Starting a small business is a difficult undertaking. And in a city like Detroit that is working to grow its economy and create jobs, the challenges of getting a small business off the ground are especially steep. Startup capital is hard to come by; customers and potential customers don’t necessarily have disposable income; and infrastructure, workforce and logistical barriers persist.
But small businesses and startups are our most powerful drivers of job creation. Within the last 25 years, small businesses have added 8 million jobs to our economy. They have provided 55% of all jobs and 66% of all net new jobs since the 1970s, and those numbers are continuing to grow as the number of U.S. small businesses has increased by nearly 50% in the last 30 years.
How do we encourage small business growth and job creation, and specifically in cities like Detroit that are working to rebuild their economies?
Mark Rigdon, Executive Director, Global Philanthropy, JPMorgan Chase & Co., recently spoke with three small business development experts in Detroit helping to support small businesses as they grow and scale up. Leslie Smith is President and CEO of TechTown Detroit, a business accelerator and incubator that serves entrepreneurs in the technology, retail and wholesale sectors. Ross Sanders is the CEO of Bizdom, an intensive accelerator program for technology companies. And Dan Carmody is the President of the Eastern Market Corporation, the nonprofit that manages Detroit’s 125-year-old historic Eastern Market, which also houses and supports hundreds of food service vendors.
Q: What are the barriers to successfully launching a small business these days?
Dan Carmody (Eastern Market): Access to the markets and capital can be huge obstacles. Someone with a great idea won’t succeed if they can’t get their product or service in front of the right customers, and they can’t scale if once they reach their customers they can’t finance expansion. We work with food companies that have great products — many are successfully selling hundreds of units a week. We help them take that next step to start marketing to grocers and food distributers that may want to buy thousands a week.
Ross Sanders (Bizdom): Gaining the practical experience of running a business is another big factor. People who start new businesses tend to be great when it comes to understanding their products, but to succeed they also need to know so many things, from keeping the books to managing employees. They need coaching, mentorship, expertise — that’s very important.
Q: So if those are the barriers, how do your organizations lower them and help more small businesses to get off the ground?
Leslie Smith (TechTown Detroit): TechTown Detroit really is a hub of mentorship, entrepreneurship and acceleration in the city of Detroit. A big part of what we do is connecting new businesses to mentors who can help them navigate these challenges. The entrepreneurs we see have great ideas for businesses, but don’t always know how to commercialize their concepts. Being able to learn from others who have travelled that path is an immense help.
Ross Sanders (Bizdom): Access to capital is crucial. We actively recruit folks who have an idea for an early stage tech-based startup and are willing to be headquartered in Detroit. Those that are accepted receive an investment of up to $125,000 along with collaborative space and the opportunity to pitch for follow-on funding from investors. That seed capital is an essential ingredient toward getting lift-off.
Dan Carmody (Eastern Market): Eastern Market offers a unique opportunity to get start-up food businesses in front of customers. We operate year-round on Saturdays with a peak of about 250 vendors and 40,000 customers in warm months. It’s a neighborhood experience unlike any in North America. We’ve also tried to develop a full pipeline of assistance to get people from an idea stage all the way through second stage development. That’s an extraordinary chance for a food business to build a customer base and reputation, which can then lead to bigger opportunities retailing to local stores and restaurants and beyond.
Q: Why are your missions important and what will it mean for the city of Detroit if you are successful?
Ross Sanders (Bizdom): Entrepreneurs create things. They create jobs. They create wealth. They create the commerce and vitality that any city needs. But to do that, they need some encouragement and environment that gives them every chance to succeed. If we can help create those conditions, then we’ll be doing our part to bring all Detroit back.
Dan Carmody (Eastern Market): The economic situation here in Detroit has forced a lot of people to go back to square one and look at what skills they have and the passions they have to start a small business. That has translated to a wealth of would-be entrepreneurs. Our goal is to try to help foster those passions and accelerate a small business pipeline to find those companies that can be employing hundreds of people five years from now, putting Detroiters back to work.
Leslie Smith (TechTown Detroit): The future of Detroit will be made by our small businesspeople. They are the ones who will attract the investment capital, create the jobs and attract talented young people to live here again. It’s what this city desperately needs. And we’re seeing the evidence everyday that this city can be a great place for small businesses.