Entrepreneurship has become a driver of economic stability, playing a pivotal role in generating jobs, fostering innovation and building stronger communities. Small businesses are often the backbone of vibrant economies, and many municipalities are increasingly recognizing the power of entrepreneurship and are adopting strategies to support local businesses. From spotlighting small enterprises to revitalizing downtown districts and main streets, cities are investing in their entrepreneurial ecosystems to breathe new life into local economies.
What is Entrepreneur-Led Economic Development?
Entrepreneur-led economic development is a proactive framework where regions intentionally support the creation and expansion of businesses driven by entrepreneurs. Rather than relying solely on traditional industries or large corporations, this strategy focuses on fostering an ecosystem at the grassroots level. By providing entrepreneurs with essential resources such as access to capital, business training and valuable market connections, this model creates an environment that encourages economic resilience.
Entrepreneurs in this context are seen as catalysts for change, driving not only economic growth but also transformation within the local economy. Their businesses often introduce new products and services that challenge the status quo and meet evolving community needs. In turn, this fosters a more diverse and adaptable economy that is less reliant on a single industry or external factors.
Benefits of Entrepreneur-Led Economic Development
Job Creation
Businesses established by entrepreneurs play a significant role in creating employment opportunities across a wide range of industries. From support staff to marketing professionals, entrepreneurial ventures often require a diverse workforce as they grow. As businesses expand, so does the demand for more employees.
According to the U.S. Bureau of Labor Statistics, small businesses (those with 249 or fewer employees) accounted for 99 percent of the 5.6 million firms covered under Unemployment Insurance in the first quarter of 2023.
Over the past decade, small businesses have employed an average of 46% of the workforce, while contributing 55% of the new jobs created, according to the U.S. Bureau of Labor Statistics.
Economic Diversification & Innovation
Economic diversification and innovation are key benefits of entrepreneur-led economic development. By introducing new products, services and business models, entrepreneurs can invigorate local economies and attract new business, fostering a more competitive marketplace. As entrepreneurs launch new ventures, they create fresh markets and drive increased economic activity, contributing not only through the business they offer but also by paying taxes that support the local economy.
Revitalization
Small businesses support building strong, vibrant local economies by catering to the needs of their communities and supporting local initiatives. Small businesses often foster a sense of identity within the community and paid taxes are often reinvested back into the local economy, helping to support infrastructure projects and further community development. In addition, entrepreneurs offer a unique benefit in revitalizing neglected areas by repurposing abandoned buildings into thriving businesses, breathing new life into forgotten spaces and enhancing the overall appeal of the community.
Municipal Example: The Shops at Sharp End
In Columbia, Missouri, the Missouri Women’s Business Center (MOWBC), led by Jayme Prenger, partnered with the City’s Regional Economic Development Inc. (REDI) and the Downtown Community Improvement District to create The Shops at Sharp End. This initiative aimed to revitalize the historic African American business district while honoring the diversity of local entrepreneurs and promoting economic growth. The Shops serves as an incubator that provides entrepreneurs with valuable resources including workshops, coaching and affordable retail space at just $50 per month, addressing high rental costs in downtown areas. In addition, the program offers entrepreneurship support and scholarships to ensure accessibility, helping build a diverse and thriving entrepreneurial community.
How Municipal Leaders Can Support Entrepreneur-Led Economic Development
Municipal leaders play a critical role in supporting small businesses as a means of revitalizing their local economy. Leaders who create opportunities for small businesses to thrive take a transformative approach to economic development, shifting the focus away from big-box retailers and large corporations to small businesses that reflect the needs of the community. These businesses not only stimulate local economies but also reinvest in their communities, creating a positive cycle of growth. Opportunities for Municipal Leaders to support entrepreneurs include:
Financial Support & Regulations
- Grants and Microloans: Offer direct financial assistance to small businesses to help cover operational costs, expansion projects or equipment upgrades; provide smaller loan amounts tailored to the specific needs of micro-enterprises through microloans.
- Tax Incentives: Introduce tax breaks for small businesses, such as property tax reductions or sales tax rebates, to ease financial burdens.
- Simplified Permitting: Streamline the permitting process for new businesses to minimize administrative barriers.
Business Development & Engagement
- Business Incubators: Create shared spaces with facilities and services to help new businesses grow during their early stages.
- Education: Provide training on essential topics such as business management, marketing, financial planning and regulatory compliance.
- Local Business Directories: Develop both online and printed directories to showcase and promote local businesses.
Programs like NLC’s City Inclusive Entrepreneurship Program play a crucial role in fostering city leadership’s support for local entrepreneurs. By providing tailored strategies and resources, these initiatives empower communities to thrive economically, ensuring long-term growth. Through such partnerships, cities can create environments where innovation and entrepreneurship are supported, paving the way for thriving economies.
Cities Inclusive Entrepreneurship (CIE) Program Summary
NLC’s CIE program has been championing small business and entrepreneurial support since 2019. Take a look at the recent impact NLC has made through this program.
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