The Federal Government's Laughably Terrible Entrepreneurship Training Partnerships
The SBA has partnerships worth a quarter billion dollars each year to provide free entrepreneurial training and business advice. American entrepreneurs and small business owners get what they pay for
For years, the Small Business Administration (SBA) has partnered with three entities to provide free, at-cost, and low cost entrepreneurial training and technical business advice to American entrepreneurs and small business owners. The entities, Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs), and the SCORE Association chapters (formerly the Service Corps of Retired Executives), are collectively known as the SBA’s “Resource Partners.” Not only are the Resource Partners functionally duplicative, but the quality of their training and services are, in the aggregate, shockingly awful. There are, as is the case in any organization, a few good apples – individual mentors who work at a WBC, SBDC, or SCORE chapter – who are trying their best to do their jobs, and sometimes even approach doing it well. They are, however, sadly trapped in a failed system. Yet the SBA still subsidizes each of the Resource Partners to the tune of about 40% of annual revenues. In FY22, the three organizations received $272 million total, and President Biden’s FY23 Budget Request asked for a $46 million increase. Because, in government parlance, $272 million is a drop in the bucket, most Republicans remain blissfully unaware of the Resource Partners’ existence, never mind how much money Congress gives to them or what they do with it. If they paid attention, they would find the Resource Partners to be duplicative organizations providing services the quality of which are shockingly poor, all the while operating largely without federal oversight by Congress or SBA itself.
The three organizations are functionally the same and cater to the same clientele. The ideal client of each of the three entities is the Soup Nazi. He’s a small business owner with a good product, but he doesn’t know how to create a business, and doesn’t necessarily have an idea that’s scaled for massive growth. Despite its nominal focus on female entrepreneurs, WBCs and SBDCs are functionally the same. SCORE at least ostensibly differentiates itself by staffing its client-facing personnel with, as its name suggested, retired business executives who could, in theory, pass on real-world learned experiences to the next generation of small business owners. But in practice, SCORE, SBDC, and WBCs compete for the same clients to whom they provide the same basic advice, sometimes disseminated by SBA itself. And to boot, it’s basically all terrible advice.
How terrible are we talking about? For about 10 years, the SBA asked Resource Partners’ clients what they thought about the face-to-face counseling they received. The last study SBA published was in 2013, looking at what clients who received counseling in FY2012 thought of the Resource Partners’ services. Here’s what they told SBA:
Nearly 90% of clients thought the services they received were not enough to convince them to take their ideas to market.
58% of clients walked away after one session.
Only 25% of clients found the services to be impactful in retaining current staff.
43% said the services were impactful in increasing their business’s sales.
20% said the services were impactful in hiring new staff.
39% said the services were helpful in positively impacting their profit margin.
The list goes on. Whatever the metric, the Resource Partners received F grades across the board, and it wasn’t even close. One can only imagine it is because the advice they give is generally rudimentary at best and counterproductive at worst. For example, the Resource Partners often emphasize the importance of creating a business plan, something even the New York Times, in 2014, said was antiquated for modern small business owners. The advice SCORE mentors give, by nature of their age, is also often out of date. For example, a common criticism of SCORE mentors is their failure to recognize the value of a small business having a digital footprint, or participating in e-commerce. In 2022. After COVID lockdowns.
So what’s changed since 2012? Not much, as far as Congress can tell. There have been very minor, if any, programmatic changes. No increased oversight by SBA, either. In fact, the head of the office that oversees the SBA’s entrepreneurial development activities earlier this year refused to give a straight answer when asked whether SBA is still doing the client impact surveys. If anything, observers are left to conclude SBA’s oversight of the Resource Partners has gotten worse over time, not better.
Instead of client impact surveys to gauge efficacy, SBA now leans on the Resource Partners’ own annual reports they publish. Surprise surprise, each gives itself glowing, 5-star reviews. Meanwhile, earlier this year the SBA’s Office of the Inspector General issued a report on the Resource Partners performance as it related to the $25 million grant in the CARES Act to build a portal for small business owners to access, and to train the Resource Partners’ mentors on how to help small businesses access COVID funding streams, such as PPP and COVID-19 Economic Injury Disaster Loans. The IG found just 62 of the over 14,000 mentors across the Resource Partners completed any of the training modules whatsoever. That led to the inevitable conclusion that only 1% of small businesses eligible to receive the SBA funding ever accessing the portal toward which the Resource Partners were supposed to be directing them. If you believe these organizations put forth such low quality work when small businesses needed them most are doing 5-star work in their day-to-day operations, I’ve got a bridge to sell you.
As you might imagine, the Resource Partners are steadfast in their opposition to providing SBA with client-level data (names, addresses, emails, etc.). They view it as an invasion of privacy. But one might be surprised to learn they aren’t trying to stop SBA from asking the clients about their experiences. The SBA isn’t interested in asking those questions. Instead, SBA wants to use the data to cold call Resource Partner clients, like a two-bit telemarketer, to sell them on taking out SBA-backed loans.
Nevertheless SBA, without basis, gives the Resource Partners glowing reviews in its annual budget justification and annually asks to increase their subsidies. Congress, meanwhile, doesn’t want to take the time to really investigate the Resource Partners, or even outsource an investigation to the Government Accountability Office. So the status quo persists and the money train just keeps chugging along.
One imagines if the veneer of the SBA’s partnerships with the Resource Partners were scratched off even just a little bit, the rotting underneath would be laid bare. But for some reason in Washington, as soon as the argument is made that a program “helps small businesses and entrepreneurs” it becomes functionally sacrosanct in some circles. Republicans should stop falling for the Resource Partners’ and SBA’s trick and begin asking if these partnerships are helping entrepreneurs and business owners, or are they an example of government bloat? According to the people the partnerships are designed to help, it’s affirmatively the latter.