As part of our commitment to advancing racial equity, EDAM will be highlighting excerpts from the International Economic Development Council’s
Playbook for Equitable Economic Development throughout the year.
The following highlights key points from the chapter entitled Entrepreneurship.
This chapter highlights the significance of entrepreneurship in offering opportunities to build generational wealth, circumvent biased hiring practices, and promote community engagement and leadership, particularly for people of color. Despite the challenges faced by entrepreneurs, such as limited access to capital and corporate networks, entrepreneurship serves as a path to self-determination and financial success.
In the last decade, there has been a substantial increase in businesses owned by people of color, responsible for creating millions of jobs. Statistics from 2020 indicate that more than half of new entrepreneurs were White, with significant representation from Hispanic, Black, and Asian entrepreneurs. The report also highlights the rapid growth of Black and Hispanic women as entrepreneurs, with women of color leading a significant share of new businesses.
However, startup success rates remain low, and the odds are even worse for businesses of color due to systemic barriers. Resource limitations are a major performance gap for people of color-owned businesses, often lacking family wealth and real estate holdings that are crucial for startup success. Inheritance disparities further disadvantage Black entrepreneurs, as they are less likely to receive substantial inheritances compared to their White counterparts.
Strategies:
Economic developers can act as leaders of innovation within their communities by engaging in various strategies to support entrepreneurs of color. These strategies involve providing technical assistance, financial support, and creating connections within the entrepreneurial ecosystem. This ecosystem includes support organizations like incubators and accelerators, lenders, investors, corporations, funders, and educational institutions.
One key area where economic developers can make a difference is increasing access to capital for entrepreneurs of color. They can offer more flexible lending options, assist with business planning and documentation, and establish funding opportunities tailored to the needs of these entrepreneurs. Economic development organizations can create their own financial tools, such as venture funds, revolving loan funds, low-interest funds, or grant programs, to support minority-owned businesses.
Read Full Playbook
The International Economic Development Council (IEDC) is a non-profit, nonpartisan membership organization serving economic developers. With more than 4,500 members, IEDC is the largest organization of its kind. Learn more at www.iedconline.org.