How this Sacramento business let clients go and yet hired more health care workers | Sacramento Bee

In the last nine months, Edward Navales has hired roughly 50 new employees at the medical staffing business he operates in Sacramento. He also started offering all of his 130-plus employees a 401K plan in which his company makes a matching contribution.

“I’m almost beside myself. I never thought that in the history of this small business, going on 10 years, that we’d be able to offer 401k and match,” Navales said.

It was especially astonishing to Navales because his business had gotten stuck on a growth plateau from 2014 to 2016, despite broader expansion in the health care industry. He said he felt like he had to find a way to get a loan that would help fuel an expansion for 24/7 MedStaff.

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Then he learned that one of his company’s clients, Kaiser Permanente, was backing a program described as “a mini-MBA on steroids” for small business owners. Over 12 years, the roughly 2,200 participants in the program had accessed $1.74 billion of capital in the form of loans or investments.

Kaiser was paying the full cost of the program, known as Inner City Capital Connections, for any business owner who qualified, but only 50 people would get a seat. Businesses must be based in an economically distressed or underserved community or, alternatively, 40 percent of their employees must live in such neighborhoods.

Kaiser said its goal in sponsoring the program is to improve health and wellness of residents in these neighborhoods by ensuring residents have good jobs that provide health care benefits for workers and their families.

The health care giant had sponsored Inner City Capital Connections for three years in Los Angeles and introduced it in Oakland last year. This year, the program will make its debut in San Diego and Sacramento. Applications for the Sacramento program will be accepted until Sept. 28.

Navales, who drove to Oakland for classes, said he didn’t need a loan to grow his business. Rather, he said, he learned he had the power to do so himself. All he had to do was make the hard decision to give his staff permission to end contracts with some clients.

“Our team was being taxed with additional things that were creating angst among the team members,” Navales said. “We found out that those things were occurring with some of our less-profitable customers.”

The coursework on business strategy, Navales said, made him realize he needed to recalibrate and refocus. As his team delivered the talent needed by his most profitable customers, he said, they found these clients called upon them more often for help with contingency workers. As his revenues grew, Navales made the decision to invest in employee benefits that would help him retain employees at 24/7 MedStaff and the 401(k) was high on the list of things his workers wanted.

Navales directly attributed his business’ rapid growth over the last nine months to what he learned in the Inner City Capital seminars and webinars.

Steve Grossman, the chief executive of the Initiative for a Competitive Inner City, runs the Inner City Capital program that grew out of Harvard Business Professor Michael Porter’s research on the competitive advantages of the nation’s inner cities.

Grossman said that Inner City Capital drafts professors from the nation’s top business schools – Harvard, Dartmouth, University of Illinois and others – to lead on-site interactive exercises with participants for the first half of seminar days. For the second half, business owners receive coaching from bankers and other types of lenders, investors and consultants. Business owners also become a sounding board for one another.

Outside class, participants can take webinars for training in specific areas where they feel they need help. Navales said he would finish listening to a webinar at his desk, walk out of his office, and begin putting what he’d learned into action.

In addition to gaining tremendous access to capital, Grossman said, program participants have seen their top-line revenue grow an average of 172 percent after graduation from the program, and Inner City Capital has documented the addition of close to 16,000 jobs over 12 years. Class participants often end up doing business with one another, Grossman said.

Asked how other health care companies have fared in the Inner City Capital program, Grossman pointed to Guardian Healthcare in the Boston area. Founded by Jose and Zoraida de la Rosa, the home health-care business has grown in the last six years to more than 300 employees from just two, Grossman said.

“He needed to build a family culture in the company to reduce employee turnover because otherwise he would never create sustainable growth,” Grossman said. “Many of the entrepreneurs who go through this program in the health care space and other spaces have never been taught leadership, talent management, leadership effectiveness. That’s one of the key components of the program from an educational standpoint.”

Inner City Capital Connections

What: Described as “a mini-MBA on steroids,” this program pulls professors from the nation’s top business schools to lead interactive seminars for small-business owners whose companies are based in distressed or under-served communities or whose employee base includes a large number of residents from such areas. The owners also get access to and coaching from bankers, investors and other sources of capital.

Applications due: Sept. 28

Apply here: icic.org/urban-business-initiatives/inner-city-capital-connections/sacramento/

More information: Contact ICCC at 617-238-3019 or iccc@icic.org