In celebration of Financial Inclusion Week and National Women’s Business Month, we’re sharing an adapted blog from our partner, Accion in the U.S., highlighting our pilot connecting small business owners to financial coaching.
By Lauren Rosenbaum, Accion in the U.S.
Mariel Cota and her three children were confronted with the prospect of starting from scratch after she left her abusive ex-husband. She had the skills to start a flower business, but as an immigrant, she had limited credit history. Mariel was able to access the capital she needed to start her business by participating in the Accion Academy, an eight-week course to provide practical, hands-on entrepreneurship training. Today Mariel’s business, Flowers by Mariel, is thriving, and she credits the program with her success. “Accion was that key that opened the door for me to start my life again. I was able to get on my feet, to stop being homeless and living in shelters. And now I have my house,” she said.
Improving entrepreneurs’ financial health
Mariel’s story is one of many Accion-supported businesses thriving. According to Accion’s multi-year evaluation study in 2018, entrepreneurs feel significantly more financially stable after receiving a loan. Yet, they face ongoing challenges around financial health. For example, less than half of clients surveyed (45 percent) had taken steps to prepare for a financial emergency, and most (58 percent) found finances to be a significant source of stress. While the study found that entrepreneurs who use Accion’s non-financial services — such as business coaching, mentorship programs, online resources, and workshops — see a significant benefit, many were not taking advantage of these resources.
To improve how we connect small business owners to resources that can help them reach their goals, we launched a pilot partnership with Neighborhood Trust Financial Partners, a nonprofit social enterprise and one of the nation’s leading providers of financial empowerment services, to provide personalized, technology-enabled financial coaching their TrustPlus program. Participants connect to a personal financial coach through video or phone sessions and have access to a customized online portal as well as SMS and email reminders to stay on track with their financial action plan.
Financial coaching’s popularity with women entrepreneurs
When implementing this program, we found TrustPlus to be popular among women entrepreneurs. The majority of Accion clients who attended sessions were women (57 percent), even though women only make up 44 percent of our U.S. loan portfolio. Interestingly, we see similar numbers for people accessing Accion’s online business resource library — according to aggregate Google Analytics data, about 56 percent of visitors are women. Additionally, women appeared to engage more deeply in digital financial support services through Neighborhood Trust. Of those clients who attended more than one coaching session through TrustPlus, 65 percent were women. Women also made up 62 percent of the Accion clients who used TrustPlus’ online tools to track their goals. While the maximum number of sessions attended by a male client was three, female clients attended up to 11 sessions. And while men averaged approximately eight interactions with their coaches (including texts, emails, and coaching sessions), women had 11 interactions on average.
Early success — and pilot expansion
We were encouraged to learn that this service was valuable to the 149 business owners who took part in the pilot financial coaching offering through Neighborhood Trust. Over six months, 47 percent of participants improved their credit scores, 49 percent reduced their total debt, and 52 percent of those who had an account in collections reduced that balance. Participants reported taking a variety of concrete actions as a result of the coaching, including paying down credit card balances and setting up an emergency fund. The majority felt they had a more robust financial plan for their business after coaching and that the service helped them meet at least one professional or personal financial goal.
As a result of this early success, we are expanding upon the partnership with a second pilot round to test new strategies to encourage enrollment in financial coaching. We will continue to monitor the service’s value to women. We will also continue offering digital resources with a focus on women (for example, by elevating the success stories of inspiring women entrepreneurs of color). We encourage our peers who support women’s entrepreneurship to consider how they might leverage digital coaching and resources as well to better meet women’s needs.
Originally published at https://www.accion.org.