Its first cohort of sixteen included restaurant owners, real estate agents, retailers, chiropractors, and clothing designers, among others.
The course provided financial management training from Booth School faculty, one-on-one consulting services from Booth students, and presentations by bankers like Newell, who called the course “a mini-executive MBA program focused on finance and customized for each business owner to give them a framework to make better business decisions.”
“The main objective was that when business owners finished the program, they would be equipped with the language and knowledge necessary to apply for a loan and speak confidently to bankers about their business, their financial needs, and their ability to service the debt,” said Kathleen Fitzgerald, Booth adjunct associate professor of strategic management and senior director of academic support, who designed and taught the course.
From creating a business plan and understanding business credit to analyzing financial statements and exploring ways to finance operations, the course’s participants immersed themselves in their businesses. They emerged with a solid grounding in when and how to apply for capital, and how to talk confidently about their companies’ business models and finances. “You have to convince bankers — and other investors, friends and family who might invest, partners, and grantmakers — that your model works. You can’t do that if you don’t understand where your money is coming from,” Fitzgerald said.
As a veteran of other Polsky programs, including the Small Business Growth program and the Small Business Bootcamp, Mitchell knew he would get solid advice and support from the course. In addition to attending weekly classes with Fitzgerald, he met weekly with his Booth MBA student consultants, Jessica Yan and Michael Surtees, to dig deeply into finances and projections for Anthos.
Surtees welcomed the chance to practice what he’s learned at Booth in a meaningful way — and to learn some new things, too, including a close-up look at the entrepreneurial life. “Shaka and I both learned from each other,” he said. “I hadn’t realized how much of a business owner’s personal finances and background goes into applying for a business loan. And it’s amazing to see just how much work entrepreneurs put in. Starting and running a business is really impressive to me.”
Mitchell says that the most valuable thing he and his consulting team worked on was a daily break-even tool that enables him to plug in data about Anthos’ client count, employee count, and revenue to determine the volume of business he needs to bring in. “If we want to expand through hiring, we can calculate exactly how many people we’ll need to be training in order to profit,” he said. Surtees also used the tool to create different financial scenarios that helped him build a comprehensive business forecast for Anthos.
Mitchell welcomed the opportunity to revisit his business plan — “I did one before we opened in 2019 and haven’t touched it since” — update his résumé, and connect with bankers. According to Newell, one of the biggest gaps minority entrepreneurs face is a lack of access to bankers not only to apply for loans, but also to informally discuss business ideas and challenges. He helped Mitchell begin to grow his network by introducing him to a business credit expert at BMO Harris Bank.
At the end of the course, each participant had collaborated with their consultants to create a complete loan application package containing information about their businesses’ history, goals and strategy; historical finances and forecasts; ratios and restatement of cash needs; personal financial statements; and much more.
Mitchell says that he was previously “very anti-loan,” but learning about small business finance in the program changed his thinking. “Now I understand that it all depends on what you want to do with the loan. The course helped me completely shift my mindset in a way I’m truly thankful for.”
He hasn’t put his loan package to the test yet, but Mitchell and his business partner are using Small Business Fundamentals tools to track finances closely and plot the next steps in Anthos’ growth. “I’ve now talked to multiple people in the banking industry, and we’re looking at different opportunities that weren’t on my radar before,” he said. In the meantime, he said, Anthos has just completed two of its most successful months ever.
The Polsky Small Business Financial Fundamentals program was made possible by a $120K grant from the Fund for Equitable Business Growth, a multi-funder collaborative to support local minority entrepreneurs in securing business financing. Funders in the collaborative include The Chicago Community Trust, Crown Family Philanthropies, Coleman Foundation, JP Morgan & Chase, MacArthur Foundation, McCormick Foundation, and Polk Bros. Foundation.