Rethinking how we support Entrepreneurship
This is a section from a report I finished drafting last week for an Economic Development Administration about how to improve their support for entrepreneurs. In the process, I developed a framework for understanding how entrepreneurs and what they need differs as they grow. A lot of times we only look at one small part of this whole continuum, and we fail to provide the support that they actually need.
And then we wonder why our entrepreneurship work has so little impact on the communities that we care about.
I will be developing a graphic for this, but that doesn’t come easily to me. I’d love to hear how you would change this or what you think it’s missing.
Reframe entrepreneurship leadership from providing a handful of programs to fostering development of a continuum of support
Like most entrepreneurship support systems across the US, the services offered by this organization and the few other entities supporting entrepreneurship are well intentioned, but inadequate to the task of moving the local economy in a positive direction through entrepreneurship and small business growth. Larger businesses, such as the ones that the organization is used to working with, typically need help filling capital stack gaps resulting from costs or meeting other needs that would otherwise make operating in the Territory less feasible.
Entrepreneurs and small business owners are completely different creatures.
Entrepreneurs and small business owners have different needs throughout their lifespan, but in all stages these needs are not the same as bigger businesses. Here is a brief overview:
These entrepreneurs’ most pressing needs are for information and guidance. They need help — typically outside, unbiased help — to evaluate the demand for, value of and best delivery method for their product or service. Access to resources like a building or money at this point without such support could send them in a direction that they will not be able to sustain when that support is no longer available.
These entrepreneurs are encountering the first wave of unexpected challenges. They may have several needs, ranging from guidance on how to handle new issues, to emotional support and inspiration, to financial support so that they and their family can eat. A loan program or an unfocused “networking event” might be of little use here, but a small unrestricted grant to help them keep the lights on, or an evening of more experienced entrepreneurs sharing their challenges, might make all the difference.
These entrepreneurs have gained a basic level of stability. They are generating enough revenue to meet their needs, they know how to deliver their product or service, and they have enough clients/customers to feel some level of security.
To stay in this position, however, they may need help anticipating and preparing for potential disruptions, such as supply chain tangles or changes in customer taste. The solopreneur may or may not actually know that they need such help, because they are likely to be so busy running the business that they struggle to look ahead. This type of business is also probably not generating wealth for that household, but lack of knowledge, experience and (importantly) confidence in their ability to grow larger may keep them from capitalizing on their bigger potential.
We should note that there is a sizable mental and operational chasm here between businesses that stay at the solopreneur stage indefinitely and those that become wealth-and job-creators. Entrepreneurs tend to only cross that chasm when they have informational and community support in doing it, or when they have clear examples in front of them of businesses that have done so successfully. Data for the U.S indicates that only 5% of all Black-owned businesses had employees in 2020.
These businesses have made the decision to move beyond the solopreneur stage, and in doing so they enter a whole new level of complexity and challenges. Issues such as hiring, project management, real estate negotiation, payroll management and more may fall completely outside of the owners’ areas of expertise, and they may struggle to find staff, buildings, equipment and other resources, especially in a small economy. Helping these businesses to grow their capacity and solve their problems is a crucial contribution to fostering their success.
These businesses are on a growth trajectory, but are still likely to face challenges ranging from leadership skills to technical problem-solving to access to new markets. Conventional thinking often concludes that these businesses have “made it” and need no further public policy support, but that is seldom the case.
Rethinking entrepreneur and small business support from the current collection of resources will require some substantial investment. Entrepreneurs and New Business owners will need more substantial education and connection opportunities, as well as material support that accounts for their high level of risk and likely lack of personal safety net. Solopreneurs will need specific resources, models and support to fully understand and evaluate opportunities for growth, and Second Stage and Expansion businesses may need technical advising and targeted support that requires specialized expertise beyond the scope of a generalist.
This continuum of services does not need to be completely located within any one department, and it’s possible that key elements may be best delivered by an outside partner, either in the USVI or on the mainland. Two crucially important parts of this continuum, however, have to be addressed:
- People and organizations who deliver services within this continuum must develop a very clear understanding of what each entity contributes, where its services are most needed, and how they will help entrepreneurs and small business owners progress along this continuum. This includes clear processes for handing off businesses between service providers so that they do not fall through the cracks.
- This continuum must be communicated to existing and potential entrepreneurs in a very clear and easy to understand manner. Economic development organizations often fail to communicate their services clearly, but time-strapped entrepreneurs and small business owners are not likely to wade through pages of text or disjointed websites looking for the proverbial needle in the haystack. If the public policy objective is to facilitate more, and more impactful and sustainable entrepreneurship, then the small investment to present this information in a fully user-friendly manner will prove crucial to fulfilling that obligation.
I would love to hear your feedback!