To help drive small business development, especially among minorities, cities and states need to foster entrepreneurial ecosystems that make it easier for fledgling companies to find the resources they need, the head of a national organization focused on developing inclusive innovation economies said Wednesday.
There are a lot of resources available for entrepreneurs from government agencies, universities, nonprofits and economic development organizations, said Christopher Gergen, chief executive officer and co-founder of Forward Cities, a North Carolina-based organization. The problem is it’s difficult to find the resources at the same time someone is trying to start a company.
“It’s incredibly inefficient,” Gergen said during a speech at the fourth annual Statewide Economic Development Summit Wednesday. “People retreat and rely on friends and family for support and advice.” The two-day summit, co-sponsored by Entergy and eight regional economic development agencies, wrapped up at L’Auberge Baton Rouge.
Since 1996, the people starting companies in America have gotten more diverse. Back then, 75% of entrepreneurs were white. Now, that number is down to just over half.
While black- and Latino-owned businesses are becoming more common, they lag behind white-owned businesses financially. Of the 2.6 million black-owned businesses, 90% of them are owned by a sole proprietor. And of those, Gergen said, 70% make less than $25,000 annually. That prevents the owners from building wealth.
New Orleans is a stark example of the wealth difference between whites and blacks. The Crescent City is 60% black, but less than 2% of the business receipts are generated by black-owned businesses. “That’s not a sustainable or competitive place to be,” he said.
Forward Cities is involved in two developments in Pittsburgh that could be models for New Orleans and Louisiana, Gergen said.
Economic development and business groups have agreed to partner and share data and resources. In connection with the University of Pittsburgh, a customer relationship platform has been established for business startups. Navigators with ties to the community have gone out and done outreach with people who are looking at starting companies and connected them into networks.
“You need a system and you need high touch outreach to really market it,” Gergen said. “You need to build a really good front door and you need to build a marketing campaign around it.”