2022 marks what could be a new era for inclusive entrepreneurship and broad-based, dynamic growth.

The historic federal investments set to flow to communities across the country in the next year present immense potential for metro economies and a tight nexus with an inclusive small business recovery. From the State Small Business Credit Initiative coming online in February and the second tranche of American Rescue Plan Act State and Local Fiscal Recovery Funds set to be disbursed in the spring, to expansive possibilities for local, Minority/Women-owned Business Enterprises contracting found in the new Infrastructure Investment & Jobs Act — our country in 2022 will have a once-in-a-generation opportunity to invest in inclusive entrepreneurship ecosystems and local institutions that more equitably build community wealth for a broader array of Americans.

To help seize this moment, the Nowak Metro Finance Lab and The Enterprise Center teamed up with the National League of Cities to develop A Roadmap for Inclusive Entrepreneurship to identify a path forward, leveraging capital, coaching, and other tools well within reach of City Hall. A list of authors is provided below.

City leaders are uniquely positioned to take meaningful action to lower barriers and expand opportunities for a remarkably diverse set of founders and business owners. Our action guide provides a practical framework for understanding and supporting inclusive entrepreneurship, including specific steps city leaders can take to improve racial and social equity, expand economic opportunity and participation, and build dynamic and resilient local economies.

The Roadmap’s framework, recommendations, examples, and case studies were refined and ground-proofed through dozens of interviews with city leaders across the country. Its unifying aim is to provide discrete, actionable steps that, taken together, can build more inclusive, dynamic, and sustainable entrepreneurial ecosystems no matter where a city is in its journey.

The Roadmap gives city leaders five high-level recommendations for driving inclusive entrepreneurship:

1.   Begin by understanding the entrepreneurial ecosystem’s baseline. City leaders should reach out to underrepresented entrepreneurs and the wide array of organizations supporting them to get a full picture of the ecosystem, developing a baseline understanding of the number and types of firms within a city as well as their sectors, revenues, and demographic diversity.

2.   Catalogue and convene a full network of entrepreneurship support organizations. To help identify partners, gaps, and potential collaboration opportunities, city leaders should create a single, easily accessible public resource that catalogues the full ecosystem and network of support organizations. It is important to consider entrepreneurship support organizations (ESOs) broadly and include a variety of community-serving organizations.

3.   Develop a plan for inclusive entrepreneurship and track metrics for accountability and transparency. To achieve truly inclusive goals in systems affected by fragmentation of resources and/or support organizations, city leaders should create (or update) a clear and explicit plan for inclusive entrepreneurship. This plan should include agreed-upon measurable goals for the number, size, and sector of diverse businesses while creating key benchmarks to evaluate program effectiveness.

4.    Build a presence in the community to enhance access and facilitate inclusive placemaking. The work and reach of city leaders are most inclusive and successful when they venture beyond city hall and connect directly with entrepreneurs. Through remote offices, pop-ups, and shared spaces, city leaders can reach entrepreneurs where they are more comfortable, provide more convenient access, amplify the work of existing community organizations, and bring materials, technology, and services directly into neighborhoods, bridging language and digital barriers while supporting inclusive placemaking.

5.   Offer a continuum of capital and business support services for a continuum of entrepreneurs by leveraging city hall’s convening power. City leaders can reach a broad range of entrepreneurs by bringing together key capital providers and business support organizations to address the discrete gaps and barriers preventing an inclusive entrepreneurship ecosystem from taking shape. Cities must use their local convening power and have a clear understanding of what types of capital and business support are needed to grow and support a wider range of businesses.

Cities Interviewed

Why entrepreneurship, why now

The opportunity to start and grow a business is fundamental to realizing the promise of the American Dream. Not only do small businesses generate two-thirds of new jobs and employ 47 percent of our workforce, but entrepreneurship provides a critical path to economic and social stability and wealth-building opportunity for many Americans.

Yet too often Black, Indigenous, People of Color (BIPOC), women, LGBTQ+, and other historically marginalized Americans are excluded from the opportunity to start and grow a business of their own. Our country’s legacies of racialized redlining, segregation, and economic exclusion lead BIPOC Americans to face particularly severe and intricate hurdles that bar them from full participation in business ownership and growth. Inequities in accessing capital, networks, and business support widen our country’s racial wealth gap and shrink our shared economic potential.

Over the past two years, the COVID-19 pandemic provided harsh illustrations of the inequities that continue to pervade America and its small business landscape. The pandemic compounded existing disparities and hit BIPOC communities hardest. In the spring of 2020, 41 percent of Black-owned businesses closed, as opposed to 17 percent of those with white owners. Meanwhile, BIPOC entrepreneurs were disproportionately excluded from Paycheck Protection Program loans and other critical financial lifelines needed to stabilize and recover.

More than any single event, the pandemic catalyzed city leaders across the country to reevaluate and refocus efforts towards building local economic resiliency and redress barriers that disproportionately hold back underrepresented entrepreneurs. For the Roadmap, we compiled and organized the best of these best practices, from practitioners in diverse communities, to chart a path forward for city leaders as they look to remove barriers and expand opportunity.

Businesses continue to face significant challenges: adapting to a still-adjusting supply chain, both the possibilities and heightened competition of e-commerce, corporate consolidation, and the emergence of fintech online lending. Meanwhile, it is not just government funding that is on the way: institutional, impact, and philanthropic investors are now more than ever looking to invest locally as part of their portfolios. The imminent confluence of challenges and opportunities for entrepreneurs creates a critical juncture for cities to act.

City leaders are at the forefront of building inclusive entrepreneurship ecosystems. City leaders — in particular mayors and city managers — are best situated to lend their influence and coordinate actions across fragmented entrepreneurial ecosystems. Without their leadership, it is difficult for inclusive entrepreneurship to improve beyond a discordant jumble of well-meaning but disconnected programs. Bold city leadership can make 2 + 2 = 5… or 6, or 7.

In building inclusive entrepreneurship ecosystems as local economies emerge from the pandemic, there is no substitute for leadership from City Hall. Our Roadmap to Inclusive Entrepreneurship is here to help guide the way.

Authors of A Roadmap to Inclusive Entrepreneurship:

Lena Geraghty is Urban Innovation Program Director of the National League of Cities’ Center for City Solutions (“NLC”). 

Tina Lee is a Senior Research Specialist at NLC. 

Brooks Rainwater is Senior Executive and Director of the Center for City Solutions at NLC. 

Della Clark is President and Chief Executive Officer of The Enterprise Center in Philadelphia. 

Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University. 

Ian O’Grady is a Research Officer with the Nowak Lab. 

Colin Higgins is Deputy Director of the Nowak Lab.

Acknowledgments: The authors are grateful to Corianne Rice, Senior Program Specialist, NLC; Jenn Steinfeld, Director, Entrepreneurship and Economic Development, NLC; and Seulky McInneshin, Executive Vice President, The Enterprise Center, for their contributions to the report.