By Steve Grossman, CEO, Initiative for a Competitive Inner City
November 26th is Small Business Saturday. It’s a day when consumers across the country strengthen their local economies by making holiday purchases at small businesses instead of at big box stores or online. At ICIC, we celebrate the spirit of this unofficial holiday year-round. We encourage a continuous dialogue emphasizing the importance of small businesses across all industries, in addition to the retail enterprises favored on Small Business Saturday.
There are many reasons to celebrate small business, most notably its powerful, yet sometimes overlooked, influence on our economy. Recent research conducted by ICIC provides compelling evidence that small businesses rival – and often exceed – the impact of larger ones when it comes to job creation. The data supporting this claim is powerful: in four of the five cities we studied, the addition of only about one new job per small business would completely eliminate urban unemployment!
Small Business Saturday naturally focuses attention on local retail shops, though small business is a force that permeates every industry. Each year we honor the 100 fastest-growing inner city businesses in America with the Inner City 100 (IC100) list, which is published annually by Fortune. In 2016, honorees represented 26 industries including construction, consulting, engineering and architecture, business and professional services, and technology. As an example, the #1 ranked firm in 2016 was Atlanta-based Caduceus, a consulting and staffing firm serving technology, healthcare and scientific companies.
With its power to boost local economies and envelop all industries, the importance of small business is even greater in inner cities, where good-paying jobs are needed most. For example, in four of the five cities we studied, small businesses create a larger share of jobs in distressed inner city neighborhoods than in the city overall: 64 percent in Detroit, 70 percent in Chicago, 74 percent in D.C., and 77 percent in Los Angeles.
Each of ICIC’s Urban Business Initiatives help communities tap into the economic power of their small business ecosystems. Since the inception of the IC100 program in 1999, the 895 firms recognized have created 119,781 jobs. The 2016 winners alone had an average of 62 full-time employees and, as a group, employ over 7,300 people.
Our Inner City Capital Connections (ICCC) program is designed to accelerate small business growth and access to capital. To qualify for the program, businesses must have at least 51% of operations in an economically-distressed area, or have at least 40% of employees residing there. To date, participants in this national program have created 12,431 jobs, with 61% of them paying over $40,000. The program has also helped minority owners go from an average of around $1 million in capital raised to an average of over $2.2 million. In total, participants have raised $1.4 billion in capital during the program’s first ten years.
The term “small business” can often be confusing, even to the business owners themselves. After completing the Goldman Sachs 10,000 Small Businesses program, which provides entrepreneurs with education, support services, and a growth plan, Carla Walker-Miller, President and CEO of Walker-Miller Energy Services in Detroit, said, “I uncovered my own unconscious bias that equated small business with inferior business. Small is a size, not a value judgment. That realization opened a door through which I ran, seeking meaningful collaborations and larger contracts, armed with more joy, power and confidence.”
Carla is just one of the thousands of graduates we have helped inspire through our collaboration with Goldman Sachs on the 10,000 Small Businesses program. Together, graduates represent a potent influence on the economy: their combined revenues total $5 billion and they employ over 80,000 people.
In other words, small business is anything but small! In fact, time and again, we have seen how small business encourages individuals and communities to work together – something many have learned to do through our programs. Of the 10,000 Small Business graduates, 85.3% now do business together. Carla Walker also noted, “In 10,000 Small Businesses I learned that a negotiation is not a fight; you don’t have to lose for me to win.” Graduates are paying it forward by mentoring an average of eight people each. We’ve seen this domino effect across all our programs, with over 200 of the IC100 winners having participated in 10,000 Small Businesses, ICCC, or both.
As we get ready to collectively contribute to the growth of small businesses this Saturday, we offer a humbling reminder about the broader impact they have year-round, in every industry. At the heart of our research and programs are hard-working, innovative, and passionate individuals who wake up every day, ready to make a difference in the communities they serve. As partners, clients, consumers, relatives and friends of those businesses, we can all play a part by continuously advocating for their success and celebrating their achievements, in every capacity, in every industry, all year long.