By Steve Eaton
It seems like a win-win situation. Dozens of marketing students have found a way to get out of their final exam and Jesús Esteban Gomez can finally send his kids to college.
The official name of the organization that makes this all possible is the Small Enterprise Education and Development Program, but it is more commonly referred to as the “SEED Program” at the Jon M. Huntsman School of Business. It started with the first summer Study Abroad group that went to South America in 2007 to visit Chile, Brazil and Peru.
In addition to meeting with business, civic and academic leaders, organizers of the trip wanted the students to examine the impact that microfinance institutions were having in Peru. David Herrmann, an executive-in-residence at the Huntsman School of Business who went on that trip, predicted that doing a research project after the students had been through such a culturally immersive, hands-on learning experience would prove dull at best. He proposed the Huntsman School could launch its own micro-lending program.
Mr. Herrmann, who teaches entrepreneurship and management, requires his students to undertake a service project at the end of his upper-division classes, and for years most students have opted to spend their time raising money for worthy non-profit causes. He decided to have them invest their energy in raising money that could be used, instead, to launch a micro-loan program in Peru. To add a bit of incentive for the students, he said that any group that raised more than $1,000 could skip the final.
“It’s important to note that these students were not buying a grade with their fundraising,” he said. “In addition to raising $1,000, they had to put into practice the various elements they would have been tested on. This required planning, goal setting, execution, leadership and team building.”
The first two classes that tackled these projects raised $32,000 for the program, Mr. Herrmann said.
Students joined forces with a South America company, Danper, in 2007 and worked with several entrepreneurs who wanted to start their own businesses. That partnership led to the creation of the SEED Program.
The focus of the program is no longer on microlending, Mr. Herrmann said. Now students teach the entrepreneurs the basics of running a business, help them create a business plan and work with those who qualify for a loan.
Mr. Herrmann said he’s seen many micro-lending programs fail.
“You can’t just give loans to people and walk away,” he said. “You’ve got to teach them how to run their business. They have to feel responsible for making the venture a success.”
In South America, loans range from $3,000 to $15,000. In Africa, they range from a few hundred dollars to $3,500. Mr. Herrmann said, so far, about $93,000 has been loaned in Peru and Africa. There are two student interns working in Peru every semester, and soon there will be two working in Ghana and Uganda in Africa each semester.
More than 35 businesses have been launched with the help of Huntsman students. Some of them have already paid back their loans. One woman in Ghana, for example, took out a loan of $700 and agreed to pay it back within nine months. She paid it off in one month.
Several entrepreneurs in Peru who were interviewed recently about their experience with SEED managed to work into nearly every answer, no matter what the question, that they were grateful for what the students had taught them and for the opportunity it created for them. They repeatedly emphasized that they feel they have a responsibility to make those investments pay off for others who might follow them.
Mr. Gomez was loaned enough money to start his own business, a mini-market attached to his home. Through a translator, Mr. Gomez said he now believes he’ll be able to send his children to college.
Mr. Gomez’s wife, Susanna Palmira Chavez Gonzalez, also runs the mini-mart when Mr. Gomez is at work.
“I don’t have words to thank you for the opportunity you have given me,” she said during a Skype interview. “It really changed my life and has given us a new path for me and my family.”
Segundo Victor Carranza Vasquez received help launching a taxi business.
“Before, I used to rent a taxi to drive,” he said. “Now, I have my own taxi. My future has changed because I’m making more money. I have a better taxi. It doesn’t break down as much. This has changed my life.”
Martha de la Cruz now owns a bakery. She said the students taught her to account for everything.
“We realize, now, how important it is to keep track of how much bread we are making and how to keep track of all our costs,” she said.
Whitney Dastrup traveled to Peru with the first group in 2007 and later went back for an internship to work with the new business owners. She was one of the students who helped Mr. Gomez with his idea.
“In spite of having to speak in a different language, they made a great effort to communicate almost perfectly with us,” Mr. Gomez said. “They are great friends, and we really miss them down here.”
Sometimes students complain that a syllabus isn’t clear or that they aren’t exactly sure what they need to do to earn top grades in a particular class.
Such concerns must seem trivial to students who have ventured off in recent years into uncharted waters in remote places to get the SEED Program off the ground.
Joey Stocking and Spencer Dearinger were the first students to serve internships in Ghana. When they arrived, they had to figure out how to set up the program in the new country and discover the best ways to offer the classes. Despite there being no manual, or how-to guide, or even professors by their side to give them step-by-step instructions, the students were able to set up the foundation for SEED in Africa.
Mr. Herrmann said he carefully selects students he can depend on and who he thinks will thrive in such situations.
When Paul Rossiter and Landon Essig heard about the possibility of going to Uganda to launch the SEED Program, no one had to talk them into going.
“When I heard that we were going to Uganda to teach classes and help people start businesses, and that we really were going to be on our own, that was extremely exciting,” Mr. Essig said. “I knew that was something I wanted to do.”
One of the first things they did was win the confidence of a local village leader named Kazibwe Bernard. At first they only offered classes and people came to learn without knowing they had some start-up money available for them, Mr. Rossiter said.
It was only after people demonstrated that they wanted to learn and began discussing their ideas, that the prospect of available loan money was shared.
“New venture creation is so exciting to me,” Mr. Rossiter said. “The SEED model is very effective in helping others bring themselves out of poverty, rather than just throwing some money or giving them some supplies.”
Three members of the Huntsman National Advisory Board have traveled to South America several times with Huntsman students and witnessed the challenging process students go through as they work with entrepreneurs who desperately want to start new business ventures.
In addition to each of them donating about $5,000 a year to support interns in the SEED Program, Tim Barney, Scott Davis and Blake Dursteler, have made several trips to Peru to personally help. Mr. Barney, ’03, Master of Science in Political Science, is president and founder of Longview Partners. Mr. Dursteler, ’96, accounting, is the director of C.L. Fred and Leora Mae Evans Family Charitable Foundation. Mr. Davis is the president and CEO of Mountain West Small Business Finance.
The three have worked with the Study Abroad students as they analyze the proposals put forward by the people applying for loans. Mr. Dursteler said the experience demands the students tap many of the skills they’ve learned in school and apply them to actual business cases.
“It’s almost like a mini-internship that goes across so many different fields in a short period of time,” he said. “The ethical leadership comes into play not only in the way they handle themselves but the way they treat the people they are working with, how they manage the information they’ve got and how they make the decisions they end up making.”
Mr. Barney said he doesn’t see how anyone could duplicate in the classroom the experience students have when they work with the SEED Program.
“It’s a phenomenal experience when you immerse yourself in the culture and the people,” Mr. Barney said. “But, at the same time, you’re learning business principles that are applicable pretty much anywhere and in any situation.”
Mr. Davis said the students get to know the applicants, visit their homes and see their humble circumstances.
“They get the idea real quick that this is the real stuff,” he said. “This means a whole lot to these people.”
Mr. Barney said during the due diligence process, students can be faced with ethical dilemmas as they grow to care about the people but realize their business ideas may not fly.
“Do you give somebody money because you want to help them lift themselves out of poverty?” Mr. Barney said. "Well, you weigh that against the merits of a business plan, and you’re faced with some pretty tough ethical choices, because the humanitarian in all of us would want to just give the money. That’s not what we’re asking the students to do. We’re asking them to make sound and solid business judgments based against that humanitarian backdrop. Last year, for example, I watched one particular group struggle to the point that a couple of the women were actually in tears several times because they couldn’t make the numbers work, but they wanted so desperately to give the family money. If that doesn’t build ethical leadership, I don’t know what does.”
Learn more about the SEED Program and its current projects here.