How to Boost BIPOC Business Ownership: The Value of an Ecosystem Model

What does it take for businesses that are owned by Black, Indigenous, and people of color entrepreneurs to thrive?

Media attention tends to focus on large-scale investments, such as those racial justice commitments that many corporations made after the murder of George Floyd, totaling an estimated $200 billion. Yet not only are many of those pledges from 2020—which typically involved exaggerated numbers in the first place—being dialed back, but also successful entrepreneurship programs often rely far less on corporate commitments and far more on local, neighborhood-based support systems.

This was a leading take-home message that came from the annual Build from Within Alliance convening. This year’s conference was held in Wilmington, DE, and brought together community economic development delegations from 16 US cities and regions—ranging from Minneapolis to Louisiana to Anchorage. At the gathering, participants shared stories of how to more effectively build business ownership in communities of color based on mobilizing the skills and expertise of local entrepreneurs and community groups themselves.

Making Real the Notion of “Build from Within”

The Wilmington convening was unique from standard community development conferences in many respects. One notable feature was the relative absence of philanthropy. To be sure, there were bank and philanthropic sponsors (and even a funder breakout session), but at the dais, the speakers were all practitioners. Each delegation introduced themselves and offered brief slide presentations about their community and their work to an audience of over 100 fellow practitioners. This was a space, in short, for information sharing and network building among peers.

Another unique feature: the event was intentionally not held at a downtown hotel but rather in a gymnasium at a local neighborhood center. That center, the West End Neighborhood House, is an alliance member and is also the oldest settlement house in the country, founded in 1883.

The notion of “build from within” may be common sense. But the tendency to focus on deficits…persists.

Settlement houses were formed in the late 19th century and early 20th century, typically with a mission of supporting immigrant communities. Beyond the services these settlement houses provided was a philosophy that the “initiative to correct social ills should come from…neighborhood leaders or organizations”—a philosophy broadly shared by alliance members.

While settlement houses are old, the alliance itself is fairly new. The group has been meeting regularly for less than a decade. Not all alliance members are settlement houses. Instead, member groups span many organizational forms—ranging from settlement houses to foundation programs to a community land trust.

What brings the 16 groups together is a common commitment to developing community-based systems that support business development by BIPOC entrepreneurs. More fundamentally, the approach focuses on translating the theory of asset-based community development—often referred to as “ABCD”—into practice.

As John McKnight, who, along with Jody Kretzmann, helped develop ABCD, has explained, ABCD emerged as a reaction to the common tendency in academia, policymaking, and philanthropy to look at “lower income neighborhoods in terms of their problems, deficits, needs, and brokenness.” This “deficit approach,” McKnight elaborated, “did not see that the people who lived in the neighborhood had some agency, some ability, some capacity, because all of their work was to help institutions come in and fix us.”

The notion of “build from within” may be common sense. But the tendency to focus on deficits that McKnight observed when he first came to Northwestern in 1969 persists. The struggle to translate the principle of “build from within” into everyday practice, in short, is ongoing.

How the Alliance Came to Be

At the center of the alliance is Mihailo “Mike” Temali, founding CEO of Neighborhood Development Center, better known as NDC. Launched in 1992, the Twin Cities nonprofit began with the idea: “What if we tapped into neighborhood residents’ skills and talents and asked them if they might be interested in training and technical assistance to either create or expand a business?” Working with Latinx entrepreneurs, NDC helped develop over five years a project known as Mercado Central (Central Market). The resulting marketplace, organized by Mexican immigrants and patterned on similar markets in Mexico City, opened on Lake Street in south Minneapolis in 1999. Today, the marketplace houses 35 separate primarily Latinx-owned businesses.

Ramón León, an organizer of the Mercado and later (in 2003) a founder of the Latino Economic Development Center (LEDC) in Minneapolis, years ago explained the core concept. “In Mexico, you have a mercado (marketplace) where the people who shop there and work there live in the neighborhood. The money that moves and is spent stays in the neighborhood. That to me is strong community development. There are also business advantages of being together. When you have those kinds of businesses all in the same place, you have more traffic. They can do marketing together.” Today, the vendors, through a business tenants’ cooperative, own the building.

The use of the cooperative building ownership structure is unusual, but the idea of building on community strengths remains core to NDC’s approach. In 2006, NDC helped support a development even larger than Mercado Center known as Midtown Global Market, a project that involved LEDC, the African Development Center, and the Cultural Wellness Center. The creation of the marketplace converted a defunct Sears department store into a thriving market that today houses a wide range of Black-owned, Indigenous-owned, and immigrant-owned businesses.

Entrepreneurs are typically good at their core business….But people starting businesses often lack key skills that are needed to run a business.

More broadly, NDC supports business development in locations well beyond these two marketplaces. Citing Wilder Research estimates, the Bush Foundation reports, “Since its inception, NDC’s training has led to the launch of more than 1,000 small businesses, about half still open, and the creation of more than 5,000 jobs.”

The formation of the Build from Within Alliance didn’t come until about 20 years after the launch of NDC. After the Great Recession, efforts to build similar strategies began to emerge in other communities, beginning with the formation of ProsperUs in Detroit in 2012. By 2020, there were a dozen groups in the network. Today, that number has grown to 16.

A “Four Pillar” Approach

The approach being advocated at the conference is what alliance members call a “four pillar” BIPOC entrepreneur support system. These four pillars are: 1) technical assistance, 2) business lending, 3) business training, and 4) real estate support.

The logic behind the model is clear enough. Entrepreneurs are typically good at their core business—for instance, most restaurant founders are good chefs. But people starting businesses often lack key skills needed to run a business—marketing, accounting, business planning, risk assessment, human resources, and so forth. The “four pillars” approach seeks to address this shortfall by providing formal classroom training (business training) on these business fundamentals and couples it with ongoing coaching (technical assistance), access to capital (business lending), and access to space to operate the business (real estate support).

As became clear at the conference, though, despite the alliance’s efforts to portray the approach as a formal, replicable model, different organizations in practice take fairly distinct approaches. For example, the Initiative Foundation—based in St. Cloud, MN—operates training, technical assistance, and lending programs, but does not operate a real estate advisory program itself and instead partners with other groups.

“We share the secrets held by people who are generational business owners.”

By contrast, Anchorage Community Land Trust—as the phrase “community land trust” would suggest—is heavily engaged in real estate, including an effort underway to raise $6 million to create a commercial kitchen space that can serve multiple local businesses. The group also offers business training and technical assistance but does not operate a lending program, as it found that its staff lacked the requisite underwriting (loan risk assessment) skills. Instead, the organization partners with a local community development financial institution (CDFI) that can provide lending services to the businesses the organization is supporting.

Regardless of organizational strategy, a team approach to support entrepreneurs is critical. As Dayton Jackson, a Black business owner of a towing company in Dover, DE, supported by West End Neighborhood House’s Launcher business support program, explained, “It is all interconnected. I couldn’t do one thing without the other”—the business loan, the technical assistance with website work for marketing, and the partnerships all had to come together to make his business successful, Jackson explained.

Pillars Are Not Linear

At a panel that focused on the work of alliance members, Donniel Robinson, who manages the entrepreneurship program at the Initiative Foundation, observed, “The beauty of this work in general is that a lot of life is a game and not all of us get the rules. We share the secrets held by people who are generational business owners.”

Another panelist, Kirk Rose of the Anchorage Community Land Trust, observed that the work, in essence, involves combining two fields that are often separate—community development and small business development—and blending the two.

Rose said he came to the work from the community development side. The pillars, he observed, are “not linear.” Nor is the entrepreneur’s journey itself, which Rose characterized as “swirling up through a funnel.”

Technical remedies can help—Rose noted his organization uses a customer relationship management system to track more than 100 technical assistance providers. But at the heart of negotiating the swirl is something more basic—namely, knowing “our communities better than anyone else.”