The Need
Technical assistance is a fundamental component of equitable economic development, as it creates partnerships with entrepreneurs who historically have been excluded from ownership experiences and who have been denied the capital needed to establish or grow their operations. Technical assistance programs have been shown to improve the abilities and problem-solving approaches of individuals pursuing entrepreneurship,50 and can help small businesses improve managerial functions.51 It is important to recognize that the overwhelming majority of small businesses in the United States (81%) are non-employer businesses (sole proprietorships), and that the majority of new job growth takes place through small business creation or expansion. Between 2000 and 2019, small businesses created 10.5 million jobs compared to 5.6 million for large employers.52 Helping emerging entrepreneurs and growing small businesses to achieve stability is, by itself, a powerful job-generating strategy.
In fact, technical assistance to entrepreneurs can have a positive impact on small business creation, survival, and growth53 in the form of increased sales, improved cash flow, and profit margin.54 Examples include the SBA's Small Business Development Centers (SBDCs), as well as programs in countries such as Ireland, the Netherlands,55 and South Africa.56 Further research suggests that the SBDC program effectively meets the needs of existing small businesses and emerging entrepreneurs in terms of startups, job creation, and sales growth.57
Overwhelmingly, cohort participants emphasized the need for greater investment in coaching small and emerging entrepreneurs, and the coupling of technical assistance with access to adequate, flexible capital. Combining low-cost financing with business coaching and technical assistance is a promising wealth-building model that can help entrepreneurs with lower incomes build credit and achieve business stability across urban and rural areas.58
An additional important consideration for local government involves the quality and accessibility of jobs created by small business. Small businesses vary in the wages they pay, and in the education and skills they require—many of the jobs they offer are neither accessible nor pay living wages. At the same time, research suggests that places with a high density of locally owned small businesses have higher incomes, higher rates of employment growth, and less poverty.59 In this way, even though not all small business jobs may be high-paying, as a component of a community’s economic makeup they contribute to better work opportunities, in particular for workers who have been most denied employment opportunities, such as individuals with disabilities, the formerly incarcerated, immigrants, seniors, and parents returning to the workforce.60
Local governments can play multiple important roles in helping small businesses grow, and in the process generate quality jobs for historically excluded residents. Workforce development systems—the main strategy governments use to train workers and connect them with employers—include public programs implemented by local agencies and community colleges, and privately run programs managed by nonprofit organizations and for-profit companies. Workforce systems, however, have largely focused on larger employers, in part because it is easier to establish relationships with firms with many positions to fill rather than smaller establishments that may add one or two employees at a time. At the same time, municipal leaders can promote both an equitable recovery agenda and stronger connections between workforce development systems and the small business community in their selection of workforce development boards. These leaders help determine training and placement strategies and goals supported by the Workforce Innovation and Opportunity Act (WIOA).
Our research and the experiences of cohort members identified strategies to further connections between business-focused capacity-building and workforce efforts, to simultaneously strengthen small businesses and connect them to local skills and employment systems. They involved local governments serving directly as workforce intermediaries (which can allow them to leverage their economic power to promote targeted resident hiring), crafting small business incentives to support quality jobs, and addressing digital inclusion through digital skills training for businesses and workers, as described below.
STRATEGY
Provide incentives for small businesses to advance accessible, living-wage jobs
Some cities are exploring what they can do to encourage smaller local businesses to thrive while also providing quality jobs. For example, the City of Boston partnered with High Road Kitchens and One Fair Wage, a network of restaurant owners and a nonprofit, respectively. The two organizations are both dedicated to fair wages and working conditions in restaurants, and together launched the COVID-19 High Road Kitchens Restaurant Relief Fund. In this short-term pilot, 38 restaurants received grants of $20,000 and one-on-one technical/operational support for retaining or rehiring employees at a minimum of $12.75 per hour, completing a training on equitable employment practices, and committing to providing a $20 per hour minimum wage by 2026.61 The Fund prioritized family-owned, immigrant-owned, and BIPOC-owned small and local restaurants with fewer than 25 employees. The City of Boston launched a second iteration of the program, the Restaurant Revitalization Fund, in September 2021.62
STRATEGY
Provide digital skills training
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Through the pandemic we found that digital coaching is as important as financial coaching for our businesses.”
The coronavirus pandemic forced many brick-and-mortar stores online, requiring small businesses with no web presence—let alone an online ordering infrastructure—to adapt quickly. For businesses that were already on the losing side of the digital divide, this only exacerbated their challenges.
In Detroit, a public-private partnership between the city and the local BIPOC-led design firm Rebrand Cities has been offering free digital skills training, including web design basics, to local small and micro-businesses. The partnership, called Digital Detroit, seeks to get small businesses online by offering web design instruction, three months of free hosting, branding, and content creation workshops. Digital Detroit is part of a larger citywide effort to close the digital divide that started before COVID-19 with the creation of a position, the municipal director of digital inclusion. That office implements digital equity strategies in a city where more than 100,000 residents, almost one sixth the population, lack fixed broadband access in their homes.
In addition to directly supporting digital skills providers, some municipalities might consider partnering with local business development organizations or small business membership groups. In the early days of COVID-19, many community-based partners quickly adapted their services to add digital training for their clients or members, and their impact could be expanded with greater municipal support. For example, the Beaver Street Enterprise Center (BSEC), a Jacksonville-based business incubator, added digital skills training as part of its Center for Entrepreneurial Opportunity. It quickly became one of the center’s most popular services and helped 40 businesses pivot and remain open in an extremely challenging environment.
Similarly, in Boston the Black Economic Council of Massachusetts (BECMA) partnered with a Black-developed app, Squire, to assist its member businesses in establishing online platforms. In the process, it also helped them build digital skills. Segun Idowu, BECMA’s executive director, explained that one of the main challenges that COVID-19 brought to the forefront is that a large number of businesses did not have an email account or internet access, with many still operating exclusively via cash. Setting up businesses online also meant creating easily accessible financial records, which in turn helped entrepreneurs qualify for PPP loans and other financial products.
STRATEGY
Reimagine cities’ role as potential workforce intermediaries
While the playbook’s major focus is small business recovery, the boundaries between supporting workers and supporting small businesses are not entirely clear cut, especially as the vast majority of small businesses involve sole proprietors for whom the business is not a main source of income: a third have other jobs.
Inspired by New Deal programs to fight mass unemployment, some local governments are leveraging federal stimulus funds to expand service corps programs to address the health and economic challenges created by the pandemic. The City of Birmingham, for example, launched the Birmingham Service Corps in April 2020 to place unemployed workers into temporary positions at local community organizations providing outreach, information, and connection to critical pandemic assistance and emergency services. Funded with a combination of $1 million from the City of Birmingham, which is reimbursable through the federal CARES Act, and $500,000 from local corporate philanthropy, the Birmingham Service Corps is managed by an independent nonprofit created to manage the program, Bham Strong, since rebranded as the Birmingham Corps. Similarly, New York City launched the City Cleanup Corps as part of its Recovery for All plan in April 2021. The City Cleanup Corps is using federal stimulus funding to hire 10,000 workers into temporary roles with 10 city agencies, including the Department of Parks and Recreation, the Department of Environmental Protection, and the NYC Housing Authority.
STRATEGY
Leverage cities’ economic power to promote hiring access
Cities are leveraging procurement and funding processes to encourage hiring from disinvested and excluded neighborhoods, and from populations that have traditionally been shut out of hiring. For example, the City of New York is engaged in a project labor agreement with the Building and Construction Trades Council of Greater New York (BCTC). In it, unions agreed to prioritize hiring workers from zip codes where at least 15% of residents live below the federal poverty level, or where at least 15% of the population are public housing residents. The agreement covers projects related to the renovation of city-owned buildings, among others, with the eventual goal that 30% of all hours are worked by residents from prioritized neighborhoods.
A parallel effort involves community hiring legislation under consideration by the New York State Legislature, to require contractors working with the city to prioritize more equitable hiring. The bill would overcome legal obstacles common to many states, where local governments are prohibited from requiring that entities benefiting from municipal procurement prioritize economically excluded communities. The legislation would allow New York City to establish a requirement that entities that do business with the city on non-construction contracts meet employment goals for people who previously have worked for low wages and use a minimum ratio of apprentices, and would enable the city to connect these contractors with workforce development programs that produce qualified talent from prioritized communities.
