CEO and co-founder at Open Trellis.
There is no shortage of disagreement and divisiveness in our country. Healing is possible, but we must continue to catalyze market solutions that include more people. This creates a strong imperative for business leaders, who want to play a larger role in improving society.
One vital component in doing so is enterprise development. Enterprise development is a trend to advance business leaders’ efforts in community engagement. It includes an array of efforts to cultivate firm formation for social impact and to support the growth of sustainable small and medium-sized enterprises (SMEs).
Business leaders should consider enterprise development approaches that leverage their firm’s core capabilities, improve employee morale and enhance customer engagement.
Examples Of Progress
While these programs may seem daunting, let’s look at a few sectors that have been successful:
Urban Nonprofits
Urban nonprofits have propagated support services for sustainable, local business owners. These organizations advance economic inclusion by building communities imbued with entrepreneurial thinking. They serve a catalytic role in local business launches, impactful increases in household income, job creation and inclusive economic growth.
The sheer breadth of business assistance is impressive: cohort-based education, workshops, networking events, mentorship, referrals, credit enhancement, crowdfunding, traditional loans, workspaces and pro bono professional services.
In 2014 we began a nonprofit to broaden business ownership in Richmond, Virginia. At RVA Works, we’re proud to report that 97% of program participants are women or minority entrepreneurs. They report an average income increase of 38% after completing the accelerator and opening their business.
Other statistics demonstrate the value of enterprise development:
• According to a study conducted by Boston Consulting Group and the Capital One Insights Center, “about 35% of Black & Hispanic business owners in Richmond saw $188,000 in personal wealth growth over the course of their business ownership, achieving parity with the median wealth for white households in the US.”
• In 2022, there were 5 million new businesses created in the U.S., a 42% increase over the pre-pandemic level.
• When an initial loan was awarded to a business with five or fewer employees, 97% remain open through an economic downturn, 5.6 jobs were created or sustained, and 32% of borrowers report higher income.
Business leaders are searching for industry-leading nonprofits, serving as board members, encouraging their employees to volunteer, providing in-kind services and providing grant support.
Regional Collaborations
We’ve also experienced success forming ecosystem initiatives that include stakeholders such as universities, churches, corporates, government agencies and foundations.
A great example is 1 Million Cups, a national initiative to foster entrepreneurship education. 1 Million Cups fosters enterprise development through regional collaborations to enhance the social connectedness for entrepreneurs. Organizations benefit through the dynamism of the local innovation and founders connect with those who can help advance their respective venture.
We’ve learned to advance those discussions that play to a region’s strengths, that prioritize engagement with stakeholders who clearly relate to the benefits, and which lead toward the marshaling of required resources.
Technology
Dr. Swati Sachan has been advancing research into the combination of technologies that advance enterprise development. This work in knowledge sharing is bridging the gap between researchers and those commercializing the technology.
Also, our efforts in credit risk optimization, blockchain and explainable AI (XAI) are helping to expand the accessibility of small-business loans. Knowledge sharing is a vital step toward policy enhancements, an expansion of capital for SMEs and the mitigation of default risk.
Business leaders are investing in the development of technology to meet internal organic growth objectives (e.g., IRR) while simultaneously improving the array of related relationships with external stakeholders.
Rural Communities
Selma, Alabama, the site of historic civil rights marches, is the home of new enterprise development that fosters grassroots entrepreneurship.
These rural communities present challenges because they lack enterprise density, but SME formation and growth are possible through the prioritization of market-based opportunities that play to the regions’ structural advantages.
We’ve found that Gilmer Management is a good example, basing its program design on the research of national programs that prioritize business ownership in difficult environments.
Business leaders are engaging local economic development officials to achieve regional SME formation and growth. They are identifying ways to leverage their organizations’ talent and community giving, establishing corporate accelerators and incubators, and applying enterprise technologies that assist in distance-based enterprise development.
Principles For Progress
Business leaders who want to boost team productivity and attract new socially conscious customers should consider four crucial steps:
1. Start with a societal problem that has an economic solution. As business leaders, challenge yourselves with the pursuit of economic productivity and return on invested capital. Go further toward benefits for those who are vulnerable. Think food, housing, transportation, energy, financial access, education and healthcare.
2. Do your homework. Regardless of the industry, there is no shortage of organizations scaling examples of related enterprise forms, impact investments and supporting technologies. Apply industry-proven metrics that capture the benefit.
3. Lay out realistic stages. Establish credibility by articulating realistic milestones, phases, required talent, financial capital, and the mechanisms for measuring progress
4. Treasure the people. Whether employees, volunteers, customers, suppliers or other stakeholders, treasure everyone involved. None of us can build a worthwhile initiative without valued relationships. Start with respect, authenticity, civility and shared interest.
Into Action
Understanding the macrotrends and opportunities helps business leaders establish a shared understanding of a region’s economic advantages. It provides a strong approach for establishing credibility and garnering regional support.
Business leaders are evaluating the opportunities for reshoring manufacturing capacity, empowering the clean tech transition, prioritizing critical and emerging technologies, and building post-pandemic supply chain resilience. These trends are translating into new enterprise development opportunities in STEM, research and design, commercialization, export and broadening business ownership.
Inclusive forms of enterprise development build solidarity, and it’s an example worth sharing beyond our borders. The democratization of business ownership requires a social impact prioritization. It accelerates technological advancement and is rigorously pragmatic, and it treasures the people.
This is a recipe for stronger people, a stronger economy and a stronger nation.
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