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To Grow Downtown Business, Cities Should Tailor Strategies

Written by Amanda Maher

During last month’s National Main Street’s conference, Della Rucker, a principal at Wise Economy, shared strategies for growing local entrepreneurship in Main Street or downtown commercial districts. Too often, she noted, municipalities jump to the conclusion that if they just keep providing more funding to businesses it will guarantee success, but more strategic activities can go a long way.

Rucker lays out three key strategies for supporting Main Street businesses:

  1. Peer and mentor networks: One of the leading indicators of whether a person will be a successful entrepreneur, Rucker said, is whether he or she had a parent who was also an entrepreneur. The opportunity to watch and learn from another’s struggles, and to turn to them for advice, is critical for early-stage entrepreneurs. These role models support risk-taking, but have been in the business long enough to understand how to make those risks more calculated. Peers and mentors also play a valuable role as cheerleaders; their optimism and encouragement is crucial in providing support as business owners get through their early years.
  2. Targeted support at the right scale: Municipalities tend to provide large grants and other incentives to small businesses to encourage them to move in or grow locally. Money matters, sure. After all, access to capital is one of the leading obstacles faced by inner city business owners. But money should be targeted. Otherwise, entrepreneurs risk becoming beholden to those who have invested in them—allowing them to be less nimble as challenges arise.

    Similarly, local governments will frequently offer up free or reduced-cost spaces for companies as they get off the ground – particularly in communities where there are high vacancies and empty storefronts. Yet many small businesses cannot fill the space of most storefronts; they only need a few thousand square feet to test their business idea and/or products. Instead, cities should consider carving out small spaces for entrepreneurs as they first get started.

  1. Whole business support: Most startup companies need whole business support – and they need it on an ongoing basis. Rucker pointed to the Mondragon co-operative model in Spain as example. Mondragon’s member companies have an 80 percent success rate because of the intensive, ongoing support entrepreneurs receive, including ongoing consulting services with industry experts, access to a resource center, connections to capital providers and a network that pairs businesses with investors.

Given these realities, what are some of the things municipalities can do today to support Main Street entrepreneurs?

First, policymakers must realize that thriving entrepreneurial ecosystems are typically led by the entrepreneurs themselves. Government can be “leaders” or “feeders,” according to Rucker – and she suggests policymakers serve as the latter. A top-down approach to supporting entrepreneurs is rarely successful.

Instead, local policymakers can create structures that enable or push collaboration. Government has a wider network than most individual business owners. Policymakers can help put business owners in touch with one another, particularly across industries, to facilitate the connections that can help businesses grow.

Municipalities serve a number of other roles, as well, including promoter, space owner, administrator, resource sharer and partnership-builder.

For instance, cities can help direct attention to the small business ecosystem to spread awareness of all the great things happening and what these businesses have to offer. The government can (and should) serve as a story-finder and media connector whenever possible.

Economic development practitioners should also consider offering businesses appropriately sized space in municipal facilities if those buildings are otherwise underutilized. In some cases, there’s no publicly-owned space, but the local government can point businesses in the right direction when it comes to identifying and leasing local offices or storefronts. In this case, the city works to find, promote and manage space.

When it comes to administration, the public sector should communicate the permitting, licensing and zoning process clearly to businesses. Entrepreneurs want to know how and why certain rules and regulations are in place. Make the process for opening a business as easy as possible to understand, and make it predictable. Uncertainty can make or break a business in its early stages.

Finally, government has a unique role to play as partnership-builder. Local officials know who’s working on what in their community, but many small business people don’t. Municipalities should leverage its powers to connect people across organizations and facilitate connections that help strengthen the local business community.

What seem like small strides in supporting the entrepreneurial ecosystem today can collectively have a major impact on urban economic revitalization.

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