Business Training Provides a Great Return on Investment

You are here

Originally published on Momentum's blog Engage on December 16, 2014

Momentum’s Self Employment program has offered business training to Calgarians since 1998. Because our participants face barriers such as disability, income level, or low education, they would have difficulty starting a business on their own. Still, we know that with the right supports, these individuals can be successful launching a business that will improve their livelihood and maybe even create jobs for others. After 20 years and 700 participants, we have a fine-tuned model that comes with a powerful promise.

With Momentum, you can launch a business in 10 weeks. And it will pay off—for you, and for those that invest in you.

We aren’t into empty promises, so this fall Momentum commissioned Dr. Emery and Dr. Kneebone from the University of Calgary to conduct an economic evaluation of the Self Employment program. Specifically, we wanted to know the impact on incomes of participants, and on the budgets of the Government of Canada and Province of Alberta. Why these governments? Because they invest the money needed to operate the program, and because they get the benefit of increased tax payments and reduced dependency on social services.

The results are in, and they are astonishing:

  • The average participant’s income grew by 250%.
  • For every dollar invested, between $7 and $19 is generated and returned to the community.

Not only do participants experience big growth in their earnings, but they grow in other asset areas as well. Here are some comments I heard first-hand at a recent business launch event.

"As a new person to Calgary, my classmates are the first people I befriended here."

"Momentum’s Self Employment program has changed my perspective on life."

And my favourite:

"Even my MBA didn’t teach me this much."

In fact, the results show that even an MBA can’t provide this powerful an economic return, either. Here’s Dr. Emery’s perspective:

"Over the past 30 years, when comparing the income gains of university and college graduates (over a high school graduate) to the cost of those degrees and diplomas, the Internal Rate of Return is generally less than 10% but the investment in that education is considered a good one since it yields double the return of a benchmark asset like a government bond at 5%.

When applying the same methodology to evaluating the return to investment on Momentum’s Self Employment program the annual returns are between 96% and 400%. This reflects the high social costs and impacts of barriers to employment for the population the Momentum program is serving. For not a lot of money invested, society gets a very high rate of return." – J.C.H. Emery, PhD

What Dr. Emery is saying is that not only do our participants earn higher incomes after the program, but they contribute 10 times the economic value to the governments that invest in them, when compared to the return on investment of a university education. And it only takes six months.

I feel great admiration for my colleagues that work in the Self Employment program. They are truly remarkable change-makers. Congratulations, everyone, on these results.

We have published a summary of the research on our website if you’d like to learn more.


Carolyn Davis is the Community Relations Director at Momentum, a Calgary based CED organization and founding member of the Canadian CED Network. Momentum partners with people living on low incomes to increase prosperity and inspires the development of local economies with opportunities for all.

 

See more Evaluation and Social Return on Investment Resources >>