A struggling national economy and battered housing market is taking its toll on Middle America, and now forward-thinking entrepreneurs are doing something about it. Michigan Corps is the latest example of a trend toward fighting low confidence and the negative imagery that stifles regional growth. The company, which focuses on building networks of regional small businesses, established Kiva Detroit, modeled after a micro-loan program that helps struggling businesses overseas. This company and others are out to show that a sense of community and innovation can still make a difference in the small-business sector. For more on this continue reading the following article from TheStreet.
Location, location, location. It’s the mantra for real estate, and it can apply to small businesses as well. If you’re in a spot where the entrepreneurial energy is high — such as Silicon Valley or North Carolina’s Research Triangle — you’re more likely to take the risk of starting a business and also more likely to meet people who can connect you to funding sources.
Would-be-entrepreneurs who live in economically depressed areas have a big psychological disadvantage. They aren’t any less smart or creative or ambitious, but they’re surrounded by an atmosphere of fear and doubt. When the economic news in your town or state focuses on job losses and home foreclosures, it takes nerve to start a business, especially when you don’t have a lot of other entrepreneurial role models.
But what if you could create a motivated, inspiring support network? Across the country, city governments, nonprofit groups and small-business leaders are working together to revitalize their local economies. These grassroots efforts focus on specific, concrete actions to strengthen existing businesses and encourage start-ups. Just as importantly, they’re about restoring local pride and changing public perception.
Consider the work of Michigan Corps. The state of Michigan has taken an especially hard economic hit over the past few decades: The well-paid manufacturing jobs that once supported middle-class families are vanishing, and the auto industry, traditionally a bedrock of the state’s economy, has been pummeled by competition from overseas. The city of Detroit has seen a steady decline in population and average income. Time magazine even dubbed it "an icon of the failed American city."
National media attention such as that inspired some Michigan residents to fight back against their state’s negative image. Michigan Corps was founded as a social network that would connect people committed to the state’s revival, from local business leaders to high-profile Michigan natives such as Sun Microsystems founder Scott McNealy and author Jeffrey Eugenides. Recently, Michigan Corps partnered with Kiva, the successful microfinance lending site, to create Kiva Detroit, a program that facilitates loans to Detroit-based small businesses.
While Kiva has had great success connecting American donors with entrepreneurs overseas, the company has also realized there’s a need for business funding in the United States. A study commissioned by Kiva and the credit-card company Visa(V) found that almost half the country’s largest metropolitan areas lost at least 1% of their small businesses from 2006 to 2008. The top 10 small-business trouble spots were Cleveland, Miami-Ft. Lauderdale, Pittsburgh, Columbus, Ohio, Detroit, Orlando, Fla., Minneapolis-St. Paul, Kansas City, Mo., Providence, R.I., and Milwaukee.
A program such as Kiva Detroit requires cooperation between a number of different organizations. Kiva manages the payments from online donors, but the microfinance lending network Accion USA and Michigan Corp will handle the day-to-day operations, finding appropriate borrowers and offering financial mentoring. Such initiatives are proof that even when the economic outlook seems bleak, committed individuals can come together to make a positive impact.
Creative, ambitious thinking can also take small businesses to the next level through public-private partnerships. Ohio has suffered from the same manufacturing decline and job losses that have affected Michigan. Yet Cleveland’s economic development department ramped up its vision of a city that supported its businesses and lured in others. The city’s Evergreen Cooperative Laundry, a LEED-certified green commercial laundry that serves the local health care industry, won last year’s award for best community development project from the National Development Council.
Throughout the city, unoccupied buildings have been refitted to attract high-tech and health care start-ups, and city officials have helped small businesses expand by taking advantage of state and federal funding programs. Miceli Dairy Products, a 130-employee business founded in the 1940s, secured a $5.5 million loan from the U.S. Small Business Administration — the largest loan in the SBA’s history — to expand to a larger facility.
The city has also set aside six acres for farming, snagging the first-ever federal agriculture grant for an urban area. Up to 20 farmers will be granted leases so they will produce food that can be sold and consumed locally.
The Midwestern region known as the Rust Belt doesn’t have the same reputation for innovation as Northern California. But initiatives in Detroit and Cleveland show that great ideas can come from anywhere. What matters is how well those ideas are encouraged, supported and ushered into reality.
This article was republished with permission from TheStreet.