East London Small Business Centre
Project Summary
In 1978, East London Small Business Centre was founded with a goal of improving the living conditions and social fabric of east London.
The centre works by helping new and existing small business owners to start, grow and develop successful businesses.
ELSBC operates a number of loan funds including specialist funds for the creative sector.
The partnership
ELSBC was originally set up as a public-private partnership. Currently, the organisation can be characterised as a not-for-profit private organisation. ELSBC's mission is to strive to be the best in the provision of help to all entrepreneurs in the London region for the starting up and development of successful businesses.
Funders and funding
ELSBC was established in 1978. Funding for ELSBC over that time has come from a myriad of sources including supranational, national, regional, local and private funds.
The project has been supported by the European Regional Development Fund (ERDF). Sources of national funds include the Phoenix Development Fund, the Local Enterprise Growth Initiative, and the Single Regeneration Budget. On the regional level, funds have been secured from the London Development agency since 1999. Local authorities have financed ELSBC on a smaller scale. Private institutions donating money to ELSBC include both businesses and charitable organisations. One example is the regular donation made by Deutsche Bank and Lloyd's of London to establish and support ELSBC's loan fund.
Policy context
ELSBC historically operated in areas of East London where social and economic deprivation are most pronounced. It is in these disadvantaged areas that most can be gained from an initiative supporting small businesses;however since 2009 introduction of some pan-London programmes has enabled the Centre to support businesses across London.
Objectives
ELSBC's mission is to help all entrepreneurs in London start-up and develop, successful and sustainable businesses. With a purpose to increase social wealth and mobility through the stimulation and support of micro-enterprises and small businesses across communities in London.
Target groups
ELSBC targets potential and existing business owners in London.
How ELSBC works
ELSBC has a wide range of services on offer. These include both financial and non-financial services and present a comprehensive package of support to clients. ELSBC currently offers the complete spectrum of services: access to finance, training and counselling. These services are described in more detail below.
Access to finance
ELSBC runs several loan funds, which either target star-ups or existing businesses.
ELSBC has the following funds available:
1. Loans for start-ups and existing businesses
2. Short-term clothing loans for fashion designers
3. Loans for creative businesses
4. Sharia-compliant loans for people of Muslim faith.
Training and counselling
ELSBC runs several programmes including free training courses and one-to-one counselling sessions for start-ups, new businesses, micro businesses and entrepreneurs.
1. Training course for start-ups
2. One-to-one business advice
4. Support for the arts and design industry
ELSBC helps entrepreneurs operating in the arts, fashion and design sectors. Entrepreneurs operating in these sectors may turn to ELSBC for start-up assistance, business plan formulation, counselling and access to finance. There is also some specialist sector help for music and media entrepreneurs.
Results
Tables 1 to 6 below illustrate the output of the work of ELSBC. Over the 2003-2006 period ELSBC carried out 14,752 one-to-one sessions, 2,174 people took part in its training courses and its loan funds awarded a total of €5.4 million. Over a three-year period ELSBC's activities generated 1,048 start-ups and 2,576 new jobs. A large share of these start-ups concern businesses started by ethnic minority entrepreneurs. The estimated three-year survival rate for newly established enterprises is over 80 %. ives an overview of the capacity and occupancy rate of the incubator support programme. Over the years capacity increased from 13 to 80 workspaces. The current occupancy rate is estimated at 80 %. Most of the entrepreneurs in the incubator (about 75 %) have an ethnic minority background.
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Evaluations
Each year ELSBC publishes an annual review in which it gives a summary of the activities undertaken over the previous year. ELSBC uses these annual reviews and other support documents to account for the funds it received from its donors.
The Phoenix Development Fund, which supported the incubator programme, was evalauated by an external consultant Peter Ramsden. The final report on the Phoenix Development Fund and the 96 projects that it funded was published in 2005.
Assessment of ELSBC
- Relevance
ELSBC successfully manages to reach out to a large and growing group of ethnic minority entrepreneurs. Thanks to its long existence ELSBC has established an immigrant community outreach that mainstream organisations normally do not achieve. The Incubator Support Programme also proved its relevance for immigrants. This is evident from the high proportion of ethnic minority clients (75 %) in the incubator and the high occupancy rate. The average length of stay within the incubator is around one year, adding a further illustration of the usefulness of the incubator units.
- Effectiveness and efficiency
The effectiveness of ELSBC in targeting ethnic minority groups is evident from the figures. This effectiveness has a positive, reinforcing effect that brings in more people willing to be advised and supported. The programme's long-term effectiveness is illustrated by the three-year survival rate of over 80 % for ELSBC's start-ups as against a national survival rate of 62.5 %. The Incubator Support Programme also shows positive results, particularly in terms of attracting ethnic minority entrepreneurs. In terms of efficiency the following numbers are illustrative. From the 2006 annual budget of €1.78 million, ELSBC generated 406 start-ups, 675 jobs, 4665 counselling sessions, and 727 trainees, and it awarded €2.85 million in business loans.
- Innovativeness
ELSBC has been innovative in two major ways. The first is its establishment of a Muslim Loan Fund. On this fund no interest is payable because of the religious prohibition of usury: instead, the borrowers make donations to the fund. The second major innovative development is the location of the business incubator outside of the regular business parks. This offside location made the rent more affordable for starting entrepreneurs.
- Replicability
Many factors are involved in replicating the success of an organisation like ELSBC. One of the reasons for ELSBC's success is the fact that it has built up a strong reputation. This has been developed through the delivery of a high-quality service and the outreach work that its counsellors undertook by attending local events and fairs. Replication of ELSCB's services would require a team of staff members willing to invest time in building similar networks. Finally, it would also require a team dedicated to obtaining funding from many sources. The project is not replicable without external funding.
- Sustainability
ELSBC has been in operation since 1978 and is set on a continued path of steady growth over the next few years. The growth of its activities is perhaps most visible in the Incubator Support Programme. Here the capacity was raised from 13 to 80 work spaces within just a few years. ELSBC managed to finance this increase of work spaces from internal sources, and not through an external subsidy. This suggests that its services are becoming more self-sustainable.
Key Learning points
- Offering the full range of business support services integrating training, counselling, access to finance and incubator services can improve results in terms of an increased number of start-ups and a higher business survival-rate.
- In specific cases policy measures should be developed in such a way that they overcome cultural barriers. A loan fund targeting Muslims for instance, should ask for donations rather than charging interest.
- Although a community outreach programme is essential to raise awareness its implementation can be a time consuming process.
Contact address
East London Small Business Centre
Universal House
88-94 Wentworth Street
London E1 7SA
UK
E: info@smallbusinesscentre.org.uk
T: +44 20 7377 8821
W: http://www.smallbusinesscentre.org.uk
Contact: Tim Heath, Chief Executive
ELSBC website: http://www.smallbusinesscentre.org.uk
Documents:
[ELSBC (2013)Annual Review 2012 [1]
ELSBC (2005). Annual Review 2005. [Electronic Version]. London: ELSBC.
ELSBC (2006). Annual Review 2006. London: ELSBC.
Maurey, K. (2006). Investing in Success: Capturing the Lessons from the Phoenix Development Fund. London: SBS.
Ramsden, P. (2005). Evaluation: The Phoenix Development Fund. London: SBS.
SBS. (2004). Leading Lights: Experiences from the Phoenix Development Fund. London. SBS.
Source Good Practices in the Promotion of Ethnic Minority Entrepreneurs
