Living Cities is committed to improving the economic well-being of low-income people. Given all of the momentum around leveraging the potential of new and small firms as job creators, we set out to learn more intentionally about the barriers and opportunities to accelerating new firm creation by taking stock of all of the initiatives in our portfolio and the portfolios of our members that aim to support entrepreneurship and small business growth.
To gain a more strategic understanding of what activities already exist and where there are gaps, we took inventory of strategies that we and/or our members are currently investing in and categorized them by the barriers they sought to address. There are common themes that emerge among the barriers that multiple organizations are trying to solve for, and we want to be sure that there is alignment and shared learning around which barriers they are targeting and which solutions are effective in achieving results.
We created this map to reflect to the field where there is already investment, and enable conversation around how we as changemakers can adopt a more cohesive and thus more powerful approach to addressing common barriers. Using that lens, we could clearly see a set of strategic solutions aimed at each barrier, so we categorized each activity according to the following:
- The barrier to start-up/growth that the initiative tries to solve for.
- The solution being employed to address the above barrier.
- The activity being done as part of a solution.
The themes that emerged gave us a clearer picture of what organizations in the field are currently attempting to do, but it doesn’t yet tell us which of those solutions are working. We believe that in order to get better results for low-income people and communities of color faster, we need to continue to codify what works, what doesn’t, and why.
Addressing Barriers to Firm Start-Up and Growth
These eight themes emerged as the major investments organizations are making to support entrepreneurs of color attempting to start up or scale up businesses:
1. Capital & Financing
Starting or growing a business almost always requires some up-front financial investment. The accessibility of different types of financing varies from place to place, and along lines of race and gender. The solutions in this category represent many different approaches to increasing the capital that is available and ensuring it more effectively gets to the entrepreneurs and small business owners who need it.
2. Professional Networks
The individuals who make up an entrepreneur’s personal and professional networks can provide support and advice, and serve as a “safety net” to protect against the risk of business failure. Entrepreneurs with friends and family who are wealthier or have a history of business ownership thus have an advantage. This category includes activities that seek to more equitably connect entrepreneurs to networks that can benefit their businesses.
3. Public Policies & Processes
Regulations around starting and sustaining businesses can often be seen as too slow, complicated, or confusing. In addition, inefficient processes, high costs, and fear of government can add to the disincentives that aspiring entrepreneurs face when thinking of starting businesses.
4. Talent Pipeline
The number of people who could start businesses (including what the market could support) is much smaller than the number of people who end up starting businesses. This is true because certain populations face a convergence of barriers, including the ones we lay out in this post. Creating an inclusive pipeline means equipping people to create jobs by being business owners, rather than preparing people to fill jobs. The theory is that creating more entrepreneurs creates more firms, which creates more jobs.
5. A “Culture” of Entrepreneurship
There currently exists in society a set of mindsets and perceptions about the “type of person” who is an entrepreneur. A culture of entrepreneurship means exposing people to the idea of even being a business owner, and shifting these preconceived mindsets. This includes creating a general environment that is supportive to entrepreneurs, for example, so that communities are enthusiastic about local business and prioritize it over non-local corporations.
6. Targeted Business Supports
A lack of access to targeted business supports can exist for a number of reasons. At times, business support services exist but there is an access issue, either due to geographic location or the extensive effort and time needed to find resources from a variety of sources. At other times, general business services exist but are not specific enough to meet the immediate needs of a business owner. And often, business support services do not exist in a place.
Most solutions we found to this barrier involve aggregating and curating resources to make them more accessible and easier to find.
7. Economic Development & Community Development Alignment
While people who work in economic development and community development often have the same objectives for a place, the former focus on regional work while the latter focus at the neighborhood level. Making these two systems more cohesive, taking place-based needs into account, has the potential to foster a more supportive environment for potential business owners.
8. Corporate Policies & Processes
Corporate procurement can have a huge impact on small firm growth: it sometimes unnecessarily displaces small businesses or competes with them. Business-to-business sales require production at a certain scale that some small firms need support getting to, and helping small businesses navigate process and policy barriers has the potential to help them achieve scale.
The creation of the inventory was led by Brittany DeBarros, now of Brittany DeBarros Consulting, and supported by Living Cities team members Demetric Duckett, Ratna Gill, and Hafizah Omar.