by Carol J. de Fries, Vice President of Workforce and Economic Innovation
Small businesses, both existing and new, are at the heart of the nation’s economy, helping drive job growth and innovation, and infusing our local economies with economic activity and vibrancy. The Small Business Administration (SBA) reports that small businesses comprise 99 percent of all U.S. employer firms. Startups stimulate the local business ecosystem, providing dynamic, creative and nimble alternative ventures. Existing small businesses provide stability, forge strong community identities, offer access to needed amenities, create local jobs and improve the quality of life in the areas where they are located.
Over the course of the last two decades, which has included some of our most challenging economic times in recent history, existing small businesses accounted for 60 percent of the private sector’s net new jobs, while the remaining 40 percent comes from the ebb and flow of new jobs created and lost with startups and closures. Small businesses with less than four employees make up more than 60 percent of all firms in the United States, which rises to 96 percent having fewer than 49 employees. Within industry types, retail comprises the largest representation within the small business ecosystem, with professional, scientific and technical service businesses; and health care and social assistance following. According to the SBA, 28 percent of business owners have at least a high school education, 33 percent have at least some college and 39 percent have a bachelor’s degree or higher. A recent report issued by JPMorgan Chase and the Initiative for a Competitive Inner City found that in four of five cities studied, the importance of small businesses as a source of jobs is greater in distressed inner-city neighborhoods than in the city overall. The report also found that a modest increase in the number of employees hired by existing small businesses, such as one to three employees per business, could create enough employment opportunities for all currently unemployed inner-city residents in the study. Businesses between five and 249 employees generate greater employment than microenterprises.
When we begin to drill down to the local level here in Philadelphia, we begin to see this landscape even more clearly and realize that comprehensive strategies and resources for both new and existing small businesses can help to foster and enhance our overall economy, and have a direct impact on our neighborhoods and commercial corridors. The city as a whole does not fare as well in the formation of new businesses as compared to the national average and these businesses do not grow as quickly as in other areas of the country. The Sustainable Business Network conducted a very extensive analysis of Philadelphia’s small business ecosystem in 2011. It found that in Philadelphia, 98 percent of small businesses have fewer than 50 employees. There are more than 93,000 small businesses in every community of Philadelphia, many started to achieve financial Community College of Philadelphia has a strong history of helping small businesses develop growth plans, and identify ways to improve their quality and business plans through our Goldman Sachs 10,000 Small Businesses program (10KSB), which has served more than 300 small businesses in the region, with the graduation of its latest cohort just this December. The College also has a Center for Small Business, Education, Growth and Training located at the Northeast Regional Center (NERC), which was established in 2010. Since then, the Center has provided one-on-one mentoring services, training and educational workshops, and small business resources to hundreds of individuals and small business owners. With just two part-time staff, the Center has served more than 140 businesses in Northeast and West Philadelphia this past year.
Building from these experiences, the College is seeking to strengthen its existing services and build out its programs that support the robust small business, creative and entrepreneurial community throughout the city, thus leveraging the existing 10KSB initiative as an asset. As an institution with a Main Campus and three Regional Centers, and being an open access institution, our College is in a unique position to serve the varying needs of businesses. Unfortunately, community colleges are not eligible to be small business development centers in Pennsylvania, unlike many of our counterparts across the nation who have traditionally been hubs and leaders with this designation. As a result, we must look to build out our programs in this area through partnerships with the city and others to have a meaningful reach that builds on the resources present in the market. The College is pursuing a broad spectrum of activities to service Philadelphia’s entrepreneurs, and the new and existing small business community. Our approach seeks to address many of the issues outlined above: continue to work with growth- oriented businesses; mentor and educate our students in the formation of their own businesses; work with our smaller businesses in the neighborhoods and commercial corridors to bring educational services into all areas of Philadelphia; and utilize these relationships with small businesses to create internships and full-time job opportunities for those of our students who are seeking to understand how to run or start their own business.
1. Philadelphia’s Robust Startup Community
- The College has funded the creation of a Student Innovation Center at the Northeast Regional Center (NERC), designed to support five student entrepreneurs who take classes at the NERC, and assist them with improving or creating a business plan. The College has dedicated funds from its own Innovation Grant toward this effort, which will provide the services of an entrepreneurial professional and 10KSB alumni to work with these student entrepreneurs as advisors and mentors. If successful, our goal will be to expand this model to the other Regional Centers. The Center for Small Business, Education, Growth and Training at NERC will lead this endeavor. The program will kick off with an Ideation Challenge, followed by a pitch session and a focused program for the five students, which will provide them with the basics of entrepreneurship and a business coach. The program will start in winter 2017.
- Philadelphia has a dynamic creative and entrepreneurial culture. We are exploring partnership options to establish an incubator at our Main Campus that would be open to students, alumni, 10KSB scholars and alumni, College vendors, community members, and other startup businesses to help foster a vibrant environment of entrepreneurship and opportunities for internships for our students. It is imperative that the energy, creativity and business acumen that is taking place around Philadelphia reaches our doorsteps, serving to inspire and support our own students who are seeking this as their career path. The opportunity to intern with these companies and to help them build a business is an experience that community college students should have access to, just as they do at other area colleges. This would include the exploration of an opportunity for students to run thier own revenue-generating business.
2. Existing Small Businesses
Our approach here is focused on two segments: Microenterprises and Growth Businesses
- Power Up Your Business—The Kenney Administration has made it a priority to ensure that our neighborhood small businesses can also experience commercial revitalization. As a result of the recent soda tax, a concern over impact to many of these businesses compelled the city to fund the creation of a new neighborhood prosperity program within Community College of Philadelphia, the Power Up Your Business program. Rotating across our Main Campus and Regional Centers, Power Up will support 250 existing or aspiring small business owners over 2.5 years through a two-tiered approach:
- Tier 1: Peer-based Learning Experience The College will offer a 10-week, 30-hour course in Basic Small Business Management and Planning, where accepted businesses will gain hands-on familiarity with the fundamental concepts, tools, and skills needed to plan and run a successful business. Topics covered include entrepreneurial leadership, understanding financial statements, the role of financing in business growth and how to create a tactical business improvement plan. The program includes small business case studies, peer learning and an introduction to community-based small business resources. In addition to the classes, participants will be supported by a business coach who will help troubleshoot challenges and help guide the business in the creation of a business improvement plan. The program targets microbusiness owners, and neighborhood-based or commercial corridor businesses that are seeking ways to improve their business and better position it for eventual growth. The first class will start in February, with applications due by Jan. 27, 2017. The program will seek to partner these businesses with other small business support organizations, provide additional follow-up training opportunities, and mentorship opportunities with 10KSB businesses. Four annual cohorts will target 25 businesses near each campus across the city.
- Tier 2: Store Owner Series
A series of technical assistance workshops will be offered for every district in Philadelphia, utilizing our Main Campus and Regional Centers, and consisting of small business basic topics such as financial management, personal and business credit, and neighborhood-based marketing. There will also be a small business resource event at each Regional Center for businesses from all nearby districts and commercial corridors. Further, more specialized workshops will focus on other areas important to commercial corridor businesses, such as negotiating leases, understanding city taxes, day care finance, food truck management and others.
- Goldman Sachs 10,000 Small Businesses Program (10KSB)—This program offers successful small business applicants access to a practical, free business education in a unique intensive 100-hour peer-learning environment. Small business owners across the region gain unprecedented knowledge, expanding their expertise and building new skills. We offer three cohorts a year, averaging 28 small business scholars in each class. The College is one of 14 sites nationally to offer this best-in-class program, which was designed by Babson College. 10KSB is designed for business owners with limited resources who have a business poised for growth. Across the United States, more than 7,000 small business graduates are increasing their revenues and creating new jobs in their communities: 69 percent of participants increase revenues in just six months, and 50 percent create new jobs. The program also has a 99 percent completion rate. Since its inception in 2013, through the graduation in December 2016, the Philadelphia program has graduated 300 business owners. Philadelphia’s program exceeds the national metrics with 72 percent of businesses in Philadelphia increasing revenues six months after program completion, and 52 percent of businesses in Philadelphia adding new jobs six months after program completion. Philadelphia is also particularly strong in participants who end up working together with other program participants; nationally the rate is 77 percent, and Philadelphia exceeds this figure at 80 percent.
- Center for Small Business, Growth, Education and Training—In addition to supporting the Student Innovation Center, and the Power Up Storefront Series, the office provides assistance to help small businesses of all kinds, including startups, microenterprises, sole proprietors, and growth companies, with growth and development needs through counseling, workshops, seminars, networking with other resource providers and an annual conference.