Every community wants new businesses.  Not only do new businesses create jobs but they give a public demonstration of a growing prosperous community. 

Academic research provides strong evidence that small young businesses lead job creation when exiting a recession.  Local economic developers have taken note and many incorporate specific work tasks called “economic gardening” designed to assist new business formation as an element in the overall community economic development strategy.

However, community economic development work tasks that make a significant contribution to the formation of new businesses are a little more difficult to identify.

Here are ten thoughts to consider when forming your community based new business economic development “gardening” strategy:

1.  Recognize Individualism

The decision to start a business is a personal decision.  Whether the decision is made by an employee that says “I can do this better” and wants to create the next “Apple Computer”, the laid-off manager that begins offering consulting services,  or the housewife that begins to sell cosmetics, the final decision to go into business is an individual decision.

It’s easy to understand that a decision of this type will be stressful, effecting personal income and the family lifestyle.

Work program suggestion –

Provide access to personality assessment services that determine ability to accept risk and manage risk.

2. Help Surmount the Hurdles

Forming a business is much more than making a product or offering a service and collecting money. It gets involved with complex things as 1) what form of legal entity do I need, 2) what are my federal, state and county business identification obligations, 3) how to I complete my accounting to comply with tax obligations, 4) what licenses and permits are required, 5) what insurances coverage is needed, 6) how to get start-up funds, among other things.

Each poses a hurdle challenging the entrepreneur.

Work program suggestion –

Sponsor how to go into business for yourself programs, offered by local SBA sponsored Small Business Development Centers. Often local colleges and universities are available to assist with these challenges.

3. Make Entrepreneurialism Part of Junior and High School Education

Is entrepreneurialism a learned desire?  Some academics believe so.  Under this assumption, the role of entrepreneurialism as taught in the classroom is important to the early introduction that “going into business for yourself” can be a career providing great personal and financial reward.

Work program suggestion –

Make Junior Achievement and similar programs available in all schools.

4. Host Entrepreneurial Cafes

There is strong evidence that certain entrepreneurial camaraderie exists, especially among today’s “younger generation” computer based entrepreneurs. In fact a recent study found that over 50% of the Gen-Z’ers, Gen-X’ers and millennials plan to start their own business some time.

The older form of dedicated office space to many younger entrepreneurs is a “thing of the past” and the new office can be any location having internet connectivity. An entrepreneurial café, being a location where resources can be found and where entrepreneurs congregate can provide the necessary networking and social support structure sought after by those considering entrepreneurship.

Work program suggestion –

Create a café and virtual office providing a physical location for business and social needs of emerging entrepreneurs.

5. “Carve-Out” opportunities within the economic landscape.

There are numerous magazines touting the next great business opportunity.  However little research is completed on a communitywide scale to identify what businesses opportunities are likely destined for success based on the current and future projected local economy.

Most times identification of the business opportunity is left to the entrepreneur and made by “gut instinct” without a formal examination or market study.

There are resources, such as Nielsen-Claritas data that can help identify “opportunity gaps” in consumer purchasing patterns for retail and household goods which when used by  entrepreneurs can help identify certain small business opportunities.  Today, almost every university has some type of research assistance mechanism that can aid an entrepreneur in identifying market opportunities for more complex business ventures.

Work program suggestion –

Create, typically a university sponsored, entrepreneurial investigation research team to identify local community needs and opportunities that can be served by new businesses, including providing private sourced socio-economic data for use by entrepreneurs when needed.

6. Raise Capital Create a “Shark Tank”

One reason given for new businesses failure is the lack of capital.  This is especially true today where commercial lenders and the US Small Business Administration have reduced lending to small businesses.  Today, it’s a rare exception to find a commercial lender interested in financing a new business “start-up”.

The need for entrepreneurial financing has been popularized on television by “Shark Tank” a program where entrepreneurs “pitch” there new business idea to potential investors, in an effort to seek needed capital for business start-up and expansion.

Work program suggestion –

Community economic development strategies may require assembling social venture capitalists a new bread of investor typically organized in the form of an LC(3) – Low-profit Limited Liability Company to provide new business start-up financing.

7. Play the Numbers

Academic research documents nationally that 32 of 100,000 people will start-up a business, each month. Indiana and Michigan while being slightly lower than this ratio, still demonstrates a strong propensity for new business formation.

But a strong propensity does not automatically result in new businesses contributing jobs to the local economy; that being the goal of a community based economic development program. An economic development program that “mines the data” focusing on the population groups that have propensities to form new businesses is called for to help create these new businesses.

The key entrepreneurial characteristics include:

  • ·         One, or more, parents being entrepreneurs,
  • ·         Childhood small business experiences,
  • ·         Personality traits that accept risk,
  • ·         Personal predisposition to succeed in face of adversity.

Work program suggestion

Programs that create interest aimed at certain population groups, such as Gen-Z’ers,  Gen-X’ers and millennial’s  which have higher propensity to form new businesses should be part of the community economic development program.

8. Support Population Diversity

Entrepreneurial population studies document that certain demographic sectors have a greater propensity to from new businesses, especially Hispanics and recent immigrants. 

Work program suggestion –

Support program that celebrate population diversity embracing population groups that have a higher propensity to form new businesses.

9.  Create a “Match-Up” Market Place

Forming a business is a “team effort” needing different “skill sets” and talents, all which must be assembled by the entrepreneur.   

Work program suggestion –

Create a “wants and needs” bulletin board to match entrepreneur business needs with available support capacities.

10. Celebrate Success – Achieving Entrepreneurial Notoriety

Nothing breeds success more than success.  Being noted in state and national media as a community hosting new business formation not only demonstrates success but encourages others to consider “going into business themselves” or to take permanent residency in a location where new business formation is thriving.

Work program suggestion –

Create a media program announcing new business formations on a regular basis to create a statewide and national recognition as a geographic location for “new business start-up”.


Today, everyone talks about “economic gardening”, the notion that government sponsored local community economic development programs can cause people to start new businesses that eliminate unemployment and create community economic prosperity. 

Philosophically, the creation of an environment that embraces entrepreneurism should be a goal of every community economic development strategy.

However, it is still an individual decision whether someone actually starts a business.

Adding some or all these suggestions to your economic development strategy will “enrich the soil for planting the seeds of new businesses”.


Author note:  This was first prepared presentation at the Purdue University North Central “Topics in Regional Economic Development” class, Spring 2010.

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