02/ 14/ 2005
by Steve Strauss
Q: I live in what once was a very vibrant economic area. But the factory that anchored so much of our small-business growth left town a dozen years ago and since then things have been tough. How do we foster more small-business growth in our community?
Jose, Michigan
A: Entrepreneurs, especially small-business entrepreneurs, are the fuel that powers the American economy. While some areas foster business development (Boston or the Silicon Valley, for example), many others do not.
It is surprising that more communities do not make a more concentrated effort to cultivate small-business growth, especially since it can make such a difference. The clear benefits are
- The creation of new jobs
- General economic growth
- A better tax base
- Social stability
But aside from these obvious benefits, there are also two other less apparent, but no less important, benefits that come from fostering small-business development.
The first is that encouraging entrepreneurship allows young, talented people to put their best efforts toward the "public good." A business only succeeds when it fulfills a market need, when it helps people solve some need or want. The entrepreneur gets the payoff of money and ego gratification that results from creating a successful business. But again, that only happens when the business helps people. Small-business entrepreneurs who solve problems help themselves by helping others. It is a classic win-win.
And this in turn creates an additional benefit. When a pebble is dropped into a still lake, it creates ripples. Well, the same is true for communities. The entrepreneur is the pebble. Once his or her business and efforts are "dropped" into the community, the ripples that emerge are remarkable indeed: Excitement, business growth, inspiration, and hopefully, imitation. Even a single successful entrepreneur can create enough excitement to get people to follow in his or her footsteps and thereby help create a more lively local economy.
So the real question is, how do we create great pebbles, that is, great entrepreneurs? There are three things people and communities can do to foster small-business development:
1. Encourage individuality and entrepreneurship. For entrepreneurship to thrive in a community, the community has to celebrate new businesses. Articles should be in the paper discussing new business success stories and such stories should also be seen on local TV. This sort of media attention encourages people to take the risk necessary to start a business.
2. Teach entrepreneurship. Yes, some entrepreneurs are born, but most are made, and that is the good news: Entrepreneurship is a skill that can be learned.
It begins in the home. Parents can encourage children to create lemonade stands and other micro-business ventures. Elementary and middle schools should also work at preparing entrepreneurs; many "junior entrepreneur" programs are available.
Maybe most importantly, communities need to work together to teach small-business success skills. Everyone has a role to play: Governments, schools, banks, lawyers, accountants and others associated with business should create “Entrepreneurial Development Associations” and “Business Incubators.” Similarly, community colleges should sponsor workshops and state governments can offer tax breaks. Other entrepreneurs can provide new entrepreneurs with free rent. For a community to really foster entrepreneurship, everyone has to get involved.
3. Make money available. Small businesses grow in areas where money to start businesses is available. So regional banks must understand that "riskier" loans may be required, and they need to work with the Small Business Administration to reduce that risk. Large corporations and wealthy individuals can create venture capital funds to help viable entrepreneurs.
The key to increased business development is tapping into the ideas that drive the entrepreneur. If financial and ego incentives are there, and the community says yes more than no, then small business growth is very possible, no matter your location.
