Guest Speaker: Neglecting Success

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I began writing a business plan for a program that would provide counseling and other support to existing businesses in order to promote urban renewal. My target client had a payroll, was already recording annual sales of $250,000 to $10 million, and was interested in growth. In order to provide the entrepreneurs with practical, real-world experience, I organized the program around four basic services: management training, peer-to-peer learning, one-on-one coaching, and networking opportunities.

The response to my plan was lukewarm at best. Time and again, I'd make my pitch to professors or to people who might fund a program, only to be told that there was no need for my program because the CDCs were doing just fine. Ultimately, frustration forced me to prove them wrong. In 2003, I launched the organization, InnerCity Entrepreneurs, or ICE. Raising money proved to be difficult. Grant-giving foundations were--surprise, surprise--more interested in helping programs that worked with start-ups, claiming that such programs already helped established businesses as well. Of the 10 foundations and corporations that I approached for seed money, only one offered support. Starting with one-third of the funding that I had hoped to secure, I put together a curriculum and began recruiting entrepreneurs.

Lining up the first class of owners of existing businesses posed another challenge. Established business owners had typically looked into free programs created for start-ups, only to be disappointed, so they were understandably leery when I approached them. I found takers only through a rigorous outreach strategy. I went to community meetings and trade association meetings to introduce ICE, and I spent days walking through Boston and stopping into businesses that looked promising to speak with their owners. I also had to convince business owners that the process for joining--filling out an application and sitting through a one-on-one interview--was worth the trouble. But in the interview process, tellingly, the vast majority of the entrepreneurs said they didn't want to participate in a peer-to-peer learning program with start-ups and sole proprietors. My interviewees wanted the opportunity to learn from other business owners striving to build growing companies--exactly the population I had hoped for.

The success stories have rolled in since my group convened its first class in 2004. Julio Nunez, who owns a company called Hispanic News Press, came to us looking for ways to expand his small publishing company. Since Nunez completed the program, the circulation of his Boston-based Spanish-language newspaper El Planeta has surged; the paper's success caught the attention of a larger local publisher, who recently bought a 35 percent stake in Nunez's business. A member of the current class, Andrea Taber, founder of Ever So Humble Pie Co., has significantly expanded the capacity of her company, which manufactures all-natural frozen pies. Taber has identified and hired a third-party distributor, and she is currently testing a contract with a national grocery chain.

By the time you read this, 33 companies will have graduated from our program in just three years. The 24 companies that completed the program in 2004 and 2005 have so far increased their sales by more than 40 percent, to $35 million. Correspondingly, these firms have created nearly 100 new part- and full-time jobs.

Based on our early track record, I believe the time has come to focus more resources on building existing businesses. To accomplish this, we have to persuade those who control the flow of precious economic development resources of the value of existing small businesses. Business owners should talk with the trade and community organizations that represent them to articulate the need for support for businesses seeking to grow. Banks should offer the small businesses that receive their loans incentives like tuition reimbursement for completing such programs. Grant money should be spread around, and existing groups should diversify their program mix to make sure to include initiatives that are tailor-made for established businesses. By supporting existing entrepreneurs, we are most likely to foster the job creation, wealth generation, and development of community leadership that are vital to America's economic future. Don't we owe it to ourselves to adopt the most effective approach?

Andrew Wolk is the co-founder of InnerCity Entrepreneurs and founder and president of Root Cause, a strategy consulting firm. He is also senior lecturer in social entrepreneurship at the MIT Sloan School of Management and Department of Urban Studies and Planning. He also previously founded a delivery business, Doorstep Express, which he sold in 1997.

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