Why don't more inner-city residents start companies on their home turf? Two experienced founders have some answers.
Eighteen years ago, Aaron Bocage and George Waters Jr. were a couple of guys with degrees in social work and the best of intentions: they wanted to help poor teenagers in Camden, N.J. From their vantage point at the University of Pennsylvania, in Philadelphia, where both had obtained master's degrees, the two had had ample opportunity to observe their neighboring city across the Delaware River, an economically ailing burg in which even today the median household income is about $20,000. Their plan was to open a take-out sandwich joint there and staff it with delinquents and dropouts who would earn while learning and vice versa. It was a nice idea, but nice does not a successful enterprise make. "We didn't have business backgrounds, so we ran it like a social-service project," recalls Bocage. "Someone would steal from us, and instead of treating it like a crime, we would turn it into a counseling session."
With the restaurant losing money, Bocage and Waters were forced to replace the social worker they'd brought in to run things with someone who had more business experience. They hired a real live food-service manager, a tough guy who fretted over details like punctuality, conduct, and attire, and who didn't give a straw for his employees' endless personal problems. The owners expected it to go badly. They were wrong. "When we started to run it like a business, the kids' performance improved and the bottom line improved," says Bocage. "They didn't verbalize it, but clearly these kids wanted to be part of a real business. They didn't want to be part of a program."
That experience stuck with Bocage and Waters and became the philosophical underpinning of their next venture, the for-profit Education, Training and Enterprise Center Inc. (EDTEC), which they founded in 1985. EDTEC's mission is to foment entrepreneurial fervor among inner-city youth while giving them the skills to start their own microenterprises. EDTEC accomplishes that by, among other things, marketing an easily understandable (fifth-grade-level) business curriculum to middle and high schools. The curriculum comprises everything from inspirational soup (a history of black entrepreneurship) to actionable nuts (a do-it-yourself business plan).
On their journey from social work to work-work, Bocage and Waters underwent their own entrepreneurial transfiguration. EDTEC, with 1998 revenues of close to $2 million, is #77 on Inc.'s list of the 100 fastest-growing inner-city companies. It is also one of only 24 companies on Inc.'s list that have minority ownership -- a significant statistic given that minorities make up 77% of the population of America's inner cities, according to the Initiative for a Competitive Inner City. But among the Inner City 100, minority ownership is still higher than it is among fast-growing companies nationwide. In 1998, only 16% of Inc. 500 CEOs described themselves as Black/African American, Asian/Pacific Islander, or Hispanic.
When senior editor Leigh Buchanan asked Bocage and Waters what they made of minority ownership's less-than-spectacular showing on the inner-city list, EDTEC's founders weren't a bit surprised.
Inc.: Clearly, there's a lot of business activity in the inner cities, but only a small fraction of it appears to spring from the people who grew up there. Why is that?
Waters: In most communities, businesses get started at the kitchen table. They get started with the help of parents and relatives and the chamber of commerce. But in poor communities there's no mechanism for young people to be raised up in a business environment. They have the desire, but there are no people, no programs, no services to support that desire. The only examples of free enterprise they see are negative ones -- drug dealers. So when you get people with the ability to finish school and start businesses, they go elsewhere to start them.
Bocage: In a poor community it's often difficult to look past the problems, because the problems seem so pervasive. But someone who recognizes opportunity can look beyond those blighted areas and see the possibilities. Unfortunately, too often people brought up in poor communities never learn to recognize opportunities, the essence of entrepreneurship.
"There's a lot of talent in poor neighborhoods, and there are a lot of businesspeople who want to help. But oftentimes they emphasize the wrong things."
--George Waters Jr., EDTEC
What happens is, the people who do have the ability to see past the problems leave home to get an education. And then we're not giving them a reason to come back. Just look at Camden. There are a few small, scattered efforts to support businesses, but there is no coordinated infrastructure of business groups to support new businesses. I don't think there are any mentoring programs that would support someone who wanted to come back to Camden to start a business. There has to be an infrastructure. Where's the hand-holding? Where are the people to direct you and encourage you after you've gotten all the academic stuff down?
Inc.: Are there systemic reasons for that?
Bocage: In the past there was an overemphasis on the welfare state, which meant people had no incentives to be anything other than dependent. Under some of the earlier job-training programs you would go down to city hall and show them you were poor and they'd give you a job. Well, the world doesn't work like that. If someone doesn't have something, you can't make it up to them just by giving them something. It's better now: the government is saying you have to do something. We can't continue just to give. They're looking more at how do we teach people to be self-sufficient.
Inc.: Are initiatives that come from the private sector any better?
Waters: There's a lot of talent in poor neighborhoods, and there are a lot of corporations and businesspeople that want to help. But oftentimes they emphasize the wrong things. One of the problems I have with mentor programs -- especially the ones that involve businesspeople -- is that it's nice to take kids to games and be a big brother and a friend, but you should also be sharing with them information about how to build wealth, how business operates, some suggestions of how to get out of their situation. I think a lot of businesspeople either overlook that or think that the young man or young woman they're mentoring isn't interested in, or is incapable of dealing with, information about wealth and asset building and capital.
Bocage: We think it should become national policy that the educational system teach entrepreneurship just like it teaches the three Rs. That's important in any school system, but in inner-city schools it's crucial. It should be mandatory that any child growing up poor, whose parents are on welfare, be given training in entrepreneurship. We should be teaching them that there are more and better ways to get money -- and ways to get more money -- than just waiting for that check every month.
Inc.: What about adults? Is there any way to reach them?
Waters: The more adults that get the bug, the better, because they're the ones who are most likely to stay in their communities to start their businesses, since they're already established there. I think it's encouraging that we're seeing more junior colleges teaching entrepreneurship. They're reaching young adults and even some older ones. But you can't overemphasize the importance of starting with youth. I was talking yesterday to a former student of our entrepreneurship class that we've known since he was 15. Back then he was doing micro-microenterprises like running a janitorial and cleaning service. He's 30 now, and he runs a jitney service in Atlantic City. He's into real estate and some other businesses. He learned at a very early age what it means to employ yourself and run a business.
Many adults aren't willing to take on opportunities even if they see them, because they have no experience at all in business, and to take on something that's capital-intensive or requires a lot of technical knowledge is frightening. Another thing that scares them is bureaucracy, which is something that cities can do something about.
Inc.: How do you encourage company owners who are already doing business in their own neighborhoods?
Waters: There are a lot of mom-and-pop operations out there, and for them it's all about getting to that next level. These companies need low-cost technical assistance. They need to know how to use the money that's increasingly available through microloans. There are hundreds of microbusinesses in Camden right now. City hall ought to know who they are. The Small Business Administration ought to know who they are. And they should know what they need and make sure they get it.
The infrastructure matters, but you also need the will to grow and succeed. And that goes back to deficiencies in education. People aren't being taught to think big enough. Self-sufficiency is important, but it's only the first step.
For a detailed list of Inner City 100 companies, please see The Inner City 100: America's Urban Superstars.
Please e-mail your comments to email@example.com.