The Power of Business Coaching
The third post in Inclusive Action’s “Doing Capital Differently” series, offering stories, lessons, and tips to financial services and CDFI practitioners, from our experience of providing capital to underserved communities. Read our previous series!
by Director of Lending, Andrea Avila, and Senior Associate Technical Assistance, Josephine Gardner
As a business coach, nurturing deep relationships with business owners is paramount. These connections and ongoing support enable us to accurately assess current and future business needs, proactively seek out resources, and provide timely interventions during critical moments in their business journey.
By cultivating trust early on, we empower businesses to feel comfortable seeking support during challenging times without fear or shame. For instance, one of our clients urgently needed capital to settle tax obligations and acquire essential equipment. Our team rallied together to provide the necessary assistance.
This proactive approach ensures that we can intervene and support our clients before critical situations arise. The strong relationships we build foster trust, enabling business owners to confidently seek help whenever they need it.
Post-loan relationships are crucial because they continue our practice of a human-centered approach to lending. This reflects our roots: we started as an advocacy organization, then became a California lender in 2018, and a certified CDFI in 2020.
We know our communities are worthy of investment and that there’s a great need for access to healthy capital. Fulfilling this vision requires that we walk side by side with business owners during their entrepreneurial journey.
That means not stopping at the loan process. We realized during the early years of the Semi’a Fund, our flagship Access to Capital program for small businesses in Los Angeles, that if we wanted entrepreneurs to thrive, we needed to offer more than capital. Small businesses also require business support and wrap-around services, which can include strategic partnerships outside of Inclusive Action.
In addition, part of the reason microfinance has been successful globally is due to the strong sense of community and mutual accountability among business owners. When we lend to a group of women in the same community or business owners who share a sense of loyalty, they are more likely to prioritize loan repayment.
Our deepened relationship allows us to project business needs and share networking opportunities, provide workshops, and external and internal grant opportunities to help businesses grow and thrive.
What does it look like after we provide a loan? For many of our clients, our support is just getting started.
We assign each client a business coach — someone who works separately from the loan underwriter.
The business coach-client relationship is important in the lending industry. Early on as we built the Access to Capital team, we recognized the value of separating the business coach from the underwriter, something not every CDFI prioritizes. Building and training a team of business coaches and ensuring their ongoing impact requires a significant investment of time and resources.
The communities we work with tend to be very averse to debt, and when they start to look for capital, it’s an intimidating process. As we wrote earlier in this series, we employ human-centered approaches to our application process, ensuring we understand the why behind their business, and personal and business background to support their application beyond just financial statements.
Once our clients have secured a loan, the role of the business coach is to work with our clients through the life of the loan, so that they can make the most of their funds.
The business coach conducts an onboarding process for the new business. The client decides the appropriate level of support they need for their stage of the business journey.
It’s essential that the business coach establishes trust early on to provide the most holistic business support throughout the life of the loan.
We select our business coaches using interview scenarios, prioritizing emotional intelligence and cultural competency. We want to hire people who reflect the communities we’re serving, which may not necessarily mean having a traditional educational background or business degree but rather someone who is willing to grow and has a passion for working with the community. That said, a number of our business coaches have a degree in business, and a few are business owners themselves. All come from the communities that we serve.
The coach and client engage in an ongoing working relationship.
In industry parlance, the title for the coach at Inclusive Action is technical assistant, or TA. This reflects the type of support our coaches provide, which includes assistance on the many technical aspects of running a business, such as permits, marketing, business planning, and pricing strategies, among other things. Coaches also offer referral services such as ITIN, legal services, or access to capital beyond $50,000.
Interactions with business owners vary in length; some can be as quick as a 5-minute phone call or a quick Zoom meeting, while others can be a 2-hour in-person meeting at our office. If business owners are facing issues, we do our best to intervene or support them with what is needed. For example, if the business’s landlord has announced that they will increase the rent to an amount not in their leasing agreement, we can make a referral to one of our partners for legal services. Where possible, having an ongoing relationship and open communicationwith the client allows us to intervene and identify solutions before the situation intensifies.
The Access to Capital team supports our business coaches – and ensures the organization meets community-wide needs.
We also support our coaches’ ongoing professional development through individual training and support, along with team-wide opportunities. Additionally, the TA team meets weekly to discuss strategies and ways to support our clients.
Our coaching process involves collecting data in each meeting, which helps us analyze ongoing trends. For example, we’re able to measure the impact of the loans we refinance by tracking the overall development of credit scores. The data also serves as an early warning system – for example, when coaches noticed that clients were behind on rent, we were able to apply for a grant to provide rent relief.
We have also created IAC’s first Business Coaching Curriculum, which includes resources on writing a business plan, creating and understanding budgets, and learning how to set prices, among other business-related topics. We will also launch a Spanish and English Business Guide and Marketing Guide.
The most important thing we’ve learned as business coaches is that every business owner is in a different stage of their journey. All our resources are designed to make sure we can give our clients the tools to succeed. At the same time, we recognize that being successful looks different for everyone. For some, there’s a growth mentality, but for others, success means stability. That’s what co-designing a strategy looks like: we want to make sure the client is in the best position to decide what works for them and then has access to the resources they need to pursue success as they define it.