This multi-part series offers ecosystem builders and economic developers’ insights into the characteristics of the four types of businesses in an entrepreneurial ecosystem—and targeted strategies that help those businesses thrive.
Small businesses form the crux of the American economy. Recent data from the U.S. Small Business Administration shows the United States is home to 33.3 million companies that qualify as small businesses. As a group, they make up 99.9% of all companies in the country and account for 64% of net new private-sector jobs, 42.9% of private-sector payroll, 46% of private-sector output, and 98% of exported goods.
SourceLink identifies four types of small businesses, each with unique needs and ways to grow: microenterprises, Main Street businesses, innovation-led ventures, and second-stage companies.
When ecosystem builders and economic developers understand the needs of each of the four types of businesses—and work collaboratively and strategically to support them—they create a resilient environment where these businesses can succeed.
Maria Meyers, the executive director of the UMKC Innovation Center in Kansas City, Missouri, and founder of SourceLink, says ecosystem developers must provide every resource possible to help make their businesses successful. She encourages ecosystem developers to ask themselves: “Do we have the basics to move each of these types of businesses forward?”
The second installment of this series focuses on Main Street businesses—their shared characteristics, their economic importance, and how ecosystem builders and economic developers can assist with their success.
Part 2: How Ecosystem Builders Can Boost Main Street Success
Main Street businesses are the “heart” of many communities, providing essential goods and services while fostering a sense of place and community pride. SourceLink estimates that approximately a quarter of small businesses are Mainstreeters.
Hallmark Characteristics of Main Street Businesses
Main Street businesses are typically small, locally owned establishments with a storefront presence. Often deeply rooted in the community, Main Street businesses are sometimes passed down through generations and are integral to the local economy. These businesses are known for their accessibility; customers can often interact directly with the owner, fostering strong community relationships. They support Little League teams, volunteer, and sponsor community events. They are also active in chambers of commerce and other local business associations.
You’ll find Main Street businesses scattered throughout your community—along main thoroughfares in a city center, in suburban mixed-use developments, and in neighborhood business districts. Examples include local retail shops; restaurants and coffee shops; service providers such as salons, repair shops; small professional offices (e.g., legal, accounting, insurance providers); and even cultural and creative businesses like art galleries and community theaters.
Sometimes referred to as “mom-and-pop” businesses, they typically employ fewer than 25 people (although usually substantially fewer) and focus on providing local services and products that meet the needs of their immediate community. Unlike innovation-led businesses that aim for rapid growth and technological breakthroughs, Main Street businesses usually have modest growth ambitions, prioritizing stability over expansion.
Darin Rutledge is director of Klamath IDEA, a SourceLink affiliate that serves Klamath and Lake counties in rural South-Central Oregon.
“Particularly in rural communities like ours,” Rutledge said, “there’s not a ton of corporate jobs … so people see entrepreneurship as a way to stay in their community.”
By adopting effective outreach strategies and providing essential resources, ecosystem builders can significantly enhance the growth and sustainability of these businesses, Rutledge noted.
Direct Engagement Is Critical
You can’t provide support in a vacuum. You must engage with your entrepreneurs every step of the way as you build and adapt your community’s ecosystem.
Have coffee with your entrepreneurs or drop by their business for a site visit. Ask them about their companies and listen to their stories. Importantly, ask them what they need and what resources are missing in the community.
Amy Asselbaye, executive director of the Office of Economic Revitalization (OER) for the city and county of Honolulu, emphasizes the importance of direct engagement. OER’s four Resource Connectors visit businesses, strive to understand their unique challenges, and provide personalized support plans, connecting business owners to appropriate resources and services.
“This hands-on, door-to-door approach ensures that businesses receive the specific help they need,” she said, adding that “in the first quarter of 2024 alone, the outreach efforts of OER’s Resource Connectors resulted in 35 custom connection plans for business owners.” These custom connection plans provide information about available workshops, startup accelerator programs, and potential funding sources.
Remember, as you do your outreach, it’s OK to share the load. Do this by understanding and building relationships with existing entrepreneurship support providers in your area. Asselbaye said OER shares the information they gain from their “door-knocking” with other OER programs so they can develop solutions collaboratively.
Further, the City of Honolulu and OER leverage the convening strength of government to bring together partners and stakeholders, enhancing the credibility and impact of initiatives. “This collaboration has led to more targeted technical assistance and support for small businesses,” Asselbaye said.
Direct engagement with other entrepreneurs is also critical. Creating collaborative spaces such as coworking facilities and business hubs where entrepreneurs can meet, share experiences, and collaborate can foster a supportive community environment where entrepreneurial “collisions” can occur. These spaces also provide access to shared resources and services, reducing overhead costs for individual businesses.
Understanding the Most Common Hurdles
Understanding the unique needs and challenges of the local business community is crucial. Economic developers should tailor their support programs to address these specific needs. For example, in Klamath County, local businesses face unique challenges related to their rural setting, such as limited access to high-speed internet and skilled labor. Tailored support programs can help overcome these obstacles and ensure businesses thrive.
Although specific challenges can vary by geographic location and industry, or even from entrepreneur to entrepreneur, some Main Street challenges are universal. Knowing what they are can give you a head start on assessing the resource gaps in your ecosystem.
Here are some of the ways ecosystem developers are addressing Mainstreeters common challenges:
Technical skills development and training. One common scenario among entrepreneurs is they are adept at a particular skill such as repairing computers or making a particular kind of product, but they lack core business skills. Offering workshops and training sessions on essential business skills such as accounting, marketing, e-commerce, human resources, and technology integration can help business owners improve their operations.
For instance, Klamath IDEA’s “Idea Talks” provide opportunities for entrepreneurs to learn from successful business owners and industry experts.
“Our work is focused not so much on the business itself,” said Rutledge, “but on the entrepreneur. Our goal is to connect them to the right resources at the right time.”
Klamath IDEA’s efforts have led to increased community engagement, economic growth, and the development of a supportive business environment.
In Honolulu, OER has established Small Business Connection hubs to support those needs. “These community-based sites are an opportunity to provide tools and resources by bringing in subject matter experts for workshops and creating spaces for businesses to connect, share experiences, and collaborate,” said Asselbaye.
Additionally, creating a robust online network of local, regional, and national resource partners, as Klamath IDEA, OER, and other SourceLink affiliates have done can provide essential support for Main Street entrepreneurs. These networks should include access to funding, technical assistance, marketing support, and business development resources.
Importantly, economic developers should facilitate connections between local businesses and these resources, helping entrepreneurs navigate the often-complex processes involved, Rutledge said.
“On the surface, it [the online network] doesn’t really look like much more than a directory of services,” Rutledge said. “But, if you are a resource in our Navigator Network, you sign a collaboration agreement … and that means if an entrepreneur needs some help and it’s not something you do, you pick up the phone and call another resource partner who can help them—basically, make a hot referral for them.”
Funding and capital access. Securing adequate funding is a persistent challenge, as it is for all the business types in the quadrants. Some aspiring Mainstreeters may be looking for startup capital, but more established business owners may need funds to enlarge or renovate their space, open an additional location across town, or buy inventory, among many other reasons.
Asselbaye points out that because Main Street business owners are so involved in the daily grind of their businesses, many lack the time and resources to fully explore resources and opportunities.
“Small business owners often wear many hats, from managing daily operations to handling finances and marketing. This leaves them with little time to seek out help or conduct research on available aid programs, grants, or other resources that could benefit their businesses,” she said.
Regulatory hurdles. Navigating local regulations, zoning laws, and permitting processes can be daunting. These bureaucratic hurdles can delay business operations and increase costs. Further, these regulations often change, making it difficult for business owners to stay compliant.
Ecosystem builders can engage in policy advocacy to create a more favorable business environment for Main Street enterprises. This can include pushing for policies that reduce barriers to entry, protect small businesses from unfair competition, and ensure fair access to procurement opportunities at the local government level.
Competition from larger chains. Main Street businesses often face stiff competition from larger chain stores with more resources and economies of scale. For instance, local bookstores compete with giants like Amazon, which often offer lower prices and faster delivery.
To counter this, ecosystem developers can work to engage Main Street businesses with their local communities through events, partnerships, and local marketing campaigns to strengthen Main Street businesses’ customer base and reinforce their role in the community.
Enhancing the digital presence of Main Street businesses through programs like Shop + HirePR can help them open new markets and increase their competitiveness. Shop + HirePR is an online directory that connects shoppers with Puerto Rican businesses and freelancers. Colmena66, a SourceLink affiliate that is part of the Puerto Rico Science, Technology and Research Trust, launched the website in November 2017 to help support Puerto Rico’s economy and entrepreneurship. The platform allows entrepreneurs to market their products to a broader audience, ensuring they can compete in the modern marketplace.
KCSourceLink’s BuyKC platform provides a similar platform for Main Street businesses in the Kansas City, Missouri, area.
Further, celebrating and promoting local businesses through initiatives like sending congratulatory cards on business anniversaries or highlighting success stories in local media can boost morale and community support. Klamath IDEA in Oregon sends personalized greeting cards to businesses celebrating milestones, fostering a community culture of appreciation and recognition.
Additional Resources
You don’t need to develop every resource your entrepreneurial ecosystem needs. You can tap into numerous resources already available at the state and federal government levels. In addition, several nonprofits with a nationwide footprint can support your work with local entrepreneurs.
Here are a few of them:
The U.S. Small Business Administration’s (SBA) programs can provide valuable support through lending options, procurement assistance, training programs, SCORE counselors, Women’s Business Centers, Small Business Development Centers, and other needed resources.
Main Street America is a nationwide movement working to revitalize historic downtowns and commercial districts in cities throughout the country. Founded in 1980 as the National Main Street Center, Main Street America works with thousands of communities and local leaders to offer programs and resources—including grants and funding resources—to help communities get started, grow, and manage positive transformation. Main Street programs lead local efforts across the country to strengthen communities through place-based economic development.
Main Street America offers Knowledge Hub, which is a digital library with hundreds of community development materials; professional development—education for downtown and commercial district leaders; and field services (on-the-ground training).
Since its launch, the organization has helped communities generate over $107 billion in local reinvestment, rehab 335,000 buildings, create 728,000 new jobs, and start 175,000 new businesses.
National Federation of Independent Business (NFIB) is an advocacy organization that represents the interests of small and independent businesses at the national level, providing resources, legal advice, and policy advocacy.
U.S. Chamber of Commerce offers programs and resources to support small businesses, including networking opportunities, advocacy, and educational materials.
Main Street Businesses Foster Community Wealth
Klamath IDEAS’ Rutledge stresses that Main Street businesses have an outsized impact on a community’s resiliency. Klamath IDEA’s has three levels of metrics, he says. The first is transactional, ground-level metrics such as how many entrepreneurs they interact with and how many referrals they make to resource partners. The midterm metrics are economic drivers like new business starts, growth in number of employees, and individual business sales. The third, and most important, metrics are transformational indicators such as increases in income, the tax base, number of new jobs, and average wages.
“Those are transformational shifts that drive sustainable communities,” he stressed. “They create a thriving entrepreneurial community that is not only a good place for our local people to be entrepreneurs but also will attract entrepreneurs from outside, drive wealth and resiliency, and foster a sense of place within our community.”
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As you work and grow to support all businesses in your community, SourceLink will help by delivering the tools and expertise you need. We’ve recently launched our newest technology: SourceLink Enterprise, a game changing CRM designed for ecosystem builders looking to build an intentional infrastructure among multiple organizations. Interested in learning more? Reach out to Krista Markley for a demo.
