How to create jobs and help neighborhoods prosper? Support local entrepreneurs

Entrepreneurs and start-up companies are getting a lot of attention across America. Well, some of them are. 

Neighborhood entrepreneurs do not share the glamour, nor glean even a fraction of the funding their better-known cousins in technology do. Yet leaders of organizations that support neighborhood entrepreneurs can attest to the impact they have in distressed areas.
Neighborhood entrepreneurs typically fall under the category of microbusinesses—businesses with fewer than five employees. In the aggregate, microbusinesses contribute to the employment of 41.3 million individuals, or 31 percent of all private sector employment nationwide, says Connie Evans, President and CEO of the Association for Enterprise Opportunity (AEO). And according to their study, "Bigger than You Think: The Economic Impact of Microbusiness in the United States," they had a nearly $5 trillion in economic impact.
The effects of microbusinesses are amplified and of particular relevance to low-income neighborhoods.
In general, business owners hold more than 2.5 times the wealth of non-business owners, Evans says, and research shows that, "If we can help businesses grow so they can hire one to three more employees, we can reach full employment in these distressed neighborhoods. The advantage is even more pronounced for minorities and women."

Evans also points to AEO's recently released study, "The Tapestry of Black Business Ownership in America: Untapped Opportunities for Success," funded by the Kellogg Foundation. The research indicates that business ownership is an important road to narrowing the racial wealth gap, and that policies that encourage black business owners to hire just one or two more employees can have a dramatic effect on black employment. 

"While white adults have 13 times the wealth that black adults do, when we compare median wealth of black and white business owners, the median wealth gap decreases to a multiplier of three."

Below are some examples of how nonprofits based in Detroit, Tampa, and Memphis are solving such problems by supporting neighborhood entrepreneurs and addressing some of the most basic needs of the distressed, underserved communities where they operate. These organizations to do not have the resources to hire economists to measure their success, but an informal extrapolation based on the data summarized demonstrates just how powerful these initiatives are economically, while also providing cascading benefits to the neighborhood in ways that are less tangible, yet are vital to their success.

Feeding neighbors in Detroit

"That is what work is going to look like in the 21st century: people who are in the business of taking care of other people," says Devita Davison, executive director of FoodLab Detroit. "The solution is not going to come from the top, it is going to come from the community. ... At the end of the day, we all have to take care of each others' children, possibly feeding someone from your home, while they go off to work."

Foodlab Detroit "unapologetically works with women of color, entrepreneurs of color, and immigrants," providing workshops and training to help them develop their burgeoning food businesses. Members range from potential entrepreneurs, who may just dabble in home food prep and need to formalize their business and goals, to food entrepreneurs that are already somewhat established and need to hone their pitch decks and obtain capital. They are also developing a program aimed at food entrepreneurs with employees. 

The programs work through a series of modules, all underpinned by Foodlab's core philosophy: triple bottom line methodology—profit, people, and planet. Davison says members are not asked to sign a contract, but to commit to these principles.

"Yes, profitable and sustainable, but also thinking about the people in their ecosystem—employees, vendors, the community they serve—and the planet," says Davison.

Membership has blossomed to more than 200 entrepreneurs in the four years since FoodLab has been its own nonprofit.

Foodlab Detroit member Good Cakes and Bakes

One member, April Anderson, pastry chef and co-owner of Good Cakes and Bakes, who participated in FoodLab Detroit's training says, "the single most important thing we've learned thus far is that we must develop a corporate culture that is not only beneficial to our business growth, but beneficial to our employees' growth too."

Anderson says they place an emphasis on their surrounding neighborhood because "it's the community and neighbors that will keep us in business." She notes they also look first in their neighborhood for hiring and support neighborhood organizations and fundraisers.

Transforming challenges into opportunities in rural Florida

The people living in Wimauma, a rural community located southeast of Tampa FL, face enormous economic challenges. Most, almost 80 percent, are Hispanic. The poverty rate is 40 to 45 percent. The area is seriously lacking in services and infrastructure with virtually no public transportation. Internet and affordable housing are scarce. But in December 2016, a start-up nonprofit dedicated to supporting, developing, and promoting working women and women entrepreneurs called Enterprising Latinas set up shop in Wimauma.

"If there was a place where there is a lack of support for women, this is it," says Liz Gutierrez, founder and CEO of Enterprising Latinas. "We knew there was a scarcity of resources here, but a lot of talent."

Trying to find the most effective way to engage local women economically—many of whom speak only Spanish—and at the same time resolve a pressing community issue, Gutierrez took on the dearth of quality early childcare in the neighborhood.

Liz Gutierrez, Founder and CEO of Enterprising Latinas

Wimauma Cares training session is offered by Enterprising Latinas

According to Enterprising Latinas, there are approximately 700 children under the age of five in Wimauma, with only one formal childcare facility in the area.
Gutierrez launched Wimauma Cares in January 2017, a program to train women to become Licensed Family Childcare providers, which is currently wrapping up its first cohort. The interest was overwhelming: more than 80 women applied for the 25 openings. Ultimately, they were able to take on 38, and will open a new cohort in the fall. 

Program graduates receive their Child Development Associates Degree (CDA) after 120 hours of coursework, licensing, and exams. Enterprising Latinas covers most of the costs. The program guides them through the next phases as well—home inspections, navigating the financial and marketing aspects of running a business, and more. Enterprising Latinas brought on a Spanish-speaking instructor and offers the classes in both English and Spanish. Four women have already gotten this certification and are now working on the next steps. Gutierrez aims to have seven new home childcare centers open in the next year.  

Jackie Brown, a native of Wimauma and graduate of the program, is pursuing additional credentials that will allow her to have certification for nighttime care and weekend care. She would like to provide transportation to and from school as well because, she says, many parents work night shifts or travel for work. She is currently awaiting final inspections of her renovations, converting her modest home into a home childcare facility where she will offer traditional childcare and Voluntary Pre-Kindergarten (VPK), initially for a maximum of ten children as per Florida state regulations. After a year, she would be permitted to apply to become a "large childcare family home" which would allow her to serve more kids.

Brown is thrilled about running a business, and also about giving back to her community.

"I have a whole new purpose, a whole new life," says Brown, who says she saw women from all walks of life in the program. They want to work, make their mark positively in this world."

Gutierrez is currently looking at ideas and sources for funding other ways of solving community challenges. Among them, starting a transportation company, "Arriba," with fixed routes that would move reliably throughout the community, seven days a week. An initiative like this would address one of the most critical gaps in Wimauma's infrastructure, and at the same time provide jobs for up to 11 women drivers while enabling others to get to work and other locations.

"Public institutions are not ready to move on that, so why not us?" asks Gutierrez. 

Capitalizing on under-banked neighborhoods in Memphis

Lack of capital is consistently cited as one of the top reasons leading to business failure. But accessing capital in distressed neighborhoods, particularly by small ventures that do not have sufficient track records or scale or credit ratings, is often unattainable. 

"We view ourselves as the neighborhood lender," says Anthony Young, director of Economic Development at River City Capital, a community development financial institution (CDFI) based in Memphis that focuses on three of its most impoverished neighborhoods. 

"We have the ability to provide capital to the under-banked and the under-served,'' Young says. "There are a lot of great businesses in these neighborhoods who just haven't had the access to capital and [we] can bridge that gap, help small businesses continue to develop, and thrive and move the economic needle in those neighborhoods."

River City Capital operates under a larger nonprofit called Community Lift that was put in place to revitalize distressed neighborhoods, initially Frayser, Binghampton, and Upper South Memphis. River City made its first loan about four years ago.

Referrals come from traditional banks that are unable to service these requests, and also as Community Lift proactively builds relationships throughout the community.  

They have issued about 14 loans to date, ranging from $2,000 to $150,000—with zero delinquencies—and support their customers with other kinds of business expertise as well, usually through partners. The businesses they serve are diverse, ranging from florists to breweries to musicians to most recently, a grassroots charter school. 

Granville T. Woods Academy of Innovation in Memphis

"As a start-up venture, it was impossible for us to receive funding from traditional financial institutions," says Pamela Brown, executive director of Granville T. Woods Academy of Innovation (GTW), a STEM-focused charter school which serves the Frayser neighborhood. "We simply did not have a long enough track record or history that satisfied their lending requirements." 

The school provides wrap-around services not only for the children who attend the school, but for their families, Brown says, which is critical to the revitalization of the neighborhood. She describes the population as urban, more than 90 percent Title 1, low-income, and about 92 percent African-American with a Hispanic presence.

In the new school, students are soaring on many fronts—outpacing counterparts on nationally normed tests and earning top accolades in sports and 4H competitions. In two years GTW's enrollment has grown from 315 to over 420 students. River City approved a loan to the school for $100,000 in April, which will allow them to continue their services until they receive funding through the state. 

Community Lift CEO Eric Robertson says that intentionality is key, a concept he says is "lost in this push for regionalism," and that the work needs to be done where the people with the most need are living: the neighborhood level.  
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