IN THE KNOW
Downtown: hotbed of entrepreneurship
posted by Errin Welty, Economic Vitality Specialist
When people hear the word “entrepreneur,” the picture that comes to mind may be a high-tech startup or an enterprising inventor with a new gadget. However, 91 percent of downtown storefronts are locally owned and operated, and these businesses are entrepreneurial ventures in the truest sense of the word. Webster’s dictionary defines an entrepreneur as “a person who organizes and operates a business, taking on greater than normal financial risks in order to do so.” Storefront businesses not only take on financial risks, but also invest substantial time in growing not only a business but the community. Much more so than for other types of startups, the success of a storefront business is tied to the success of the local community. This vested interest in creating a welcoming customer environment is just as critical to the success of a downtown as volunteer contributions and private investment.
A Profile of Entrepreneurship
Downtown businesses tend to be small, but collectively they play a significant role in the local economy. The downtown areas of Wisconsin Main Street communities are home to businesses that account for 14 percent of retail sales and 22 percent of restaurant sales made within their host communities. Most of these businesses start out small, with an average of $5,000 in cash on hand, and many rely on locally funded public and private financial assistance programs to make the improvements necessary to repurpose historic storefronts for new use. While starting a business is inherently risky, Wisconsin is ranked second in the nation by the Kauffman Index based on the high percentage of small businesses that survive and continue to operate for five years or longer.
The face of entrepreneurship is changing. Today’s new business owners are increasingly likely to be recent retirees or close to retirement. They are also more likely to be immigrants and/or women. In Wisconsin’s Main Street communities, women-owned and -managed businesses account for 39 percent of all businesses, and for 26 percent of businesses within the categories of specialty shops, salons, law firms, real estate firms, restaurants and nonprofits. While women’s entrepreneurship is increasing overall as a share of new business, our research shows that women entrepreneurs are more likely to choose a downtown rather than an outlying area as the home for their business. For many of these women, the opportunity to join a community of like-minded entrepreneurs is a source of pride and inspiration.
There are many strategies that can help improve the likelihood of success for new businesses in your community. The benefits offered by a downtown include small and affordable spaces that are attractive to new businesses, built-in foot traffic and streamlined marketing, but many challenges still face new business owners. Communities can mitigate these challenges by making it easy for new and prospective businesses to access information and tap into local knowledge during the startup phase. Strategies might include:
- creation of formal or informal networks that aid businesses in identifying challenges, quantifying costs and navigating the multiple licensing and permitting systems – saving new businesses thousands of dollars and shaving months off the opening process;
- establishing networks to connecting local businesses and service providers, providing necessary support and retaining spending within the local economy; and
- fostering mentorship and networking relationships between adjacent or complementary businesses through educational, brainstorming or other group activities can also help raise the profile of individual businesses and the downtown district.
Ultimately, entrepreneurs define the character of your district and provide the unique mix of goods, services and personalities that bring customers back to the area. National Small Business Week is April 30-May 7. During this week, make sure to recognize the entrepreneurial risk-takers that have invested in your community.
Wisconsin Rural Summit
Webinar: working with DOT
Main Street Now Conference
Farmers Market Discussion Call
Additional support for women entrepreneurs in your community can be found at the following links:
The Wisconsin Women's Business Initiative Corporation
Kiva Crowdfunding in Wisconsin
The Small Business Administration
The SBA start-up guide for Wisconsin entrepreneurs
Wisconsin Small Business Development Center
SCORE – Counselors to America’s Small Business (various Wisconsin chapters)