Keep the Engine of Small Business Humming
In 1982 as an MBA student at The Ohio State University, I read Dr. Michael Porters book Competitive Strategies. Fast-forward to the mid-1990s when I attended Porters presentation in Springfield about the importance of businesses locating in the urban core. My then-business partner and I took the bait. Within a year, TSM Design was located in the heart of downtown on Bridge Street, where we remain today.
Recently I received an e-mail from Porters brainchild, the Initiative for a Competitive Inner City. The ICICs mission is to promote economic prosperity in Americas inner cities through private-sector engagement that leads to jobs, income, and wealth creation for local residents. Given my long history with Porter, I decided to attend the ICIC summit in Washington, D.C. titled Growing Businesses in the Inner City: Building Capacity and Creating Impact.
Featured at the two-day event was Porters presentation of 10 years of data collected among 600 successful urban enterprises. He focused on the following factors influencing the growth of inner-city firms: financing, the inner-city business environment, company revenue sources, and leadership and human capital.
Some of Porters findings are as you might expect. Inner-city firms generally use personal assets for startup funds and bank loans for growth. The vast majority (76%) indicate limited access to growth capital. Yet these financing statistics yield an interestingly low failure rate among the studied inner-city businesses.
Among the sectors represented, 3% of distributors, 3% of manufacturers, and 4% of service businesses have closed their doors during the 10-year study. None of the retailers have gone out of business.
Included in the summit were presentations from Karen Mills, the administrator of the U.S. Small Business Administration, speaking about national policy and the Obama administrations commitment to growing the small business sector, and Rob Walsh, commissioner of the NYC Department of Small Business Services, who spoke in detail about best practices of a business-friendly city government.
Of particular interest to me was a panel discussion on how large companies use their procurement dollars to grow the inner-city economy, and a case study involving New England Blue Cross Blue Shield and one its small local vendors. BCBS and the vendor split the cost of hiring NextStreet Financial to mentor and grow the vendor into a more robust supplier. The vendor happens to be a communications firm specializing in diverse audiences. The net result is a vendor with increased capacity with more opportunities both within BCBS as well as other companies.
All in all, this summit was personally affirming to me as a small-business owner in Springfield. Intuitively Ive known we made the right decision 14 years ago to move the business out of the suburbs and into the center of the city. There are some discernable fringe benefits. For one, a downtown address has considerably more gravitas than a suburban one. Visibility is another factor. I can walk down the street and see dozens of current or potential clients and colleagues. Also, most of my civic involvements are within walking distance from my office. Lunchtime also yields far more interesting menu options.
The conference raised the bar for my expectations of the opportunities for my business and those of my peers. My eyes were opened to what other cities are doing to increase opportunities for small businesses. Even more importantly, I now know there are large corporations that both walk the walk as well as talk the economic-development talk. They make a point of doing business with local small businesses.
One eye-opening fact presented during the conference: 70% of all U.S. workers either work for or own a small business. The SBA definition of a small business is fewer than 500 employees. In Springfield, there are only 35 employers with more than 500 employees. So the thousands of businesses that comprise this citys economy are small, like mine. If Springfield is going to regain its economic health, its time we develop a comprehensive strategy to keep this dynamic little engine going.
Nancy Urbchat is owner of Springfield-based TSM Design; (413) 731-7600.