[Senate Hearing 112-881]
[From the U.S. Government Publishing Office]
S. Hrg. 112-881
REAUTHORIZATION OF SCORE: DISCUSSION
AND RECOMMENDATIONS FOR VOLUNTEER-BASED SMALL BUSINESS ASSISTANCE
=======================================================================
ROUNDTABLE
BEFORE THE
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
MARCH 8, 2011
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Printed for the Committee on Small Business and Entrepreneurship
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED TWELFTH CONGRESS
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MARY L. LANDRIEU, Louisiana, Chair
OLYMPIA J. SNOWE, Maine, Ranking Member
CARL LEVIN, Michigan DAVID VITTER, Louisiana
TOM HARKIN, Iowa JAMES E. RISCH, Idaho
JOHN F. KERRY, Massachusetts MARCO RUBIO, Florida
JOSEPH I. LIEBERMAN, Connecticut RAND PAUL, Kentucky
MARIA CANTWELL, Washington KELLY AYOTTE, New Hampshire
MARK L. PRYOR, Arkansas MICHAEL B. ENZI, Wyoming
BENJAMIN L. CARDIN, Maryland SCOTT P. BROWN, Massachusetts
JEANNE SHAHEEN, New Hampshire GERALD W. MORAN, Kansas
KAY R. HAGAN, North Carolina
Donald R. Cravins, Jr., Democratic Staff Director and Chief Counsel
Wallace K. Hsueh, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana. 1
Witness Testimony
West, Meredith................................................... 3
Burlington, Sheree, owner and operator of Museware Pottery,
Manchester, NH................................................. 7
Evers, Ridgely, SCORE boardmember and a small business owner and
farmer......................................................... 7
Pages, Erik, President, EntreWorks Consulting.................... 7
Pickett, Penny, Associate Administrator, Small Business
Administration for Entrepreneurial Development................. 7
Sedlin, Len, State Director for SCORE............................ 7
Shear, Bill, Director of Financial Markets and Community
Investment at GAO.............................................. 8
Weiss, Ron, District Director for SCORE in New Hampshire......... 8
Yancey, Ken, CEO, SCORE.......................................... 8
Sanchez, Amy, professional staff with Senator Landrieu's
Committee staff................................................ 8
Alphabetical Listing and Appendix Material Submitted
Burlington, Sheree
Testimony.................................................... 7
Evers, Ridgely
Testimony.................................................... 7
Landrieu, Hon. Mary L.
Opening statement............................................ 1
Pages, Erik
Testimony.................................................... 7
Pickett, Penny
Testimony.................................................... 7
Sanchez, Amy
Testimony.................................................... 8
Sedlin, Len
Testimony.................................................... 7
Shear, Bill
Testimony.................................................... 8
Snowe, Hon. Olympia. J.
Prepared statement........................................... 4
Weiss, Ron
Testimony.................................................... 8
West, Meredith
Testimony.................................................... 3
Yancey, Ken
Testimony.................................................... 8
REAUTHORIZATION OF SCORE: DISCUSSION AND RECOMMENDATIONS FOR VOLUNTEER-
BASED SMALL BUSINESS ASSISTANCE
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TUESDAY, MARCH 8, 2011
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The committee met, pursuant to notice, at 10:00 a.m., in
Room 428-A, Russell Senate Office Building, Hon. Mary L.
Landrieu (chair of the committee) presiding.
Present: Senators Landrieu and Brown.
OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S.
SENATOR FROM LOUISIANA
Chair Landrieu. Good morning, everyone, and thank you for
joining us for this morning's roundtable. We have had several
dozen of these since I have become chair of the Committee, and
we find them very, very helpful in building a case either for
or against an issue that we feel strongly about.
I really appreciate you all being a part of this rather
informal but important meeting this morning to discuss the
reauthorization of the SCORE program.
As all of you know, this nonprofit organization started in
1964. Originally, it was made up of retired executives. Now, it
draws many others in a wide variety of industries providing
counseling and technical assistance to promising businesses and
mentorship to entrepreneurs across the country.
Before we begin this morning, I just want to put a few
things into context. I became chair of this Committee two years
ago. When I took over, our country was facing one of the worst
economic melt-downs, if you will, or slow-downs since the Great
Depression. In the face of tightening credit markets and
insufficient resources to assist small businesses, many of our
businesses were struggling to keep their doors open.
The primary federal agency for assisting them, which is the
Small Business Administration, was itself struggling to keep up
with great demand after suffering significant budget cuts in
previous years.
At that time, this Committee faced the challenge of
increasing the Federal Government's capacity to assist small
business, helping to ensure small businesses continue to serve
their historic role as key job creators and innovators and
doing all of this without substantially adding to our national
debt.
It was a significant challenge but not an impossible one;
and through an aggressive legislative agenda, Senator Snowe and
I rolled up our sleeves and went to work. We have met some of
those challenges and we continue to meet others.
While we are starting to see signs of improvement in the
overall economy, the job numbers are up, our Committee has been
a part of that revitalization although the Congress, as a
whole, has taken some extraordinary steps, as we all know.
So today we want to continue our efforts from the last
Congress, focused on job creation, economic recovery. We want
to do so in the most fiscally responsible manner. We would like
to do so by leveraging private sector efforts and support,
partnering where we can in smart ways, and that is what really
leads us to this roundtable this morning.
During the roundtable today, we will discuss the
reauthorization of one such program, a program that has been
noted for its effectiveness and efficiency. In this extremely
budget-conscious environment, these kinds of partnerships might
be an important step for us to take or to continue to take.
So, our program that we are going to be discussing this
morning is Service Corps of Retired Executives or more commonly
known as SCORE.
At the forefront of enabling more small businesses to grow
and succeed, the SBA's entrepreneurial development programs
like SCORE, as I say, serve as one model. Unlike other programs
of its kind, however, SCORE provides its services through a
network of over 13,000 volunteers that serve as counselors,
advisors, and mentors to small business owners seeking
assistance.
In this way SCORE is leveraging private sector resources
through the know-how of successful, experienced members of the
business community utilizing their particular skill set and
expertise.
Today, we will hear from Ridgely Evers, a SCORE board
member; Ken Yancey, CEO of SCORE. They will discuss the value
of SCORE and some of their plans and objectives.
According to a recent Gallup survey, SCORE has helped
16,510 small businesses save jobs in 2009 and at least 90
percent of SCORE's in-business clients remained in business in
2010.
According to the same polls, SCORE clients created 30,603
jobs in 2009, and these same clients projected a total growth
of an additional 155,000 full-time equivalent employees.
There is a chart of the SCORE chapters that you all I am
sure are very, very familiar with. Some of you run them and
helped organize them, and we are looking forward to hearing
more about that as this roundtable unfolds.
To discuss the local impact and the value of the
organization at the ground level, we have state SCORE directors
with us, including Ron Weiss from, of course, the State of New
Hampshire, who has done some very impressive work, Ron, and I
appreciate everything that you have done.
We also have Sheree Burlington, an actual SCORE client from
New Hampshire. We are happy to have you with us. We also have
Penny Pickett from the SBA and Bill Shear from the Government
Accounting Office. We thank you all for being with us.
Unfortunately, Senator Snowe was unable to make it for
today's roundtable but Meredith West from her staff will help
me moderate the panel this morning.
So, I would like to turn it over to Meredith for some very
brief remarks. This is a very easy operation here. After we
introduce ourselves, if anyone has questions or comments just
signal that way and we will have very open and informal and
hopefully lively discussion.
Meredith.
Ms. West. Thank you, Chair Landrieu, for holding this
roundtable this morning, and happy Mardi Gras to you.
Chair Landrieu. Thank you. Rex is passing Gallier Hall as
we speak, and I am sitting here happily with you all.
[Laughter.]
Ms. West. Indeed. As the chair stated, Senator Snowe is in
a Finance Committee hearing right now and as well as running
back and forth between a fisheries hearing on her Subcommittee
on the Commerce Committee. That is, of course, an issue of
great importance to Maine. So, I regret that she is unable to
make it this morning.
But we would like to recognize two of the Ranking Member's
constituents from Maine, our SCORE Director Neil Elder and
Nancy Strojny, over here on your left. Nancy is the vice chair
of the Portland chapter, and we appreciate you all joining us
here this morning.
I have Ranking Member Snowe's statement to enter into the
record.
Chair Landrieu. Without objection.
[The prepared statement of Senator Snowe follows:]
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Chair Landrieu. Why don't we start even thought I have done
brief introductions, why don't start, Ms. Burlington, with you
and just give a little bit, name and 30 seconds of background.
And then we will go around that way and start.
Ms. Burlington. My name is Sheree Burlington. I am the
owner and operator of Museware Pottery, a small business in
Manchester, New Hampshire, and I have been working with SCORE
for about four and half years.
Chair Landrieu. That is wonderful.
If you all push your talk button, it will come on red and
speak a little closely into like mike might help.
Ridgely.
Mr. Evers. My name is Ridgely Evers. I am on the board of
SCORE. I am a small business owner and farmer. I am also deeply
involved in issues surrounding how to plug the capital gap for
small business. I have been CEO of five Silicon Valley
startups; and earlier in my career, I created a software
program called QuickBooks.
Mr. Pages. Good morning, Senator. My name is Erik Pages. I
am president of an economic development consulting firm called
EntreWorks Consulting. I am here actually in another guise as
well, though. In addition to being a small business owner, I am
also a senior fellow at the Rural Policy Research Institute's
Center for Rural Entrepreneurship, which is a national
technical assistance provider for rural communities that are
trying to promote entrepreneurial development.
Ms. Pickett. Good morning. I am Penny Pickett, and I am the
Associate Administrator for the Small Business Administration
for Entrepreneurial Development, and it is my honor to have
this position because coming from small business I recognize
how necessary and how important the technical and management
assistance is to anyone starting a new company.
Chair Landrieu. Thank you, Penny.
Len, you are from Louisiana. I am sorry. I got that mixed
up. Go right ahead.
Mr. Sedlin. That is all right. You are excused, Senator. We
will correct the record.
Chair Landrieu. Thank you.
Mr. Sedlin. My name is Len Sedlin. I am the State Director
for SCORE in Louisiana. My background is engineering. And when
I was first invited to consider SCORE, I said what do I know
about business. I am an engineer.
Surprisingly, I knew a fair bit, but I am pleased to be
here and I am pleased to share our story of SCORE with the rest
of the audience here today. Thank you.
Chair Landrieu. And did I not meet you with a Raising Cane
executive?
Mr. Sedlin. You did, one of our success stories.
Chair Landrieu. I hope we talk about that this morning.
Mr. Sedlin. Raising Cane's is a restaurant that started
with SCORE assistance in about 1998. Todd Graves was the winner
of a national SCORE award this past September here in D.C. for
being the outstanding socially progressive small business in
the United States.
And he started his business, he had the usual turn-down on
his business plan. It would not work, never would work with one
product in his restaurant, but he did not listen. But he came
to SCORE, learned that you have to have some skin in the game.
He went up to Alaska and did salmon fishing, got his money,
came back to Baton Rouge, got with SCORE again, worked out his
business plan, and got an SBA loan to help him get started, and
the rest is history.
He now has over 100 restaurants in 13 states, and he is
opening in Arizona apparently two more sometime soon. Quite a
success story.
Chair Landrieu. That is terrific. That is a great, great
story. We would love to hear more of those.
Mr. Sedlin. And he employs more than 3500 people, I
believe, through his restaurants.
Chair Landrieu. Fabulous.
Mr. Shear. I am Bill Shear. I am Director of Financial
Markets and Community Investment at GAO. It is a pleasure to be
here.
My participation today is based on two pieces of work we
have done. Recently, GAO came out with a report on overlap
duplication and fragmentation in federal programs, and I led
our effort on economic development programs.
So SCORE was one of 80 economic development programs that
was contained in that body of work which is still ongoing. The
other is that we looked at SCORE to some degree on our work on
Women's Business Centers in looking at uncertain coordination
issues.
So, I can state here today we have not done a direct audit
of SCORE, but SCORE has been involved in this body of work that
brings me here today.
Thank you.
Chair Landrieu. Okay. Ron.
Mr. Weiss. Yes, I am Ron Weiss. I am the District Director
for SCORE in New Hampshire. I have been in that spot for five
years. I was doing venture capital startups, and I am presently
a business owner, and I am also a GSA contractor.
Mr. Yancey. I am Ken Yancey, and I am CEO of SCORE. I have
been with SCORE for 18 years. Prior to that, in small business
banking and other small business associations.
Chair Landrieu. Thank you.
Amy, why do you not introduce yourself.
Ms. Sanchez. Sure. I am Amy Sanchez. I am professional
staff with Senator Landrieu's Committee staff. And thank you
all for joining us here today. I know it has been some work to
get here, and I appreciate you being here.
Chair Landrieu. Let us just jump right into questions, and
I am going to address some of these questions to individuals;
but if you all feel like you want to respond, please just put
your cards up as I said, and we really want this to be an
informal exchange.
But I would like to start with Ridgely and Ken. Can you all
provide a brief explanation of SCORE and the breadth of
counseling and services that the organization provides?
Ken, if you want to go first, and then I will turn it over
to Ridgely. You know, in some specificity and you could give a
couple of examples of individuals. Leonard just talked about
one that we are very familiar with. Not in the specificity of
the kind of counseling but a general story about success. But,
why don't we start with that and if you could share with us
some of your ideas.
Mr. Yancey. I would be happy to. Thank you as always for
your support and for holding this hearing. We appreciate
everything that Senator Snowe does, and it is nice to see our
longtime partners, the SBA here.
Penny, we appreciate all that you and your staff do for
SCORE.
As all of you know, SCORE was founded by the SBA in 1964.
Since that time, we have grown to over 13 and a half thousand
volunteers serving over a half a million different businesses
and individuals each year.
We do this primarily in two methods. First is one-to-one
counseling. It is available to anyone who would like that
counseling on topics that relate to starting, growing,
managing, buying, selling a business. The second thing we do is
a series of workshops or seminars.
Sometime back we looked at our organization and determined
that we could be far more effective, far more efficient and
provide much greater impact in the communities that we served;
and in going through that review, we determined that it was in
our best interest and in the country's best interest for us to
rethink our delivery process, our counseling methodology, the
focus of our volunteers.
And in doing that, we wound up with a new strategic plan
that many of your staff and you are aware of. That strategic
plan is driven by a vision, a dream, a goal of helping to
create a million businesses by 2017, a very ambitious goal that
required us to think very, very differently about the way that
we operate.
In doing that, we made substantial changes. Those changes
included listening much more effectively to our clients and
their needs.
As many of you know, we have been fortunate to partner with
the Gallup organization through the generosity of one of our
partners, Constant Contact. In order to measure our success, we
need to determine what those outcomes need to be and agreed
that we would look at, in terms of success, businesses formed,
jobs created, jobs sales, and sales growth.
We worked with Gallup to develop this survey, and the
methodologies are fairly simple. We did a census of a hundred
percent of our 2009 client base. We took that information and
extrapolated it across the balance of the base.
As you mentioned in terms of some of the impact, SCORE in
2009 helped to create 68,000 new businesses over 31,000 new
jobs at a cost to the taxpayer of the $229 per job about $102
per business.
In that survey and based on the research that was done by
the Gallup organization, SCORE, as an organization, their
clients return $107 to the Federal treasury for every dollar
spent on the program. So, the return is excellent.
We believe that we can do far more, and we are working
diligently to continue the implementation of that plan. We very
much appreciated your support through that process.
As we listen to our clients, we have learned more from our
clients in the last year than we have known in the last 46
years. We find that they are interested in a consistent
counseling methodology, a process that we could use that would
help them generate the outcomes that they want which would be
growth, starting, and so on.
We developed a propriety counseling methodology with the
help of the Delux Corporation Foundation. We have developed a
new certification program, and we have had almost 600
volunteers involved in that entire process.
Today, we have over 500 volunteers certified in just the
pilot and are excited to be able to launch that here very
quickly.
Our clients made it very clear and, quite frankly, our
volunteers have made it very clear over time that they are more
interested in long-term relationships.
SBA research actually shows that small businesses who
receive five or more hours of counseling do better and
outperform those that do not.
So our new methodology is focused on providing that long-
term relationship between client and counselor. Our new tag
line is for the life of your business which supports the idea
that we will work with them in a long-term fashion.
The plan that we developed, as you know, we committed to
you and to our stake holders that we would take this on and
that we would achieve that. For the purposes of talking about
the reauthorization, I have been told a number of times that I
am quite foolish and a bit crazy and I think one of the words
was ten-eared when I decided to, quite frankly, ask for more
funding.
Having said that, SCORE as an organization is one of the
most efficient, effective job creation, business formation
engines that the Federal Government presently funds.
In this environment of slow-starting recovery, the need for
SCORE is great. We would like to ask that in reauthorization,
Senator, that you consider $13 million for SCORE in 2012, $15
million in 2013, and $18 million in 2014.
We will use this money to continue to implement all of the
programs and initiatives that we have launched. In terms of how
we would exactly spend that investment, what we would like to
do is send $5.2 million directly to our chapters in the form of
opportunity that goes to the districts, in addition to six
full-time field support staff.
You will hear from our district directors that one of their
biggest challenges is expansion and having the staff to get out
and actually engage clients beyond just the offices that we are
in at the present time.
We will use 7 percent of that for volunteer leadership
education in our annual conference. As we work to share best
practices and be a single, strong, nationwide organization that
benefits from the value and the contribution of 13 and a half
thousand volunteers instead of just the 20 or 30 that might be
in your chapter, the opportunity to communicate and to share
and to find best practices that we can then bring about
successfully in other chapters is really critical.
We will use a portion of that, 6 percent, on marketing and
communications. We are building a remarkable infrastructure
that is designed to deliver and impact outcomes, businesses
started, jobs created, and so on.
As we implement that, we need to work diligently to make
more people aware that it is available, and to make it, quite
honestly, say available to every entrepreneur in this country
that needs help. And that can be done not only from a
geographic perspective but also through the use of technology.
We would spend $1 million of that on volunteer services
which is going to support our recruiting. As you know, our goal
is going to require us to grow our volunteer corps to over
25,000 total volunteers.
And those needs are going to be met by a strategy of
beginning to recruit more within the ranks of our successful
clients. With ten and a half million clients over time, we have
the opportunity to find those that are interested, that have
benefitted from the program and have the opportunity to give
back and use them successfully in the deployment of the balance
of our program on the whole.
We will use a portion of it to continue the technology that
we are rolling out. As your staff knows anyway, we are in the
midst of rolling out the largest deployment of salesforce.com
CRM system in the history of the world.
To be able to do that with dollars would have cost us more
on an annual basis than we are presently appropriated by the
Congress. We were fortunate to be able to work with the Sales
Force Foundation and to develop a process and an opportunity
where we did not have to pay any licensing fees, and they have
been very generous in their approach.
We will also with this technology roll out a new financial
management software for our chapters. I am sure it will be a
surprise to most of you but our volunteers tell us that they
did not join SCORE to fill out paperwork, you know,
particularly that paperwork that is mandated.
So these new systems give us an opportunity to provide a
technology solution that limits the administrative burden. It
will put all of these tools in an online environment, cloud-
based, that clients can enter their own data. It will be easier
to track, and it will lessen that amount of volunteer time for
administration so that we can, in fact, focus more on outcomes,
outreach, and the needs of our clients.
So, we are very excited about that.
Chair Landrieu. That was a great overview and explanation.
Ridgely, do you want to add anything to that?
Mr. Evers. You know, there is not much to add to that but I
am going to try. I got involved in SCORE because I was
introduced to it in the context of a startup that I was running
that was focused on small business, and I was blown away that
it exists. What an extraordinary resource.
Actually, let me also say, what an extraordinary resource
this Committee is, and I appreciate very much your inviting me.
I cannot tell you how impressed I am with all of staff.
People outside of Washington have no idea how hard you
work. It is often awesome.
Chair Landrieu. Thank you.
Mr. Evers. Having worked in a startup and watched people
work hard, this is just a giant start up. It is amazing.
SCORE was formed 50 years ago really to kind of put
structure around two magnificent phenomena that are uniquely
American. One is the entrepreneurial spirit of the country, and
the other is the desire to give back.
If you think about what SCORE does and the reason it is
able to do what it does with as little money as it takes is
because of being able to harness those two forces.
The foundation on which it was established remains valid
but everything else has changed. You know, it was founded in
the middle of the 20th century to deal with a middle of the
20th century small business environment.
Small businesses today are dealing with a completely
different set of factors than was true 50 years ago. So they
have changed. The world has changed.
And one of the things that impressed me about SCORE when I
first became acquainted with it was their willingness to say,
hum, I wonder if we should change which is fairly unusual to
find in an organization of any age, much less one that has been
around for as long as it has.
And the question they kept asking was how can we get
better, you know, how can we improve. And this is something
that is refreshing. Having been involved with a number of
nonprofits, SCORE is actually run like a business.
The board meetings are business board meetings. In fact,
there are startups that I run where I wish I had a board as
business-centric and as business-focused as this board.
So to kind of put the whole organization up on a lift and
said how can we do better--and by the way, you did not ask us
to do this, we asked us to do this--what we found is kind of
our own scorecard.
We have 370 chapters. That is good news. But we only have
370 chapters. That means that there are huge chunks of the
country that we are missing. We are missing rural areas. We are
missing a lot of inner city areas.
We are not as engaged with women, minorities, and so forth
as we ought to be. We have committed volunteers,
extraordinarily committed volunteers.
Chair Landrieu. We actually have a map of your chapters.
Mr. Evers. All you need to do is look at that. This is not
the coverage map for AT&T, although sometimes it feels like it.
[Laughter.]
The volunteers are incredibly committed but we do not have
enough support for them. While we are very responsive to our
clients, we are principally reactive.
So we looked at what can we do better, what is our
opportunity, and we found that we can give a better quality of
service, we can stay engaged, we could be truly everywhere, and
we could serve everyone if we made some changes.
So, we developed a plan, because we operate in business,
not to make us bigger. That was not the intent. But rather to
make us better.
And I think it is very important to keep in mind. You know,
again, I have been involved with organizations that are all
about how do we get bigger.
That is not this. This is how do we deliver the service
that we all pledge to provide, and working backwards from that
what do we need to have.
So, the vision is to have one nationwide organization in
the future whereas today we have really a confederation of
chapters, and by putting together that one nationwide
organization and growing the number of counselors from 12 and a
half thousand when I started to 13 and a half thousand today,
to 25,000 or more, we are going to have an incredible resource
pool that every entrepreneur in the country will have access to
regardless of where they are.
Chair Landrieu. And these services are free to these
businesses?
Mr. Evers. These services are a hundred percent free.
We are going to manage that growth. You know, it used to be
the Service Corps of Retired Executives. We are actually
begging you in the reauthorization to change the name to SCORE.
We used to recruit from retired executives. A lot of our
best counselors are retired executives. But there is an
opportunity, as you will hear from Sheree, for our best clients
to come back and bring to bear the benefits of their learning,
because there is like someone who has walked a mile in your
shoes to be able to sit down and tell you, you know, I get it,
I understand what you are going through, and I think very
importantly, Senator, to be counselors for the life of the
business.
So many businesses fail, yes, but in particular
underperform because the owners are doing this for the first
time and they make preventible mistakes.
If only someone had been there to say, wait a minute, hold
on, do not step on that. The second time down the path you know
you do not step on that. But for most entrepreneurs this is
their first trip.
This all comes down to execution and with SCORE, you know,
the beauty of SCORE is its people, 13 and a half thousand
volunteers, an extraordinary organization.
But what we need to do is give them backups, and we need
better organization, we need training so you take someone like
Sheree who is successfully running a business, and you train
her not in how to run a business, but in how to deliver
counseling.
And you make sure that what we are disseminating is best
practices gleaned from across all of our experience across all
of the country, appropriate for the business that we are
counseling, and then you use technology.
There is this thing called the Internet, a series of tubes,
that has a huge role in it; and then, because we are a
business, measure everything.
I have heard a lot of suggestions that you guys need better
monitoring of how SCORE is doing and what SCORE is doing. You
know what, any data you need, just ask because we have it, we
monitor ourselves in every possible way.
And finally, in terms of efficiency, SCORE is already by
far the most cost-effective program in the federal arsenal. I
am virtually certain of that.
We have 17 paid staff for 13 and a half thousand
volunteers. The American Red Cross, which is held up by many
people to be sort of the benchmark that you use for looking at
volunteer organizations, has one staff member for every hundred
volunteers. So, we are only understaffed by 118 today.
Ken has gone over the cost of job creation, the cost of
business formation. Interestingly, the small business owner
does not count as a job, so you can add another 65,000 onto the
job creation numbers because they are feeding their family.
If we were a consulting firm, which we are not, we are a
counseling organization; but if we were a consulting firm, we
would be one of the largest consulting firms in the world,
managed by a staff of 17 people, extraordinarily dedicated
people.
We are providing effectively greater than 25 to 1 match on
the federal dollar. It is sort of the ultimate public-private
partnership because not only are our volunteers providing
services that market value would be some three digit number per
hour for free. But we also have great support from the private
sector.
The sales force deployment is a perfect example. A 13 and a
half thousand seat licence for salesforce.com would cost way
more than $7 million a year. Yet we are doing that with almost
nothing.
So why are we here? Obviously, it is in part for the
authorization of where we have been; but it is really to say we
have a plan particularly in this environment. I do not envy
anybody in public office today because there are really hard
choices coming.
These are not going to be fun. If we learn anything from
business, you know, the way you do it is not to say, okay, 10
percent off of everybody.
You have to make tough decisions about what you do and what
you do not do. In some cases, you invest more and in some cases
you stop something entirely. That is the right thing to do, and
you are going to have to do that.
SCORE is incredibly efficient, and we can grow it at a
fraction of the cost of almost anything else you can do in
terms of entrepreneurial development. But, we cannot do what is
possible for us to do unless we have the funding to do it.
The operating budget for SCORE has to come from the Federal
Government because it has to be predictable, reliable,
recurring. We get a lot of stuff done with private money that
we put toward one-time expenses.
For example, we have been able to pull forward a number of
things, facilitation things, with respect to implementing the
new plan by leveraging private dollars.
We got something done this year that we would have had to
do next year or the year after by using those private dollars.
But the basic operation of SCORE has to be a Federal budget.
Finally, as Ken said, you know, people have said you guys
have got to be nuts. You know, what are you doing here asking
for more money in this kind of climate.
And I guess I would say in answer to that, I think we would
be remiss if we were not here presenting to you the opportunity
that SCORE offers the Federal Government to help small
businesses as a way of dealing with what is certainly going to
be an overall reduction in service level or an overall
reduction in the service budget to mitigate the reduction
service level.
And finally, I think the most important thing for us all to
recognize is we are here for two reasons. One is for small
business owners, and we need to honor them, and the second is
for our volunteers who we also need to honor, and they deserve
our support. Thank you.
Chair Landrieu. Thank you very much.
I would like to ask anyone that wants to jump in with your
best, you know, SCORE story. It can be good. And if you had a
bad experience, please share that as well, based on what the
CEO and board member have shared, and then I am going to get
back to you, Mr. Shear, about your analysis of the 80 economic
development programs. And if there is any one modeled like
SCORE, I would like you to share with us based on the ratio
from staff to volunteers.
Ms. Burlington, do you have anything to add about your
association with SCORE?
Ms. Burlington. I have a story that I would like to tell
you because I am proud of it. I am proud of my accomplishments
as a businesswoman but I can honestly, truly tell you that I
would not have been able to do it without the help of SCORE.
I started my small business in 2005. I was a one-woman
show. My business is hand-painted, personalized pottery which
we sell to gift stores nationwide.
When I first started my business, I did everything myself.
I worked every day, every night, every weekend. People say how
isolated you are as an independent, as an entrepreneur. It is
worse than anybody can ever imagine. I do not know that anybody
would start a business if they had an idea what they were in
for in reality.
So, I found myself reaching a point where I did not have
any more physical energy left. I tapped all of my mental
resources in terms of where do I take this, how do I keep
myself going. And I had seen SCORE on a billboard driving years
prior and I remembered it.
I made the phone call and my counselor, John Post, answered
the phone; and within a day, he was sitting on my couch with a
cup of coffee, talking about my business.
I had no one to talk to about my business. I mean, the
isolation is so complete that my friends do not want to talk to
me any longer because all I can talk about is business.
So, to sit with a cup of coffee with a really experienced
business person who was only focused on me, how to help me out
of my dilemma or to help me move forward was just so freeing.
So, when I started working with John, again I was a one-
woman show, and I was trying to figure out how I was going to
survive being a business owner so that I could take it to the
next step.
One of the things he did for me was to just work on my
business, not my business plan. I was already in business. He
showed me how to market my business and develop it and then he
took me to a bank and helped me get financing, because without
financing I had a single kiln. I could not produce anymore. I
could not hire employees.
So, I was able to secure a line of credit and a loan which
enabled me to buy another kiln and hire staff; and so, for the
first time, I was not climbing those three flights of stairs to
my studio all by myself. I actually had people helping me.
We grew so quickly. In the first year of being in business,
I tripled my business which sounds wonderful but it is also
very exhausting.
Our primary product was mugs. I sold a lot of $40 mugs to a
lot of really expensive gift stores. When, in the fall of 2008
which you all remember, it was horrible. When the banks started
to fail, my business died.
I was under my desk looking to see if my Internet
connection was still on. There was no business at all. So, I
was on the verge of bankruptcy. You know, I am making it sound
like it was an easy road. It was not an easy road.
I had people guiding me down a really rocky road, and I was
frightened a lot of the time.
So, I called my SCORE counselors. Now I have two who are
wonderful men, and they came and I said, I think I am closing
the doors. I think I am done. I cannot figure a way out of
this. I have no business and I do not know what to do.
So, one of the things that they said was, if they do not
want your mugs, what do you have that they want; and we figured
out that people get married more than once, and they have
babies, and that business is never going to die.
So, I had a small collection of product that I could offer
to the people who were marrying and having babies and we hyper-
focused on that. And I finished 2010 up 46 percent.
Chair Landrieu. Fabulous. I feel like clapping.
Ms. Burlington. I do too.
[Applause.]
So, the counseling that I received from SCORE, to tap into
this incredible group of minds, you know, all small businesses
think that their business is terminally unique. No one has a
business--painting pottery, who does that?
I have a guy from HP who is counseling me on a pottery
business. What I came to understand is it does not matter what
your business is. It is a business. The business structure, the
business recipes, they all exist.
So, I started to evolve from being a designer of this
pottery into a businesswoman. One of the things I find myself
doing now is casting about who can I help.
Well, of course, I will be a SCORE volunteer. When we talk
about taking the volunteers, mentoring them and then asking
them again to come to the table with their skills, I am an
example of that.
I am going to attend my first SCORE meeting on Wednesday
when I get back to New Hampshire. I am excited about the
opportunity to share what I know. Sometimes I am a little
intimidated because I am surrounded by so many bright minds.
But I know so much four and a half, five years being in
business than I did when I started with this that I have a lot
to share, and I have it because it was given to me, and it was
given to me for free.
When I talk to people about SCORE and tell them that it is
free, you know, they look at me as if I have made this up. It
is a free service and it is way worth more than whatever it is
they are getting.
Chair Landrieu. Well, it taps into what Ridgely said about
this uniqueness, and it may not be completely unique, but what
I do find to be prevalent here in the United States is people's
willingness to give back.
You travel in other parts of the country and the concept to
them is a little bit foreign, this sort of civic
responsibility. But here, and you expressed it beautifully.
Leonard, do you have anything that you want to add from
some of the people that you have seen in your chapter, or some
of the stories that you wanted to add maybe to the transcript
this morning?
Mr. Sedlin. Certainly, I have some stories and I can speak
for Louisiana SCORE. We have the happy situation of having
tremendous demand and the challenge that we see is being able
to satisfy that demand.
I have traveled around the State. I have met with economic
development people. I have met with chambers, CEOs, and so
forth. And one of the first things I heard from a chamber CEO
is ``where the hell have you guys been? We need you. Why have
you not come to see us?''
As a consequence of that, we have executed cooperative
agreements with four chambers already in the State. In fact, up
in Bossier City, before I got back to Baton Rouge, the SCORE
logo was already on their website. That shows the receptivity.
This was a couple years ago.
We have some areas that are under served, central
Louisiana, Alexandria.
Chair Landrieu. I was just looking. You have what looks
like six or seven chapters in our State, but the entire central
part, there is no chapter there.
Mr. Sedlin. Exactly. Alexandria is an interesting area. I
met with the chamber CEO there and with other economic
development people. We went out to the central Louisiana
business incubator which is owned by the city of Alexandria. We
held a couple of meetings there, SCORE meetings. I had a
district meeting there.
It was being built in part by LSU Alexandria. They were
building classrooms. I was shown where the SCORE office was
going to be in this business incubator in Alexandria. That was
two years ago.
Unfortunately, we have not been able to execute and that is
the same situation in a couple of other areas of Louisiana. We
have the demand for the product. They know the product. We are
limited in my great staff of one, sitting here in front of you,
in being able to execute.
Chair Landrieu. So the additional resources would really
help you to be able to hire----
Mr. Sedlin. Field resources, absolutely.
Chair Landrieu [continuing]. Field resources, one or two
additional people to leverage the volunteers that you might
have in Louisiana, as well as the demand for those volunteers.
Mr. Sedlin. Exactly. The same type of demand encountered in
the Bayou region around Homer and Thibodaux.
I was recently in January at a quarterly meeting of the
South Louisiana Economic Council, which is made up of the
council head and representatives of chambers and other economic
development agencies.
And similarly at Nicholls State University, a former
dormitory has been donated to SLEC and is being outfitted right
now to house economic development agencies under one roof, and
there is a SCORE office. Where is my SCORE entrepreneur center
head for that area? But these are the opportunities that are
available.
We have developed alliances. Louisiana Economic Development
is an example, and you know John Matthews very well, Senator.
When we first started talking about SCORE services and he
had dinner with Ken Yancey and myself when Ken came down for a
district meeting, he heard the story of the strategic plan.
Immediately, he jumped on board to support SCORE to where
we have a grant from LAD of $25,000 to support Louisiana SCORE
statewide with a focus of eventually building our capability to
provide the Simple Steps program, the workshop program, as an
entry point to their small and emerging business program
development program under our LAD.
That was stated to me more than once, that they are really,
really anxious and have asked how quickly can you roll out
Simple Steps. It was called Quick Start before.
So, that is the happy situation. We have the demand. We,
unfortunately, are not able to deliver on the schedule I would
like to be able to deliver the product.
Chair Landrieu. Well, we are going to work on that.
Ron, what is your experience, and then I would love to get,
Erik, you to jump in here with your consulting and give some
comments from your perspective.
But what does your situation look like?
Mr. Weiss. We also see a demand issue. The situation in New
Hampshire in the last few years has been a dramatic change in
support for small business.
The community loan funds and the economic development
centers are no longer providing small business counseling. The
Women's Business Centers have not been able to be funded by the
State of New Hampshire and they have gone out of doing
counseling. The SBA does not do counseling any more, and we are
getting referrals from this SBDC.
We are now the largest free business support in the State
of New Hampshire. This is my fifth year as district director;
and in the five years, we have actually doubled the number of
SCORE volunteers serving in the community. We now have 220
counselors in the State and we only have about a million three
people of the State.
It seems no matter how much we add we still have demands.
In 2010, we opened up a new SCORE chapter in the Lakes Region
of New Hampshire which is where people go. It is a resort
community. We opened it up from nothing. In one year, we have
22 counselors and some of the best counselors in the State.
We are in our southern tier, and I should explain that to
you. The State is a combination of both urban and rural
communities; and the lower tier of the State which borders
Massachusetts, we have big chapters. We have chapters as large
as 70 some odd counselors.
And in our upstate chapters, the Mt. Washington Valley,
like Sunapee area and even in the Lebanon, New Hampshire area,
we are talking about 25 or 30 counselors, but they service a
rural community.
So, the demands throughout the State are very different. In
the big centers, we have an adequate number of counselors to
handle it; but no matter what we see, we have a growing demand
for SCORE services.
And we are not selective in taking on people. If clients
have problems with business, it does not matter to us whether
they are going to be a contributor to State revenue in the next
year, it is a matter of keeping them in business and making
sure they get the kind of service to keep it all going. We do a
lot of that.
To give you some statistics, we did roughly about 6000
client contacts in the State of New Hampshire in the year 2010.
4500 of those were actually case activities and 1500 were
sponsored workshops. The largest workshop series we do is on
Internet marketing.
This year, year to date, we are at 20 percent above our
performance numbers of last year, and there is just a continual
growing need for SCORE counseling services. We have a good
story to tell. I mean, we keep businesses going and we create
jobs and keep jobs.
I did want to say one thing. Last year, our total volunteer
hours in the SCORE organization of New Hampshire was 19,000,
almost 20,000 hours. We get a supplement of about $30,000 a
year from the SCORE organization and that comes down to a sum
of about $1.55 an hour for a SCORE volunteer, and I do not
think there are too many consulting avenues where you can get
that kind of service for that kind of price. I think it is a
great return on the U.S. government's investment in SCORE.
We also, because we have had such success, business success
here in New Hampshire, we have also been doing some of the
pilot programs on the new SCORE program, and I would like to
tell you a little about the success we have on that.
Chair Landrieu. Before you do, let me just welcome Senator
Brown who joined us this morning. He has been at an armed
services meeting so I really appreciate him stopping in.
Senator, this is a very informal roundtable discussion
about the reauthorization of SCORE. We are hearing some
remarkable stories about the leveraging power of this
organization, and I am sure you are familiar with it in
Massachusetts.
Did you want to say anything or wait for Mr. Weiss to
finish?
Senator Brown. I came to listen. I am bouncing back and
forth. Thank you.
Chair Landrieu. Thank you.
Ron is the director of the SCORE chapter in New Hampshire.
Mr. Weiss. We also border on the Massachusetts border.
Senator Brown. You do?
[Laughter.]
Mr. Weiss. We are close by.
By the way, four of our chapters service adjoining states
because it is a relatively small area; and for us, it does not
make any difference where the client comes from. We service the
client.
Chair Landrieu. Senator, if you look at the map up here,
you have a big cluster up there your way. All the SCORE
chapters cluster up in the northeast.
Senator Brown. What is the interaction between the
Massachusetts and New Hampshire chapters?
Mr. Weiss. We get along absolutely great. We are giving
referrals to one another. We had somebody from California who
wanted to open up a big business in New Hampshire because they
thought it was going to be a HUBZone.
It turned out that people in the Lowell area made a better
offer than the people in the Nashua area, and so we helped them
move down there.
I think she has a business going. It is a semiconductor
assembly business, and it is growing quite nicely. They are
still using New Hampshire counselors. We are here to help
people. The State line does not mean anything.
Chair Landrieu. That is good to hear. And you wanted to
share something. Ken, you had something you wanted to add.
Mr. Yancey. If I may, Senator Brown, our district director
for Massachusetts, Jack Calkins, is here in the back and has
been with us for the day as we prepared, and we had a nice
visit with your staff yesterday. Thank you, and I hope to be
able to meet with him.
Senator Brown. Thank you.
Mr. Weiss. I was going to say we have been fortunate to be
an early State trying out some pilot aspects of the new
program, and I just would like to share a little with you about
some of the success we have had.
One of the biggest stories we hear from most clients when
they find us where have you guys been. We say it is the best-
kept secret in New Hampshire; and despite that, you know, we
see a lot of people coming in.
We have formed this year a strong affiliation with the
chambers of New Hampshire. We are participants in something
like 12 to 15 chambers around the State.
And by the way, these are not fee memberships for us. We
actually have to pay full fees for those. We have partnered
with the State Department of Resources and Economic
Development, which is called DREAD. I cannot imagine why they
called it that, but we have also partnered for the first time
in an outreach area with the New Hampshire Timberland Owners
Association.
There are people who make their living, it is a very large
business for the State of New Hampshire. It is also one of the
highest export items, and we are now providing business
counseling to people who have been trained in forestry and are
now worried about biomass products and wood products, and we
are providing services for that.
The other thing we have done is partnered with banks, not
so much big banks, but small banks. Economic incentives for
cities who give funding for small business because there is no
money to be had from the large banks throughout the United
States.
In summary, we are this year based on an FCC study, we are
estimating that some 75- to 80,000 small businesses in New
Hampshire are not using the Internet to full business
potential, and in early June, we are providing a free statewide
conference on bringing Internet to small business.
It is a program being funded by the SCORE organization. The
problem we have is that the small businesses in the northern
part of the State are going to be difficult to get to, and so
one of the problems or challenges we have is to address how do
we get the same kind of conferencing, the same kind of
information for the small businesses in the northern part of
the State.
Chair Landrieu. Try to wrap up because I want to get to
Erik.
Mr. Weiss. We have an opportunity to open two or three more
chapters if we had the manpower and funds to do that. We want
to bring our Internet counseling to areas which are not local
and which we can do things like Skype counseling, and that
takes money and dollars, and we are looking forward to the new
program as being capable of providing the funds for what we
need to grow.
Chair Landrieu. Thank you so much.
Dr. Pages, did you want to add something from your
perspective?
Mr. Pages. Yes. Thank you, Senator, and thank you, Senator
Brown, as well.
Yes, I think I will just second this point about sort of
the intensity of demand and just point out that it is really,
it is even more of a problem in rural areas, and several of the
other speakers have talked about that.
Our group, the Rupri Center for Rural Entrepreneurship, we
probably worked on rural entrepreneurship development
strategies in every state of the United States.
Kind of two things we have learned about that is one you
have got to have kind of a comprehensive, systematic approach,
and the second thing is that what really matters for rural
entrepreneurs are what we call soft factors, really is kind of
a shoulder to cry on, this coaching, this mentoring, this peer
networking.
When you talk to rural entrepreneurs, that is the thing
that they are most hungry for; and unfortunately, at the same
time that is the service that is least available to them, to a
rural entrepreneur.
I have owned a small business here in the D.C. metro area
for about 10 years. I know I can go to SCORE, but I can also go
to many other places to get peer networking, to get coaching
and mentoring. There are lots of availability of that service
here.
In rural communities, that is really not the case. Really
SCORE and the Small Business Development Center network, that
is kind of the core part of that soft infrastructure in rural
America.
You do not have a lot of, it is really sort of a scale game
and numbers game. You do not have quite as many entrepreneurs
in an absolute sense. You do not have as large a population. So
these sort of places where you can find peer entrepreneurs,
places where you can find a coach, where you can find a mentor,
they just do not spring up out of thin air in rural America.
Where they are in place, and they are not in many places of
the United States, they are there because of SCORE and because
of the Small Business Development Center networks.
And I would hazard to say that as we think about expansion
of SCORE and sort of just generally about providing technical
assistance to entrepreneurs in rural America, I would suspect
that you are going to see a big increase in demand in rural
communities over the coming five to ten years.
And I think there are a couple of factors going on. One, we
know that startup rates and self-employment rates in rural
America are higher. Now, certainly the absolute numbers are
smaller but in terms of the proportion of the population that
is involved in self-employment is much higher in rural America
than it is elsewhere in the United States.
In fact, there are some projections that show that up to a
third of the workforce in rural America could be self-employed
in the next five to ten years. We just have a huge base of
entrepreneurs, aspiring entrepreneurs, sort of potential fast
growing businesses in that base of the self-employed in rural
America.
I think the other thing that is going on is that rural
communities are rethinking what they are going to do in terms
of economic development. It used to be we are going to give you
a tax break, we are going to give you a building, come on in,
move a branch manufacturing plant in our community. What people
would call the buffalo hunt.
Well, we know because of globalization and technology
change many of those firms are going overseas when they used to
go to rural America.
So rural communities around the United States are getting
much more aggressive about using entrepreneurship in growing
home-grown businesses. It is kind of the core of their economic
development strategy.
So in effect, you are increasing demand. You are pushing
demand through these economic development strategies. You have
got to have some kind of service or some kind of support for
these entrepreneurs and these businesses that are going to be
coming through the pipeline in rural America.
The demand is not being met now, and the demand is going to
grow significantly over the next five to ten years. So I would
encourage you to look at different kinds of strategies and
approaches to working in the rural communities.
Chair Landrieu. You have worked in a number of different
positions at the federal level. Before your current position,
you served as policy director for the National Commission on
Entrepreneurship. You were an official advisor to the White
House and small business conference.
Is there any other national organization, like SCORE, that
leverages the dollars as effectively as we have heard this
morning, to your knowledge, and what do you think the value of
an organization like this is for the country?
Mr. Pages. Well, I think very few have the sort of leverage
numbers that SCORE presents, although I will tell you that all
of the federal economic development agencies really perform
quite well in terms of leveraging.
So you talk about the EDA, talk about the Small Business
Development Center, talk about overall SBA investments. All of
them, when you compare that to other kinds of economic
development strategies, they provide significant bang for the
buck.
I think the benefit of SCORE and sort of any kind of hands-
on technical assistance is when you talk to entrepreneurs, they
do not want to fill out a lot of paperwork, they do not want to
have to go from one agency to another agency to another agency
to get the kind of package of support they need.
They want a comprehensive solution, and so it is not so
much that the SCORE counselor kind of fixes everything for
them, but he or she kind of serves as their network hub. So I
can go to the SCORE counselor, and he or she can say, let me
help you get capital here, let me help you get market expansion
services here, let me help you get human resources services
here.
So it is kind of that packaging is what an entrepreneur
wants. They do not want to have to go to ten different agencies
to get ten different kinds of support.
So that is the real secret of SCORE and programs like that.
Chair Landrieu. Mr. Shear, let me ask you, and then I would
like Penny, if you would jump in here, but you said that you
reviewed about 80 programs you testified in your opening
comment.
How many other programs like SCORE in terms of leveraging
and efficiency did you find? You said they were duplicative.
Are there any that come to our mind that are similar, not
similar, like SCORE?
Mr. Shear. To answer the question on similar, I would say
generally the answer is no. We certainly see a lot of use of
nonprofits involving a lot of programs but not on the model of
SCORE. We do not see a network of a vast number of volunteers.
In terms of the efficiency of leveraging, we are not at a point
yet to really talk about that.
And I want to emphasize that we do see potential
duplication among the 80 programs but we are at the beginning
stages of looking at that.
There is certainly overlap among programs. There is
certainly some fragmentation of programs, and I was very glad
that Erik brought up the point, you know, sometimes a business
owner needs somebody to put things together.
And a big focus of our work, so in terms of our
interactions with Erik and Ken and others at this table over
time will not just be about how SCORE is run but it will be
about how can we facilitate a more efficient distribution of
economic development resources.
So the programs that come the closest to SCORE are really
the other SBA programs, Women's Business Centers and SBDCs. And
as we know, the funding mechanism, the accountability
mechanism, the oversight by SBA is just different for those
programs.
Chair Landrieu. What jumps out at me when I focused on what
SCORE does and I have known about it for years and years but
just recently refocused, is that it is the sort of organization
of all of these out there that are sort of the connectors and
the glue that can kind of hold everything together.
At least for the SCORE volunteers, they are familiar with
the landscape and they can direct a business owner, you know,
like Ms. Burlington, through the several hurdles and barriers
with the limited amount of trouble or frustration which seems
to me to be sort of missing as you are trying to keep these
puzzle pieces together.
Ridgely, did you want to add anything?
Mr. Evers. Yes, just quickly. We have talked a bunch about
the needs of the rural communities, and I live in a rural
community. I actually am a farmer.
And the geographic gaps are real and we cannot wish them
away. It is going to take effort to address them. One of the
things that I think is the most exciting about SCORE is that
under the new strategic plan even where we do not have a
physical presence, we can bring to bear the entire power of the
SCORE organization to support an entrepreneur.
If somebody is growing potatoes in western Sonoma County,
we can bring to bear somebody who knows about growing potatoes
from Iowa or from Idaho.
The other thing is what this new model provides is the
ability to create virtual centers of excellence within SCORE.
So that if you are a counselor in New Hampshire and you have
somebody who, heck, if you are a counselor in Maine, let me go
even further.
If you are counselor in Kentucky and you have got somebody
who wants to grow organic vegetables, you know, Maine has been
growing phenomenal organic vegetables for a long time, and you
have got farmers there who figured out how do you get to
market. Those people are part of SCORE. We can bring those to
bear for the farmer in Kentucky.
Two other quick points. One is to Mr. Shear's point and
also to Erik's. The whole model of SCORE in this new
environment is that the person with whom you engage, with whom
Sheree engaged, for example, becomes the relationship manager
into the whole, not just the SCORE organization but whole
fabric of economic development.
To say, you know what, in this particular case, the person
you need to talk to is not part of SCORE. They are over here.
Or they are part of SCORE but they are in another state.
And then the other thing is this whole concept, and I am so
glad that you are here, Ms. Burlington, because this is the
poster child for how we want to do things going forward.
When you come into SCORE and you first engage, we say, you
know what, we are so glad you are here and we understand that
you are here because you cannot make payroll on Friday, and we
are going to help you with that, but we are going to stay with
you, we're going to stay with you across the life of your
business. And if you turn out to be one of our successful
entrepreneurs, we are going to come tap you and we are going to
ask you to give back.
That is an incredibly powerful mechanism for growing this
organization very, very efficiently and very powerfully.
Chair Landrieu. Penny, would you like to add anything? And
if you all do not mind, I am going to slip out, turn this over
to the able hands of Amy and Meredith, and then Senator Brown
may have a question or two.
Senator, this is a roundtable, very informal, not like a
regular hearing. You can jump in at any time. There are some
questions the staff has.
Senator Brown. Thank you.
Chair Landrieu. Go ahead if you want to ask a question or
two and then we will get to Ms. Pickett.
Senator Brown. She can start. You can head out. I am
waiting for the word that I have to go.
Chair Landrieu. Okay.
Ms. Pickett. Thank you. The discussion has been
fascinating, and I would say at first blush maybe there is some
thought that the programs that we oversee at SBA, Small
Business Development Centers or Women's Business Centers, and
certainly SCORE, people at first blush tend to think that they
are fairly similar.
As we dig down, we find that each of these programs has its
particular niche, its organizational structure, and it helps
clients in a very distinctive way.
If entrepreneurs could wear one size, if one size fit all,
then it would be easy. Your job would be easy. My job would be
easy, and we could just simply lay this out.
The best thing about entrepreneurs is that they are
innovative, they are different, they are unique. The worst
thing is they are unique. So, we reach them in many ways.
We are very proud of SCORE. I think Ken mentioned very
client focused. We cannot lose sight of the fact that our
client is the small business owner at whatever stage they are.
Ridge mentioned entrepreneurial spirit; and SCORE has shown
and demonstrates, and daily demonstrates, the most amazing
entrepreneurial development, entrepreneurial spirit, the
willingness to constantly reinvent, to look at the market, to
change its approach.
This is one of the most exciting things about SCORE is it
is not stagnant. It is going to change with its clients and
with the market situation.
Ms. Burlington, you mentioned the phrase that caught my
attention. You said the group of minds that came together to
help you was significant.
I think what SCORE captures is we do not lose the
experience and the knowledge and the education of huge array of
business people that have led this country.
It may be slowing down. Some may be actually retire, some
may be cashed out entrepreneurs. But SCORE captures that. We do
not have that brain drain that could be really, really
detrimental to our entire economic system.
So, SCORE captures that, recycles it, puts it through you.
You have a fresh approach. You have a fresh business, and you
pass it along because entrepreneurs are incredibly generous not
only with their ideas, with their time.
So in looking at this program, we are very, very pleased
because it is very efficient. It does change, and it does
really, really make the difference for clients in every small
business at all time.
Chair Landrieu. Thank you. Does anybody want to add
anything?
[No response.]
Ms. West. I would like to follow up on Bill's comments
related to duplication and coordination. In November 2007, as
you mentioned, the GAO did a report on the Women's Business
Centers in particular and, in the that report, pointed out that
there was a lack of coordination between the SBA's resource
partners, the Women's Business Centers, the SBDCs, and SCORE
chapters.
Yesterday in speaking with our SCORE leaders in Maine, we
heard that in some chapters there is great coordination between
SCORE and SBDCs. Often SBDC counselors will lead workshops and
such in SCORE chapters. But in other areas, there is really no
coordination at all.
Can you speak at all to the GAO's work on that and have we
seen any progress in improved coordination since then? And then
maybe Ms. Pickett can talk about the SBA's role in pushing
these resource partners to better coordinate their services.
Mr. Shear. Thank you for the question.
From our Women's Business Center work, specific to the
Women's Business Center program, we pointed to a couple areas
where SBA has made progress and implemented recommendations.
It is defining the role of the district office technical
representatives and some other matters dealing with what is
required of the Women's Business Centers.
Our report contained a third recommendation which had to do
with trying to identify promising practices in coordination
among the three programs, and given that recommendation,
Meredith, your comments really bring that to life.
We see places where coordination occurs very well in
certain geographic areas, but we also observed areas where it
did not occur, and we know the programs are supposed to serve
different niches and, to a large degree, they do.
After we completed our report, there seemed to be an
eagerness to move forward on all three recommendations and
agreeing with those, including the coordination issue, in using
some type of tools which could include an Internet site to try
to facilitate such coordination and identify promising and the
best practices, and that is one where there has been a little
bit, from our interactions with the agency, some stagnation in
not moving forward.
So, that we still list as being a challenge for the agency
to address.
Ms. Pickett. I will look into that because I was not aware
of that particular part about the Internet. However, I will say
I think there is much more coordination support. I think the
Administrator has talked about linked leverage online, and that
means our resource partners as well as with the public partners
throughout the government.
So, an example that has been absolutely phenomenal, when
the FCC was rolling out its broadband plan, the first person to
step up, they said small business has got to be part of this.
The first person to step up was Ken Yancey.
He said this is great. He understands the technology. How
can we help? He has actually put together, through SCORE has
led this effort to collaborate with the FCC to develop training
for small businesses in the value of broadband, getting online,
how they can market, how they can use this as an international
tool.
He has also taken the approach that broadband is a huge
small business opportunity. Somebody has got to do the
installation, somebody has to do the wire, somebody has to come
up with the next packet switching device that makes it faster,
cheaper, and easier.
SCORE has led the way in really doing a huge effort,
bringing in partners from the technology world, develop this
phenomenal content.
And the first thing he did was he organized and developed
the content, and he turned around and said, okay, now this is
going to all the Women's Business Centers. They need the
training. Our SBDC partners, here is the content. So, I think
that is a wonderful example.
We are rolling out the women's procurement rule, and I know
that our leadership has taken the chance to train all of our
partners on that kind of thing.
These examples exist. Our district offices have played a
huge part in making sure that our SCORE volunteers have a place
to sit. Our SBDC people are there. We saw this in Deepwater
where everybody worked together to save small business. We have
lots of examples.
Ms. West. Okay. Penny, my specific question was about how
the SBA's resource partners are coordinating and how we are
preventing duplication between them. So, Women's Business
Centers, SCORE, and SBDCs.
The agency's own cooperative agreement with SCORE says at
the very beginning that one of the objectives is to ensure that
these resource partners are working together, collaboratively
to help the small business client in their area.
Can you speak specifically to how the SBA is conducting
oversight of that as part of your grant management process of
the SCORE grant and your management of the other programs?
Ms. Pickett. Well, that comes in our quarterly reports not
only anecdotally but in the data. I can illustrate again. The
Small Business Jobs Act, passed in September, provided
additional grants specifically to Small Business Development
Centers.
SBDC in Atlanta has contracted with Women's Business
Centers to deliver services and outreach to under served women.
This was their own collaboration. It is the kind of thing that
gets reported. And the SCORE person in Atlanta is overseeing
this kind of thing.
We continue to monitor. I can provide more examples of how
they actually reach out to each other and then report back to
us. This is what their programs are.
Ms. West. So, it sounds like they are doing a lot on their
own to coordinate in that we hear these anecdotal stories of
that happening. But it is the agency's responsibility to
oversee the grant, according to the Small Business Act and in
your cooperative agreement to ensure that they are
coordinating.
What kind of metrics do you have to evaluate specific
coordination between these entities? You know, one thing we
heard from our Maine folks yesterday is sometimes there is some
competition between SBDC counselors and SCORE counselors over a
particular client that has a need. Who is going to help them
and who is going to get credit for it? How does the agency
track those metrics, evaluate who gets credit for providing
those services, and preventing duplication, while encouraging
coordination at the same time?
Ms. Pickett. All of our partners under the agreements are
subject to financial and programmatic reviews. That is a given.
They are done. Our program managers are involved with almost
day-to-day contact following up, are they meeting the
requirements.
The measurements in terms of how we record actual
collaborations is probably not something they can check off on
the approved forms that they do.
However, they worked out very closely how the client gets
recorded, is the number of hours they spend with the SCORE
counselor versus the number of hours they may spend with an
SBDC. That has got to be on the forms, and it is going to
increase with the international trade.
I would have to check with our program managers and give
you many more details about how they record it anecdotally or
how they might credit each of our partners with other
collaborations. It is not something that fits neatly into a
check-off box.
Ms. West. Okay. Given GAO's report last week and our
concerns here in the Committee about duplication among these
programs, this is something that we would like to continue to
talk with SBA about in terms of how, specifically, we are
preventing duplication of these programs. Thank you.
Ms. Pickett. I would be glad to talk with our program
managers and can provide you with more information as we will
with Bill as well.
Ms. Sanchez. Bill, can you tell me, are you aware of any
kind of, you know, in these reports that you do, and I do not
know, any mechanisms in which you provide recommendations for
departments and agencies to quantify, I guess, qualitative
relationships? Specifically, how you define ``cooperation''?
How you define the ability of one entity to work and, I guess,
work well within the other?
Do you have those kinds of recommendations and do you
provide those regularly or do you find those available?
Mr. Shear. What we have done, and please tell me whether
this is responsive to your question, is we have looked for
criteria for effective collaboration between programs and
agencies.
And this especially came up, and Erik pointed to our work
looking at collaboration between SBA and USDA's rural
development.
So there are certain qualitative factors that we take into
account, just having what is the mission procedures, some
commonly understood responsibilities and accounting mechanism
and some metrics to say what is being achieved.
So, if you have two agencies getting together to provide
some training, it could be as much as how do the recipients of
that training view the value of the training.
So, to a large degree, the metrics can resemble the types
of metrics that we look at generally for program management but
it is looking at it in a broader way.
So, we, as the agency, have applied that model to a number
of venues, including economic development.
Mr. Pages. I would just add two tools. In my business, I do
a lot of program evaluation and not necessarily collaboration
across federal programs but I think some of the same
mechanisms, the same issues certainly fall in place there.
Two metrics that we find pretty powerful that can be used
to capture collaboration, and they are only going to capture a
small portion of the picture, is referrals across agencies.
Once you start tracking that, people will start responding to
that.
The other one is how many different agencies or how many
differ programs does each customer utilized. And if a customer
utilizes a number of different programs, that is a positive
sign that there is collaboration occurring, one potential sign
that there is collaboration occurring across agencies.
Ms. Sanchez. Ken, do you know if SCORE keeps track of that
information or, Penny, do you know if you keep that information
as to where you are referring to, let us say, I mean, you
mentioned referring to other entities and being that hub.
Do you have anything to add to that?
Mr. Yancey. I can. Today we do not track referral
relationships. The deployment of the salesforce.com CRM that
will occur a little later this year is going to allow us to
track that.
We believe in our initiative that we call shoe leather
marketing. The important thing for our chapters to do is to
create referral relationships with other organizations within
the community that are serving similar clients, maybe with
different services, maybe with the same, and that those
relationships be written, monitored, have specific metrics.
It is not good enough to say that you partner with the
chamber or you partner with SBDC. You need to have an active
engagement manager, for lack of a better term, to ensure that
these things are happening, that we can stay on top of it, and
that everybody can benefit from the value that both
organizations bring.
So, the answer is no, until April 29th.
Right, Devin?
Ms. Sanchez. Great. Thank you.
Penny.
Ms. Pickett. Very briefly, the CRM that Ken is referring to
is for SCORE. That is not an SBA system. But also, currently
our 641 does not capture that data. We have plans to convene
work groups, and we have already done this on previous things
such as client definitions.
The reporting form that all three partners use, any
changes, of course, have to go through OMB for clearance and
that sort of thing.
Ms. Sanchez. Ridge, did you have something? And then Ken.
Mr. Evers. Yes. Now, I am not speaking as a SCORE board
member just as a J. Random citizen.
One of the things that I have observed is that there is
tremendous unevenness in the quality of service delivery
independent of the entity, of the ED entity, whether it is
federal or state or local.
And I will tell you specifically in my backyard the SCORE
chapter is not our strongest by a long shot. The SBDC in that
area happens to be terrific.
I can also tell you without naming names that there are
other places where exactly the opposite is true, and I think
that it is important to track this, Meredith, to your point. I
think it is really key that we pay attention to what kind of
referrals are going back and forth.
But I think you are going to get two things out of that,
and it is important to recognize going in that there is going
to be two kinds of data revealed.
One is how actively are the organizations overall bouncing
stuff back and forth. But I think it is also going to shine a
light on where one or more of us is deficient, and I think that
is really key to pay attention to.
And one of the things that I am excited about with the
SCORE model going forward is the idea that every counselor in
SCORE is going to be certified because that is one of the ways
that you get at that consistency of service delivery.
What you do not measure does not get done except by
accident. We are measuring now the quality of service delivery;
and we will be able to tell on an individual counselor level
because the feedback loop through the sales force with the
client, hey, you know, Ron needs some help here in this
particular area and Len is doing a great job in this kind of
counseling but could use some help in that kind of counseling.
This is an incredibly powerful infrastructure that is being
put in place specifically to address what really matters which
is the success of a client.
Mr. Yancey. Just very quickly and to build on Ridgely's
point, what we find in communities where we have an SBDC,
SCORE, and a Women's Business Center is that the closer we get,
the more evident the strengths and weaknesses are, and the more
easily we can refer clients to the stronger resources.
And when we go at it with the client's best interests at
heart, the collaboration is remarkably powerful, and we see it
in a lot of markets.
In upstate New York, in Buffalo it is common for our
counselors to do a good bit of counseling at Women's Business
Centers. In Pennsylvania, the Kutztown SBDC has a remarkable
relationship with our chapter and they actually collaborate on
delivering the fast track program within that community.
I can give you more examples of how it works when we are
close and we do not think about the competitive situation. I do
not want to put words in my SBA's colleague's mouths; but with
influence from Senator Snowe and Senator Landrieu a number of
years ago as we worked through the EDMIS process, one of the
things that was determined that it was appropriate when
together counseling a single individual that both organizations
get credit.
So it eliminated that competitive piece and encouraged
collaboration and an ability to add value by bringing to bear
the best talent regardless of where it is.
Another quick example, in Louisville, Kentucky, they have a
traffic the SBDC and they do a lot of loan packaging. They are
better at finding capital for all sorts for small businesses
than anybody probably in the region.
SCORE does not do that anymore because why would we
compete. We do not have the capacity. Everybody that needs
financing, we send them to the SBDC. When SBDC sees somebody
that they are not able to or believe there is a better use of
their time, they send them to us. It is a great collaboration
and one we are proud of, and we would love to replicate it
beyond those few markets.
Ms. Sanchez. So to simplify what you are saying is, when
everyone shares the common goal of assisting and focusing on
the client, cooperation necessarily follows.
Mr. Yancey. It is magic.
Ms. Pickett. Very quickly, and I think within the Office of
Entrepreneurial Development, the cohesiveness, the
collaboration that we are all working together is being passed
along to our partners everyday.
Ms. West. I would like to talk a bit about the allocations
that SCORE sends to the districts and chapters. In fiscal year
2010, two and a half million of the seven million in
appropriations went to the districts and chapters.
It is my understanding from previous meetings with Ken
Yancey and Devin Jopp at SCORE that those allocations are
determined based on your local services index process.
And about 20 percent of that determination is related to a
reserve, a historical funding level; and that in the future,
you expect for that reserve portion to drop from 20 percent to
15 percent and ultimately to 10 percent.
The Maine district SCORE operation really depends on that
20 percent, and with the new strategic plan focusing more on
opportunity for new clients and new businesses which is a
specific metric related to the number of businesses in an area,
the population of an area, et cetera, we are very concerned
about that allocation model.
Can you speak to that, and Ridgely, you might be able to
jump in here. Can you speak to where you all are up with that
allocation?
We are very concerned about the transparency in that. So,
we heard yesterday that Maine's allocation changed three times
in three different days, and that determination is made by a
couple of executives in the SCORE office in Herndon.
So, there is no transparency in the process and we are
concerned about how those funds were equitably distributed
among the SCORE chapters and such. And I hope that it is
something that you all have addressed in the strategic plan,
given that there is no guidance whatsoever in the current
statute related to how funds are distributed to the states and
chapters, unlike with the other programs. This is an issue of
concern for us in the reauthorization process.
Mr. Yancey. I understand. Thank you for the question. If I
may, may I take one step up and talk to you about the budget
process and then this piece and how we distribute?
Ms. West. As long as we spend some time on that.
Mr. Yancey. I promise I will get to it.
So, from a SCORE standpoint, the overall budget begins
certainly in my office, myself, our COO, our director of
finance.
Once we have a draft, we negotiate with our finance
committee within the board of directors. That finance committee
is made up of two SCORE volunteers and one person from the
outside, all of whom are board members.
Once we are through that process, we begin the negotiation
with our colleagues at SBA, and that is part of our negotiation
around our technical proposal and what winds up being in our
notice of award that governs us for the year.
In that budget process, we recommend an amount that would
go to the field organization. Once there has been agreement on
how that money goes out, we do have a formula that we use. The
formula has changed this year.
It was developed in conjunction with our advisory council
which actually Len Sedlin sits on.
Len, I do not think you were on the council at the time we
developed the most recent iteration, but this is a group of
SCORE leaders, district directors, chapter chairs that work
with Devin and myself, and more specifically Devin, to develop
what we believe to be an equitable distribution of funds based
on a number of different factors in the organization.
Today, what we look at is new cases and follow-ons. So,
that would be the volume of clients that a chapter sees and the
number of times that they see that.
20.25 percent of the budget is distributed based on that.
We look at our new online cases, the number of clients that we
serve in an online capacity. 6.75 percent of our budget to the
field is based on that.
We then look at local workshop attendance. 18 percent of
the dollar amount that goes to a district is based on that. The
reason that is less than new cases is because, as you know,
most of our workshops actually have a small charge associated
with them.
So, in addition to being a service, it is also a revenue
generator at the chapter level. So, there is a lesser dollar
amount assigned.
Then we do look at the market, and we look at coverage
within the market. 35 percent goes to that coverage. How many
businesses are there, what is the potential, and the way that
we measure that potential which is the LSI, or for those of you
who are not familiar with SCORE, local services index is a
relative measure of market penetration.
And what it is based on is the number of clients that we
serve as compared to, it is the number of clients we serve per
thousand businesses in the community or the geographic area
that the chapter has told us they serve.
So, that is the measure. We do not use the measure in the
formula. What we do look at is coverage.
We have kept an adjustment. The first year it has been 20
percent, and Maine has benefitted specifically from that and
there are other chapters that have as well.
Our goal in leaving an amount in reserve was, as we
implemented in the first year this new formula, there were
adjustments. There were chapters that received, quite frankly,
far more than they could put to use in a year, and some
chapters that would receive far less.
Maine has been getting these extra funds even before we
implemented this particular process. Maine did and all of our
chapters did get three different allocations in two days. It
was an error on staff's part which means that it is my
responsibility and it is error on my part.
That has been addressed. We have a remarkable staff that
works very hard with an incredible volume of work; and in that
particular instance, we have someone now that we believe is
going to help us be better stewards and better communicators of
what we do.
So, my intent in no way is to be anything less than
transparent. This year for I believe the first time we actually
distributed this formula to our field organization.
In the past, we had not been transparent and we knew we
needed to. As we moved into our new plan and with one of our
overarching goals to be one strong nationwide organization we
need to be transparent.
Not everybody liked the process and not everybody likes the
result. The good news about the plan, and this is part of it,
is that we have continued to learn what we have done well, what
we have not done well, where we can adjust and improve; and as
we have learned that, I think that our district directors that
are here and our volunteers around the country will tell you
that we continue to adjust.
What I will tell you right now is I do not have a plan to
change the allocation this year and I do not have it today
because we really have not spent the time dialoging with our
advisory council and talking a little bit about it.
As you know, Meredith, we have a monthly district directors
conference call. We use that to communicate and vet and learn
and exchange and share best practices.
This will be something that is on that call. We will share
with you the process and all the input. I will step back up
again.
My challenge is that the pie I am trying to spice up is too
small. I need a bigger pie. If I can find a bigger pie, my
ability to fund these organizations at the chapter level, at
the district level, and allow them to become more successful
and to service the pent up demand that is there that we know,
it is going to be far better.
Until then, we need to deliver a level of service from the
national office and that competes with what we want to send to
the chapters, and therein lies the challenge, and we do what we
can to buffer that with private sector funds, most of those
raised at the chapter level, as Len mentioned getting a grant
from Louisiana Economic Development.
It is a challenge. So, what I would pledge to you is I am
happy to sit down, have a dialog around this, make sure that we
have heard everything, be completely transparent in the
responses that we get, and work through this in a manner that
you will absolutely understand.
I am not sure that at any point in time we are all going to
agree on exactly how this needs to look but we will get close.
Ms. West. I will say the Ranking Member is very concerned
about this issue and, in fact, is her biggest issue with
reauthorization of the SCORE program because of our concerns
that the Maine chapter has raised.
If we are looking at including any portion of the national
expansion plan and reauthorization and increasing authorization
levels in any way, she is going to make sure that Maine gets
their fair share of the funding; and so, the fact that the
reserve portion of the allocation is declining is problematic
for us.
Mr. Yancey. May I have one more quick comment? Loud and
clear. I completely understand. May I offer to add either Nancy
or Neal to our National Advisory Council for the specific
purpose of helping us deal appropriately with this issue.
Ms. West. We would very much appreciate that but I defer to
these very busy individuals.
Mr. Yancey. Which one of you said yes? Now is the time to
volunteer.
Ms. West. All right, Nancy, thank you.
Mr. Evers. I think what you heard in that answer is one of
the things that attracted me to SCORE. There are a lot of
things that we do not have answers to yet. What I really love
is the determination to experiment and to figure it out.
You guys are our customer. If you look at what is SCORE's
revenue source, it is you. So if we are not doing what you need
us to do, that matters. We need to listen, and we need to
listen hard. We need to make sure that you understand, and this
gets back to the whole transparency thing. We need to make
sure. We have an obligation to ourselves. We have an obligation
to our volunteers. We have obligations to you to be totally
open about how we do this.
And at least to my knowledge, there is no, it is not like
the reserve fund is being held in some sort of, you know,
punitive or reward kind of our fashion. It is just, we may have
gotten this wrong. Right?
If you have got a household budget, you keep a little bit
of reserve because you were not counting on needing a new
muffler, and I think that is a way to look at that.
As we dial this in better and get a better handle on how do
we allocate funds, then we can, nobody wants a reserve. It is
not a good thing except for potentially the rainy day part of
it.
But it is really about navigating through, okay, how do we
best do this. I think everybody in here who is getting all the
money that they want for everything they want to do, please
raise their hand. Anybody? No.
That is really the issue that we are dealing with is trying
to sort through that.
Ms. Sanchez. I know we are quickly running out of time.
Len, did you have something you wanted to add?
Mr. Sedlin. Just a comment from one of the guys on the
other end of this discussion here on getting the funds, I would
caution that there not be a formula written into the
legislation that dictates this.
It is strictly a management decision based on the input of
the worker bees who are going to make that decision and how we
use it is up to the directors within the guidelines that are
presented by our association.
So, we have to have some flexibility as business people to
make sound decisions. Thank you.
Ms. Sanchez. Thank you, Len.
I actually have one question from the Senator. She wanted
me to get this on the record before we close. This is for Ron
and you, Len, and anyone else who wants to chime in.
She wanted to get a sense from you on the ground in terms
of what you are seeing from small business lending. Are lines
of credit easing up at all? Are you seeing any kind of
positivity as a result of the things that are happening
recently and what is the temperature right now in that
environment?
Mr. Weiss. If I can, it is tight. Most of the SBA program
funding, banks are still insisting on guarantees; and despite
the efforts of the SBA to make it better, the banks are not
responding.
Most sourcing for funds comes from small local banks,
people who are economic development centers who are willing to
give it, even the cities themselves.
The city of Nashua gave a client of mine the $50,000 loan
just to complete his import so he could stay in business for
the rest of the year.
But that is where the money is coming from. And it is not
coming from the major banks or the regional banks. It is tight.
Money is tight.
Ms. Sanchez. In closing, I just want to say this is a
really important program and issue for Chair Landrieu. She has
really done, I think, a tremendous amount of work to get us to
this point in working with SCORE, with SBA to be able to ask
the tough questions that we need to ask and hopefully get
adequate answers.
I know it is no small trek for some of you to be here. So,
we really appreciate each and everyone of you who joined us
today and we absolutely look forward to working together with
you in the future as we put together a legislative proposal
containing SCORE's reauthorization. Thank you.
[Whereupon, at 11:47 a.m., the roundtable adjourned.]
[all]