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Fostering Small Business Success

Small businesses are the hearts of their local communities. They create jobs, provide goods and services to residents, add to a unique sense of place, and attract outside consumers who bring money into the neighborhood. They also may be more rooted in the community than a non-local chain, and therefore more likely to remain and to be involved in neighborhood change efforts. There are several ways community actors can support local businesses to locate and remain in their neighborhoods.

1. Provide incubator space for fledgling entrepreneurs

The cost of renting a building or storefront can be a significant challenge for a new business owner. To encourage and nurture small businesses in your neighborhood, an incubator can offer low-cost shared space that meets the needs of early stage businesses. Sometimes these are specifically tailored to types of businesses: gallery and studio space for artists, commercial kitchen for food businesses, “maker space” for small manufacturers, or space that is wired to meet the needs of high tech ventures. This type of specialization can be particularly useful when you are focused on bringing a specific brand to your neighborhood, such as an arts district or dining destination.

More than just co-working space, an incubator also helps entrepreneurs with business planning and financial management during their critical early period, teaching skills that will be needed as the business grows. Ideally, businesses will mature and expand with this support, so that they can move out of incubator space and into commercial spaces in the community.

In West Philadelphia, The Enterprise Center used support from Philadelphia LISC to open the Dorrance H. Hamilton Center for Culinary Enterprises (CCE), an incubator for food businesses that includes kitchen spaces that entrepreneurs can rent by the hour. The spaces are outfitted with professional equipment that would be cost-prohibitive for fledgling new businesses. The CCE also provides facilities to allow entrepreneurs to pack, store and ship food items. Small business owners can also access training, technical assistance with business planning and development, and capital for start-up and expansion through The Enterprise Center.

Learn more about incubator basics.

2. Help small businesses access capital

Entrepreneurs need to find sources of capital to get their businesses off the ground, or to grow them into more profitable enterprises. Shops need to buy inventory, restaurants need to supply ingredients, and most businesses need to rent or buy space in which to operate.

But many small business owners struggle to find sources of lending capital that they need to succeed. A 2015 survey of 3,459 small businesses by seven Federal Reserve Banks found that only about half of those that applied for loans were approved. That speaks to an unfilled need for entrepreneurial capital.

LISC’s Small Business Lending program offers several different products to meet the needs of small businesses, from microfinance to larger loans. LISC’s offerings include 0%-interest loans through the Kiva Zip online crowdfunding platform, which has helped entrepreneurs in Cincinnati’s Walnut Hills and Over-The-Rhine neighborhoods, underserved by traditional financing, get their businesses off the ground.

To connect small businesses in your neighborhood with resources, check out LISC’s products, the U.S. Small Business Administration’s (SBA) list of lenders and application guidance for microloans and the Opportunity Finance Network’s CDFI Locator. For small businesses located in rural communities, the U.S. Department of Agriculture offers a set of specialized products.

3. Build business owners’ capacity

Many start-up businesses fail because the owners know their product, but they don’t know how to manage or market a business. Owners of start-ups need to understand their market, know how to state the unique value of their business, and manage their day-to-day financial position. As businesses grow, their owners’ business savvy must also grow in order to keep up.

Recognizing this capacity gap, Los Angeles LISC has provided support to the Asian Pacific Islander Small Business Program, a collaboration of five community organizations that assists small business owners with culturally appropriate counseling, training and connections to business resources. The program focuses specifically on low-income and immigrant entrepreneurs in the Chinese, Korean, Japanese, Filipino and Thai business communities.

To help business owners in your community, look for your local small business assistance center. You can also explore some best practices and guidance for urban and rural small business development.

4. Improve business district appearance and marketing

Making the neighborhood business district inviting to visitors and potential customers helps all local businesses. At a minimum, the business district should be clean, safe and visually appealing.

Neighborhood associations can accomplish this on their own or by helping the merchants to form a local business association or business improvement district (BID). Such entities can take over responsibility for organizing cleanup events or paying for a street cleaning and trash removal service; making sure there is clear and appealing signage; improving the storefronts and streetscape; creating inviting public spaces; and installing adequate lighting.

Some neighborhoods have had great success with creating a unique sense of place by leveraging cultural or historical aspects of the community, such as events celebrating the shared cultural heritage of many residents. Creating a unique neighborhood brand can make your community a destination for visitors who bring business and revenue with them.

Read on for some lessons from LISC’s MetroEdge program on revitalizing commercial corridors. Get guidance for creating a neighborhood marketing plan and a neighborhood marketing toolkit. Explore how to start a merchants association in the Main Street model originated by Main Street America or start a Business Improvement District with practical help from the City of New York’s step-by-step guide.

Browse our How To Do It and In The News sections on economic development for more on how to support small businesses in your community.

Posted in Commercial & Economic Development

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