Business Services Collective earned second place and $30,000 in the 2019 John Edwardson, ’72, Social New Venture Challenge (SNVC) on June 4. Run by Chicago Booth’s Rustandy Center for Social Sector Innovation and the Polsky Center for Entrepreneurship and Innovation, the SNVC is the social impact track of the University of Chicago’s nationally ranked Edward L. Kaplan, ’71, New Venture Challenge (NVC).    

In this Q&A, Business Services Collective cofounders Kyle Johnson, ’19, Nitika Nautiyal, ’14, and Krithika Narayan, a student in Booth’s Full-Time MBA Program, explain their plan to provide a shared back office solution to small minority-owned construction companies.  

Q: How did your team come up with the idea for your startup?  

We have almost two decades of combined experience in economic development nonprofits serving minority-owned businesses. We shared our clients’ frustration trying to separate their back office tasks from entrepreneurial selling and strategy, a leap required to get on the path to growth. We targeted the construction sector because it has the density for community-level impact; a $12 billion industry supporting 160,000 workers in Chicago alone. Interviews with 30 construction entrepreneurs, general contractors, and developers confirmed the need for an affordable back office service to support a healthy ecosystem in the construction trades.  

Q: What problem does your venture work to solve in society? And can you explain the exact services you offer and to whom?  

We want to support the growth of minority-owned businesses as engines of wealth creation in their communities. While barriers to growth are shared by most small businesses, the racial wealth gap magnifies these barriers for entrepreneurs of color. The average Latino or Black household in the U.S. has just one-tenth the wealth of the average white household. This means there is often little capital available to cushion and invest in minority-owned businesses.  

The Business Services Collective provides a suite of back office services including bookkeeping and legal support plus construction-specific services like bid estimation and project management. By organizing a collective of construction businesses with shared needs, we negotiate a volume discount from service providers (many which are also minority-owned) bringing their rates down to affordable levels. Our relationship managers tend to the ecosystem by facilitating information sharing, quality control, and ensuring that insights from the back office fuel performance improvements of our member entrepreneurs.  

Q: Who will benefit most from your services?  

Our target market are small construction businesses doing repair and remodeling in residential and light commercial projects. Think of the roofer, plumber, or carpenter you’ve welcomed into your home, who does great work but is hard to get ahold of. The entrepreneurs we interviewed have average revenues of $500,000 per year and spend 15 hours a week on back office tasks, sometimes with help from family members or unsteady part-time hires. By delegating these functions to experts, entrepreneurs recycle the time savings into meeting more customers and growing their business.  

Q: Have you already launched a pilot? What are your short- and long-term goals?  

We have strategic partnerships with Sustainable Options for Urban Living (SOUL) and Elevate Energy, two trusted nonprofits building capacity for minority-owned construction businesses. We join their workshops to meet entrepreneurs in our target market and compliment their consulting with our day-to-day support. Through this model, we’ve met 50 entrepreneurs, including 10 construction companies and four service providers ready to pilot.

By the end of 2019, we want to validate our model and the impact we’re having on businesses and the community, measured by increases in revenues, take-home pay, and wages paid relative to 2018. With philanthropic support, we can scale to serve thousands more businesses across Chicago, helping entrepreneurs and their workers take home more wealth to their communities. We already have partners interested in replicating our model in the Bay Area and Washington DC.     

Q: Anything else you’d like to add?  

To close the racial wealth gap and make cities like Chicago equitable for everyone, we must make a collective effort. We need to build community-owned assets and reverse the decades of disinvestment in communities of color. In that spirit, we welcome partners, entrepreneurs, and interested parties to engage in our work with questions, feedback and support.     Business Services Collective

For more information, contact Kyle Johnson at kjohnso9@chicagobooth.edu. To learn more about the 2019 SNVC winners, visit the Rustandy Center blog.