How Four Employees Of A Failed Microlender Salvaged The Model & Built Denver’s Small Nonprofit of the Year
(From left) Rob Smith, Ben Weeda, Stacey Saggese and Brendan Landry
Rocky Mountain MicroFinance Institute, a nonprofit whose mission is to “help curious people transform into serious entrepreneurs through skill building, mentorship and micro-lending.” They specialize in working with low-income individuals without access to traditional lines of credit, helping them gain economic and social mobility through business ownership.
Yes. Rob, Stacey and Brendan work with RMMFI full time. Ben now works at a personal finance education nonprofit, mpowered, and he donates to and volunteers with RMMFI. The organization has five more full-time employees and one part-time Boot Camp instructor (who happens to be Owning My Own co-founder Annie Roethel). More than 130 active volunteers coach and mentor RMMFI Boot Campers and Boot Camp Graduates.
RMMFI grew out of a failed microfinance organization where the four co-founders were all staff members. Rob, Brendan, Stacey and Ben took over the management of that nonprofit’s outstanding loans and started RMMFI with the few thousand dollars’ worth of interest payments.
BEFORE BEING FOUNDERS, THEY:
Rob studied finance and worked in banking, along with a brief stint as a coffee roaster and a dream of starting a gourmet coffee company in Denver. (An idea he says was a little ahead of its time.)
Brendan was a creative writing major and was (simultaneously) on staff at a preschool and a liquor store before starting his career in microfinance.
Stacey’s degree is in marketing, and she worked in that field for a global, commercial printing company. She also taught English in Thailand and “worked as a server many times.”
Ben studied Spanish and was a bilingual elementary substitute teacher. He also sold Teaching English as a Foreign Language (TEFL) courses before entering microfinance.
HOW IT ALL STARTED
In 2008, the CEO of RMMFI’s predecessor organization surprised the whole staff, “closed the doors and laid everyone off, leaving behind a mess of clients,” Brendan said. There were more than 650 entrepreneurs who collectively owed $1 million in outstanding loans.
Stacey recalls having to call clients to break the bad news. When she told one man they couldn’t have their scheduled meeting on Wednesday because the organization was closing, he said, “That’s okay. Let’s just meet on Thursday.”
When she explained they were closing forever, he was devastated and asked her, “What am I supposed to do? Where am I supposed to go?”
Internally, the staff was being advised to send all the outstanding loans to collections, but as Rob put it, “There was no way in hell.”
He, Stacey, Brendan and Ben decided they just couldn’t walk away. They began talking, and as Brendan says, “literally writing on napkins. At least we knew how not to do it!”
HOW THEY DID — AND DIDN’T — SPEND THEIR MONEY
“We didn’t spend on anything!” Rob said. The four of them worked out of the old office for a short time, but there was such a stigma there, they decided they needed to get out. They took the technology and relocated to Rob’s kitchen table and held their first board meetings in a coffee shop.
They also didn’t pay themselves for the first 18 months. Instead, they got side jobs and paired that income with unemployment money they received after being laid off from the old organization.
As Rob put it, “We did precisely what our RMMFI Entrepreneurs do.”
MOMENT THEY FELT IT WAS REAL
RMMFI filed the federal IRS paperwork necessary to be granted tax-exempt status as a 501(c)3, meaning they could accept tax-deductible donations. Then they waited more than six months to hear back.
Before taking a salary at RMMFI, Stacey was a server at Denver’s Cuba Cuba Café & Bar. She always had to leave the office at 3 p.m. to make it in time for her shift. She remembers “taking an order for her 500th pineapple mojito” when another server handed her a purple sticky note. Written on it were the words, “RMMFI is a 501(c)3.” She ran over to the bar to find Rob, Brendan and Ben waiting there to celebrate.
“I still have that sticky note,” she said.
When the four founders first decided to “strap the mission to their backs,” they turned to some of the old organization’s financial supporters for funding.
“Every single person said no.” Stacey remembers.
“We got turned down in some of the best conference rooms in town,” Rob says.
They insisted they were not going to make the same mistakes as their predecessors, but their unproven track record still left donors too uneasy to pull out the checkbooks. Many agreed to help out in other ways, though, such as making introductions or consulting.
It was the beginning of what they now call the RMMFI Community — a network of hundreds of people “who are invested in the success of the organization, and more so, the success of the entrepreneurs.” Many of them do donate now, but they also volunteer at events, coach the Boot Campers, and come to hear their business pitches and give feedback three times during each Boot Camp cycle.
Rob reflects on the early funding rejections now. The co-founders didn’t get the type of investment they wanted at the time, but they definitely didn’t walk away empty handed. “We didn’t have everything, but we had a big Rolodex of people… It takes investment from the community at all levels,” he said.
SOMETHING THEY’VE STRUGGLED WITH
Brendan says the founders think a lot about how to offer the most value to the clients they’re trying to serve. It’s something that’s changed over time.
In RMMFI’s early days, they offered three different classes, helped entrepreneurs write a business plan and then gave them the chance to apply for a loan. They measured success based on the number of people who showed up, although many did not complete the whole process.
“We didn’t want to be an organization that congratulated ourselves on having classes,” Stacey said.
So they pivoted. They gave a presentation to one of their major funding foundations saying that, instead of working with 300 clients a year, they wanted to focus on 30. The 30 most prepared and viable.
The foundation members at that meeting gave them a standing ovation.
This fall, RMMFI welcomed its 17th Business Launch Boot Camp class, which has 10 aspiring entrepreneurs. RMMFI has launched 135 businesses to date and closed 134 loans totaling more than $315,000. They have a 95 percent repayment rate. The Denver Chamber of Commerce named RMMFI the 2016 Small Nonprofit of the Year.
BIGGEST DIFFERENCE BETWEEN OWNING AND WORKING FOR SOMEONE ELSE
Brendan reflects on how their perspectives on leadership have changed over the organization’s eight-year history.
“When we started, we said, ‘We’re all in this together. We’re all making the decisions,’” he said. “At first, whenever we had meetings [with donors or advisors], all four of us showed up. But over time, a more standard structure emerged.”
Rob is RMMFI’s executive director, Stacey oversees development and marketing, and Brendan heads the program staff. They understand their employees are also key to RMMFI’s identity.
“We are having strategic and specific conversations about how we step back as founders,” Stacey said. “When you look at the rest of the team, those are incredibly talented, very smart, passionate people. Creating an environment where their ideas and their voices can have an impact on the organization – that’s how we’re going to get to the next eight years and beyond.”
BEST ADVICE TO BUSINESS OWNERS JUST STARTING OUT
Rocky Mountain MicroFinance Institute’s entire existence is devoted to answering this question. (And we’ve dedicated an entire article to their wisdom on this subject!) But, in short, Rob says, “Make sure you are right for the business and the business is right for you.”
Stacey mentioned their motto, which she calls the “heartbeat of the organization.” (Co-founder Ben even turned it into a social media hashtag.) WUYEO. We urge you endlessly on.
RELATED: Wish RMMFI could help you decide whether you’re ready to launch your biz? Read some of the best advice Brendan’s offered to the hundreds of aspiring owners he’s met.