How Entrepreneurship Support Promotes Community Goals

Entrepreneurship support is the most cost-effective economic development strategy for many communities. Entrepreneurship is the act of business start-up. The entrepreneur risks money, time, and effort. So increasing their success rate allows your community to grow jobs provided by employers who already have chosen to live in your neighborhood.

The significance of this topic to community people is that successful entrepreneurship support generates new jobs and new income to circulate within the community. An incubator for start-ups and intensive entrepreneurship support are far more likely to yield results than excursions to other parts of the country or world to woo business owners to your location.

Why Entrepreneurship Support Is the Best Road to Economic Development for Most Communities

Small businesses as a group generate most of the net new jobs in this country. More specifically, the federal Bureau of Labor Statistics says they created about two-thirds of the new jobs in between 1992 and 2005. In July, 2008, when the economy was beginning to go south, they still were hiring.

Small businesses apply for and develop most of the patents, and employ about half the workers and produce about half of the gross domestic product. If you've been around an entrepreneur in their first two years, you know that growing a baby business is just as intense as parenting a child. The creative energy, effort, and persistence are off the charts.

But from the community economic development standpoint, here's the best part: No site visits with unpredictable results and poor ratio between effort and payback. No huge dog and pony show for people who live elsewhere, followed by the big let-down when they choose not to move or to move to someplace with advantages you can't match.

And even if you succeed in attracting an office of an existing business, you still have to cope with the "black box" of corporate intentions into which you can't peer. If the corporate headquarters are out of town, the corporate profits are spent out of town.

Let's see. If you grow your own businesses, they are very likely to stay in your town if they can succeed there. After all, they were there before they started the business. They're unlikely to leave, because your town is home. If and when they make a profit, they'll spend a lot of it in your town. They will bring a burst of creative energy onto your scene, and they will hire workers. What's not to like?

Critics will say that the government exaggerates some of the figures about the percentage of the net new workers (the term takes into account the fact that some workers are hired and then quickly laid off) that small businesses create. However, until I see definitive studies otherwise, I accept these figures because they are consistent with my own observations.

Another set of more discouraging figures pertains to the failure rate of small business start-up attempts. Again, lively debate would be the polite term for the discussions about statistics on small business failure. If there's any consensus at all, it tends in the direction of about a third of all small businesses succeeding, a third breaking even, and a third losing money. About a third drop out within the first two years, and only about half are still in existence in four years. Maybe 30% are still in business in 10 years.

Given all these tendencies and allowing for bad measurement, liars who figure, and scholars who keep the liars somewhat in line, the following are realistic conclusions from the community standpoint:

• Small business is by far the most reliable source of new jobs for your community.

• Start-ups are quite vulnerable within their first two to four years.

• Entrepreneurship support embodies your community's energy, enthusiasm, and courage, and gives your economic development program a more active stance than waiting around for investors to find you.

• If new ventures succeed, there is a high probability that jobs will remain within your community and be far less vulnerable to moves than jobs that were imported from somewhere else in the first place.

How Entrepreneurship Support Can Be Helpful

Personal qualities that start-ups need to succeed include good timing, adequate capital, realistic financial projections and a way to support themselves long enough to make it, intuition and the confidence to pay attention to it, ability to present themselves well, and the ability to self-correct quickly if they see that they have made an error.

But this site is focused in on community development. So from the standpoint of what the fledgling business needs or can gain from the community, worthwhile contributions from the local government, local business organizations, and colleague start-ups include:

• Accurate advice on how to navigate the legal and governmental aspects of business start-up, ideally in a one-stop shop

• Referrals to competent professionals, including attorneys, accountants, business plan advisors, lenders, and marketing professionals, as needed

• Ways to make the business look more advanced and more profitable than it is, so that business visitors feel they are dealing with a solid organization

• Support services so that the business owner isn't spending time majoring in minor tasks

• Low-cost rent and overhead

• Emotional and practical support from a network of peers, and an accompanying learning environment

• A growing sense of involvement in and loyalty to the community, so that when the business becomes successful, the entrepreneur will be a civic asset

• Great quality of life

How to Cultivate a Crop of Baby Businesses

Entrepreneurship support resembles most of the long-range projects explained on useful-community-development.org. It requires persistent, day-in and day-out attention, effort, and reflection on what efforts are helpful and which ones are counterproductive. Then, in community work even more than our personal lives, sometimes we have to force ourselves off of auto-pilot and quit doing the thing we've always done if we see it's not working.

Also just like other aspects of community development, you need to organize a burnout-proof network of others who share your interest, passion, and responsibility for cultivating entrepreneurs. When you move on to another job, have to care for an ailing parent or child, have a baby, get cancer, fall in love, and otherwise participate in life, your entrepreneurs keep rolling right along. Go it alone, and you subject the community effort to interruptions if something changes for you.

We're big believers in business incubators. That page gives details of why bringing entrepreneurs into the same physical environment makes great business sense. However, even if you decide not to sponsor a community business incubator, or while you're waiting to get one going, see what shared services your entrepreneurship support program can provide.

At a minimum, you can provide frequent entrepreneurship support seminars or breakfasts by the most dynamic presenters you can find. You need some programs on the topic of whether entrepreneurship is appropriate for a particular person, because not everyone is cut out for the intensity, focus, and risk taking inherent in start-ups. You should add other practical "how to" sessions on getting the paperwork side of things tidy and keeping it that way. New business owners will appreciate sessions on selecting marketing, accounting, and possibly legal firms.

The local Small Business Development Center, government, chamber of commerce, community college, or university would be ideal sponsors of these entrepreneurship support programs. If not, see if someone wants to start or expand a business, and put together his/her own series of half-day workshops and charge an entrance fee.

But cultivating small business start-up implies much more than throwing up a few programs on how to get started. If we think back to the farming metaphor, cultivating means removing the weeds so the good stuff can grow. Be there at the beginning, but also early and often as the entrepreneur moves through the process. Help him or her observe what is happening, and point out weeds. Ideally this is a community effort, shared by an entrepreneurship support team consisting of several experienced entrepreneurs who have succeeded in small business at least once, as well as subject matter experts from the potential sponsoring agencies we discussed above.

Your community needs to locate at least one person, or ideally more than one, who has time, expertise, and inclination to roll up the sleeves and pitch in to help an entrepreneur when the going gets tough. Think of retired executives, such as SCORE, as well. If you did this, you would have a selling point that most communities can't offer, and you would increase the likelihood that your locally grown start-ups will succeed.

How to Prioritize Entrepreneurship Support

You're going to roll your eyes and think we're asking you to judge who's most likely to succeed, or to generally pick your favorite start-up and go with that gut feeling. But you'd be wrong.

The only suggestion we want to insert gently here is that you keep in mind what constitutes and contibutes to your economic base, and how you can expand your base laterally with compatible and complementary businesses.

When you see that type of start-up, yes, you should favor it over the hobby boutique that may never be more than a source of pleasure for the owner, if successful.

How to Retain Entrepreneurs

Let's say that your entrepreneurship support program is fabulously successful, and that in four or five years, you have a great crop of successful small businesses. A few have fallen by the wayside, but you have a real and noticeable net gain.

Now what? Will they start looking for more advantageous locations for their business? You can bet that if they are truly successful, nearby towns and faraway cities will be trying to lure them away, sometimes with actual cash bribes in hand.

Of course it's possible that you will lose an entrepreneur or two along the way. There could be compelling business reasons that they will thrive more in a different location, more central to markets, suppliers, their transportation network, cheaper or more skilled labor, and supportive resources such as universities.

You can't control everything in their business environment. So control what's within your sphere, and that's the loyalty and attentiveness of the community to their needs. Make sure that by the time other communities are knocking on their door, and they're getting a restless feeling that they need to take their business to the next level, they are so firmly entrenched in and happy in your community that they will be very reluctant to leave. So be disciplined along the way; try to make their families love your community too!

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