Looking for Global Entrepreneurs Who Want to Build a Smarter Planet

ICIC’s stated mission is to “drive economic prosperity in America's inner cities through private sector investment to create jobs, income and wealth for local residents.” In achieving our mission, we partner with some of the country’s most innovative companies to help businesses grow and revitalize their communities in the process. Today, we’d like to highlight IBM’s SmartCamp program, a high-powered attempt to identify and mentor young companies aligned with IBM’s larger Smarter Planet vision.

What is IBM Smarter Planet?

IBM’s Smarter Planet initiative is an ambitious attempt by one of the world’s foremost technology companies to infuse global data intelligence into the systems and processes that make the world work – things no one would recognize as computers like cars, appliances, roadways, power grids, clothes, even natural systems such as agriculture and waterways. The program is built off the idea that the world is becoming more instrumented, more interconnected, and more intelligent and that IBM’s expertise should be brought to bear for the benefit of humanity in pursuit of those tenets. SmartCamp, conducted in 15 countries so far, is a key part of the initiative.

New Age Entrepreneurs for a Changing World

SmartCamp, coming to Boston on June 20, is an exclusive event aimed at identifying early stage entrepreneurs who are developing ventures that align with IBM’s Smarter Planet vision. These mentoring and networking events put entrepreneurs in touch with over 400 mentors from around the world representing investment firms, serial entrepreneurs, academics, marketing, communications, and technology experts that can help accelerate startup companies to market. While so much of today’s business world is looked on with suspicion, these IBM programs are great, explicit examples of how the private sector supports and enables employment and innovations that improve people’s lives.

Get Involved

Are you a small business working to address world problems in healthcare, energy, healthcare, or any other Smarter Planet areas? If your company is less than 5 years old and privately held, this program could jumpstart your company’s growth. Past participants have raised over $50 million in venture capital and received significant press in the Wall Street Journal, Forbes, and Bloomberg. The next application deadline is on May 25 – don’t miss out on this great opportunity! Click here to apply for IBM SmartCamp Boston.

BY Sathya Vijayakumar on May 16th, 2012

TAGS: small business | business | cities | jobs | community development | entrepreneur | shared value | capital | ibm | smartplanet

Fast-Growth CEOs: Bullish on the Economy

shutterstock images
by Kimberly Weisul is Editor-at-Large for Inc.

At a recent gathering of fast-growing inner-city companies, the consensus was clear: We’re back. Manufacturing is back. Things are getting better.

Granted, these are all companies being recognized for their fast growth. But many of them are in industries that also give them a bead on how the larger economy is doing.

The one CEO who said he wasn’t sure which way the economy was headed was Jeff Silver, CEO of Coyote Logistics. Shrugging, Jeff says he doesn’t know what’s going on with the economy “any more than the guys on Squawk Box.” But ask how many employees his company has, and he replies, “1,025 today; 1,040 by Monday.” Revenues were $750 million last year, up from $328 million the year before.

Read the full article at Inc.com

BY Guest Blogger on May 15th, 2012

TAGS: small business | business | economic development | jobs | economy | detroit | manufacturing | entrepreneur

Introducing the 2012 100 Fastest-Growing Urban Businesses In America

INNER CITY 100

Yesterday, over 500 urban business owners and leaders from both the public and private sectors converged in Boston for a full day of executive education and the unveiling of 2012’s Inner City 100 list. Published today in Fortune, the Inner City 100 is a list of the fastest-growing urban businesses in America. With everything from craft beer distributors to green consultants, this year’s list and the event that unveiled it have shown the inner city to be remarkably vibrant. As ICIC Founder and Chairman Michael E. Porter said at last night’s event, “Nothing makes me as hopeful about America’s future, out of all the things I do, as this event and these companies.”

This year’s Inner City 100 boasts a stunning 577% average growth rate over the last 5 years. These firms created nearly 5000 new jobs and grossed $1.5 billionin revenues, all while employing 40% of their workforces from within the inner city. Showcasing their stories proves the rationale behind ICIC’s mission – inner cities have unique competitive advantages that can allow companies to be wildly successful if they take advantage of them. Number 22 Gelato Giuliana for instance took advantage of New Haven’s status as a transportation hub to grow the company over 50% per year since 2006. 2012 Diversity Award winner Intelect Corporation (#96) retrofitted a former broom factory to service their IT needs to great success. Examples abound of companies using transportation hubs, reusing old industrial buildings, and taking advantage of their city’s central locations to outdo their competition.

In addition to the list, be sure to check out Fortune’s take on Revolution Foods, Brooklyn Brewery, reusing industrial space, and urban business success! Yesterday’s awards ceremony showcased a lot of amazing stories. We’re excited to share them with you through Fortune and hope you’ll spread the word.

BY Sathya Vijayakumar on May 10th, 2012

TAGS: business | entrepreneur | ic100 | #ic100 | workforce | growth | inner city | small business | community impact

Tick, Tock. Tick, Tock. Less than 24 Hours Until the Inner City 100 Symposium!

(avg: 1.00 of 5)

One hundred entrepreneurs are descending upon Boston today in preparation for the Inner City 100 Symposium which is now less than 24 hours away!  In preparation for the event, below is a crash course on the Inner City 100 program. In its 14^th year, the Inner City 100 list has highlighted the 100 fastest-growing inner city companies in America. Built on the premise that the inner city provides unique competitive advantages such as access to skilled labor, transportation systems, and urban clusters, the Inner City 100 list recognizes firms for the critical role they play in urban communities as both employers and community builders. The 720 companies that have earned a place on the list since the program’s inception have consistently exploded stereotypes of the inner city – this year’s list is no different!

2012 Inner City 100

The 100 companies on the list collectively created over 4,600 jobs over the last 5 years and employ nearly 8,000 workers even as the broader economy has faltered.

How crucial were they to inner city employment and local government coffers? We found that 40% of their workers reside in inner city communities and that they logged a combined $1.5 BILLION in revenues in 2010. Despite chronic undercapitalization relative to their non-urban peers, the Inner City 100 winners actually grew their revenues, on average, 577% between 2006 and 2010—a truly stunning feat.

With the publishing of this year’s list, the genie will be out of the bottle; these are the companies to watch. The only question is: Which financier will get to these clearly investment-grade firms first to provide them with the growth capital they need to expand and create more jobs?

Who made the cut?

Three key themes that jumped off the list this year were food-related businesses, companies with mission-driven founders, and firms with a near unanimous commitment to maintaining and developing human capital.

A little known fact: the food sector employs over 10% of the American workforce. Twelve of the country’s 100 fastest growing inner city firms over the past five years are part of the emerging food cluster, and the list boasts companies ranging from manufacturers to distributors to restaurants. Many inner cities already possess cost-effective industrial space and have strong transportation networks, making these areas ideal for the needs of food manufacturers, distributors, and restaurants alike.

Another general trend was mission-driven founders. From Revolution Foods’ mission to end childhood obesity to Research Into Action’s desire to grow the capacity of the energy industry towards environmental ends, this year’s inner city firms fancy themselves as social enterprises and profit makers. 

Finally, this year’s list boasts a disproportionate number of CEOs who paid more than lip service to developing and supporting their workforces. To share a few examples, Brooklyn Brewery’s CEO Steve Hindy took half his staff to Italy and the other half to Sweden to celebrate 100,000 barrels of production while SEER Interactive CEO Will Reynolds reports creating a friendly atmosphere through sushi-making and photography classes for his staff. Far from the desolate picture of the inner city portrayed in the media, these firms are companies with character that have gone after big markets and succeeded.

Inner City 100 Event

On May 8 and 9, Inner City 100 winners and a wide array of leaders from the public and private sectors will converge on Boston to recognize this year’s winners and go through a day of executive education with some of the foremost minds in commerce from Harvard Business School, Boston University, Babson College, Next Street, and R/GA. ICIC will be live streaming ICIC Founder and Chairman Michael Porter’s Wednesday afternoon speech entitled Strategy: Creating and Sustaining Competitive Advantage.Tune in to participate in the week’s festivities and hear an insightful address. Finally, keep your eyes open for Fortune Magazine’s unveiling of this year’s Inner City 100 list!

BY Sathya Vijayakumar on May 8th, 2012

TAGS: small business | cities | business | entrepreneur | ic100 | capital | food | job training | social enterprise

5 Tips for Revitalizing Inner City Commercial Corridors

(avg: 4.00 of 5)

Back in March, we joined hundreds of community development practitioners in Chicago for the “Getting it Done II” conference hosted by the Institute for Comprehensive Community Development. Several roundtables and workshops allowed participants to dig deeper in to their particular community development interests.

For me, that landed me in the commercial corridor workshop. I learned how San Diego is using “Tastes of” neighborhoods to bring together diverse populations and celebrate cultures. I heard how, despite significant housing improvements in West Baltimore, attracting retails remains a challenge. And I listened as Matthew Thrall detailed the plans for the Fairmont / Indigo transit line in Boston that will hopefully revitalize portions of Boston’s low-income communities.

Building off the learnings from the workshop, the Institute for Comprehensive Community Development recently put together a brief “how-to” guide for upgrading you local commercial corridor.

Their five main tips:

• Build your team with clarity: the neighborhood residents and local merchants should share a common vision for what they want the corridor to look like. When businesses, residents or local nonprofits have diverging interests, each should find ways to support the others.
• Get the data—then use it: a market study for the corridor can identify unmet demand for goods and services; and identify the strongest business opportunities. Learning about the business climate and demographics helps determine what new businesses can be supported.
• Make quick, visible improvements: the simplest storefront and sidewalk improvements can spur additional business development and investment.
• Find a jumpstart project: sometimes the first step in revitalizing a commercial corridor is not through attracting a new retail company, but can be from building a community facility—such as a new YMCA. The effect is to drive foot traffic in the corridor that will then attract new businesses.
• Make friends in government: Funding for projects in low-income neighborhoods traditionally comes from the government; collaborating with governmental departments can result in partnerships where everyone has a stake in seeing a project succeed.

To read the entire article, as well as the examples associated with these tips, click here.

What do you think? Are there other strategies that you would advise community developers to use in order to revitalize their commercial corridors? What has worked in your city?

BY Amanda Maher on May 7th, 2012

TAGS: institute ccd | commercial corridors | economic development | community development | businesses | small business | urban revitalization

Skills Gap or Wage Gap?

(avg: 5.00 of 5)

Just yesterday, the stock market surged with news that U.S. manufacturing sector expanded  yet again in April and is now at its highest level in 10 months. The day before, ABC News ran a story about the numbner of global manufacturing companies reshoring their operations in American cities and towns. There's no doubt manufacturing will be at the forefront of America's economic recovery. 

But repeatedly, we're hearing that there's a skills gap between workers and the employees these manufacturing companies need. In this guest blog from Stacey Wagner of the Manufacturing Extension Partnership (MEP), she explores whether it's really a skills gap that's hindering manufacturing's growth--or a wage gap.

By Stacey Wagner, originally posted on the Manufacturing Innovation Blog

Reading my way through my IndustryWeek online magazines last week, I noticed two articles that, taken together, sounded funny to me, although I was not amused.  The first was a piece entitled “Job Shops Need Marketing, Skilled Workers to Grow” and the second was called “How Much Do U.S. Production Workers Make?”.   Thinking both of these articles would describe how the continued resurgence of American manufacturing was creating and filling plenty of good jobs, I read through the first article  to find that 78 percent of small manufacturers surveyed by MFG.com said they are optimistic about sales and profits for 2012 even though “one of their greatest challenges is finding skilled employees”.  The second article, then, didn’t make sense.  It said the median weekly income for U.S. production workers dropped 2.5 percent this year from the same period in 2011.

Could it be that people who would be good candidates for manufacturing training and jobs are not seeing wages commensurate with the jobs (and thus, choose a different type of job)?  That small manufacturers are having trouble finding workers because they aren’t willing to pay market wages?

This disconnect was not lost on me. For a decade, manufacturing skills gaps and solutions have been identified by organizations as diverse as the National Association of Manufacturers, the Center for Law and Social Policy, and Georgetown University.  Two-year colleges have been ratcheting up their workforce training to accommodate individuals who want to work in advanced manufacturing, and public and private grants have been driving manufacturing skills acquisition in regional collaborations around the country. To what, then, should we attribute this continued “dearth” of skilled workers?  “You get what you pay for” is an old aphorism.  But it does seem to me that perhaps, generally, many small manufacturers haven’t yet fully adapted to the fact that in order to grow, they need to invest, not simply cut costs.  Whether those investments are in technology, continuous improvement, sustainability, supplier relationships or workforce development, understanding how investments pay off is a core function of a successful business.  It’s about risk management and investment optimization.  It’s about vision.  A business will amount to very little without smart people running it.  And those smart people should be compensated appropriately.

I can’t say for sure that the continuing skills gap is about wages and not about skills.  I’ve seen and conducted enough research demonstrating that, over the last few decades, many of our educated young people have chosen careers outside of manufacturing because they saw it as a declining industry.  And as manufacturing jobs changed over that time from brawn-based to brain-based, many current job seekers don’t have the basic STEM (science, technology, engineering and mathematics) education needed to work in advanced manufacturing.  But the U.S. is bouncing back and advanced manufacturing is pulling the economy forward like a Clydesdale in front of a beer truck.  It would be a shame to see it all slide away because we aren’t investing in our workforce to the same extent we invest in other manufacturing strategies.

BY Guest Blogger on May 2nd, 2012

TAGS: manufacturing | industrial | wages | workforce | workforce training | economic recovery | mep | jobs | skills gap | stem

Building Bridges to Jobs and Safer Inner City Neighborhoods

(avg: 5.00 of 5)

Late last month, the American Journal of Public Health found that low-income neighborhoods have the most dangerous roads. The impact? Low-income residents are more apt to suffer from traffic-related injuries than their wealthier counterparts.

Pedestrians in low-income neighborhoods are six times more likely to be injured than pedestrians in higher-income neighborhoods. Motorists and cyclists are at risk in these areas, too: these drivers were 4.3 and 3.9 times more likely to be injured, respectively.

Researchers explained the reason for the discrepancy is because low-income residents are exposed to more traffic, and with increased traffic comes more accidents. The authors wrote, “Traffic volume at intersections increased significantly with poverty.” Specifically, low-income neighborhoods have 2.4 times the traffic volume than higher-income neighborhoods. Low-income neighborhoods are also more likely to contain complex intersections, such as congested four-way stops and major arterials.

In addition to having worse traffic and poor road design, ICIC’s research shows that low-income neighborhoods also suffer from a disinvestment in infrastructure.

Unquestionably, infrastructure quality represents a significant national problem. One common measure of infrastructure quality – bridge deficiency – reveals that one in four bridges in the U.S. is deficient. This issue is even more pronounced in inner cities. On average, more than 40% of inner city bridges are deficient, a staggering 60% higher than the national average. Moreover, inner cities have twice as many bridges per square mile than the rest of the country.

While poor road design, traffic congestion, and structurally deficient infrastructure are currently a risk to low-income neighborhoods, they also offer an opportunity for significant job creation.

At the core of President Obama’s 2009 American Reinvestment and Recovery Act (ARRA) was fixing the nation’s infrastructure while putting residents back to work. Some progress was made, but certainly more can be done. Inner cities are the ideal location for additional infrastructure spending.

Inner cities have incredibly high concentrations of infrastructure assets, including water ports, intermodal facilities and the country’s largest airports. Per square mile, the average inner city has roughly 100 times as many of these assets as the rest of the U.S. This infrastructure is also at the core of regional transportation and distribution systems. By investing in inner city infrastructure, the U.S. has a great opportunity to strengthen the competitiveness of both local and regional economies.

On its own, the bridge quality gap has cost inner city economies between 2% and 3% of their total job base—or upwards of a quarter of a million jobs—affecting key industries such as transportation, logistics and professional services. Infrastructure investment in America’s inner cities offers the best opportunity to restore these lost jobs and create new jobs, both locally and regionally. ICIC’s research shows that a 10% decrease in the percentage of deficient inner city bridges is correlated with a 1.83 increase in inner city growth and a 1.69% increase in regional growth.

As we continue to look for ways to pull America out of the dredges of this economic recession, policymakers should relook to infrastructure investment as a means of job creation—starting in the inner city. We would be left with both safer streets and stronger economies.  

BY Amanda Maher on May 1st, 2012

TAGS: cities | economic development | jobs | safety | infrastructure | bridge quality | research | community health

Growing the Economy Through Food: Inner City 100 food companies

(be the first to rate this article)

Maybe you’ve noticed. If there’s one thing we love here at ICIC it’s food. Pizza, cupcakes and sweet potato fries are among our favorites. Sure, we have a passion for urban economic development and supporting small businesses. But we really love food. As luck would have it, our love and passions aren’t mutually exclusive.

In last week’s What Works webinar, experts outlined the complexity of the food cluster, the opportunities for job growth and business development within the cluster, and the challenges that hinder the growth of the food cluster. Over 100 practitioners joined us to learn which tools and policy levers can be used to make food a component their urban economic development strategies.

Through the webinar, we learned that the food cluster – from packaging to machinery, through distribution, processing, and retail – is comprised mostly of small businesses. Over 40% of all companies in the food cluster have between 1 and 4 employees; another 50% of companies employ between 5 and 49 people. In total, the food cluster employs nearly 14 million people, or 12% of the entire U.S. population.

The 2012 Inner City 100 list confirms that food cluster businesses are also among the fastest growing inner city firms. Interestingly, these small food companies represent a range of functions within the food cluster, including a distributor, manufacturer, and restaurant. Quite different than the urban agriculture firms or food trucks that most people associate with the emerging food cluster!  

Here’s a preview of food companies that made this year’s cut:

Bronx-based Down East Seafood employs 42 people, many of which are inner city residents. They are a supplier of seafood for restaurants, hotels, private clubs and other vendors. In 1990, Edward Taylor started the company with a friend’s credit card and a $500 loan. Last year, Down East and Seafood had over $20 million in revenue and distributed seafood to seven states across the nation. Located in the Bronx, this reliable, responsible company displays a unique commitment to sustainability intertwined with a value proposition that draws customers in and keeps them coming back.

Once a small gelato shop in New Haven, Gelato Giuliana is now a 24-person gelato manufacturing company with distribution across much of the Northeast U.S. Founder and CEO Giuliana Maravelle grew up in Italy, self-funded the venture and prides herself on making the most authentic gelato in the country. Gelato Giuliana’s products appeal to a high-end specialty boutiques and well-educated clients with a sophisticated palette. Manufacturing authentic-tasting gelato is a cumbersome process, so cutting corners and mass producing are not options. Maravelle has taken great steps to carefully nurture her company’s growth to make sure it doesn’t diminish her gelato’s taste. The company is at a crossroads: should it scale into new products (such as kosher gelato) or expand geographically with its existing product?

The Red Iguana is a full-service, casual Mexican restaurant. With two main locations and a satellite at a downtown mall, they have been a pillar of the Salt Lake City community since their founding in 1985. Admirably, this family-run restaurant has promoted four former cashiers to senior management positions and places a big premium on employee loyalty. In an age of globalization and quick turnover, Red Iguana is a restaurant with values that has stood the test of time.

Food companies are among the businesses innergizing our urban economies. Join us May 9^th to celebrate their successes. If we’re lucky, maybe these companies will even bring along some snacks!

BY Alex Rodriguez on April 26th, 2012

TAGS: ic100 | food | cluster | small business | entrepreneur | business | bronx | new haven | salt lake city

Peace, Love & Happiness in Your City

(avg: 3.50 of 5)

New England states like Maine, Vermont and New Hampshire might get poked fun at now and then for being too hipster, outdoorsy or NRA-loving – but maybe these states are on to something.

The annual United States Peace Index was just released and it has these three states listed as the top three most peaceful states in which to live. The three least peaceful states? Nevada (48), Tennessee (49) and Louisiana (50).

Rankings are determined based upon five factors: the number of homicides per 100,000 people, number of violent crimes, incarceration rate, number of police employees and availability of small arms.

The good news: the survey shows that nationwide, there has been a 3.2% drop in homicides and 5.5% dip in violent crimes over the past two decades. This is important because the economic impact of crime is huge—it cost the nation’s economy approximately $460 billion last year alone. Costs include loss of productivity and state compensation for medical care for victims. A reduction in crime would funnel these resources to most productive uses.

According to the Index, the most peaceful cities are (from 1^st to 5^th)

• Cambridge, MA
• Edison/New Brunswick, NJ
• Seattle, WA
• St. Paul/Minneapolis, MN
• Peabody, MA

The least peaceful cities (from 1^st to 5^th)

• Detroit, MI
• New Orleans, LA
• Nashville, TN
• Miami, FL
• Baltimore, MD

It’s no surprise that the there is significant overlap between least peaceful cities and cities with the most violent crime. Topping the list of cities with violent crime: Detroit, Nashville, Las Vegas, Miami and Baltimore.

As a caveat, it should be noted that the Index really measures "metros" and not center cities--so inner-ring suburbs may be contributing to some of these rankings. (For instance, Cambridge's ranking is coupled with data from wealthy suburb Newton, MA.)

To see where your city (metro) or state falls on the index, visit the Vision of Humanity’s website, which published the rankings earlier this week.

What’s your city doing to combat crime and create a more peaceful environment for residents?

BY Amanda Maher on April 25th, 2012

TAGS: cities | crime | police | peaceful | index | cambridge | seattle | twin cities | detroit | new orleans | nashville | baltimore

Beyond Urban Farming and Rooftop Gardens: The Complexity of the Food Cluster

(avg: 3.67 of 5)

Above: Eastern Market in Detroit 

It seems as though everywhere we turn, we hear stories about new urban farms or rooftop gardens atop city buildings. Food-related business incubators are churning out more than just jellies and jams: they’re spinning off new small businesses that then go on to hire local residents.

And yet, as much as we hear about the growth of the “food cluster” – few of us really understand the complexity of it.

Last week, ICIC hosted its second What Works Webinar on “How to Cultivate Your City’s Food Cluster.” To preface the conversation, Karen Karp, President of Karp Resources, began with an overview of the food cluster taxonomy—showing how both federal and local policies have implications for the food cluster.

Some fast facts about the food cluster:

• It’s a major segment of the U.S. economy: more than 700,000 U.S. food establishments (9%) employ nearly 14 million people (12%)
• There’s a high concentration of small businesses: Over 40% of all companies in the food cluster have between 1-4 employees; another 50% of companies have between 5-49.
• Low-educational requirements make it an attractive sector in inner cities: 60% of cluster workers have high school diplomas or less versus 44% for the rest of the economy.

Using a Detroit versus Boston case study, Adina Astor of Next Street and Teresa Lynch of ICIC then highlighted the challenges and opportunities faced by cities seeking to develop an inner city food cluster strategy.

The researchers found that the biggest opportunities for job and business creation include: production (entrepreneurship such as incubators and urban agriculture); distribution (with an emphasis on diversified distribution mechanisms to get a range of foods into the marketplace, particularly where local foods or value-added foods are involved); institutional food service (servicing schools, universities and hospitals); restaurants and retail (especially around healthy foods and innovative, quick service models); and commissaries (food that is prepared at one site and distributed to another for consumption).

Think of Boston, for instance: $3.5 billion was spent last year on food in the Greater Boston area (within Route 495), but few of these dollars were returned to Boston. Capturing just 1% of this total spend would result in $350 million returned to the local economy. The opportunities are huge.

But challenges exist.

Production requires affordable spaces, and in land-constrained cities like Boston, buildings and land can be cost-prohibitive. Distribution channels can be hard to navigate by small scale food companies with small volume distribution. The costs for food companies can be high: from higher wages and unionization, to heavy licensing fees and tax burdens. Demand for goods is heavily dependent based on a city’s population and income density. Financing can be extremely difficult: despite the high up-front costs for facilities and equipment, there are few traditional lenders willing to finance start up food companies. And finally, the breadth of city and federal oversight makes understanding, navigating and complying with regulations difficult.

After the presentation was complete, three major themes became apparent:

• All cities, whether land-rich like Detroit or land-constrained like Boston, have opportunities to leverage their food clusters to create jobs and businesses. The opportunities will vary by city, depending on land characteristics, capital resources, workforce skills, demand and income density. But the breadth of the food cluster – from packaging to machinery through distribution, processing and retail – means that each city can reap benefits from the food cluster.
• Though there are challenges to developing the food cluster, cities can do a lot to help. Land policy and zoning are perhaps the most obvious ways for cities to help. However, cities can also play a role through public procurement, tax policy and by deliberately targeting the food cluster as an opportunity for economic development.
• Preserving industrial land – especially in land-constrained cities – is important. Much of the industrial land in post-industrial cities has been converted for commercial or residential use. In doing so, it hinders the growth of many segments of the food cluster that rely on industrial land for growth. Once industrial land is converted, rarely can it be converted back.

The What Works webinar was great reminder that as the food movement pushes forward in our cities, we must not forget to acknowledge the complexity of it. Designing an inner city food cluster strategy is no small feat, but the bounty can be plentiful.

For the entire presentation, click here to view a sidebar with the webinar recording and slides.

Have addition questions for the presenters? Want to connect with your peers on the subject matter? Use the discussion tool below to share with us how efforts in your city are supporting its food cluster growth!

BY Amanda Maher on April 24th, 2012

TAGS: food | what works | webinar | economic development | cities | small business | boston | detroit | clusters | industrial | production | distribution | nextstreet | karp resources

On Earth Day, a Look at Cities Across the World Going Green

(avg: 4.00 of 5)

The 1970s: a decade that saw the Vietnam War, growing disillusion of government, The Kent State Massacre, advances in civil rights, The Rolling Stones, mood rings, and the introduction of affirmative action.

Amidst political upheaval and turmoil, though advocacy and protests, the environmental movement was born. At the forefront of this movement was the celebration of “Earth Day” – April 22, 1970.

In honor of Earth Day’s 42^nd birthday today, we’re taking a look at some of the efforts cities are taking to promote sustainability.

• Reykjavik, Iceland: Heat and electricity come entirely from renewable geothermal and hydropower sources. The city is committed to become entirely fossil-fuel-free by 2050. Recently, the city began using hydrogen buses to meet this goal.
• Curitiba, Brazil: Nearly 75% of residents use public transportation daily in this city—using a bus system that is regarded as one of the world’s best
• Austin, Texas: Perhaps the solar manufacturing capital of the U.S., Austin is on its way to achieving its ambitious goal of being carbon neutral by 2020.
• Vancouver, Canada: Another city with an ambitious goal: to be the “greenest city in the world” by 2020. Vancouver already leads the world in hydroelectric power (90% of its supply).
• Seattle, Washington: More than 20 buildings are on their way to being LEED-certified.
• Oslo, Norway: To conserve energy, intelligent lighting was installed that adjusts intensity depending on traffic conditions and weather. Over 1,700 electric vehicles are on Oslo’s road, which enjoy free parking, toll immunity and access to lanes reserved for public transit.
• Portland, Oregon: Consistently declared the most “bikeable” city in the U.S. for its 200+ miles of dedicated bike lanes.
• Copenhagen, Denmark: Over 1/3 of the city’s population cycle to work. A mandatory green roof policy was implemented that requires all new developments to incorporate some level of vegetation in to their building designs. This, along with an offshore wind farm and new metro system make Copenhagen one of the greenest cities in the world.
• Chicago, Illinois: Implemented a requirement that 50% of all construction debris must be recycled or reused. To help generate demand for recycled materials, the City is going to repave all alleyways in the city with construction debris.
• Australia: Okay – so this isn’t a city – but the national government is gradually phasing out all inefficient incandescent light bulbs in all of its cities to conserve energy.

The wealth of the nation is its air, water, soil, forests, minerals, rivers, lakes, oceans, scenic beauty, wildlife habitats and biodiversity… that’s all there is. That’s the whole economy. That’s where all the economic activity and jobs come from. These biological systems are the sustaining wealth of the world.                                    - Gaylord Neslon

What efforts are underway in your city to make it more sustainable? What city do you think deserves the title of “Greenest City” in the world? 

BY Amanda Maher on April 22nd, 2012

TAGS: cities | earth day | sustainability | chicago | seattle | vancouver | portland

Caine's Arcade

This short film was created by Nirvan, a filmmaker interested in new-media, collaboration, and social change. By chance he came across an amazing 9 year old boy in a used autobody parts store. Nirvan was able to use his film background to help tell this boy's story.  It's an inspiring story about youth entrepreneurship and community development.

Backstory
Written by Nirvan and found on cainesarcade.com

Caine Monroy is a 9-year old boy who spent his summer vacation building an elaborate DIY cardboard arcade in his dad’s used auto parts store.

Caine dreamed of the day he would have lots of customers visit his arcade, and he spent months preparing everything, perfecting the game design, making displays for the prizes, designing elaborate security systems, and hand labeling paper-lunch-gift-bags. However, his dad’s autoparts store (located in an industrial part of East LA) gets almost zero foot traffic, so Caine’s chances of getting a customer were very small, and the few walk in customers that came through were always in too much of a hurry to get their auto part to play Caine’s Arcade. But Caine never gave up.

One day, by chance, I walked into Smart Parts Auto looking for a used door handle for my ’96 Corolla. What I found was an elaborate handmade cardboard arcade manned by a young boy who asked if I would like to play. I asked Caine how it worked and he told me that for $1 I could get two turns, or for $2 I could get a Fun Pass with 500 turns. I got the Fun Pass.

Talk about an inspiring story.

BY Mary Duggan on April 20th, 2012

TAGS: small business | business | entrepreneur | innovation | inspiration | community development

When Innovation Outpaces Policy: Amazon, Sales and Taxes

Photo: Amazon sales tax map last updated Sept. 8, 2011, The Street

Earlier this year, ICIC supported AMEX’s Small Business Saturday event in solidarity with small, local businesses across the country. One of the oft-mentioned facts from that event was that purchases at big-box retailers return drastically less money to local communities than purchases at small businesses. The elephant in the room, however, is that online purchases currently return no money to local communities because of Quill Corp vs. North Dakota, an obscure 1992 Supreme Court decision. In the ruling, the courts essentially determined that out-of-state companies had to have a strong physical presence in a state to necessitate collecting sales taxes. 1992 was 2 years before the founding of Netscape, the first Internet browser – purchases made over the internet were thereby protected from state sales taxes. Should local small businesses be at a competitive disadvantage because the law hasn’t evolved with the times? Further, should states be deprived of sales taxes in a time of ballooning deficits?

Amazon’s Case – Burdens and Bottom Lines

Enter Amazon. Founded by Jeff Bezos in 1994, the company is a bellwether for the fates of online retail in this fight. Comprising 1/3 of all purchases on the Internet in 2011, they are to ecommerce what Walmart is to brick and mortars – the undisputed king of their commercial jungle with an inexhaustible appetite for continuing success. As the picture above shows, Amazon has faced resistance as states have cottoned on to the law’s distorting features and dealt with it in a patchwork manner. It should be noted that the 5 states where it pays sales taxes (Kansas, North Dakota, New York, Kentucky, and Washington) are the only markets in which the company has stores or offices.

From the online retailing giant’s perspective, they follow the rules as they are on the books and shouldn’t be burdened with the task of incorporating wildly varying state tax codes into their payments platform. Amazon’s official line has been to support a Streamlined Sales Tax Agreement in which rates would be more consistent and states would agree on a single list of what kinds of goods and services are taxable. Throw in the sales tax’s potential effect on Amazon’s bottom line and it’s clear why this is a fight where the battle lines were drawn early and contested heavily.

Leveling the Playing Field – Small Business Focus

From local small business’s perspective, Amazon not only undercuts their prices through scale and selection, but also benefits from a legal definition of commerce that would seem to make more sense in internet-scarce Azerbaijan than up-and-coming Atlanta. Additionally, Amazon’s claim that it would be an unreasonable burden to force them to incorporate state tax codes into their platform seems odd from a company that stores, processes, and analyzes trillions of data points about its myriad consumers with a precision that could make a surgeon blush.

Tensions were no doubt further raised when Amazon released its Price Check app for smart phones last year. Allowing users to price check items within physical stores against Amazon’s database of sellers and giving them a $5 Amazon credit when they inputted photos of prices, the app is a direct bid to take business away from brick and mortar locations. Given that small businesses have accounted for a disproportionate amount of the country’s job growth over the last century, Amazon’s targeted encroachment onto local business’s turf has implications that go well beyond the simple battle for commercial fairness.

An Open and Shut Case

In a lot of ways, Amazon’s court struggles represent the quintessential economic dilemma of modern times – profits are no longer the same thing as employment and innovation is happening faster than the law can ensure fairness. It seems clear however that in a world in which borders are becoming historical artifacts, tax codes shouldn’t unfairly disadvantage physical shops. While Amazon may have a point that state sales tax rules should be more consistent, consumers and businesses shouldn’t have to wait for the ideal policy to emerge to solve a problem that’s within Amazon’s considerable power to resolve today. The bottom line is fairness – an even playing field should be a prerequisite, not a question.

Works Cited:
Small retailers take aim at online stores, taxes – Metro Boston http://bit.ly/Iy4BOd
Amazon sales tax - Slate Magazine http://slate.me/Iy4HWk
Amazon Sales Tax: The Battle, State by State - TheStreet http://bit.ly/Iy4GSd
Amazon Price-Check App – Small Business Trends http://bit.ly/HL1bqE
Streamlined sales tax – SSTGB http://bit.ly/Iy4JNN
An Analysis of Small Business and Jobs – SBA http://bit.ly/IG34IU

BY Sathya Vijayakumar on April 17th, 2012

TAGS: small business | entrepreneur | business | retail | innovation | policy

Entrepreneurs and Bureaucrats, Dogs and Cats

Want to hear from an Inner City 100 winner whose company has grown exponentially in spite of the difficult economy?  This CEO appeared on the Inner City 100 list for the first time last year and has continued to scale his operation and guide his organization to maturity.  Orbit Media Studios is a digital marketing agency in Chicago.  The company is led by Principal and Strategic Director Andy Crestodina.  Andy started the company with a high school friend, a combination of their 401Ks and some credit cards. Orbit is located in a very diverse neighborhood with populations hailing from Romania, Germany and Latin America. Crestodina and the rest of the “Orbiteers” are also involved in doing online overhauls pro-bono for local non-profit organizations.

Guest Blogger: Andy Crestodina, Orbit Media Studios

Businesses are started with an exhilarating rush. Everything is new. Don’t know how to do something? Improvise! It’s a great feeling.

As things get off the ground, you start making those first big improvements, setting the foundation, and establishing the main processes. You feel like you’re building, and it feels good.

Gradually, the main pieces are in place, but there are still wrinkles to iron out. You start to “optimize” those processes. You feel like you’re getting smarter, and it feels good.

Eventually, you become the best-in-class in your category. Your business is now the best at what it does, but you do it by using tools and rules, best-practices and quality controls. Because of this, you might feel stuck and that isn’t good.

It’s the natural evolution of business. It’s called “maturing,” and its a good thing. However, it’s also the transition from entrepreneurial to bureaucratic. And if you’re the type of entrepreneur who thrives on chaos and the thrill of starting new things, you might get bored.  

So how do you keep that initial exhilaration alive even after your enterprise is so optimized it feels bureaucratic? Be creative.

Here’s an example someone shared with me the other day:

It's a fairly short story -- it was told to me by my roommate -- years ago.  This roommate -- a very nice fellow -- had gone to university at Cambridge some years earlier.  He told me that, at the dormitory of the college he attended, there was a long-standing rule, which stated that "No dogs were allowed in the dormitory as pets."  

However, a certain headmaster was appointed who happened to have a pet dog, of which he was very fond.  The headmaster was informed of the long-standing rule about dogs in the dormitory.  He requested permission to keep his pet.  

A committee of some sort at the ancient college met in order to discuss this matter.  In the end, they decided to keep the long-standing rule, but pass another one, which stated that this particular headmaster's dog was a cat.  

Simple, eh? If you find it’s easier to make a new rule than get rid of an old one, do it.

Victory through absurdity.

Thanks to John O’Neil, who told me this story while we were pruning trees in Edgewater.

Andy Crestodina is the Strategic Director of Orbit Media Studios, a web design company in Chicago and a 2011 and 2012 ICIC winner. You can find Andy on Google+ and Twitter.

BY Guest Blogger on April 13th, 2012

TAGS: small business | business | entrepreneur | creativity | bureaucratic

Creative Placemaking in Massachusetts’ Gateway Cities

(avg: 5.00 of 5)

A few months back, we posted a blog entry discussing how cities nationwide are turning to “placemaking” as a way to revitalize their economies. We profiled placemaking efforts—strategically creating places that people gravitate to because they are appealing and enjoyable—in Grand Rapids, which include Zombie Walks, Chalk Floods and an Annual Downtown Santa Invasion. While these efforts have certainly grabbed folks’ attention, more traditional placemaking is happening right here in our own backyard.

Today, research and policy organization MassInc hosted “The Gateway Cities Creative Placemaking Summit” to highlight the growth of cultural and art projects in Massachusetts’ older industrial cities.  These “Gateway Cities” tend to be low-income, distressed, and very culturally diverse. Politicians and community leaders from the various Gateway Cities convened to discuss what placemaking efforts are working best to revitalize their downtowns, and where cities continue to struggle.

An early observation worth noting: Anita Walker, the Executive Director of the Massachusetts Cultural Council, pointed out that there are two sets of lenses with which to look at placemaking:

• Those with deep, personal knowledge of the community; or
• Those who have never been to your community before, but who you would like to attract to your city.

Walker references a town called Battle Mountain: upon entering the town, there’s a massive Shell Company sign that, for a long time, had the “S” burned out—not a good first impression for visitors. Creative placemaking begins with a remedy for these simple problems to make your community more attractive.

So what placemaking efforts are happening in Massachusetts’ cities?

In Pittsfield and Lynn, two former industrial powerhouses, efforts have been narrowly targeted within two “Cultural Districts.” The Cultural District designation is a result of the Massachusetts Legislature’s 2010 economic stimulus bill that devoted funding to the creation of five “Cultural Districts” whose priority would be to help attract artists and cultural enterprises, encourage business and job growth, expand tourism, and preserve historic buildings. The designation allows the five districts to access new sources of revenue and business, tourism, conservation, and housing support.

Pittsfield, in perhaps a play on the word “downtown,” began by renaming its cultural corridor “Upstreet.” Often, cities find that simply rebranding an area can improve public perception and drive new business creation. The Upstreet Cultural District mirrors the Downtown Arts Overlay District—an overlay district formed in 2006 that has successfully drawn artists and entertainers from across Berkshire County. Now efforts are focused on making the city’s cultural assets and activities more visible to residents and tourists alike.

In Lynn, the new downtown “Central Exchange” Cultural District brings together contemporary artists and multicultural cuisine in the city’s historical industrial buildings. Central Exchange includes historic museums, performance spaces (such as the Black Box Theater), art galleries, WFNX radio station, and retail outlets reflecting the city’s diverse population. Recently, Lynn reopened its historic Memorial Auditorium which now attracts visitors from across New England for its nationally-known performers.

Even though only five Massachusetts’ cities were chosen for the state “Cultural District” funding, other cities are using art and culture to revitalize their downtowns.

State Senator Eileen Donoghue, Chair of the Joint Committee on Tourism, Arts and Cultural Development and former elected official in Lowell, explains that people used to urge Lowell to adopt a strategy to become the next Portsmouth, NH or Newburyport, MA – two smaller, waterfront post-industrial cities that have thriving downtowns. But she recognized that Lowell had its own identity and needed to repurpose its downtown in a manner that reflects the city’s individuality.

Lowell, a geographically small city (13 square miles) was once a robust manufacturing economy at the turn of the century. The industrial landscape still exists, though the downtown had for years been incredibly vacant. How could they reuse and repurpose these buildings?

The city made a concerted effort to attract artists to downtown Lowell. Why artists? They bring creativity and a lifeblood to streets downtown, says Donoghue. Elected officials began meeting with groups of artists – many of whom had been pushed out of their prior home in Boston’s Fort Point Channel due to the Seaport’s revitalization and higher cost of living. The artists’ requests were simple: they wanted affordable space where they could live and work—something Lowell had plenty of.

Lowell’s economic development team responded by creating an overlay district and new zoning to allow artists to move in to underused and vacant buildings downtown. The city put the downtown, vacant Ayer Building up for auction at a price of $1 on the condition that the developer would convert the building into artist live/work space. The project was wildly successful and sparked further economic development – new housing and retail projects – around the new Ayer lofts.

Once used to refer to the city’s industrial arts, Lowell reuses the city’s long-standing motto - “Art is the Handmaid of Human Good” – to refer to the art and cultural renaissance happening downtown.

What has become clear throughout the Summit is that, while cities may not have many resources to devote to this “creative placemaking,” they do have weapons in their economic development arsenal – such as the power to rezone, create overlay districts and sell city-owned property – to spark private development within these cultural corridors. And it’s already happening; not just in Pittsfield, Lynn and Lowell, but in cities nationwide.

How can you spur creative placemaking – or arts and cultural development – in your city? Panelists at the Summit offer the following advice:

• Identify what’s the most precious and most threatened cultural asset in your community, and then work to preserve it. Save something that you would want to ensure is around for your grandkids to see.
• Develop partnerships with city government, neighborhood and business leaders—then, together, build consensus around one initiative. Prioritize it and push it forward. 
• Learn from people outside of your community: travel and visit other cities to see how they are placemaking. When you return home, go back to work with your “traveling eyes.”

Worthwhile advice, not just for those involved in creative placemaking, but for economic development practitioners in cities and towns – large or small – across the U.S.

Is your city using the arts and its culture to spur urban economic development? If so, how?

BY Amanda Maher on April 11th, 2012

TAGS: cities | economic development | placemaking | gateway cities | pittsfield | lynn | lowell | cultural institution | art | industrial | massinc | community development | downtown

Crossing the Digital Divide: Deploying Technology to Leverage Growth

Guest Blogger: Beth Goldstein, Boston University School of Management

A recent study by the Pew Research Center showed that almost 9 out of 10 American adults own a cell phone and 46% own a smartphone. That’s an impressive climb from 35% just under a year ago. Even more interesting is a recent AT&T Business Technology Poll that showed 70% of small businesses use mobile apps for business operations. So, how are these small business owners using applications to grow their companies? According to the study, almost half (49%) used it for navigation and mapping (GPS), 26% for social media marketing, 26% for document management, 23% time tracking/management, 22% for travel and expense tracking and 20% for credit card payments in the field. These tools have moved from playing Angry Birds or Words with Friends to being critical applications that empower growth and help companies succeed and outpace their competitors.

Using apps is a powerful example of how technology can truly help level the playing field. This relatively new capability allows small business owners to more effectively compete for customers against much larger organizations since they now have access to tools only previously available to large firms. This can support every level of business operation from managing operations and cash flow more efficiently to driving leads to their website and social networks, facilitating the identification of customer needs, increasing and improving customer touch points, managing business relationships and making payment to their companies easier, smoother and less risky for both their organization as well as their clients’.

But it’s not all good news… there is a digital divide in terms of individuals with access to the web relevant to their level of education and income. For example, only 43% of all adults 18 and older without a high school diploma access the Internet while 94% of adults with a college degree (or higher) access the Internet. That’s a HUGE disparity. Looking at income variances, approximately 62% of adults earning less than $30K per year use the Internet while 97% of adults earning $75K or more annually access the Internet. This creates groups of ‘haves’ and ‘have-nots’ and can have a significant and long-lasting impact on success rates and employment opportunities.

Clearly technology can help businesses grow yet we are still not at point in time where everybody has access or a solid understanding of the tools they need. 63% of small business owners state that without wireless technology they couldn’t survive or it would be a major challenge to do so. In addition, more small business owners are accessing social networks to grow their companies with 31% using LinkedIn and 44% using Facebook. What happens to those companies and individuals that don’t participate and get left behind?

Are you using technology to enhance your business relationships, manage growth and improve your operations? Are you using these tools marginally or fully? Can you confidently answer that question? If you aren’t using tools readily available at your fingertips than you’re likely to lose out on critical competitive advantages that can be gained by deploying technology to grow your company.

About Beth Goldstein
Author of The Ultimate Small Business Marketing Toolkit and Lucky By Design, Beth Goldstein has empowered hundreds of entrepreneurs and companies to create successful marketing and sales programs. Consultant, nationally recognized speaker, and educator, Beth runs Business Growth Workshops around the US and abroad. She teaches Entrepreneurial Sales & Marketing at Boston University and runs their annual $50K New Venture Competition. In addition, Beth served as the Lead Instructor and core curriculum designer for Interise's nationwide business accelerator program, run with the SBA, designed to help inner city entrepreneurs in 30+ cities grow their existing businesses.

Beth will be leading a workshop, “Crossing the Digital Divide: Leveraging Technology to Accelerate Business Growth,” for small business owners on May 9^th at the Inner City 100 Symposium in Boston.  Learn more.

BY Guest Blogger on April 10th, 2012

TAGS: small business | business | entrepreneur | ic100 | technology | inequality | digital divide | social media | smart phones

Gearing up for the Inner City 100: A Preview of Winners

(avg: 2.50 of 5)

Photo: Specialized Therapy Services of Amarillo

When entrepreneurs decide where to locate their companies, many overlook inner cities. This is somewhat surprising, given the assets located in inner cities: access to infrastructure, untapped markets, a diverse workforce and business-to-business clusters are only a few of the reasons Inner City 100 winners have found success. There's also the myriad governmental programs offering incentives to locate within the inner city. 

These facts were not lost on CSI, an 8(a) certified, American Indian owned, HUBZone certified Small Disadvanted Business. CSI topped the Inner CIty 100 - a compilation of the 100 fastest-growing inner city businesses - last year for it's year-over-year booming sales. It's no wonder the company finds itself on the 2012 Inner City 100 list this year, too.

Located within the Brick District of inner city Oklahoma City, CSI is an IT and engineering contractor for the U.S. Department of Defense. CSI employs an estimated 60 to 80 inner city Native Americans and boasts a 98% retention rate.  Over the last five years, CSI has created 210 jobs, which ranks fifth among 2012 Inner City 100 winners in this category. The company was also ranked as the top firm on the 2011 Inner City 100. To foster entrepreneurship, CEO Ken Novotny mentors a lot of small, up-and-coming firms and offers one key piece of advice to business owners: Always be a strong leader and have confidence in yourself and your team. 

What other types of companies landed on the Inner City 100 this year? Here's a preview of a few. Where they fall within the 100 ranking is still a secret! Be sure to tune in on May 9th to find out who takes the coveted spot!

Sunset Healthcare, located in downtown Chicago, is a company that sells post-respiratory medical products, such as those addressing home oxygen and sleep apnea needs. Co-founder Chris Slosar worked for a competitor for five years and discovered a niche on which he could capitalize: using an internal sales team to build relationships with customers. Sunset hires great people and its talented internal sales team differentiates the company from its competitors, most of which outsource sales. Sunset’s customers are home medical equipment suppliers across the globe and they've grown from just the founders initially to a staff of 25 today. Sunset Healthcare is proud of its location and enjoys easy access to Chicago’s great public transportation system. Since moving to its current location in 2006, the company has seen tremendous improvements in the surrounding community – and it likes to take credit for some of that. 

Specialized Therapy Services of Amarillo provides physical therapy, speech therapy and occupational therapy to special needs children. The company was started by CEO Karen Day, a speech pathologist, after she was laid off from another company. Day, an entrepreneur with no business experience, was able to obtain advice from a local entrepreneur who taught her how to launch her own operation and put the company in a strong position for growth. In an effort to give back, STS is highly involved in with the local Down Syndrome Guild and other causes that help children with disabilities.

Gourmet Guru of the Bronx, NY is an organic food manufacturer and distributor that focuses on natural and perishable foods. In fact, Gourmet Guru was the first American distributor of Greek yogurt. Gourmet Guru has helped a lot of organic food startups to get up and running and has been helped by them in return. With a mission to make the world a better place to eat, CEO Jeff Lichtenstein has turned this values-centric Bronx company into a high-growth success.

BY Mary Duggan on April 6th, 2012

TAGS: small business | cities | ic100 | business | entrepreneurs | csi | sunset healthcare | specialized therapy services | gourmet guru | oklahoma city | amarillo | bronx | chicago

Identifying Ways Cities Can Help Small Businesses Thrive

(avg: 4.50 of 5)

Small businesses and entrepreneurs are fueling America’s economic recovery. Already, 95% of new jobs are created by small businesses. Yet businesses cannot go at it alone; mayors and economic development practitioners must support startups, entrepreneurs and existing small businesses in order to help them succeed.

Sounds great. We’re all on board. But how do local governments do that?

The National League of Cities (NLC) has spent the last several years researching how local governments can strengthen their small business climate. Today, NLC introduced “Supporting Entrepreneurs and Small Business: A Tool Kit for Local Leaders.” It includes an analysis of the various roles that support small businesses within city hall, partners for growth, and introductory case studies to analyze how cities are already supporting small businesses to create local jobs. Below is NCL’s blog entry about the launch of the Tool Kit. 

By J. Katie McConnell, originally posted on CitiesSpeak.org 

There’s been no shortage of interest and commentary about the importance of entrepreneurs and small business to the nation’s recovery.  Almost daily, economists and policy wonks engage in a seemingly never-ending discussion on what the “right” businesses are to create jobs. And while these conversations have utility and value, they have not produced many actionable strategies for cities where entrepreneurs and small businesses actually exist.  In response, NLC released Supporting Entrepreneurs and Small Businesses: A Tool Kit for Local Leaders.

Almost universally, city leaders understand the value of all shapes and sizes of entrepreneurs and small businesses.  These businesses create jobs, employ local residents, and help define a community’s sense of place. What is often unclear, however, is how city leaders can foster an environment that encourages entrepreneurs and small businesses.

The tool kit profiles efforts in cities of all sizes to support entrepreneurship and small businesses. These efforts range from knowledge focused in Boston’s Innovation District, governance focused in Seattle, Wash., export focused in Wichita, Kan., or regulatory focused in Rockhill, S.C.

The tool kit’s core message is that cities need to look to the things they can actually control. This includes providing a supportive political leadership; channels of communication between business and government; and reasonable, transparent regulations with accessible interfaces.

Additionally, given the shaky track record of some government-led entrepreneurship efforts, as cities strive to provide more sophisticated services to spur entrepreneurship, partnerships with necessary expertise are essential along with sufficient levels of resources and realistic expectations and time-frames.

It is our hope that this new tool kit shines additional light on the role that local government plays in business development and helps city leaders create a more supportive environment for their local entrepreneurs and small businesses. To download Supporting Entrepreneurs and Small Businesses: A Tool Kit for Local Leaders, click here. 

BY Amanda Maher on April 4th, 2012

TAGS: small business | economic development | community development | boston | innovation district | jobs | placemaking | seattle | national league of cities | tool kit | entrepreneur | start-up

The Cleveland Model: Leveraging Anchor Purchasing for Community Benefit

(avg: 4.50 of 5)

By: Steve Dubb, Research Director, The Democracy Collaborative

Anchor institutions, often known as “eds and meds,” can leverage their power as local investors, developers, and consumers of goods and services in order to create jobs in nearby disadvantaged communities. This strategy has the potential to start a virtuous economic cycle that can foster new job growth locally and regionally.

The Evergreen Cooperatives in Cleveland, where our organization, The Democracy Collaborative, has been a partner since 2007, provides an example of this approach.

The Evergreen Cooperative Initiative is centered in Cleveland’s University Circle area, home to many of the city’s leading anchor institutions that are a legacy of the city’s industrial past.  Local anchors include the Cleveland Clinic, Case Western Reserve University, and University Hospitals. Together, these institutions employ more than 50,000 people and are among the leading economic engines of Northeast Ohio.

Yet the surrounding neighborhoods (Glenville, Hough, Fairfax, Buckeye/Shaker, Little Italy, and the eastern portion of East Cleveland) are among the most disadvantaged (43,000 residents with a median household income below $18,500).

In 2005, the Cleveland Foundation brought together major anchors, community groups, and others to form the Greater University Circle Initiative. The goal is to stabilize and revitalize these “Greater University Circle” neighborhoods.  As part of this initiative, in 2007 the Initiative launched Evergreen.

Evergreen’s audacious goal is to spur an economic breakthrough in Cleveland by creating living wage jobs and building wealth in these neighborhoods.  Rather than income just trickling down to employees, Evergreen incubates new businesses that their employees then own.

In this work, we are animated by a vision of “community wealth building.” Community wealth strategies aim to improve the ability of communities and individuals to increase asset ownership, anchor jobs locally, strengthen the municipal tax base, prevent financial resources from leaking out of the area, and ensure local economic stability.

Our 5-year goal is to catalyze the creation of up to 10 new for-profit, worker-owned cooperatives based in the Greater University Circle neighborhoods of Cleveland. Together, these 10 businesses will employ approximately 500 residents of six low-income neighborhoods.

Our financial projections indicate that after approximately 8 years, typical worker-owners will possess an equity stake in their companies of about $65,000. The longer-term objective is to produce 5,000 new direct jobs for Clevelanders over the next 10 to 15 years.

The first two businesses – the Evergreen Cooperative Laundry (ECL) and Ohio Cooperative Solar (OCS) – launched in October 2009:

• Evergreen Cooperative Laundry, owned by 25 employee-owners, is the greenest commercial-scale health care bed linen laundry in Ohio and cleans over 4 million pounds of health care linen a year.  When at full capacity, it will clean 10 to 12 million pounds of health care linen a year, and will employ 50 neighborhood residents.
• Ohio Cooperative Solar, also owned by 25 employee-owners, is a community-based clean energy and weatherization company that will ultimately employ as many as 75 residents. In addition to home weatherization, OCS installs, owns, and maintains large-scale solar generators (panels) on the roofs of the city’s biggest nonprofit health and education buildings. The institutions, in turn, purchase the generated electricity from OCS over a 15-year period. Within three years, OCS likely will have more than doubled the total installed solar in the entire State of Ohio.

A third business—Green City Growers—is in development. It will be a year-round, large-scale, hydroponic greenhouse. The greenhouse, with 3.25 acres under glass, will be the largest urban food production facility in America. GCG will produce about three million heads of lettuce a year, along with hundreds of thousands of pounds of herbs. GCG will employ approximately 35 people. Construction began in September 2011.

Evergreen’s approach is gaining attention. Already, it has spawned imitators, with efforts now gathering early momentum in places as diverse as: Amarillo, TX; Atlanta, GA; Pittsburgh, PA; and Washington, DC.

Beyond these three businesses, the Evergreen Cooperative Corporation acts as a research-and-development vehicle for new business creation tied to the specific needs of area anchor institutions.  Through this process, a pipeline of next generation businesses has been developed.

A central element of the Evergreen strategy has been to work closely with Cleveland’s largest anchors to devise ways in which their business decisions, particularly procurement, can be focused to produce greater neighborhood and citywide benefit. The potential here is enormous: Cleveland’s three largest anchors alone purchase an aggregate of more than $3 billion in goods and services annually. Until recently, little of this spending had been targeted locally.

Today, spurred by the example provided by the Evergreen initiative, anchor institutions in Cleveland have extended their commitment to targeted local procurement far beyond Evergreen. 

University Hospitals, for example, has reviewed its entire supply chain. Steve Standley, Chief Administrative Officer at University Hospitals, noted in a 2011 interview that University Hospitals (UH) had "essentially doubled the spending in Cleveland in the last three years."

An illustration of this shift is shown by how University Hospitals implemented its five-year strategic plan, called Vision 2010. The total cost of the plan was $1.2 billion, of which about $750 million was in construction. In implementing Vision 2010, University Hospitals chose to intentionally target and leverage its expenditures to directly benefit the residents of Cleveland and the overall economy of northeast Ohio. Specific targets included:

• 5% of contractors working were to be female-owned businesses
• 15% of contractors were to be minority-owned businesses
• 20% of all workers were to be residents of the City of Cleveland
• 80% of businesses that received contracts were to be locally based

Over the five-year course of the initiative, UH exceeded all of these targets except for the residency goal.  In particular, as a result of this effort, UH developed business relations with more than 100 minority and female owned businesses, virtually none of which had previously participated in UH construction projects. More than 90% of all businesses that participated in Vision 2010 were locally based, far exceeding the 80% goal.

As Ronn Richard, CEO of the Cleveland Foundation, has noted, “Institutions such as Case Western Reserve University, the Cleveland Clinic, and University Hospitals increasingly ‘buy local’ rather than from out of state,” By keeping purchasing power in the neighborhoods, these institutions are helping to strengthen Cleveland’s neighborhoods.”

Keith Parkham, the first person hired at Evergreen Cooperative Laundry, noted that employee ownership transforms the jobs into careers. Evergreen workers are involved in strategic business decisions. “When I come to work every day, I know I am building something – for my family and for the community.  Evergreen has changed my life.”

BY Guest Blogger on April 3rd, 2012

TAGS: small business | economic development | jobs | anchors | shared value | cleveland | ask the expert | evergreen cooperative | university circle

Being Business-Friendly Doesn’t Always Mean Job Growth

With the presidential election around the corner, the issue of the day remains the state of the economy. Americans continually voice their concern over looming unemployment, stagnant wages and the rising cost of inflation. The federal government, many argue, should be doing more to strengthen the economy.

But there is only so much the feds can do: the American Recovery and Reinvestment Act was passed in 2009 to boost job growth, but its cost infuriated those concerned about adding to an already large national debt. The feds can keep interest rates low, but unless Americans are willing to take risks, borrow money, or invest, the lower interest rates won’t make much of a difference. The feds could outright hire more governmental employees—but budget cuts have caused a significant decrease in public servants; not vice versa.

Absent of federal leadership, to whom should we turn for job growth? The private sector.

It’s no secret that robust consumer and business demand hold the key to further economic recovery. In February 2012, total U.S. payroll rose by 227,000: private sector employment grew by 233,000, signifying a net loss of 6,000 public sector jobs.

At first glance, this tells us that cities should be implementing policies and taking action to make themselves more business-friendly. The more conducive the climate is for the private sector, the more likely a business will be able to expand and create new jobs.

Which regions are doing best at creating a business friendly climate?

A new KPMG report measured 26 cost components for the largest U.S. markets, including costs of labor, taxes, real estate, and utilities as they apply to 19 industries over a 10-year analysis horizon. The findings are as follows:

These findings are not terribly surprising: the cost of doing business coincides with the cost of living in most of these cities.

We should expect regions with the most business-friendly climates to experience the most significant increases in employment, right?

Not so fast.

In January 2012, the U.S. Bureau of Labor Statistics announced that the areas with the largest increases in private-sector employment over the year prior were Houston, Dallas, New York City, Los Angeles and Boston. Three of these cities – NYC, Los Angeles, and Boston – were among the most costly places to do business, and yet, they still experienced growth.

How do you account for this discrepancy? What factors may influences private sector job growth despite the high costs of doing business? How does your city stack up to the others—and why?

BY Amanda Maher on March 29th, 2012

TAGS:

How to Keep Your Employees Happy, Engaged and Contributing to Your Bottom Line

Why This Book from Teresa Amabile on Vimeo.

During a time when many companies are trying to accomplish more work with less staffing power and limited resources, employee engagement has never been more critical.  Unfortunately, job satisfaction is at a low in the U.S.  Disengaged employees are not producing their best work, resulting in slower revenue growth for businesses.

Harvard Business School Professor Teresa Amabile, and independent researcher Dr. Steve Kramer have dedicated years of research to bear insight into the emotional aspects of work.  The pair was able to tap into the minds and hearts of American workers by collecting and analyzing 12,000 diary entries from 7 different companies.  Recently, Amabile and Kramer published their findings in a book titled, The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work.

What did they find?

It matters how people feel at work.  Employee engagement drives the bottom line and managers have the power to re-energize their workforce.

Here are a few key themes from Amabile and Kramer’s research: 

The key to engaged and productive employees is a positive “inner work life.”   Inner work life is defined as the mix of emotions, motivations, and perceptions that individuals experience over the course of a workday. While some managers employ high pressure and arouse fear to spur achievement, Amabile and Kramer found that employees are more productive and creative when their inner work lives are positive---when they feel motivated by their work and have positive perceptions of their colleagues and the organization.

What evokes a positive inner work life in employees?  It’s what Amabile and Kramer refer to as the Progress Principle.

When Amabile and Kramer compared their participants’ best and worst days, they found that the most common event triggering a “best day” was progress by the individual or team.  On the same regard, the most common event triggering a “worst day” was a setback.  It didn’t take major breakthroughs, only a forward momentum in meaningful work, or “small wins” that created the best inner work lives. 

How can business leaders foster this progress?

Business leaders can foster these small wins through “catalysts,” or actions that directly support the work, and “nourishers,” or actions that encourage the person.  Managers should provide clear goals for their employees along with both the autonomy and resources for their employees to achieve them.  To avoid setbacks, Amabile and Kramer suggest that managers communicate with strategic clarity and take responsibility of enforcing quality work through early warning systems and regular reviews. They wrote in the Mckinsey Quarterly:

As an executive, you are in a better position than anyone to identify and articulate the higher purpose of what people do within your organization. Make that purpose real, support its achievement through consistent everyday actions, and you will create the meaning that motivates people toward greatness. Along the way, you may find greater meaning in your own work as a leader.

Building a work environment that is productive and profitable means first taking the initiative to build a positive and nourishing work environment for employees.

Dr. Amabile will be diving deeper into the findings from her research at the 2012 Inner City 100 Symposium in Boston.  Her presentation will instruct high-growth business leaders how to ignite small wins in their workplaces. Dr. Amabile’s presentation will be part of a full day of executive education at the Inner City 100 Symposium on May 9^th.  Learn more.

BY Sathya Vijayakumar on March 28th, 2012

TAGS: small business | business | workforce | ic100 | ask the expert | progress principle | workplace

Taking Roommate Applications: The Rising Cost of US Apartments

(avg: 4.33 of 5)

Each week we are seeing new signs of economic recovery here in the United States. Investor confidence is up as Greece’s debt restructuring came through. Financial markets continue to climb. Reduced unemployment is fueling higher incomes and greater spending.

Lost in this positive economic news is the struggle plaguing our poorest residents.

A new report by the National Low Income Housing Coalition (NLIHC) highlights the impact that the recession has had on low-income families. The recession may have reduced the cost of homeownership, but the number of foreclosures had the unintended impact of forcing up prices within the rental market. Why does this matter? Low-income families are those most likely to be in the rental market.

Specifically, the authors analyzed the gap between the estimated hourly wage (the “Housing Wage”) necessary to afford a two-bedroom apartment and the wage the average renter in America actually earns (“Renters’ Wage”). The Housing Wage is determined based upon the full-time hourly wage a household must earn in order to afford a decent apartment at the HUD estimated Fair Market Rent while spending no more than 30% of income on housing.

The report finds that in 2012:

• The average Housing Wage: $18.25 per hour
• The average Renters’ Wage: $14.15 per hour
• Gap between Housing and Renters’ Wage $4.10 per hour

What this means is that in no state is an average 40-hour workweek enough to accommodate the rising cost of renting an apartment.

The East and West coasts, not surprisingly, are the regions that require residents to work more hours to afford rent. But how many more hours are really needed? In New York, New Hampshire, Massachusetts, Connecticut, New Jersey, Maryland, Virginia, and California residents must all work above 88 hours per week. That is more than two workweeks in one—just to “afford” an apartment! Washington, D.C. takes the cake with 140 hours needed each week to afford rent.

Our poorest residents often do not make more than minimum wage (nationally, $7.25 per hour). This is why affordable housing and rental assistance programs are vital to these residents’ stability. Yet, as the number of “extremely low income” (residents earning less than 30% of area median income) renting households rises (9.8 million in 2010), the number of affordable housing units has declined.

In the Preface to the NLIHC report, HUD Secretary Shaun Donovan explains that the U.S. has lost 150,000 homes from our affordable housing stock in the past 15 years. Moreover, an estimated $26 billion is needed to finance the backlog in capital needs for public housing.

Washington is taking action to mitigate housing needs. The Obama Administration invested $4 billion in public housing repairs as part of the Recovery Act. HUD’s FY13 budget requests an additional $1 billion for the National Affordable Housing Trust Fund to build or repair additional affordable housing units. Yet despite these programs pumping money into housing for low-income residents, a gap still exists.

As federal programs continue to be cut – HUD suffered $3.7 billion in cuts for FY12, 9% below FY11 – it is all the more important for states and local communities to find ways to produce affordable housing. State legislatures can pass measures to ensure affordable housing is built in the neediest communities: in Massachusetts, for instance, Chapter 40B allows developers to build more densely in communities when less than 10% of its housing stock qualifies as affordable. Cities can also take the lead: they can require developers to build a certain percentage of affordable housing units with each new development.

What’s clear is that despite the ongoing economic recovery, housing is a basic need that is becoming out of reach for many Americans. In cash-strapped times, we must find innovative ways to alleviate the burden felt by low-income residents who spend a disproportionate percentage of their income on housing related expenses.

Click here to read the entire Out of Reach 2012 report and see where your state ranks in terms of rental affordability. What measures are your cities taking to make housing more affordable for low-income residents?

BY Amanda Maher on March 26th, 2012

TAGS: housing | poverty | rent | cities | affordability | wages | workforce | economic recovery | affordable housing

Growing a Family-Owned Business

Photo of Red Iguana CEO Luzmaria Cardenas

Family-run businesses experience both advantages and challenges that are unique from their competitors.  However, this week our CEO Series revealed that over 85% of the issues faced by family-owned businesses are shared.  Florence Tsai, Senior Advisor, Cambridge Advisors to Family Enterprise presented “Growing a Family-Owned Business” and noted that these issues are shared regardless of industry, size or culture.

This staggering stat offers good news for family-business owners in that many of the challenges they face have already been experienced and worked out by many other families.  Identifying and preparing for these top family-business challenges is critical for achieving long-term growth.  Below are the top three issues that Dr. John Davis, co-founder of Cambridge Advisors and Professor at Harvard Business School, found from his 20 years of research: 

• Financial tension:  One of the biggest sources of tension occurs when family members disagree on what should be done with dividends - whether it’s taking money out of the business or putting money back into the business.  This tension is especially prominent for older owners who want to build the company for future generations but also want to protect their retirement nest egg.  Families in business together on average have little diversification in financial assets, with the business accounting for 80%of their assets.  This means that owners are financially dependent on the dividends stemming from the operation.  Hiring an outside financial consultant has proven helpful in reducing the financial tension.
   
• Working out relationships:  Family businesses are confronted with complex and overlapping relationship roles.  As a family business ages into the second and third generation, relationship dynamics become even more complex because more owners are involved.  It is very easy for family issues to carry over into the workplace and impact the decision-making and planning process.  Distinguishing roles within each relationship and establishing structured business governance is critical for maintaining healthy relationships.  The most successful family businesses have a united and industrious family who are supportive of each other and the business goals.
   
• Succession:  Succession periods are extremely fragile to a family business’ future.  The question of when the ownership transition should occur is problematic because the older generation has nowhere else to go and wants to hold on to the business.  If the succession occurs too late, there is a risk that the younger generation will lose interest in the business or feel untrustworthy.  The question of who is also an issue during succession because parents hesitate to show favoritism among their children.  Coordinating the management and ownership transition is critical for a smooth transition.  In addition, owners must actively develop the next generation of talent before the succession takes place. 

Florence Tsai offered many more insights into growing a family-owned business, which can be found on our website in the section entitled ICIC’s Executive Insights and Business Tools.  The next CEO Series webinar “Beyond the Numbers: Assessing Your Business Growth” is scheduled for April 24^th and promises to be a practical discussion of how to manage your business growth.

BY Mary Duggan on March 23rd, 2012

TAGS: small business | business | entrepreneur | ceo series | family business | family

More than Understanding Your Market: Being a Part of It

(avg: 4.00 of 5)

Any entrepreneur will tell you: you must understand the market you’re serving. So who better to create a multicultural advertising firm than a Hispanic entrepreneur?

Jose Villa, a Cuban-American, jumped into cross-cultural marketing back in 1998 when he founded Focus Multimedia. Now known as Sensis Agency, the full-service advertising agency specializes in digital and online marketing for multicultural audiences.

How did Villa notice the market demand for such a business? Well, simply, Sensis was not his first venture. After college, Villa was developing website largely for small businesses in the Los Angeles area. He had such strong business from the Cuban-American community that he realized there was a real niche for multicultural marketing. For instance, Hispanics spend more time on the web than they do reading magazines or newspapers. Moreover, Latinos currently visit 13% more web pages and spend 10% more time online per day than their general market counterparts. There was huge opportunity given that studies show U.S. advertising companies find minority markets complex and difficult to reach.

No stranger to the Inner City 100 list, this two-time winner faced struggles when initially starting the company. First, Villa founded Sensis during the heart of the Dot-Com bust of the late 1990s. Despite the online business climate, Sensis found early success. But this lead the startup company to another challenge: meeting the demand of multiple clients with large-scale projects. Sensis was still in its infancy when large contracts began coming in, making it hard for the company to build out and meet demand. As Villa will be the first to admit, he started the company when he was young and inexperienced—but finding ways to overcome these challenges helped him grow Sensis in to the company it is today.

Villa grew the company through persistence and stubbornness. He began to take on more business as clients moved their commerce from brick and mortar operations to online e-commerce. The growth of multicultural affinity markets happened to coincide perfectly with the growth of online businesses: Sensis was ready to capitalize on these trends.

To ensure the company was successful, Villa handpicked a workforce that was young, energetic, analytical and, not surprisingly, multicultural. As Villa puts it, his employees are a “reflection of their work.” In fact, the staff speaks a combined nine languages and conducts business in each of them. Many of the employees come from non-traditional backgrounds; only one-third of employees had any experience in advertising before coming to work for Villa. Instead, Villa hires people looking to build on their digital skills within the advertising industry.

Villa realizes, like many Inner City 100 winners, that keeping your workforce happy significantly contributes to the business’s success. As such, Villa implemented policies at Sensis to retain workers, while other advertising agencies “churn and burn” workers. Sensis offers employees competitive wages, ample benefits and a life-work atmosphere that other in the industry would envy.

And the strategy seems to be working.

Entering its 14^th year of business, Sensis has grown to an $8.6 million company with 33 employees. The company has experienced a 5-year compound annual growth rate of over 57%. The company services diverse clients, such as the U.S. Army, United Healthcase, WorldTV Globecast, the U.S. Department of Homeland Security, U.S. Department of Agriculture, KPCC 89.3 and Coba Beverages.

Villa encourages other entrepreneurs to locate in the inner city as a mechanism of sparking creativity among employees. As our urban cores grow, so can your company. Innovate alongside changing inner cities to adapt and meet new cultural demands. Had Sensis not, it likely would not be the successful, rapidly growing company that it is today.

Be sure to check out Sensis this May when you’re in town for the 2012 Inner City 100 Symposium! They will be one of the companies at the Urban Business Connections Corner and Demonstration Pavilions.

But the real question—will this former winner make the cut again this year? Will they be on the list of 2012’s fastest growing inner city businesses?! Join us and find out for yourself!

BY Alex Rodriguez on March 22nd, 2012

TAGS: small business | ic100 | los angeles | jobs | workforce | employee retention | employer | diversity

March Madness: Teaming up With Your University

(avg: 5.00 of 5)

Universities give you more than someone to cheer for. They can have a major impact on your bottom line.

It’s that rare time of year when we indulge in an long lunch or keep an extra browser open so we can watch the game. March Madness draws all eyes to colleges and universities across the country. But your local universities offer much more than a team to cheer for. They can have a major impact on your bottom line.  Here are three ways to team up with local colleges and universities to help grow your business:

Scout out universities’ procurement policies to score an easy contract layup

U.S. colleges and universities collectively spend $200 billion annually on goods and services; better, they’re beginning to prioritize contracting with local and diverse small businesses. The University of Pennsylvania is perhaps the UK Wildcats of local procurement: Through its Buy West Philadelphia program, UPenn has increased spending with local suppliers from $2.1 million to over $90 million over the past two decades. Likewise, the University of Virginia has committed to increasing spending with small, woman-owned and minority-owned businesses by 5% each year.

Aztec Promotional Group, a promotional licensing company located near University of Texas-- Austin is one company that has reaped the benefits of university procurement. The company creates promotional materials for student organizations affiliated with the University. As Texas enters the NCAA tournament, Aztec is prepared to jump on related business opportunities. Your company should be prepared to service universities, too.

To read the entire article, as originally published on Inc.com, click here.

BY Steven Pedigo on March 20th, 2012

TAGS: small business | business | jobs | entrepreneur | workforce | anchors | universities | march madness

Ask the Expert: Answering the Lingering EBDI, Anchor Webinar Questions

(avg: 4.67 of 5)

Anchor institutions occupy a unique and influential place in America’s inner cities. In 66 of the 100 largest inner cities, an anchor is the largest employer. Some 925 colleges and universities, or roughly one in eight, are based in the inner city. About 350 hospitals, or roughly one in 15 of the nation’s largest hospitals, call an inner city home.

So what can your city do to extract the most benefit out of your universities and hospitals? What sorts of partnerships can be developed to create shared value for your inner city?

Earlier this month, Andy Frank, Special Advisor to the President on Economic Development at Johns Hopkins University and former Deputy Mayor of Baltimore, joined ICIC to answer these questions. Specifically, he discussed the well-known, and sometimes controversial, East Baltimore Development, Inc. (EBDI) project. He outlined the background of the EBDI project, financing of the project, the relationship between Johns Hopkins and the City of Baltimore, and the results that have stemmed from the redevelopment of the 88-acre Middle East neighborhood. To download the entire presentation, click here.

While webinar participants were able to ask questions throughout the presentation, a few important questions went unanswered. Below are the questions, followed by Andy Frank’s responses:

1)      How much private real estate and business investment has been attracted to date - both equity and totals? 

To date, there are eight completed projects, representing a total private investment of approximately $214 million.  Three apartment projects were funded with low income housing tax credits.  Forest City, the developer, reports having about $18 million of true equity in the project.  The largest project is the $100 million Rangos building, a 278,000 square foot biotech building. 

2)      Do I understand correctly that this mixed-used redevelopment cost $200 million? What is the anticipated payback years/ROI? How are you quantifying the return – especially the "social" return?

That is an excellent question. The public sector investment is approximately $200 million. Sources include an $80 million TIF, $21.2 million HUD 108 loan, $30 million city revenue bond funds, $9 million federal transportation earmark, $53 million in State capital funds, $12 million miscellaneous HUD funds. The two sources that must be repaid are the TIF and Section 108. Repayment of the TIF is the only source that depends on the success of the project. As buildings come on line, their incremental tax assessment is used to service the TIF.  The Section 108 is paid from the city’s annual CDBG allocation.  The other funds are essentially grants that do not require a traditional ROI calculation.  The social returns are measured in terms of wealth creation, job training and placement, neighborhood satisfaction (measured in three independent surveys), business development, economic inclusion, and the right to return. 

3)      In terms of creating a mixed-income community: are you starting to see hospital employees residing in the area, or is that (as of now) only a hope for the future?

Not yet, but that is because we don’t have any product for middle income families.  Recall that the catchment area for the new school is first the neighborhood and second the children of employees who work at Hopkins and other institutions.  Last year, we had six Hopkins families apply to East Baltimore Community School.  This year we had 22, almost a fourfold increase.  We expect that number to increase when we open the new school in 2013, when we also will have housing product for non-income restricted families. 

4)      As a former Baltimore resident, I think this sounds great in many respects.  Some of the problems we face here in Philadelphia, talking with anchor procurement folks, are that there are not enough local businesses producing what the anchors need. Is there a business development angle here?

The focus has been on job readiness and placement at the expense of a meaningful business development program.  This should change with the creation of a Community Benefits Agreement that will generate revenues for local non-profits whose mission is to support minority business development.      

5)      How has the relationship between Johns Hopkins and the community evolved? 

Books could be written about that subject.  Like many large institutions, Johns Hopkins has had a complicated relationship with the community.  I will just speak to the relationship as it relates to EBDI. Ten years ago, many in the community feared that the EBDI project was a subterfuge for a Hopkins land grab. This is understandable given the Hospital’s expansion into formerly residential neighborhoods over the years.  The facts are that Hopkins owns no land within the EBDI footprint and never will.

The perceptions survey in 2009 revealed some surprising statistics, disputed by some:

• 59% said that the influence of Johns Hopkins on adults, families and children living in East Baltimore has gotten better in recent years. 
• 88% responded that they trust Johns Hopkins as a partner to improve health status of the community.
• 85% said that Johns Hopkins has a positive influence on the health status of East Baltimore. 
• 81% said that Johns Hopkins has a positive influence on jobs and employment.
• 81% agreed that Johns Hopkins was trustworthy or believable.          

There's no evidence that there is any connection between EBDI and these results.  However, we do know that the parents at the East Baltimore Community School want to change the school name to include Johns Hopkins.

A big thanks from ICIC to Andy for taking the time to answer these follow-up questions. To listen to the entire What Works webinar, “Leveraging Your City’s Anchors,” click here.

The next What Works webinar will be on 4/18 from 2:00 to 3:30 p.m. EST. This webinar will look at “How to Cultivate Your City’s Food Cluster.” The webinar will help economic development practitioners and city stakeholders better understand the complex taxonomy of the food cluster. Using a Boston (land-constrained) vs. Detroit (land-rich) case study, the presenters will highlight the significant opportunities for job creation within the emerging food cluster and how lessons can be applies to cities across the country. 

Learn more and register. 

BY Guest Blogger on March 19th, 2012

TAGS: ebdi | ask the expert | johns hopkins | cities | economic development | community development | anchors | shared value | what works | baltimore | urban revitalization

The Hodgepodge of Partners in Frogtown Square

(avg: 4.00 of 5)

Public-private partnerships: Repeatedly we have heard they are the key to urban economic development projects. From Tallahassee, to Chicago  to back here in Quincy, MA – municipalities are teaming up with private developers to finance the redevelopment of neighborhoods.

But what happens when a community decides there’s no role for private investment?

In St. Paul, Minnesota, activists pushed forward despite skepticism and, perhaps to the surprise of many, spent the past decade redeveloping the blighted University/Dale intersection of Frogtown Square.

Long known for its strip clubs, rampant prostitution and adult theaters, Frogtown Square had fallen in to a state of disarray. This mini-vice city served as a magnet for crime, drugs and gang activity. It was not long before the turf wars spilled in to the neighborhoods surrounding Frogtown Square. The disinvestment in the neighborhood was clear: boarded windows and shattered glass were everywhere. Homes in the area had plummeted to as low as $8,000 each by the mid-1990s.

Failing any major plans by the city or private sector to combat the dissolution of the neighborhood, community activists stepped in.

But where would they start? So many issues needed to be resolved. The Neighborhood Development Center (NDC), a local nonprofit, began by purchasing two vacant buildings on the Northwest corner of Frogtown Square. NDC had a reputation for working with local and minority-owned businesses, and as such, decided to renovate the two buildings and fill them with young minority entrepreneurs.

NDC then began conversations with the University Dale Redevelopment Holding Company, Greater Frogtown CDC, Model Cities, and Aurora St. Anthony Development Company to decide which project they could all tackle together. They decided to start with housing: building a new mixed-use, transit-oriented development (TOD) along the intersection of University and Dale. Collectively, the partnership among these nonprofits became Northeast Dale-University (NEDU).

Initially, the NEDU vision included high-end residential units above small businesses. NEDU held conversations with several nonprofit real estate developers and ultimately chose Episcopal Homes based upon its quality work and fine reputation. But soon after joining the project, President and CEO of Episcopal Homes, Marvin Plakut, convinced NEDU that the neighborhood simply could not support high-end apartments. Instead, Plakut urged NEDU to look to his high-quality affordable housing projects for senior citizens as a more appropriate project. 

The partners of NEDU trusted Plakut, and rightly so. Within 24 hours of going on the market, all 49 of the affordable senior housing units rented.

Moreover, the focus on affordable senior citizen housing allowed NEDU to secure over $6 million in federal Housing and Urban Development (HUD) 202 grants. These grants are highly competitive but the Frogtown Square project was highly attractive due to the mixed-used, TOD components, nearby churches and retail. The City of St. Paul followed suit and provided $4 million in grants for the project.

Completed in February 2011, Frogtown Square now contains affordable senior housing as well as 11,700 square feet of Class A commercial/retail space that supports seven local businesses—including an Ethiopian restaurant and ethnic grocery store. NEDU steered clear of big box retail, instead preferring to support locally grown businesses. Soon, a stop along the Central Corridor light rail will be at Frogtown Square’s doorstep.

The project, once feared by city leaders for NEDU’s reluctance to include private developers, is now hailed as a model for mixed-use and TOD. During last year’s groundbreaking, U.S. HUD Secretary Shaun Donovan explained: “Frogtown Square is unique and innovative. Frogtown Square represents a real model for development.”

Project leaders credit the success of the project to team members’ trust and mutual respect for one another. In a recent interview with Mike Temali (President of NDC), Marvin Plakut (President of Episcopal Homes) and Dr. Beverly Hawkins (President of Model Cities), each reiterated that the quality of partnerships and the ability to check egos at the door is critical.

Frogtown Square represents a case of nonprofit partnership perseverance unlike many others. Time and time again, partners had to decide to really commit to the project – through financing challenges and all. And after they had decided, they had to redecide to move forward when speedbumps arose.

But to all the naysayers – NEDU and Episcopal Homes proved that the future of community development will include more than just public-private partnerships. Sometimes, when strong partnerships have been built, nonprofits can collaborate and see the project through to completion.

To learn more about the Frogtown Square project, its background, challenges and lessons learned, click here for a more detailed “What Works: Solutions for Cities” case study.

Have there been urban economic development projects in your city that occurred without private developers? How are nonprofits taking the lead in your community? 

BY Amanda Maher on March 16th, 2012

TAGS: cities | economic development | community development | housing | retail | urban revitalization | st. paul | frogtown square | ndc | episcopal homes | model cities | tod | mixed-use development | transit

ExporTech: Helping Small Businesses Access Emerging Markets

(avg: 3.33 of 5)

We’ve said it before: Contrary to popular belief, manufacturing isn’t dead in America’s cities. In fact, a new study by the Brookings Institute shows that American exports area at their highest level in over a decade. From 2009 to 2010, American exports grew by a whopping 10%--the highest growth seen since back in 1997.

While these numbers are impressive, they could be even better, if small businesses only had a better understanding of how to access foreign markets.

In December 2011, Commerce Secretary John Bryson echoed this fact: “Many companies would like to export – they have great products to sell – but they aren’t sure how to get started. Small businesses in particular often face big challenges getting export financing, building relationships with foreign suppliers, or dealing with unfamiliar foreign rules and regulations.”

Small businesses already face challenges in capacity; the bandwidth needed to understand the complicated emerging market scene often prevents American companies from accessing the 95% of the world’s consumers who outside of the U.S.

To help small manufacturing businesses weave their way through the complicated international trade web, the U.S. Department of Commerce’s International Trade Administration has created the ExporTech program. The program assists participating companies in “developing an international growth plan, provides experts who will vet their plans and connects the companies with organizations…that will help them move quickly beyond planning to actual export sales.”

As outlined in a recent Manufacturing Innovation blog, entrepreneurs meet for three, one-day sessions over the course of three months. Between sessions, participants work with exports to develop their specific export plans. Customized workshops address the needs of each participant and include specialized attention to each company’s exporting and manufacturing challenges.

Since the programs’ inception, 53 ExporTech sessions have occurred in 23 states. More than 360 companies have participated, reporting the following results:

• Average sales increase of $170,000 per company
• Additional sales generated within just 3 to 6 months
• Average cost savings of $34,000

Programs such as these are vital to the success of small and mid-sized manufacturing companies located within our cities. Nine metro areas – including Chicago, Houston and Boston – each have more than 100,000 export-related jobs; New York and Los Angeles each have over 300,000 of such jobs. Cities that used to be manufacturing powerhouses are rejuvenating their economies by focusing on exports: in Milwaukee, Youngstown and Grand Rapids exports account for 90% of their manufacturing base.

As we already know, small businesses are a major driver of job growth, particularly in our inner cities; however, supporting small businesses in manufacturing produces a further catalyst to economic development, as the sale of goods brings money back in to the local economy. Moreover, manufacturing jobs offer good, middle-class wages that can put urban residents on a path to economic opportunity. 

How is your city or region supporting export growth? What programs have you deployed to help small businesses navigate foreign markets?  

BY Amanda Maher on March 14th, 2012

TAGS: small business | jobs | business | entrepreneur | manufacturing | exports | exportech | emerging markets | commerce

Entrepreneurship: Solving "People Problems"

(avg: 5.00 of 5)

News flash: new ventures are risky propositions. For such a universally accepted truth, however, a consensus on why startups fail has eluded the practitioners, researchers, and policymakers that have generally supplied conventional wisdom over the last few decades. New work by Harvard Business School professor Noam Wasserman has uncovered that around 60% of failures occur due to “People Problems,” or issues dealing with the management and growth of personnel. Part of what’s mystifying about managing a new company is that even answers to problems seem to create an ever-expanding frontier of new questions that need to be answered for the organization to move forward. Below are some of the most salient People Problems that you should be aware of before you start your next venture. 

Cofounder Dilemmas

Perhaps the first question an aspiring CEO must gauge is whether to get a cofounder and, if so, who it should be. Paul Graham, founder of what became Yahoo Store and the paradigm-shifting seed accelerator YCombinator, lists having only a single founder as one of the 18 mistakes that kill startups. Graham writes, ‘The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws. Each thinks "I can't let my friends down.’ This is one of the most powerful forces in human nature, and it's missing when there's just one founder.”

Additionally, once you’ve found that special someone, it can be difficult to reconcile visions for the company, decide on equity splits, and carve out work niches even among the best of friends. Getting through this initial and quintessential problem unscathed can be the difference between becoming etoys.com and Amazon.

Idea Sharing: Collaborative or Risky?

Anyone who has seen The Social Network, a movie on the founding of Facebook, will recall the moment when the Winklevoss twins and Divya Narendra realize that Mark Zuckerberg had launched The Facebook after months of pretending he had been working to create their product. The clear lesson would seem to be that ideas have too much value to be shared without the comfort of a Non-Disclosure Agreement (NDA) at minimum.

Smart Bear Software founder and CEO Jason Cohen, however, disagrees. Noted venture capitalist Mark Suster even recommends 50 coffee meetings with VCs and Angels in which he recommends building relationships for the sake of it. The bottom line from both articles is that either your competitive advantage is defensible or it isn’t. If you’d like to leave out your secret sauce just in case your venture happens to be one of the few that are susceptible to first-mover advantage, this is acceptable practice. Most times though, relationships and a willingness to iterate will ultimately matter more to the success or failure of your business.

Scaling and Hiring

So you’ve forded the initial obstacles and crossed the metaphorical Rubicon to revenues and potentially greener pastures in terms of a coming IPO or acquisition. To continue to grow at a rate that allows your employees to take on increasing responsibility and your revenues to take up increasing market share will require a team of individuals comfortable with meeting these challenges. Unfortunately, all of the resumes you find work for Goliaths like Microsoft and Boeing. How do you find David?

According to the article linked above, potential hires that have shown an ability to adapt at previous jobs, worked internationally, or are self-aware about how their profile matches up to an early stage firm are more likely to succeed. In short, looking for traits that are transferable can be a strategy to filter the best from the rest.

For more insight on entrepreneurial decision making, register to attend the Inner City 100 Symposium on May 9th where Harvard Business School Professor Noam Wasserman will be presenting Founder’s Dilemmas based on his bestselling book of the same name. Former Apple evangelist Guy Kawasaki has said, “This book provides the rare combination of practical advice and scholarly research. It gets to the heart of the people issues that can bedevil every, and I do mean every, startup. Issues such as founder motivations, equity splits, and equity control can make or break a company. I guarantee that the price of this book is approximately one-thousandth of what you'll pay lawyers to clean up your mess if you don't read it."

BY Sathya Vijayakumar on March 12th, 2012

TAGS: entrepreneur | small business | start-up | ic100 | workforce | business

Coming Down Just a Little Bit: #GIDII

(avg: 4.50 of 5)

On March 5-6th, ICIC was in Chicago for the “Getting it Done II” (followed on Twitter using the hashtag #GIDII) conference hosted by the Institute for Comprehensive Community Development, a LISC organization. The two-day event was to look at the strategies being used to “Build Strong Communities in a Changing World.” From education, to safety to adapting to a globalized world, over 800 economic development practitioners convened to discuss the strategies they’ve been employing to improve their home cities.

We learned how San Diego is using “Tastes of” neighborhoods to bring together diverse populations and celebrate cultures. We heard how despite significant housing improvements in West Baltimore, attracting retail remains a challenge. And we listened as Matthew Thrall detailed the plans for the new Fairmont / Indigo transit line in Boston that will hopefully revitalize the city’s low-income communities.

Each of the eight workshops and thirteen roundtables offered unique case studies like that above. However, there were more general themes that ran throughout the entire conference.

1)      There needs to be a comprehensive approach to community development, with state and federal governments supporting the efforts. During Day 1’s luncheon keynote, Erika Poethig of the U.S. Department of Housing and Urban Development outlined the several programs being implemented at the federal level to support such efforts. Specifically, she pointed out that this year is the 10^th anniversary of the New Communities Program; and that Obama’s “Strong Cities, Strong Communities” initiative continues these efforts by bringing together representatives from throughout the executive branch (such as the EPA and the Department of Justice) to streamline community development in six of the nation’s hardest hit cities. She explained that despite these efforts, however, congressional committees need to lend their support; not all work can be done within the executive branch.

2)      The first step in community development is ensuring that residents are safe.  In order to attract new residents to the area, or to draw retail to commercial corridors, there must be a concerted effort to prevent crime. We’ve heard this time and again: back in October ICIC honored Mayor Mallory of Cincinnati partially for his crime reduction efforts in helping to revitalize the city.  Moreover, conference attendees expressed that in a time where budgets have been cut and police forces diminished, we should seek alternative models for policing.  Julia Ryan of LISC noted that “Every one of us has a role in preventing crime; not just the police.”

Of particular note, the “Broken Windows” theory was referenced—the theory put forth by Wilson and Kelling that vandalism and crime (or, broken windows) spur further deterioration of our urban communities. The theory, first introduced in the 1980s, still resonates today with the increase in vacant properties and foreclosures in distressed communities. At the heart of comprehensive community development is fixing these broken windows before crime can proliferate.

3)      The most successful urban revitalization projects will occur where low-income neighborhoods find ways to connect to their regional economies. As ICIC’s own research has been shown, the correlation between regional economic development and inner city economic development is not equal. Moderator Julia Stasch of the MacArthur Foundation explained that as our economies become globalized, regional economies are emerging as the dominant players. We need to find ways to better connect neighborhood jobs to these regional economies. Alan Berube of the Brookings Institution laid out the three sectors in which he sees the most room for growth: manufacturing, low-carbon technology and exports. There are several ways for inner cities to connect to these industries, from production and distribution to higher education and medicine.

4)      Change takes time, and it must happen from the bottom. Monique “The Bus” Howard gave perhaps the most rousing speech of the day on Monday when she urged attendees to “Come down just a little bit!” She was referencing the notion that too much community development is top-down; instead, it needs to happen at the ground level and residents must be engaged on a person-to-person basis.  Mariano Diaz agreed, and stated that “if we are talking and not actively listening, we’re probably not doing the job right.”

It was agreed that we must start now by planting the seeds of change—while we might not see the effects for some time, the roots are there and plants (or, community development) will follow. To do so, speakers urged CDCs to include younger generations; to allow them to become involved and take over the next waves of urban revitalization. One participant explained that “younger leaders can see the weaknesses in the field [of comprehensive community development] and don’t want to wait 10 years to see change.”

What was perhaps most clear after the two day event was the passion emitting from the room of leaders. With participants hailing from each corner of the U.S., there was a sense of national commitment to improving urban communities. To culminate, organizers of the event urged attendees to fundamentally think differently about “community development.” Instead of using the term “’comprehensive community development,” we should begin viewing all community development as comprehensive, taking a full-scale approach to housing, economic development, education, crime and small business growth. Failure to take a comprehensive approach will hinder a community’s success.

Join ICIC in continuing to discuss the best practices for community and economic development on our “What Works” page – share ideas and additional stories with us so we can profile your organization in the “What Works: Solutions for Cities Spotlight!”

BY Amanda Maher on March 9th, 2012

TAGS: economic development | community development | lisc | institute ccd | chicago | conference | safety | cities | regional economies

Drum Roll Please...OK We Can't Take It Any Longer

At ICIC we are counting down until the Inner City 100 Symposium on May 9^th.  In just 9 weeks we will showcase the 100 fastest-growing inner city businesses in the U.S.  The 2012 Inner City 100 rankings will be revealed for the first time and CEOs will share their inspiring stories of how they have grown their businesses and created jobs in their communities.  

The theme for this year’s Symposium is “Innergize your city,” which is exactly what these business leaders have accomplished across the U.S.  Creating job opportunities, hiring locally, investing in workforce training and partnering with local suppliers are just a few ways in which these companies are bringing a contagious force into their communities.       

Let’s face it: we are a little too eager to share these urban success stories.  Below is a sneak-peak of three companies to be highlighted on this year’s list.

Detroit-based Edibles Rex was founded two decades ago when Tammy Tedesco purchased a 700 square foot yogurt shop and turned it into a deli. Using personal capital, she grew the deli into a catering business serving major corporations, social events and charter schools in and around Detroit. Schools now make up the majority of the company’s revenue as Edibles Rex provides nutritionally sound, high-quality meals to children on free and subsidized meal plans. With innovative offerings such as black been brownies and blood oranges, Tedesco continues to envision new ways to help kids eat healthy.

Mainstream Global, of Lawrence, Massachusetts, is a distributor of used and refurbished computer equipment that also handles leased computer recovery and data erasure. Mainstream’s target market is Latin America and its customers include manufacturers, resellers, e-tailers, retailers and independent distributors. Within the industry, Mainstream Global has earned a solid reputation as an honest, serious and reliable company. CEO Juan Yepez founded the company after working as a bi-lingual sales representative for a similar firm. Mainstream Global uses the Merrimack Valley Career Center to hire new employees to sustain the company’s growth as well as create jobs in a largely economically depressed city.

Specialized Therapy Services of Amarillo provides physical therapy, speech therapy and occupational therapy to special needs children. The company was started by CEO Karen Day, a speech pathologist, after she was laid off from another company. Day, an entrepreneur with no business experience, was able to obtain advice from a local entrepreneur who taught her how to launch her own operation and put the company in a strong position for growth. In an effort to give back, STS is highly involved in with the local Down Syndrome Guild and other causes that help children with disabilities.

Register for the Inner City 100 Symposium on May 9^th and meet these entrepreneurs for yourself!

BY Mary Duggan on March 7th, 2012

TAGS: small business | business | entrepreneur | jobs | workforce | ic100 | detroit

Biotech Grows in Brooklyn

SUNY Downstate Medical Center in Brooklyn, New York is a medical anchor institution that has led the growth of the biotech cluster in Brooklyn through its Biotech Initiative. Downstate leverages private and public dollars to build biotech incubator facilities in distressed areas of Brooklyn, providing much-needed lab space for growing biotech companies, offering entrepreneurial opportunities for students and faculty, and transforming neighborhoods for the better. The school also builds a critical pipeline of local talent through a workforce development program that offers training to local students with a basic science education by providing paid internships and job placement opportunities at the incubators.

The visionary director of the Biotech Initiative, Dr. Eva Cramer, tells us more about Downstate's exciting Cluster Anchor activities.  Dr. Cramer, a "one-woman biotech powerhouse" as described by One Thing New, has done amazing things for the biotech cluster in Brooklyn.  Click here to learn more about Dr. Cramer's story.

Guest Blogger: Dr. Eva Cramer, SUNY Downstate Medical Center

While New York City has top academic medical research institutions and is rich in scientific and biomedical talent it has lagged behind other areas of the country in retaining and attracting small and midsized biotechnology companies. A primary reason has been the lack of affordable wet lab space.

In October 2000, Downstate developed Downstate Technology Center Inc. (DTCI), a not-for-profit corporation, to establish and operate a biotechnology park adjacent to its campus.  The Biotech Park would not only provide much needed commercial biotechnology space but would enable a symbiotic relationship to develop between the companies and Downstate’s faculty and students.

The cornerstone of the park was a Biotechnology Incubator for early-stage companies. DTCI financed the design and construction of the Incubator with city, state, and federal grants. The first of these, $500,000 from the New York City Council and an equivalent grant from the New York State Foundation for Science, Technology and Research (NYSTAR), funded the architectural design. Construction, it was decided, would proceed in phases as the building filled and grant funding became available.

Downstate’s vision for a biotech park took a major step forward with its first biotech tenant: ImClone Systems, one of New York’s largest biotech companies, invested $4.5 million to construct a state-of-the-art commercial synthetic chemistry facility within the Park. This 13,000 sq. ft. site opened in March 2002 and gave added credibility to Downstate’s efforts and helped attract tenants and construction funding for the Incubator.  ImClone brought 45 jobs to the area and operated this facility until September 2005, when the company decided to discontinue this line of research. ImClone then gave this fully-equipped facility to DTCI to be used for other tenants.

Meanwhile, the Incubator garnered strong political and financial support and construction proceeded.  Phase I of the Biotech Incubator opened in April 2004, and in late 2006, Phase II began operations. Today, the Incubator spans 24,000 sq. ft. and offers companies wet lab/office space ranging from 400 sq. ft. to 4,000 sq. ft.  The Incubator offers affordable scientific space in a nurturing, supportive environment, with convenient access to the specialized facilities that biotech companies need. The Incubator’s close proximity to Downstate is a major advantage for small companies, since Downstate provides a medical/scientific library, faculty interaction, students for internships, and facilities that start-ups typically can’t afford on their own.

Both phases of the Incubator are now fully occupied, and construction of the balance of the Incubator is scheduled to begin in spring 2012. When Phase III is complete, the Incubator will total 50,000 sq. ft. Tenants are already reserving space in the new addition.

As the Incubator was being developed, Downstate recognized that successful biotech companies would eventually require larger space than the Incubator could accommodate. Such space would enable Incubator graduates to remain within Brooklyn as they transitioned toward manufacturing, and would also attract more mature national and international companies seeking to establish themselves in the New York area.

Downstate reviewed several potential Brooklyn sites for a larger biotech facility; of these, the Brooklyn Army Terminal (BAT) was selected. This 97-acre, Cass Gilbert-designed facility on the Brooklyn waterfront offered commercial space that was very adaptable for biotech needs. Among the site’s many advantages is its secure, gated campus, large floor plates, ability to accommodate manufacturing, affordable rents and its accessibility to New York’s outstanding medical and research institutions via public and private transportation.

In June 2006, Downstate, working with the New York City Economic Development Corp., incorporated BioBAT, a new non-profit organization, to lead biotech development at the Brooklyn Army Terminal. Like the Incubator, BioBAT development is occurring in phases as funds are raised. The first phase, 38,000 sq. ft., was completed in November 2008 with the International AIDS Vaccine Initiative (IAVI) as its initial tenant. IAVI, supported by the Bill and Melinda Gates Foundation and other funders, began at the Downstate Biotech Incubator, and expanded to BioBAT when it outgrew its original space. IAVI still retains space at the Incubator so that it can continue to use resources at the Medical Center.

Design for Phase 2 of BioBAT, an additional 85,000 sq. ft., is complete and construction is underway. When all phases are complete, BioBAT will total 524,000 sq. ft. and is expected to create over 1,000 jobs.

To ensure that biotech companies will have an appropriately trained labor force, Downstate developed a biotechnology laboratory training program together with Hunter College of CUNY. This program offers a market-driven curriculum tailored to today’s biotech workplace and consists of a four-week, four-credit workshop, followed by paid internships and job placement services. In addition to being geared to employer needs, the training program provides a career pathway for students to become part of this emerging sector. The program has garnered enthusiastic feedback from both employers and students, with over 275 students trained and 137 graduates employed as of February 2012.

From the beginning, Downstate recognized that if the biotech initiative is to be successful the surrounding neighborhood would need to develop with it. This involves training programs such as the one discussed above and the hiring of local residents to service the facility. The development of the synthetic chemistry facility and the Biotech Incubator dramatically transformed the street by removing warehouses and replacing them with modern state-of-the art scientific facilities (see Incubator before and after pictures). Also, DTCI has worked with the Brooklyn Economic Development Corporation and the Nostrand Avenue Merchants Association to beautify the biotech park and adjacent area with new street lighting and over fifty new street trees. The biotech initiative stimulated new real estate development in the area including new residential housing and businesses.  

The success and strong demand for biotechnology space at the Biotechnology Incubator and the growth of organizations such as IAVI demonstrate that this initiative has helped the biotech industry take root in New York and in particular, Brooklyn. The symbiotic relationships that we originally envisioned are developing between companies and Downstate.  This is exemplified by our MD/PhD students getting trained in vaccine development with scientists at IAVI and BioSignal, an incubator company that has developed a miniaturized EEG machine, performing clinical trials with our physicians. In addition, these benefits extend to our patients who now have access to new cutting edge medical treatment and devices.

The workforce development programs that we developed have been successfully preparing college and graduate students to work in the biotech industry. They align academic training with industry needs, and encourage entrepreneurship. These programs provide the workforce for the future and tie the benefits back to the community.  

We expect this momentum to continue, with the biotech initiative creating many more high quality jobs, offering new educational opportunities for our students, stimulating entrepreneurship at the Medical Center and developing medical innovations that will dramatically transform people’s lives.

BY Guest Blogger on March 6th, 2012

TAGS: cities | economic development | anchors | business | community development | shared value | brooklyn | biotech | workforce | jobs | workforce training

Workforce1: Putting NYC Back to Work

(avg: 3.75 of 5)

Despite the recent uptick in the economy, many Americans are still searching for work. Employment opportunities are particularly crucial for inner cities, as the poverty rate is a whopping 19% in cities compared to just 9% in the rest of the United States.

So how do we get these residents back to work and on a path to prosperity?

While there is no one single answer, New York City has found success with its Workforce1 Career Centers.

The Centers, located throughout the five boroughs, prepare and connect residents to entry- and mid-level jobs with local employers. Any resident aged 18 and above is eligible for these free services, from those without a GED to those with advanced degrees. The Workforce1 Centers screen candidates for job opportunities, host recruiting events, offer skill-building workshops and house a resource library for job advice and networking tips. The goal: getting New York City residents back to work.

A workforce development center—don’t all cities have these?

Sure, most do. But the difference lies in the rapid emergence and success of the Workforce1 Centers. Two new centers, in Staten Island’s South Shore and in Long Island City, Queens, opened just last week. In a recent radio address, Mayor Mike Bloomberg explained:

When our Administration began, there were three career training and job placement centers, connecting only about 500 people a year to jobs. Today, thanks to the work of Commissioner Rob Walsh and our Department of Small Business Services, there are 15 centers – and in 2011 our Workforce1 Career Centers helped connect 35,000 New Yorkers to jobs.

Connecting 35,000 residents to jobs—impressive!

But perhaps more noteworthy is the Administration’s effort to target inner city residents. These Workforce1 Centers are opening in low-income communities and in accessible areas. In fact, two of the Centers have opened in libraries: the Sunset Park Library and Flushing Library in Queens. Another is planned to open this spring at the Francis S. Martin Library in the Bronx. As Bloomberg noted, “Libraries have always served as gateways of opportunity. They’re also the place where people go to get information, use computers, and network – all of which makes them great places to look for a job.” Librarians are being in the latest job search strategies and technologies, and are being educated about labor market trends to better serve those looking for work.

Additionally, there are particular modules that help connect residents to careers in New York City’s high-demand fields: Healthcare, Industrial, and Transportation. Workforce1 engages often and closely with local businesses to monitor the workforce needs of employers in order to equip jobseekers with the skills needed for these fields. With this understanding, Workforce1 employees can turn around and prepare residents not just for entry-level jobs in these fields, but also for long-term careers.  

The Workforce1 Career Centers are more than just job banks. They are full-service facilities located in depressed urban neighborhoods that take a very hands-on approach to help get City residents back to work and on track for success. And 35,000 residents can’t lie—it seems to be working.

How does your city engage residents to help get them back to work? 

BY Amanda Maher on March 1st, 2012

TAGS: jobs | workforce development | nyc | cities

Seven Questions to Ask a Potential Investor

Last month the 2012 CEO Series premiered with Peggy Wallace, Managing Director of Golden Seedspresenting What are Angels Looking For?  Peggy walked entrepreneurs through the angel investment process and offered tips for preparing a pitch and closing a deal. 

Last week the CEO Series continued by offering a guide through another source of funding – venture capital.  Cody Nystrom, Principal at SJF Ventures, along with Ed Powers, Managing Director of BAML Capital Access Funds, presented Negotiating with a Potential Investor.

As background, SJF Ventures provides equity financing through its investment funds, between $1M and $10M, to companies seeking expansion capital.  The firm focuses on the clean tech, web-enhanced services and consumer products sectors. In particular, SJF looks to partner with entrepreneurs in the field of social enterprise—using their businesses to positively impact the world.  BAML Capital Access Funds is a private equity funds-of-funds manager and advisor focused on meeting the targeted mandates of institutional investors.

During the webinar Ed Powers and Cody Nystrom shared their unique perspectives with the participating CEOs to help prepare them for the venture capital investment process.  Both presenters emphasized the importance of choosing the right financial partner.  A good test for determining the right financier is asking yourself if you would feel comfortable sitting next to him or her during a four-hour flight.  If the answer is “no,” then you probably shouldn’t be entering into a long-term financial partnership with this person.  In addition to asking yourself this question, CEOs should feel comfortable turning the tables on potential investors during the negotiation and posing their own due diligence questions. 

Below are seven key questions that small-business owners should not shy away from asking potential investors.

• What are your expectations for the term sheet?  Investors don’t offer a term sheet to a CEO until they have done their due diligence by researching the company, checking references and reviewing financials.  This due diligence process could take up to several months.  A CEO does not want to go through this time-intensive process and then find that they do not agree with the investor on a presented term sheet.  In the early stages of due diligence, a small-business owner should bring up expectations for the term sheet so both parties are on the same page as they move forward in the process.
   
• Do you sign Confidentiality Agreements and/or Non-Disclosure Agreements?  For small-businesses with intellectual property or private customers, this could be an important issue during the negotiation process.  Venture capital firms tend to not sign these agreements due to the paperwork involved and their high volume of clients. 
   
• What is your cost for capital? Investors know what they’re looking for in terms of a rate of return and often have mandates they need to meet.  Getting an idea of this number will reveal if you are both on the same page for how quickly or how large you will need to grow the business. 
   
• Do you lead investment or co-invest? A lead investoris the principal provider of capital and typically the entity that originates and structures syndicated deals. In order to minimize the risk, an investor may form a syndicate or co-invest with other partners.  During the negotiation process, it is important to understand where capital is coming from and what parties are involved in a deal.
   
• What’s on your due diligence checklist?  Find out what documents or references an investor will want to dig into.  Having a list of industry, customer and employer references, along with other market and financial documents ready will help move the due diligence process along. 
   
• What experience do you have in my industry?You want to partner with an investor who will not only bring capital to the partnership but also knowledge and a network of contacts.  If an investor specializes in another field or has not closed deals in your industry, they may not add value to your company.
   
• How do you plan to interact with my business?  An investor may want a seat on your board or frequent metric reports.  Find out how hands-on or hands-off an investor plans to be and determine if it works with your management style.

The full webinar is available on our website.  If you have more questions on the topic or have an idea for a future webinar topic, we would love to hear from you in the comment section below.

BY Mary Duggan on March 1st, 2012

TAGS: small business | business | entrepreneur | capital | ceo series | executive education | negotiation | venture capital

Special Delivery from an Inner City Pizzeria to Air Force One

Michael Cisneros (clockwise from left), Dan Piecora Jr., Brian Gojdics, Joe Fugere and Emily Resling stand on the steps of Air Force One. By Tom Schabarum

Inner City 100 firms literally serve every type of customer imaginable – businesses of all sizes, local residents, every level of government, non-profits, universities and hospitals and even the President of the United States.  That’s right, the Seattle-based team at Tutta Bella Neapolitan Pizzeria and CEO Joe Fugere recently had the opportunity to serve their authentic, Neapolitan-style pizza to the Customer-in-Chief and his flight crew as they traveled out of the Seattle-area on Air Force One.  What an incredibly well-deserved opportunity for a highly successful firm that is creating jobs and wealth within an inner city community.

Below is an except from an Issaquah Press article about the special delivery.

Issaquah chef prepares pizza for president to eat aboard Air Force One

The unusual delivery order originated far from the Tutta Bella Neapolitan Pizzeria restaurants in Issaquah and Seattle — 1600 Pennsylvania Ave. in Washington, D.C.

The call from the White House to restaurant founder Joe Fugere occurred late Feb. 15, days before President Barack Obama left the capital for a fundraising jaunt to the West Coast. The tight deadline left Fugere and the Tutta Bella team less than 72 hours to overcome culinary, logistical and security challenges to deliver 40 pizzas to Air Force One.

North Bend resident Michael Cisneros, a chef at the Issaquah restaurant, and other Tutta Bella chefs prepared the pizzas for Obama in a loaned outdoor oven beneath a tent on the Paine Field tarmac.

“‘The president won’t be able to stop at Tutta Bella, but if you can bring Tutta Bella to the president, we’ll make it happen,’” Fugere recalled from the White House call.

The team decided to use a 4,000-pound oven at Paine Field to ensure the pizzas reached the president as crisp as possible — rather than after a 30-minute trip from Seattle to Everett.

The setup to cook for the customer-in-chief posed hurdles to Fugere, Cisneros and the other chefs.

“We’ve been making pizzas for years now, and when it comes to the execution of the pizzas, so long as you’ve got your dough right and the oven temperature right and you’ve got all your ingredients there, we all have the skills to make pizzas quickly,” Cisneros said. “Whether it be inside or outside, it’s the same technique.”

The plans for the special delivery started to coalesce Feb. 16. Fugere set up a command post at the original Tutta Bella in Columbia City to create a menu and address the logistics.

Joyce Morinaka, director of operations for Tutta Bella, did some research and learned Obama is keen on spicy foods.

Read the full article.

BY Alex Rodriguez on February 29th, 2012

TAGS: small business | business | entrepreneur | ic100 | food

How Google+ Can Add To Your Business

(avg: 4.00 of 5)

Guest Blogger: Brad Farris, Principal Advisor, Anchor Advisors
Brad Farris has spent the last 10 years as a Small Business Advisor at Anchor Advisors in Chicago. He also shares Small Business Tools and Templates at EnMast.com, a small business owner’s community.

Just when you’ve mastered Tweeting and posting, Google has thrown another social networking site into the mix – Google+.

When I first learned about Google+, I signed up for it, but didn’t give it too much attention initially. At first I thought, “It’s a slightly better version of Facebook, but there’s no one there.” But as I thought more deeply about what Google’s all about, and how Google+ fits into their product line as a whole, I realized that if you’re doing any social media for your business, it should be Google+.

Google+ works in a way that the other social media don’t. You see, Twitter and Facebook discourage (or prohibit) Google from including their content in Google search results. But Google understands the power of a personal recommendation, so they have started including the things that you recommend on Google+ so that your friends can see your recommendations when they conduct a Google search. It’s called “Search plus your world” and it’s a huge change in how Google will be driving traffic to your site. Whenever you are logged into any Google product and you search for something in Google, it will change the results to reflect the things that your friends have +1’ed (Google’s version of “liking” something).

Google+ is the strongest signal they have about who your friends are and what they like. So if you want Google to send more traffic to your site, you should:

• Have a good, content-rich website, full of high-quality articles and videos
   
• Make sure pages from your site are all over Google+
   
• Add lots of people to your Google+ circles
   
• Make it easy for people to +1 your website

I can hear the groans! There’s yet another thing to learn? Well, yes, and no. You do need to learn how to use Google Plus – but it’s pretty easy (Google’s own help files are a good place to start). But building the circles and adding content is a lot like mingling at a cocktail party, networking group or barbecue (“Nice to meet you” and “Thanks for the +1”). You need to be interesting, and take an interest in other people. Then those people (plus lots of the people they know, because Google recommends it to them) go to your website, and learn about you before they pick up the phone or fill out your contact form. Your website should answer their questions and educate them, so that when they do call you, they are ready to buy.

That’s why I’ve started to think of the fees I pay for SEO and content-marketing services, and the time I’m spending on social networking sites (especially G+) as an investment in the value of my company rather than as a marketing expense. When my team is working on attracting Internet traffic and leads, those links and posts stay out there forever. Each additional post and inbound link will directly increase the value of my firm now (because I’m getting more leads) and in the future (because the traffic itself is valuable).

So, if you don’t want website traffic from people who are interested in what you do and who are ready to buy, then skip Google+. But if you want lots of relevant traffic, which I hope you do, then Google+ is the answer.

More on Google Plus

BY Guest Blogger on February 27th, 2012

TAGS: small business | business | entrepreneur | marketing | social media | google plus | seo | content marketing

Thinking big, thinking bold - Introducing What Works: Solutions for Cities

(avg: 5.00 of 5)

What do baby boomers, families, young professionals and new U.S. immigrants all have in common? They’re driving the reurbanization of America. After decades of flight, cities are becoming the go-to choice of living. Access to amenities—including parks, transportation, restaurants, cultural facilities and sporting events—are making cities the preferred alternative to suburban living.

But as the demographic shift continues, cities must find ways to accommodate growth. Economic development initiatives are at the forefront of cities’ agendas: how can we promote equitable urban revitalization and foster job growth and economic opportunity for all residents—new and old alike?

There is no one answer. Indeed, solutions will flow from the public, private and nonprofit sectors—and will often need the collaboration of all three. In some cases, cities will lead the way. In others, the private sector or anchor institutions such as hospitals and universities might be the vanguard of action. What’s clear is that we need to identify what’s working in cities across the nation in order to learn from others and implement variations in our own cities.

This is why today, after many discussions with our national partners and with attendees of the Inner City Economic Summit, ICIC is launching its What Works: Solutions for Cities campaign.

At the heart of What Works is the compilation of best practices being employed to address some of the nation’s greatest economic and businesses development challenges in cities.

While many think tanks, policy organizations and experts provide valuable insight to the topic, our experience is that there is no go-to source that provides an aggregation of thought leadership, best practices and innovative programs to create jobs in the communities that need them most. We hope to fill this gap with the What Works digital platform. This platform will allow stakeholders to engage and discuss solutions—to ask each other questions, share “what’s worked” in their own cities and examine how to overcome challenges that might arise.

In addition to the What Works best practice inventory, the What Works campaign will include expert training seminars that provide participants with a deeper understanding of how selected best practices have succeed in revitalizing communities, and how these practices may be applied in their own cities. Where there is interest, ICIC will work with our partners to hold roundtables and convenings to dive even deeper into these issues.

We hope that you will engage with ICIC as we move forward with this endeavor. Share with us what’s working in your city and we’ll highlight you in Solutions: Spotlight.   Tell us if you have questions about some of our What Works examples and we’ll see about getting an expert to answer you. Provide us with feedback and inform us if you know of other good examples. Together, we will find the best city-led, business-led, and nonprofit-led solutions working in our cities.

A look at What’s Working:

”How Local Purchasing Spurred Growth in West Philly” – The University of Pennsylvania, despite being a renowned academic institution, found itself struggling to attract students in the mid-1990s because their West Philadelphia neighborhood was so unsafe and economically blighted. To spur local business growth, the University made a concerted effort to spend more of its purchasing dollars locally. In 2010, the University spent roughly 16% of its total budget within local and diverse businesses—making it a national leader among anchors procuring locally.  Learn more.

“Transforming an Industrial Weakness in to an Asset” – New York City’s 1.5 mile “High Line” was once an abandoned railroad track. Perceived as a weakness and inhibiting local growth, it was on the brink of being torn down when the “Friends of the High Line” lobbied for it to be turned in to a set of public parks.  After gaining local support, the city invested $115 million in the park, and in return, there has been over $2 billion in private investment around the High Line, including 8,000 construction jobs related to the project and 12,000 new jobs as a result of the area’s redevelopment. Learn more.

“Forgivable Student Loans Helping Employees Advance” – Around 2005, Brigham and Women’s Hospital (BWH) began to evaluate its workforce needs. It became clear that there were several openings above the entry-level position that were increasingly hard to fill. To encourage employees to seek further education, and to fill these roles, BWH created the Educational Financial Assistance Program (EFAP). EFAP allows eligible employees to gain up to $10,000 in tuition reimbursement in exchange for a 2-year commitment to the hospital upon completion of their educational program. Learn more. 

To read other case studies, click here.

Let’s dig deeper: The first What Works webinar on 3/1 at 2pm EST

City leaders across the country are recognizing the impact that anchor institutions have on their cities and job creation.   When it comes to economic development initiatives, many cities view anchors primarily as employers or real estate developers. While these roles are important, there are multiple other opportunities for cities to partner with them more aggressively, and in doing so, creating a more profound impact on local economic development.

In this webinar you will learn:

• Why the power of anchors is important for cities to harness
• How to bring diverse actors to the table and take action
• Challenges that cities face in working with anchors, and how to overcome them

Presenters: Andrew Frank, Johns Hopkins (formerly Deputy Mayor of Baltimore) and Nicki MacManus, ICIC

When: March 1, 2012 from 2-3pm EST

Cost: FREE

Learn more and register now!

BY Amanda Maher on February 23rd, 2012

TAGS: economic development | jobs | cities | small business | community development | business

Finding Demand, Rapid Growth and then: Selling

(be the first to rate this article)

There’s no denying it: rapid business growth is great for companies that can accommodate increased sales.  It leads to new job creation and an influx of dollars in to the local economy.

At the same time, it raises eyebrows of competitors who may seek to acquire the fast growing business before it hinders the growth of their own company.

This is exactly what happened to 2011 Inner City 100 winner Salar, Inc.

Salar, based out of Baltimore, provides electronic filing services for the health care industry. They integrate information and documentation systems for doctors and hospitals, enabling health care providers to move from paper-driven processes to electronic data tracking and storage.  

CEO Todd Johnson and his co-founder, Meir Gottlieb started Salar right after graduating from Cornell. The two opted to start their own company rather than trying to work for someone else. They graduated at the height of the dot-com boom, making an internet start-up a wise decision. Initially, they offered a software development service that attracted a few health care service clients. As a result, they began to develop a keen understanding of the digital serviced in high demand by health care customers.

Using this expertise, they changed the company’s focus in 2005: rather than providing software services, they began to develop a concrete product intended solely for U.S. health care providers. The electronic filing system is now available to hospitals and doctor’s offices nationwide.

The change in focus has helped propel Salar to rapid growth. The company nearly doubled revenues from the year prior. Their growth trajectory remains strong.

Certainly, much of the growth has to do with the new federal focus on health care information—an opportunity that Salar was poised to take advantage of and jumped on the opportunity. The federal government recently invested over $31 billion in health care IT, helping firms like Salar rise quickly. Furthermore, the health care industry has historically underinvested in IT services: currently only 1 in 41 hospitals offer the technology that Salar sells. This represents a huge opportunity for established and successful software companies like theirs that directly serve the industry, and can help health care companies become more technically sophisticated.

To keep pace with the rapid growth and changing federal regulations, Johnson admits that he sometimes overburdens his employees. But as a result, he is able to avoid over-hiring and the risk of layoffs during the feast and famine cycles of the health care market.

Also contributing to the company’s rapid growth: its inner city location in the Fells Point neighborhood of Baltimore. This bohemian area used to be an old shipyard but is now populated by numerous other small businesses, like microbreweries (who doesn’t love that kind of neighbor?!) and tech companies. The area has excellent access to transportation, helping to attract employees and making travel for Salar’s sales team a breeze.

But alas, the rapid growth led Salar to the same fate as many other high growth firms: in August 2011, Salar was acquired by Atlanta-based Transcend Services, Inc. in an $11 million cash-for-stock transaction. Transcend, to the delight of the city of Baltimore, opted to keep the company’s inner city location in Fells Point.  Now Transcend is adapting Salar’s growth model to continue expanding within their urban locale.

Small businesses: tell us - have you considered acquisition, either acquiring another company or selling yours to a competitor, as part of your growth strategy?

BY Alex Rodriguez on February 21st, 2012

TAGS: small business | business | entrepreneur | ic100 | acquisition | baltimore | health care

Food Trucks: Another weapon in the food cluster arsenal

(avg: 4.67 of 5)

Move over urban gardens. It’s food truck time.

The latest rage sweeping our cities is the food truck movement. In formerly barren neighborhoods, food trucks are popping up left and right. In downtowns and in neighborhood squares, these trucks serve quick, convenient food for passersby.

So what’s behind the movement?

In some cities, the cost of doing business has grown so high that it prevents new companies from entering the market. By some estimates, it costs an average of $275,000 to open a new restaurant; a food truck can cost as little as $10,000 to get up and running.  Given the tight credit market over the past few years, it takes more up-front capital to start new businesses. This makes the food truck market easier to enter than the traditional restaurant business.

Once in operation, the food trucks are a way to introduce consumers to new foods. From vegetarian-only vendors to Thai-food vendors, the trucks draw people from the traditional fast food joints they might otherwise frequent during lunch. As food truck licenses increase, new options abound. Food trucks serve (pun intended) as vehicles for cultural dissemination.

But food trucks are certainly not without their critics. Some argue that food trucks operate like the Wild West— there is no regulation, food trucks can be unsanitary, food trucks, in some instances, unfairly avoid paying taxes or that food trucks leave premises cluttered and dirty upon their departure. While these claims are certainly valid, each can be solved with the appropriate regulations.

The biggest complaint, one that cannot necessarily be solved at City Hall, is that food trucks take away business from brick and mortar restaurant locations. These critics often fail to point out that food trucks offer different services than sit-down restaurants. First, those who frequent food trucks may not have the time to sit down for a full meal during lunch. Nowadays, who really has the time to take an hour break from lunch? And if you do have an hour or more, perhaps you’re wining and dining a client, you’re certainly not going to take them to a food truck; you’ll do a full sit-down meal.

Second, many of us visit restaurants for the atmosphere or to catch up with old friends. This is an amenity that food trucks cannot provide. Third, because food trucks are regulated to prevent alcohol sales, those looking to unwind with a cocktail will still always head to their favorite local restaurant or bar.

Even if one were to overlook these differences, food trucks are not necessarily bad for local businesses. In a recent Huffington Post article, the author notes that food trucks are a win-win: for small businesses, for retail establishments, for bars and restaurants, for the city, workers and for residents. How does he reach this conclusion? He explains that food trucks are part of a larger small business ecosystem that drives overall economic growth—the more growth, the more everyone benefits. Well-known food trucks with large followings can attract customers from outside the area, and therefore draw attention to surrounding retail and restaurant locations.  

If we look beyond the actual purpose of food trucks (to serve customers quick, easy foods), food trucks have broader implications in our cities.   

Food trucks tend to occupy underutilized lots. In Boston’s South Station area, as many as three food trucks are open daily. The lot would otherwise spend most of the year unoccupied (with the exception of the summer farmers’ market and occasional Occupy protesters). In Washington, D.C., the Franklin Square area has turned into a gather place as a result of food trucks. And in Austin, the number of mobile food vendors has more than doubled in since 2007, turning unused space into a foodie’s heaven. These food trucks active streetscapes; they encourage people to visit parks and promote commercial activity.

Food trucks also promote small business growth. The trucks are a form of entrepreneurial startup. Given that small businesses account for over 99% of all U.S. companies and are the drivers of job growth, it would be irresponsible for cities to inhibit their multiplication. Food trucks in Boston have created over 72 new jobs in the last couple of years, whereas Detroit prohibits food trucks. Almost anyone will tell you: Detroit should be supporting any job growth opportunities possible.

Food trucks are just another tool in the repertoire of the growing food cluster. From production, to distribution, to retail and consumption: the food cluster offers significant opportunities for inner city job growth and economic development.

How is your city proactively leveraging the beneficial impact of mobile food vendors?

BY Amanda Maher on February 20th, 2012

TAGS: food | cluster | economic development | jobs | small business | cities | retail

Key Terms to Help Get You Through Your Next Negotiation

To help you avoid having to breathe fire as in the cartoon above, I’ve compiled a list below of a few key terms that will give you a leg up when you engage your next negotiation. Whether you’re trying to buy a new car, find middle ground on wages with a labor union, or settle on a cost structure for procurement contracts, being a good negotiator is an invaluable skill to have in your professional repertoire. As President Obama recently found during the debt ceiling debate, negotiating skill can be the difference between success and default.

• Anchor:  Anchors are reference points around which negotiations evolve. As this working paper by Professor Adam Galinsky of Northwestern University recommends, negotiators should anchor aggressively and make the first offer in most circumstances. Why do anchors work so well even among educated negotiators?
  
  “The answer lies in the fact that every item under negotiation (whether it's a company or a car) has both positive and negative qualities—qualities that suggest a higher price and qualities that suggest a lower price. High anchorsselectively direct our attention toward an item's positive attributes; low anchors direct our attention to its flaws.”
   
• Frame:  Make sure you “frame” the context of the debate in a positive perspective. The excerpt below from “Negotiation Strategy: 6 Common Pitfalls to Avoid” profiles research by prominent Stanford Business School professors and provides a telling comparison of how framing makes a difference in an argument.
  
  “For example, you are a purchasing manager renegotiating an hourly wage contract with a subcontractor. The subcontractor currently makes $10 an hour. You are willing to elevate the subcontracting firm to $11 an hour. Another organization recently boosted its rate with your subcontractor to $12 an hour. You know that when the negotiators for your subcontractor hear your $11 offer, they may think they are going to have to give up a dollar an hour.
  
  You must get them to focus on the point you are starting from — $10, not $12. You frame the issue positively by talking about all the ways your contract is different from the others. Your contract has some advantages outside of the hourly pay. The other side will be more willing to risk lower wages for the purported other benefits. A common mistake is negotiating from a negative frame: "The other firm's deal offers more, but we can afford only $11.”
   
• Bundling:  Have you ever bought a combo meal at a fast food restaurant? If so, you’ve enjoyed the advantages of bundling – the practice of offering or supplying related products or services at one all-inclusive price. For a word that many of us are familiar with, it’s incredible how deeply the concept has penetrated our conception of what’s normal. Have you ever bought a computer without prepackaged software or a car without a sound system? Maybe you have, but you’re definitely in the minority.
  
  Not only can this concept allow you to sweeten deals at the end of a long negotiation, but it can also allow you to bridge previously insurmountable objections and change the “frame” of the debate. For example, negotiating to lower your employee’s bonus is a very different thing from discussing how he would feel about more vacation days in exchange for less bonus upside. Furthermore, if final deadlines are fast approaching for either party, bundling can allow you to add in previously off-the-table items to help close a deal.

If you can anchor, frame, and bundle effectively, give me advance notice so I’m not across the table from you at a major negotiation. In an age when people interact directly less and less for both their professional and personal lives, having the finesse and savvy to not blink when the chips are down (excuse the cliché) can take you and your company from good to great.

For more insight on this topic, register to attend the Inner City 100 Symposium on May 9th where Harvard Business School Professor Francesca Gino will be presenting Negotiating to Yes. The session is designed to help entrepreneurs not only advance their personal negotiation skills, but also help diagnose and resolve negotiation-related problems across many different interpersonal, organizational and cultural contexts.

BY Sathya Vijayakumar on February 17th, 2012

TAGS: small business | negotiation | executive education | business | entrepreneur | ic100

The Future of Community Banking, and What it Means for Small Businesses

(avg: 3.75 of 5)

Above: Chairman of the Federal Reserve Ben Bernanke Addresses FDIC Conference this morning

Year in and year out, we honor the 100 fastest growing inner city companies. Part of the year-long process in finding and awarding these firms includes both quantitative and qualitative surveys and interviews of the CEOs. Through this process, we learn about how inner city companies come to fruition, what some of their business challenges are, and how CEOs finance their companies.

This year, like each year in the past, we are coming across a trend: overwhelmingly, most inner city companies view access to capital as one of their most prohibitive obstacles to growth. Yet, these companies are still growing and finding success.

How?

One thing the CEOs have attributed their growth to is their strong relationships with their bankers. In one of my most recent interviews, the CEO explained that he and his banker go out to lunch once a month just to chat, to address the needs of the CEO's business. Another CEO said he is a customer at a large bank that doesn’t understand his needs, and therefore, is shopping around to smaller competitors.

These smaller competitors are often local community banks. Community banks are defined as those with aggregate assets less than $1 billion. To put this in context, the four largest banks (Bank of America, Citi, JPMorgan Chase and Wells Fargo) have over $50 billion each in assets. From 1995 to 2004, community banks comprised 94% of the banking industry. From 2004-2008, there was a boom in big banking – which, as we all know, played a part in our tumultuous economy.

But signs are now pointing towards a resurgence of community banks. These banks have small regional footprints, and local decision-making is key. Small businesses, like the Inner City 100 companies we have interviewed and the drivers of our national economy, are increasingly turning to community banks that will take the time to truly understand their needs.

Today, banking leaders meet in Arlington, Virginia to discuss “The Future of Community Banking” – a conference sponsored by the Federal Deposit Insurance Corporation (FDIC).

Chris Whalen, Senior Managing Director at Tangent Capital Partners, wasted no time in drawing the disparities between large banks and community banks.  In one of the morning’s first panels, he explained that big banks are not nearly as efficient as they pretend to be. He explains that, “There are no economies of scale in banking—you either know your customer or you don’t,” and this is why we’re starting to see a resurgence of community banks. Community banks lend money to people they know, retain that credit on the balance sheet and are able to manage the credit going forward in time, reducing the risk for both the lender and borrower.

In an era of tight credit and limited access to capital for inner city business owners, this is music to our ears. The fact that the federal government is meeting with community banks to address their needs (multiple community bank spokesmen have discussed how increased regulatory burdens have hindered their ability to lend more efficiently) is a positive step toward helping small business owners across the United States. Stronger and more active community banks will encourage small business growth and job creation in a time where the economy remains in flux.

To see the agenda or watch the panel sessions from today’s FDIC event, click here. 

BY Amanda Maher on February 16th, 2012

TAGS: small business | jobs | business | entrepreneur | capital | federal policy | banking | fdic

How Cities and Businesses Can Grow Together

(avg: 4.00 of 5)

Article by ICIC's Steven Pedigo, originally published on Inc.com

Location, location, location! We’ve all heard that, for many small businesses, one of the keys to success lies in landing the right real estate.  But the reverse is also true: Small businesses are essential drivers of America’s cities, and your company and others like it have the capacity to make your city a prime location, location, location!

As businesses invest in their community, the community grows and becomes healthier.  Businesses then reap the benefits of being part of a thriving community. This principle of shared value – creating economic value while also creating value for society – lies at the very heart of economic success.

Here are five ways your business can increase its competitiveness by helping to re-energize your city.

1. Your Neighbors; Your Talent. Hire Locally.

Before looking at outside talent, fill positions with residents of your own community if possible. Hiring locally benefits your business, your city and your neighbors.

Employees who live and work locally are more engaged, and their employers enjoy increased employee retention and reduced fringe costs. Seeking talent locally and promoting from within is good for your neighborhood too: it boosts local employment rates and drives dollars back into your community.

To read the entire article, click here.

BY Steven Pedigo on February 14th, 2012

TAGS: cities | small business | entrepreneur | jobs | business | clusters | workforce | real estate

IC100 Companies: Innergizing Their Cities

(avg: 4.00 of 5)

We know that small businesses drive inner city economic growth. From mom and pop shops, to manufacturing firms, inner city companies employ local residents, invest in community programs, and add value to their neighborhoods. This is why ICIC has been honoring the fastest growing inner city firms for the past 13 years.  

And we’re at it again!

After months of outreach and applicant review, we have identified the 100 fastest growing inner city companies. The 14^th Annual Inner City 100 list will be published in Fortune magazine this spring. The list is comprised of 59 new firms in an array of industries: ranging from organic food manufacturing and distribution, online pet moving services to a NYC-based microbrewery. The diversity of companies is matched by diversity in location—this year’s list includes businesses from every corner of the United States.  Through sound business practices, every member of the 2012 Inner City 100 grew at rates that defied national trends.

The award allows Inner City 100 winners to take part in a full day of management education at Harvard Business School, with presentations by Boston University and Babson College, among others. The final unveiling of the list will occur on May 9, 2012 at the Inner City 100 Symposium and Awards dinner. For the first year in the program’s history, you will be able to join this dynamic group at a discounted rate:  To find out more about the event, access our agenda and register today.

In the meantime, we wanted to provide a glimpse of some of our Inner City 100 winners. We hope that you’re as stoked for these companies as we are:

Bevilacqua Research Corporation provides knowledge management and scientific support for the Department of Defense and NASA. Part of the company’s success comes from investing in employees rather than chasing profits. To beat competitors' benefits' structures, the President added incentives for employees such as a computer loan program and tuition assistance. In fact, employees can now take a paid humanitarian assistance leave for up to 40 hours to join their church, local Red Cross or other organization providing support to people in times of crisis or need.

Accurate Autobody is an automotive collision repair company out of Nashville, Tennessee located right by the Tennessee Titan's stadium. Founded in 2004 by current CEO John Hughes, they pride themselves on state of the art equipment and a reliable product.

Specialists in on-line lead generation, Neutron Interactive has carved out a niche in the higher education marketplace.  Originally the firm specialized in recruiting students to truck driving schools.  With that niche endangered in the wake of the 2008 recession, the firm turned lemons into lemonade and broadened its focus.

BY Alex Rodriguez on February 13th, 2012

TAGS: ic100 | jobs | cities | small business | business

Hiring a Non-Traditional Workforce

(avg: 4.75 of 5)

We’ve all heard the stories: one mistake can ruin your life if you wind up with a criminal record. From misdemeanors like possession of marijuana, to more serious crimes like assault and battery, those who err may not just end up in prison, but they will forever have to check off the “offender” box on job applications, all but guaranteeing their application is bypassed.

In Baltimore, the incarceration rate has become profound. When released, failure to become gainfully employed often leads these ex-offenders back to a life of crime.

Johns Hopkins Medical (JHM) took note of this phenomenon: each year, there are as many ex-offenders released from Maryland’s prisons as are the number of people employed at the entire Johns Hopkins medical complex in East Baltimore. If JHM could find a way to reintegrate these people back in to society though meaningful employment at the anchor institution, it would certainly help reduce the rates of recidivism. 

Moreover, JHM was struggling with its own employment situation: after the human resources department analyzed employment projections, they realized that there would soon not be enough workers for the jobs they needed to fill. Thus, they developed a new employee recruitment strategy: the hiring on non-traditional employees, including ex-offenders.

Of course, there was some pushback from university employees. Would hiring an ex-offender be safe? Could these employees be reliable at work? Were they more likely than other employees to steal from the job, from other workers?

All of these questions are valid. To get the buy in from everyone, the human resources department had to spend some time educating the JHM staff. Furthermore, the human resources department created strict guidelines for the hiring of ex-offenders, including thorough background checks to determine the infraction, severity and time elapsed since the person committed the crime.

Some may ask why JHM would spearhead such an initiative, especially now during an economic downturn where so many other qualified employees struggle to find work. Shouldn’t unemployed workers without criminal records be considered first?

To be clear, the JHM ex-offender initiative is by no means an affirmative action policy. Instead, it is a strategy where ex-offenders are not automatically ruled out as prospective employees given their criminal histories. The offenders must be able to show that they are at least equally qualified for employment as the other candidates applying for jobs with the Hospital.

What’s more, once hired, the ex-offenders records are sealed so that nobody outside of HR and security are aware that the new employee has a criminal record. Not even managers are aware that an ex-offender has been placed on their team. While it may seem counter intuitive at first, it has helped to curb prejudice and has kept the initiative’s integrity intact.

This workforce strategy has been heralded as a major success within the Baltimore community. In 2010 alone, 5% of all JHM’s new hires have some sort of criminal background. By being open with the public about the initiative, it has led to myriad new referrals for ex-offenders looking for work.

The ex-offenders seem to appreciate being given a second chance: one-year retention rates are at least as strong as traditional employees (80%). The initiative is looking to hire a full-time career coach for the ex-offenders to help them move up the career ladder at JHM as well.

Pamela Paulk, VP of human resources at JHM, explains the importance of anchor institutions finding strategic ways to engage their local communities by creating shared value. “As an anchor institution in East Baltimore, we must provide stability to our entire community, and keeping ex-offenders employed clearly benefits the community….If more of those returning prisoners were trained and earning a living, our streets would be safer and our communities would be stronger," she writes.

Thinking outside the box is paying dividens to JHM. More anchor institutions should follow suit: perhaps hiring ex-offenders wouldn't work for all businesses, but it shows us that other non-traditional workers can be good for the bottom line.

BY Amanda Maher on February 10th, 2012

TAGS: johns hopkins | baltimore | workforce | shared value | anchors | community development

Addressing Small Business Needs in Targeted Cities

Over the past two days, Living Cities’ Integration Initiative has been in Washington, D.C. presenting the findings of its Small Business Framing paper. By way of background, The Integration Initiative (TII) is working in five distressed cities to help them “harness existing momentum and leadership for change, overhauling long obsolete systems and fundamentally reshaping their communities and policies to meet the needs of low income residents.”

BY Guest Blogger on February 8th, 2012

TAGS: cities | business | jobs | entrepreneur | detroit | baltimore | newark | twin cities | cleveland | living cities | the integration initiative | capital

How Columbia University Partners with NYC to Support Local and Diverse Small Business

(avg: 3.80 of 5)

Columbia University provides a leading example of how an anchor institution can make its purchasing dollars more accessible to local small businesses. Working with local construction enterprises strengthens the university's ties with the local West Harlem community. It also expands and diversifies the pool of qualified vendors, which provide speedy, nimble, and reliable service. La-Verna Fountain, Associate Vice President, Construction Business Services and Communications of Columbia University explains how the institution's local purchasing efforts took shape and articulates several key lessons for aspiring anchor institutions.

Public-Private Partnerships:  Making Things Work

By: La-Verna Fountain

Sometime in early 2008, the Executive Vice President for Columbia University’s Facilities Department, Joe Ienuso and the Commissioner for New York City’s Small Business Services, Rob Walsh met to discuss the possibility of Columbia University and Small Business Services joining together  to address a common challenge.  Joe wanted to increase the amount of construction dollars spent with minority, women and locally-owned (MWL) businesses.   Commissioner Walsh wanted to increase the amount of city contracts awarded to minority- and women-owned businesses operating in the City. 

The challenge facing both the City and Columbia was the fact that they were large, bureaucratic institutions.  In the nation’s largest city, too few minority and women owned businesses are equipped to handle the administrative and financial complexities of large institutions to compete with majority-owned construction trade firms. 

The answer was to join forces and create a mentorship program unlike any other mentorship program in New York.  While several organizations in New York have created mentorship programs for the small, disadvantaged construction trades firm, the programs range in services and training provided.  None link the free services of a governmental agency focused solely on helping the small business succeed with the academic rigor of an Ivy League education and the commitment to create bidding opportunities for the participants once all program requirements are met. 

As of December 2011, Columbia has spent more than $16 million alone in construction work with mentorship firms.  As of June 2010, the City of New York had awarded more than $12 million in contracts to the mentorship firms. 

I wasn’t there at the beginning.  I joined the initiative part way through the first year.  Following are a few of the things that help make the program a success:

Vision and leadership.  Joe and Commissioner Walsh’s vision was larger than either of their organizations.  For Columbia University, the oldest higher education institution in New York, it was a matter of operating in a manner that not only would enhance Columbia’s reputation but strengthen Columbia’s community relations.  Under Joe’s leadership, Columbia increased its MWL business construction spend goal to 35 percent -- one of the highest commitments in New York State.  Joe also recognized that by increasing the number of qualified construction trade firms from which Columbia might do business, the value and quality of work would benefit the University.  Lastly, he understood that many of the MWL firms would already be committed to our high goal thereby helping to create jobs in the area.   

It took Joe and Commissioner Walsh’s vision to start the ball rolling, but once the ball rolls someone has to be there to make sure it stays the course.  The person who helps to keep things going must be committed to the vision and committed to doing the daily hard work it takes to run a mentorship program.  From answering the multitude of inquiries to reviewing paperwork to counseling the participants, the front line people must be equipped to respond to multiple challenges quickly, proactively and often quietly.

Communicate with stakeholders.  As with the vision itself, there is a need to have both an internal and an external communications strategy.  Internally you need to communicate the vision in a way that will help create buy-in.  On a daily basis, project managers and their supervisors confront the challenge of completing their tasks with as few problems as possible.  By adding one more component to their workload, it is vital to create excitement, shared vision and a sense of ownership for everyone involved. 

Externally, it is important to not communicate too much too soon.  It is far better to exceed expectations than to fall well below them.  At the same time, it is important to include leaders who can help make the program a success.  In this case, we formed an advisory council to help provide guidance and get the word out to potential candidates for the program.  As a result, by the second year of operations, as many as four times the number of applicants were applying than would be accepted into the class.  People were beginning to realize it was a serious program with quality results.

Stakeholders in this initiative included local community leaders, various labor union representatives, construction trade firm owners, Columbia personnel and City personnel.  To work as effectively as possible with all of the stakeholders, articles were written, meetings were held with leaders in each of the groups, and periodic updates were provided. 

Be prepared to make adjustments.  We are now in our fourth year of operations.  During the academic year for the firms participating in the program, Joe and Commissioner Walsh along with representatives from Columbia University’s School of Continuing Education participate in a “Chat and Chew” event.  In an informal atmosphere, the participants and alumni are encouraged to provide an honest critique of their experience participating in the program -- the good, the bad and the ugly.  As a result of the feedback, changes are made to the program.   

Our goal is their success.  Their success will happen when we listen and adjust whenever appropriate. 

Be open and honest about expectations.  Often people want to join the mentorship program because they think it is an easy way to get a contract.  That is not the case with this mentorship program.  Throughout the academic year, program managers are listening and watching.   While firms are given an opportunity to bid, the firm must meet the same requirements as the larger construction firms.  We examine their records and look at their previous work.  And, the hard reality is that every construction firm is not right for a large institution.  This can be a difficult message for many firms who think they finally found the golden goose that lays the golden egg.  There is no golden egg. We have high standards.  This is a place where we work, live and play.  We must justify every dollar we spend in construction or maintenance as something that will benefit our core mission – education and academic research.  And, it is a tough, competitive environment.  For every one firm given an opportunity, there are at least 10 others who are trying to get an opportunity to work with us. 

Recognition.  For the participants, there is a graduation ceremony and reception.   We like to highlight their success.  For the front line workers, we praise their involvement at meetings.  It is important to acknowledge the successes.  Every day presents opportunities for improvement, and we often forget how far we’ve come. 

We are not done, yet.  We want more success.  We’ve added more corporate partners to our initiative.  We have more improvements to make.  Fortunately, we still have the vision, leadership and commitment to move forward.  This is truly a public-private partnership that works.

BY Guest Blogger on February 7th, 2012

TAGS: anchors | shared value | nyc | public-private partnerships | columbia university | chre | workforce | industrial | ask the expert | mwbes

Economic & Social Inclusion: Day 3 at New Partners for Smart Growth

(avg: 5.00 of 5)

Seattle sees its music scene as part of its city’s economic development and appeal. Pictured here: Slimpickins, busking at Pike Place Market.

By: Alex Abboud

The third and final day of the conference featured two plenary sessions (the first and last ones during the day) and two breakouts. The themes of the sessions I attended focused on diversity, social, and economic inclusion.

The Great Reset: Reshaping Our Economic and Physical Landscape to Meet New Needs
This session, featuring senior civic leaders, discussed the changing landscape, and the urgency to develop communities that meet the demands of consumers.

Kim Walesh, Director of Economic Development for San Jose, spoke to the demographic changes, and how this affects the market. She noted that development has targeted the 35-54 age group, but demographics are shifting to seniors, as Baby Boomers enter that demographic in large numbers, and young professionals, as Millennials come of age. They both want a more urban environment. Baby boomers want to be able to walk to restaurants/shops and medical appointments. Millennials have what she described as a “live first/work second” outlook, meaning they’ll choose a community/city where they’ll want to live first, then look for work second. She also noted that this group is 33% more likely than other demographics to want to live within 3 miles of a Central Business District.

Speaking anecdotally as a Millennial (and child of baby boomers), Walesh’s argument resonates with everything I see and hear amongst both my and my parents’ respective cohorts.

On the inclusion theme, Walesh made a powerful argument for the value of immigration, pointing out that 50% of CEOs of Silicon Valley tech companies are foreign-born, and 40% of Fortune 500 companies were founded by immigrants or second-generation Americans.

Additionally, Mayor Mark Mallory of Cincinnati, who I’ve been a fan of since first hearing him speak at the Urban 2.0 conference, spoke about building on his city’s concentration of Fortune 500 companies and head offices, and the appeal of the old streetcar they’ve reintroduced. Officials from Portland and Seattle spoke as well about their respective initiatives. I was impressed with Seattle’s goal to be carbon neutral by 2050, and how they view green initiatives and goals as a key part of their economic strategy. They’re also building a more inclusive city by including the city’s thriving music scene in its economic development initiatives, and by increasing the diversity of housing types available for young people (such as 300 square foot “pods” that have shared amenities). As the speaker noted, for many young people, “home is not necessarily the place they want to stay”.

Advancing Equity in Minneapolis/St. Paul: Action, Research, Advocacy, and Place-Making
This session put forward four perspectives on greater inclusion and equity in the Twin Cities.

ISAIAH, a community organization, organized the Healthy Corridor for All initiative, around the Central Corridor Light Rail Development. This development affected many low-income and minority communities, and the community wanted to ensure that the health of residents and communities was not adversely affected. The speaker also stressed the point that silos between public health officials, advocates, and planners need to be broken down. The link and impact planning has (for better or worse) on public health has been a recurring theme throughout the conference.

Louis King, founder of HIRE Minnesota, spoke powerfully to the need for economic equality. He began by stating that “the best social service program in the world is a job”, and noting that African-Americans were more than 3 times more likely to be unemployed than Caucasians in Minnesota. HIRE is an accredited educational institution, both advocating for equality, and providing training and skills development for individuals. He spoke to several principles that would foster greater economic inclusion.

Laura Zabel of Springboard for the Arts presented their Irrigate project, partnering local artists with businesses and community organization to create place-making. I was impressed with a number of things with this initiative, in particular the way it engages artists who are already in the community, pushes an understanding that the arts are a key part of – not extraneous – to the economy, and the way it expands the conventional notion of who, or what, is an artist.

I am incredibly impressed with the work Justin Kii Huenemann and the Native American Community Development Institute are doing. They are focusing on building equity and community along Franklin Avenue, where the greatest concentration of Native Americans in the Twin Cities is found. They’ve helped foster local ownership, from institutions such as a bank to arts initiatives such as a gallery and a festival. NACDI has put forward a powerful vision of Franklin Avenue as an American Indian Cultural Corridor, and are putting resources behind it to make it a reality, transforming from an economy of social service to one of entrepreneurship and growth. Living in Edmonton, which by the end of the decade will have the largest urban Aboriginal population in Canada, I see great value and opportunity to foster inclusion through initiatives like this in both my community.

Huenemann also spoke to the need for responsibility from the communities affected and involved. He passed on an old saying from an Elder, that when you’re pointing one finger at someone else, you’re pointing three back at yourself – meaning, you need to think about what you’re doing, rather than blaming others.

Restoring the American City: Augusta, GA and Laney Walker/Bethlehem
Laney Walker and Bethlehem are traditionally African-American communities adjacent to downtown Augusta. Vibrant communities from the 1920s to 1970s, they’ve experienced significant decline over the past 40 years. In Laney Walker, 33% of housing was in poor condition or dilapidated; the number in Bethlehem was 70%. The areas had hollowed out; while 1000 acres in size, and home to 3500 parcels of land, it was home ot only 4700 people.

Beginning in 2007, revitalization efforts sought to build on its character and proud history as an African-American community. As Chester Wheeler, one of the leaders of this initiative noted, “Government could not come in and plan for the people. It would never work”. Government did, however, need to mitigate the risk of private developers to encourage investment. The project has been sensitive to existing residents, including them in the consultation and planning from the site, and ensuring any tenants that are displaced are successfully relocated to a home in their existing community. Impressively, they have yet to acquire a single property through eminent domain, respecting local ownership of each property. The project has focused on preservation and reuse (where the former is no longer possible). As one resident said, “it’s important to keep these buildings so they can continue to tell their story”

This effort receives a public investment through a hotel/motel surcharge, and is using it to leverage private investment at a 5:1 ratio. It builds on the area’s history by creating a Heritage Trail, which identifies 150 sites of significant recognition of African-American people and places throughout the city. This speaks to one of the best strategies I see for urban development, building on your own city’s character and making them strengths, rather than copying the trend of the day.

Community Design and Urban Innovation for a Knowledge Economy
Michael Freedman, Principal at Freedman Tung Sasaki in San Francisco, closed out the conference.

He covered the evolution of the smart growth movement over the years, noting that we now know what the problems and solutions to them are. The key challenge he identified is to create “a broader consensus for the coming prosperity”. It’s a well-found point, that the coalition of smart growth/new urbanist advocates needs to grow. I’m reminded of a speaker yesterday who asked, “how can you create an environment where people see a reflection of themselves in your work?” I see this as important to any successful movement, that people can relate, and see a place for themselves as part of it.

He also noted that, “when the nature of work changes, the city is entirely transformed”. He followed by pointing out that transportation changes follow changes to work, rather than influencing the change itself as many assume.

Freedman covered the evolution of cities since the industrial revolution, noting where we have arrived at today, a place where creativity and innovation are the primary wealth-generators of the new economy. He tied this back to cities, focusing on the need to develop cities (physically and otherwise) that foster innovation and creativity, and talked about what the city of the future might look like (hint: the business park is dead).

This is the challenge for smart growth and new urbanist advocates like myself. To articulate a vision and a road map to create cities that respond to the economic, social, and environmental needs of the 21st century. With the work being done by people like Freedman, and many of the speakers and attendees I’ve met in the past three days, I feel like this future is closer than many of us might think.

BY Guest Blogger on February 6th, 2012

TAGS: economic development | community development | housing | retail | san jose | seattle | twin cities | cincinnati | cities | equity | new urbanism | npsg | conference

Sustainability, Walkability & New Urbanism: Recap of New Partners for Smart Growth Conference, Day 2

(avg: 4.00 of 5)

By: Alex Abboud 

Following on my post from the first day of New Partners for Smart Growth, here is a quick recap of Friday’s sessions:

Building a Powerful Regional Equity Coalition to Deliver on Sustainable Communities
Building on what I noted in the East Baltimore project, three organizations spoke about how they’re ensuring smart growth and redevelopment is inclusive of all residents, particularly marginalized communities. Urban Habitat, out of San Francisco, has developed a Board and Commission Leadership Institute, where they prepare and encourage members of marginalized communities to participate in civic boards and commissions. They’ve gone, in the words of CEO Allen Fernandez-Smith, from “the goal of influencing decision-makers to the goal of being the decision-makers”. San Francisco is also leading the way with a Local Hire Policy for public works, including a provision for employing residents from disadvantaged communities.

Farmers’ Market
For lunch we went to the Farmers’ Market at Cancer Survivors’ Park, adjacent to the conference hotel. California is leading the way with more than 700 farmers’ markets across the state, and this ties in well with San Diego’s thriving local food culture I noted in the Thursday recap.

Little Trips, Big Difference: Predicting Traffic for Mixed-Use Sites
As someone who values metrics and analytics, I was interested to see what’s being done to measure the efficacy, and continue to build the case for mixed-use developments (MXDs) and transit-oriented developments (TOD).

The speakers focused on 7 ‘Ds’ that reduce demand for trips and vehicular traffic:
- Density
- Diversity
- Design
- Destinations
- Distance to travel
- Development scale
- Demgraphics
- Demand management

Tools now can predict number and types of trips from factors such as how many jobs are available within 3 miles of a location. I see a real value in being able to demonstrate the value of MXDs over traditional suburban development in terms of environmental impact and infrastructure cost. I’m thinking some universal metric likebaseball’s Wins Above Replacement.

Jobs, the Workforce, and the Economy: Rethinking the Role of Smart Growth and the Economy
Speaker Larry Fitch began by noting that economic growth is often seen as separate from the smart growth agenda, when in reality they’re heavily intertwined. This point is well-found. Smart growth and new urbanism need to be about more than a built form. The inherent economic benefits, and the potential economic opportunities for citizens, need to be a conscious part of this effort, and well-articulated as part of the vision as well. He also focused on the issue of transit and accessibility, and how without it residents can become marginalized. He used the example of his guitar instructor in San Diego, who has to take the bus an hour and a half to teach his 30 minute lesson.

Hop Hopkins, a community organizer in Los Angeles, spoke about what the Conservation Corps is doing to train workers from disadvantaged communities in emerging green industries. Programs like this point to the possibility of greater economic benefits, while also ensuring that residents of marginalized communities benefit, rather than are displaced from these efforts.

The State Center project in Baltimore is another example of this. An infill project just north of the Inner Harbor, development is filling in a suburban-style government office, providing affordable housing and community resources, and delivering economic inclusion by ensuring local hiring in the development process.

These are just two examples of how smart growth and new urbanism can be part of a new, more sustainable, economic agenda.

BY Guest Blogger on February 5th, 2012

TAGS: cities | economic development | food | transit | workforce | smart growth | new urbanism | npsg | conference

New Partners for Smart Growth - Takeaways from Day One

(avg: 4.50 of 5)

By: Alex Abboud 

BY Guest Blogger on February 4th, 2012

TAGS: housing | economic development | community development | ebdi | baltimore | food | cities | npsg | conference

How two vastly different cities can leverage food cluster

(avg: 4.20 of 5)

There’s an undeniable trend towards Americans seeking healthy, locally grown food. Oftentimes, this is what people understand to be the growing “food movement.” But what people may not realize is that the food cluster encompasses so much more than that: retail and consumption is only the very last end of the supply chain.

At last night’s Open Classroom Series at Northeastern University’s Policy School, ICIC’s Director of Research Teresa Lynch and NextStreet’s Adina Astor gave a presentation that compares Boston and Detroit:  how each city has opportunities to leverage its food cluster to create urban jobs.

The researchers broke down some key characteristics of each city as they matter to the food cluster:

Boston has experienced a growth in population, a growth in jobs, and has an average household income of $52k ($40k in the inner city).

Detroit has a similar sized population but has experienced a 25% decline from 2000-2009; 19% of local jobs have been lost from 1998-2008, and the median household income is $29k ($26k in the inner city).

Because land availability is so important to the food cluster, they also did an analysis of the two cities’ land distribution: Detroit has 139 square miles of land, 100 in the inner city. Boston is only 48 square miles, 19 of which are in the inner city. There are 2,472 acres of vacant acres of industrial land in Detroit but only about 80 acres free in Boston.

And income density, which reflects a population’s purchasing power, is also vastly different. In Boston, income density is roughly five times higher per square mile than in Detroit: $280 million per square mile in Boston versus $55 million per square mile in Detroit.

By all accounts, these cities are vastly different. So what do they have in common? Both have the ability to leverage the food cluster.

Boston, a land-constrained city, is a significant hub for Atlantic seafood in the U.S., though a majority of food is imported due to local supply constraints. Food processing is a strength, which breweries, meat processing, bakers, seafood and specialty food manufacturing some of the strongest. Boston also has strengths in wholesale and distribution: there are about 280 local wholesalers/distributors that receive regional and national shipments and then distribute locally.

Down the supply chain, Boston has strengths in retail and restaurants. Retail has been driven by Boston’s concerted effort to increase the number of grocery stores: there have been 23 new or expanded supermarkets from 1992 to 2004.  There’s a flourishing restaurant scene in Boston that has grown over the past decade: these restaurants now employ almost 50% of all those involved in Boston’s food cluster. And of course, we would be remiss if we didn’t mention the number of innovative food trucks popping up all over Boston within the past couple of years: 18 food trucks have created an estimated 72 new jobs.

Detroit, a land-rich city, has different strengths and opportunities for job creation. The available land makes the city ripe for agricultural production: in addition to an increase in community gardens and smaller firms, larger (30-120 acre) farms are in the planning stages. Moving down the supply chain, Detroit has opportunities in process. The city already has a strong historical base of blue chip food processing and manufacturing. Vacant industrial space presents opportunities for future processing facilities.

One way to leverage Detroit’s strengths in production, processing and terminals is to encourage local procurement. “Buy Detroit” has been successful in convening local institutional purchasers – Detroit Medical Center, Henry Ford Hospital and Wayne State University – to increase business with local companies. Local foundations have also been driving the local food movement in order to promote economic development and social justice. The money flowing from these foundations in to the food sector presents a significant opportunity for food-related initiatives.

The insight from the presentation was valuable. The speakers went on to explain the challenges the cities might encounter in promoting the food cluster, and how city officials can use land policy to support food initiatives.

To see the entire presentation, watch the videos here.

Tell us, what are your cities doing to promote the food cluster?

What are some of the areas of opportunity for cities similar to Boston – such as Chicago and New York?  Or cities similar to Detroit – like Cleveland and Baltimore? Which city do you think is the current leader in the growing food cluster movement?    

BY Amanda Maher on February 2nd, 2012

TAGS: detroit | boston | jobs | businesses | economic development | manufacturing | retail | industrial | food | clusters

Angel Funding Helped this Small-Business Owner Improve the World through Chocolate

(avg: 4.00 of 5)

Sarah Endline grew up in a small farming township of 500.  Somewhere along the way dreamed of building her own mission-based business.  After years of contemplation, she founded Sweetriot, a small company based in New York City who’s aiming to improve the world through chocolate. 

Sweetriot produces tiny nibs of cacao bean covered in dark chocolate and packaged in tins decorated with images from emerging artists.  The eco-friendly treats, which satisfy a demand for purer free-trade foods, have been stocked in retail chains including Whole Foods, Wegmans and Zingerman’s.  The company has experienced rapid growth in both revenues and product locations since its 2005 founding. 

To help the company expand, Sarah sought angel funding as a compatible source of capital.  As we learned from last week’s CEO Series Webinar, individual angels or angel groups can serve as valuable financial partners for high-growth businesses seeking below to $2 million in investment.  To date, Sarah has successfully secured over $300,000 in angel funding.  Below she provides tips to other small-business owners seeking or considering angel financing.

Angels come in all sorts of shapes and sizes.  There are four tips I can pass on to fellow entrepreneurs:

• Angels are individuals
  Although they appear as groups, angels often they make individual decisions.  It is important to get to know them on an individual basis.  Even if a group says no, there are entrepreneurs that sometimes raise from individuals alone.
   
• Angels are regional
  Most angel groups say they will look at deals from any region, but if you study their track record they focused on companies they can visit and interact with on a local basis.  There are a few exceptions to this but not often.
   
• Angels need to believe in you
  Angels are fundamentally deciding to invest in the founder.  It is important to build trust with them from the beginning.   It is also a two-way street.  Seek out angels whom you connect with and whom your gut instinct tells you will be supportive over time.
   
• Search for affiliation and trust
  It is helpful if you begin your angel relationship with some type of affiliation in common.  This affiliation could be your University, a friend's introduction, being from the same region of the country or a non-profit board membership.

Riotly,

Sarah
Mastermind & Chief Rioter
Sweetriot
 

BY Guest Blogger on January 31st, 2012

TAGS: ceo series | ask the expert | small business | entrepreneur | capital | nyc | angel investment

The Immigrant Artist Who Helped Build Urban Business Success

(avg: 3.00 of 5)

We’ve all heard stories of immigrants moving to the U.S. to find better lives: America is a land of promise, a land of opportunity. These immigrants are a vital force for inner city economies. Businesses on the Inner City 100 list have created roughly 70,000 jobs and employ nearly 100,000 people—40% of which are inner city residents. Many of these business owners open Mom and Pop shops, but others wind up transforming existing businesses.

This is the case with Luc Brami, Principal of Gelberg Signs in Washington, D.C.

Luc Brami’s father came to America from North Africa in 1959. An impressionist painter by trade, he only had $25 in his pocket when he immigrated. He had trouble selling his wares when he first arrived in the U.S., so he went to work for Gelberg doing hand-letter paining for his sign company. He eventually transitioned in to creating logos—including the well-known Marriott logo. Before long, he was Gelberg’s right-hand man.

When Gelberg passed away in 1977, Luc’s father took over the business. By 1987 he was ready to buy Gelberg Signs from the Gelberg family. Despite his attempt to do so, he was outbid by investors who spent the next two years running the company in to the ground. Then, in 1989, Luc and his brother bought the company from the investors and set the business on a path for success.

Initially, Luc’s goal for the business was to pay off the $750,000 loan he had taken out to transform the business. It took 10 years to pay It back, but now the company is growing at such a fast rate that it was recognized as #93 on the 2011 Inner City 100 list, with year-over-year growth averaging 13%. And Luc sees continued growth on the horizon: he expects to expand the company 3-4 times its current size within the next five years. What makes the company so unique is its ability to achieve such steady growth, despite competing in a market with larger companies that have access to newer sign-making technology.

So how does Luc maintain such growth?

Seven years ago, he noticed that all of his biggest companies were located outside D.C.; only 1-2% of his businesses were local. So Luc attended a local city council meeting and pulled one of the council members aside afterwards. He explained to the councilman that he was having a hard time hiring local workers. Together, he and the city councilor a program that created set-aside standards for inner city businesses. Now, 15% of Luc’s business comes from within Washington, D.C.

As a result of expanded business, the company added 15,000 square feet of front office space in 2008. By taking a chance an buying a company from investors who had seemingly let the company fall apart, Luc was able to grow the company and expand profits.

Luc now supplies signs to a number of large corporations, chief among them: Turner & Clark General Contractors and HMS Host Travel Plazas. He explores businesses opportunities using referrals from regular customers, and by pursuing leads in trade magazines and construction trade journals. Of course, a bit of cold calling happens now and then too. Luc may begin with a cold call, but he then focuses on building a relationship with the potential customer before making a bid on services. And when he’s successful, he’s careful to follow up once the job is completed. These personal relationships are what keep clients coming back time and time again.

There have also been advantages to locating the business in Washington, D.C. Namely, the access to D.C., Virginia and Maryland expand the number of prospects for business. As a D.C.-based business, Gelberg Signs has easy access to federal government contracts. According to Luc, business may be strong but there needs to be a greater initiative to hire local employees. He’s hoping that the improvement in local public schools over the past several years will increase these residents’ access to jobs like those with his company.

In addition to hiring locally, Luc offers more business advice to similar inner city CEOs: Create a plan for investing and spending your money. Set goals and stay on top of them. Create metrics to measure your goals, but reevaluate the metrics as needed. Engage in this type of strategic planning, even if you have limited funding and it seems cost prohibitive to do so.

Tell us how your company is creating jobs and investing in its local community. How have you been able to do this despite a difficult economic climate? 

BY Alex Rodriguez on January 30th, 2012

TAGS: small business | jobs | business | ic100

Tips from an Angel

(avg: 5.00 of 5)

Thank you to everyone who joined us for our first CEO Series webinar of 2012!  We were lucky to have Peggy Wallace, Managing Director of Golden Seeds to present “What are Angel Investors Looking for?”  The Golden Seeds angel group offers funds to early and growth-stage companies, with a preference for firms headed by women. 

Peggy was one of the first investors to join Golden Seeds in 2005 and has since invested in a diverse portfolio of 30 companies.  During the webinar, Peggy shared her investor’s perspective to small-business owners who are currently seeking or considering seeking angel investment.  Peggy outlined the current angel market and gave tips to entrepreneurs on pitching for investment.  Below are a few of the tips and takeaways that stood out to us:

• Angel investors look for companies that have a high-growth trajectory and are scalable.  Most often angel groups invest in companies in the technology, life sciences and medical industries.
   
• The Angel market is a big market – comparable to the venture capital market –both about $20 billion annual investment.
   
• Angels actually invest in MORE companies than venture capitalists (about 50,000 deals annually) but invest at a lower level.  An average angel investment is around $700,000, where an average initial venture capital investment is $5,000,000.
   
• Acquiring angel investment is usually a 138 day process from when you first apply to when you close.  Make sure you build that timeline into your business plan.
   
• Angels look for a talented management team.  If your company is not yet at the stage of having a team, there should be a plan in place to hire.  Typically, a portion of an angel investment is put towards hiring.
   
• Angels look for entrepreneurs who have spotted a market need and have built a company/product to solve that need.  An entrepreneur must demonstrate that there is a large market opportunity---a market of $1billion is attractive to an angel.
   
• When meeting with an angel investor, have a clear 30 second, 60 second, 5 minute and 10 minute pitch ready.  Angels might ask you to explain your company in any of those time constraints.
   
• What is your “go-to-market strategy?” This is most often the weakest part of an entrepreneur’s pitch, so make sure you have an answer carefully planned out before meeting with an investor.
   
• If an angel asks you a question after your pitch, pay attention – they may be giving you a second chance to say something you missed!
   
• Angels do not work with brokers so you should not pay someone to introduce you to an angel.  The Angel Capital Association is a good resource to help you find a local angel.
   
• Angels bring more than their dollars to your company.  They bring access to their networks and their passion for your business to succeed.

The full webinar, including Peggy’s PowerPoint slides, are available on our website.  We also invite you to register for our next CEO Series webinar-Negotiating with a Potential Investor- which will take place on February 22^nd.

BY Mary Duggan on January 27th, 2012

TAGS: small business | entrepreneur | capital | ceo series | ask the expert | angel investment

Gambling on Urban Real Estate in 2012? Here are some places to do it

Above: City of Pittsburgh courtesy of Jan Tyler/Getty Images

Pittsburgh, Worcester, Houston, Akron and New Orleans. Five cities that appear very different on the face of things. Some are post-industrial cities trying to position themselves for a comeback. Houston is a post-WWII city based on energy and built via sprawl. And New Orleans—well, we know the challenges New Orleans has faced since Hurricane Katrina.

So what do these five very geographically diverse cities have in common?

According to the forecasting firm Local Market Monitor and as reported by MSN online, these are the five most promising cities for real estate in 2012. A bit of the rationale:

• Pittsburgh: Colleges, hospitals and the health-care industry have helped the city avoid the major job declines faced by other cities during the recession.
   
• Worcester: High-tech job growth throughout the Boston region has made outer-ring cities an attractive, more affordable alternative to Boston.
   
• Houston: The growing trend toward alternative energy has created a boom in Houston’s energy sector, resulting in job and population growth despite the recession.
   
• Akron: Manufacturing, once the linchpin of Akron’s economy, is finally beginning to return to the city. Because Akron didn’t experience the housing boom like other cities, existing homes retained a high percentage of value compared to the national average.
   
• New Orleans: Simply, efforts to rebuild the city are starting to work. People are returning.

Meanwhile, the research firm predicts continued weak markets in Wilmington (DE), Atlanta, Virginia Beach/Norfolk, Sacramento and Fresno—ranging anywhere from another 7% to 10% decline in housing value over by the end of 2012.

Interestingly: I was at the Urban Land Institute’s annual Boston meeting this past fall. Here, real estate investors all indicated that there was little chance their companies would invest in “second- or third-tier cities,” such as Akron and Worcester. Instead, they preferred to pay higher prices for investing in cities like Boston, New York and San Francisco because these were safe markets that would still provide a return on investment.

So readers - what do you think of these all predictions? In which cities do you expect real estate values to increase? Where would you place your bets if you had to purchase real estate in 2012?

BY Amanda Maher on January 24th, 2012

TAGS: cities | real estate | local assets | economic development | housing

What the Deepening US Competitiveness Problem Means for Urban Businesses

Source: The Educated Society: http://bit.ly/xoPXGg

Recently, Harvard Business School’s Institute for Strategy and Competitiveness, led by Dr. Michael Porter (ICIC’s founder), released the results of its first annual Survey on U.S. Competitiveness. The survey sought to pinpoint the roots of the country’s competitiveness problem. Specifically making their definition of competitiveness holistic enough to include rising living standards (and by extension employment), the survey provides an interesting snapshot of commercial realities, attitudes, and expectations. Below is an outline of the result’s implications for urban businesses.

1)      Urban Employment Continues to Suffer

To state the painfully obvious, America’s economic morass has lasted much longer than most experts originally anticipated. A large majority of survey respondents (71%) expect U.S. competitiveness to decline over the next three years, with worker’s living standards under greater pressure than firm’s successes. As was recently reported in Atlantic Cities, most metro areas won’t return to pre-recession employment levels until 2015—a  stunning 8 years after the beginning of the financial crisis. Unemployment results in diminished consumer purchasing power, affecting urban small business directly, but can also result in indirect costs like higher crime rates—impacting not just businesses but entire communities.

2)      Decreasing Desirability of the U.S. as a Business Location

According to Dr. Porter, “The U.S. is losing out on business location decisions at an alarming rate, and those activities being offshored are more job-rich than those coming in.” The survey found that, in offshoring decisions that had been resolved by the time of the questionnaire, the U.S. lost the activity 84% of the time, a deeply distressing figure for employment. The most common alternatives considered for relocation were, predictably: China (42%), India (38%), Brazil, Mexico, and Singapore.

So, how does the offshoring of U.S. businesses impact our urban areas? Business, especially large corporations, are increasingly investing in “shared value” – i.e. turning a profit while simultaneously investing in their local communities. Whether through workforce development initiatives or the unbundling of purchasing agreements to subcontract to minority- and women-owned businesses, businesses can have an immense impact on urban vitality. In fact, central to ICIC’s vision of urban development is the idea that private sector investment can reinvigorate distressed communities through this virtuous cycle of private gains leading to public investment and cooperation.

3)      American Impediments to Investment are Preventable

When asked to identify the greatest impediments their firms faced in investing in and creating jobs in the United States, respondents cited tax and regulation policy as major factors along with labor costs and immigration issues. While labor costs are a problem encountered by most developed nations, reforming our tax code, easing regulations, and aligning immigration policy with the needs of talented foreigners all represent low-hanging fruit to create jobs and profits.

But this problem is not just one faced at a national level. Many of our cities can take action to reform outdated and complicated tax and business policies to be more conducive to business growth. Otherwise, just as companies move businesses offshore, cities risk losing businesses to other cities and states.

Philadelphia is just one of several cities trying to improve its local business climate. According to a recent study by the Sustainable Business Network, 98% of businesses in Philadelphia are small businesses; 65% of jobs are created by small businesses; and 65% of jobs are created by businesses five years old or younger. Yet Philadelphia has a long history of being anything but a business-friendly city. The report recommended that Philadelphia reduce the time, cost and confusion of obtaining City approvals; simplify their tax compliance burden for small businesses; and ensure that laws do not unnecessarily harm small businesses. In doing so, they can expect to reap new business development and spur job creation.

It’s clear that oftentimes, what’s hindering business at a national level is also hindering us at the inner city level—but this doesn’t have to be the case.

As HBS Professor Jan Rivkin eloquently has stated, “The findings [from the U.S. Competitiveness Survey] allow us to assess whether individual elements of the U.S. business environment, such as the complexity of our tax code or our K-12 education system, each strengthens or weakens U.S. competitiveness. This provides important insight for leaders who are seeking ways to boost America’s long-run prosperity.”

Moreover, given that cities and their metros account for nearly 90% of U.S. economic output, it is crucial that local and state policymakers don’t defer the task of business development and retention to national politicians. As the survey shows, the onus is on everyone to contribute if America is to dominate the 21^st century as it did the century prior.

Sources:

• Prosperity at Risk – HBS http://bit.ly/zGsalj
• Metro Job Recovery Remains a Long Way Off - Jobs & Economy - The Atlantic Cities http://bit.ly/zHsWJ6
• Harvard Business School Survey Reveals Deepening U.S. Competitiveness Problem - MarketWatch http://bit.ly/A6CChi

BY Sathya Vijayakumar on January 23rd, 2012

TAGS: jobs | economic development | employment | competitiveness | hbs | shared value | study

Good News for Small Business? More Like Mixed Signals from the White House

Photo courtesy of CNN.com

Last Friday President Obama announced a proposal to combine the Small Business Administration (SBA) with five other government offices.  If approved by Congress, the proposal will merge the SBA with the core business functions of the Department of Commerce, the Office of U.S. Trade Representative, the Export-Import Bank and the Overseas Private Investment Corporation and the U.S. Trade and Development Agency.  The proposal, aiming to streamline the agencies, is part of Obama’s broader executive branch reorganization.  

At the same time, President Obama leveraged his authority to elevate the SBA to a cabinet-level agency.  The elevated status gives the head of the SBA, Karen Mills, a seat at future Cabinet meetings.

However, Karen Mill’s seat might not be warm for long.  If President Obama’s reorganization is approved by Congress, the SBA will immediately lose its Cabinet position. 

How’s that for mixed-signals?

During the announcement, Obama promised that the SBA elevation will “make sure that small-business owners have their own seat at the table in our Cabinet meetings.”  It’s always nice to have friends in high places and since the SBA hasn’t been recognized at this level since the Clinton administration, it’s good news for small businesses.  This seat at the table, while politically convenient in timing for President Obama, is definitely a tribute to the great work Karen Mills has done since she was sworn in as SBA Administrator in 2009.  She could help keep the small business community front-of-mind during those Cabinet meetings.     

The impact of the reorganization on small business owners is still up for debate (besides removing the SBA from the Cabinet). Obama described the proposed merger as a “one-stop shop” for entrepreneurs, a streamlined department with “one website, one phone number, one mission: helping American businesses succeed."  It’s difficult to argue with an effort to cut the run-around that many small-business owners face when seeking government services.  Many small-business owners don’t know what services are available or even where they would go to find them. 

However, it’s not so clear that changing things around is going to reduce that confusion.  It seems that entrepreneurs are becoming increasingly familiar with the programs and services offered by the SBA.  Karen Mills reported that the SBA set a record with $30.5 billion in loan guarantees to over 60,000 businesses in the government’s 2011 fiscal year. 

In addition, with a “one-stop shop” there is a risk that small businesses could get lost in the shuffle.  Small businesses have unique needs that the SBA serves.  If small businesses are only one of the customers for this shop, their needs might be masked, especially when competing with Fortune 500 companies for attention.   

The reorganization seems well-intentioned, but the change could disrupt the momentum the SBA has built from its great work. 

Small businesses are the drivers of our economy—we know this. They represent 99.7% of all firms here in the U.S., they create more than half of the private non-farm GDP and they create 60-80% of all net new jobs. The needs of small businesses cannot be ignored, especially in a time when we’re all searching for new ways to get Americans back to work.

Small businesses--- let us here from you!  What do you think about the SBA’s Cabinet status?  What do you see for President Obama’s reorganization proposal?

BY Mary Duggan on January 19th, 2012

TAGS: small business | sba | politics | entrepreneur

On Second Thought, Maybe U.S. Manufacturing Isn’t Dead: At Least Not in Our Inner Cities

Above: Inside of Unwrapped in Lowell, MA

We hear it all the time. U.S. manufacturing is dead.

Except, that’s not really true.  According to the National Association of Manufacturing, the industry supports an estimated 18.6 million jobs in the U.S. – or about one in six private sector jobs. Nearly 12 million Americans (9% of the workforce) are employed directly in manufacturing.

And this manufacturing is still happening in our once-thriving industrial cities. Lowell, Massachusetts is one of those cities. Located just north of Boston, the city is home to over 100,000 residents. It’s location on the Merrimack River made it a hub for textile production during the early 1900s. But as is the case with many older industrial cities, Lowell lost much of its manufacturing when companies moved to the Sun Belt or overseas. In 1931, Harper’s magazine even referred to Lowell as a “depressed industrial desert.”

Today, however, Lowell is gaining a reputation as a hotbed for small business activity within the mills that once housed the textile industry. While many high-tech companies have moved in, manufacturing companies are also capitalizing on the inexpensive real estate and mill space.

Unwrapped, Inc. is one of those companies. A 2011 Inner City 100 winner, Unwrapped is a contract production and sewing factory that produces reusable grocery bags for Trader Joe’s, mattress and pillow covers for Wal-Mart and Target, technical gloves for the U.S. Army and medical bags. The company already employs over 70 operators and sewers and continues to grow: from 2005 to 2009 the company had an average 19% year-over-year growth rate.

Led by CEO Steven Katz, the gloves the company produces for the Army account for approximately 50% of the business, bedding and mattress covers comprise 20% and medical bags an additional 15%. The remaining 5% of the business is fluid from year to year, depending on requests from consumers.

Katz explains that his company takes a one-stop-shop approach that is often underutilized in today’s era of specialization. In addition to providing the necessary sewing capabilities, Unwrapped performs all shipping services for customers. For example, mattress covers ordered on Target.com are made and distributed directly by Unwrapped—saving time that would be lost if shipped from Target’s warehouses. Katz attributes this full-service approach to the company’s rapid expansion.

Unwrapped hopes to further expand by focusing on glove manufacturing for the U.S. Armed Forces. According to current federal procedures, any glove manufactured for the U.S. government must be produced on American soil. Thus, the workers who make these gloves hold positions that simply cannot be shipped overseas. The “Made in the USA” labels might as well say “Made in Inner City Lowell.”’

Aside from gloves, Katz also believes the market for reusable grocery bags will continue to expand as consumers become more dedicated to protecting the environment. Presently, Unwrapped is the sole provider of reusable grocery bags for the increasingly popular Trader Joe’s franchise. They also make the bags for Market Basket, a large grocery store chain with locations throughout upper New England. As such, Unwrapped is exploring the possibility of producing and weaving its own line of fabric. The company has the capability to do so, making outside purchasing seem counterproductive. Indeed, they could then sell the fabric to other sewing companies as well.

The company is growing so quickly that it will soon need more manufacturing space. Unwrapped has already absorbed every floor in its current facility, as they house the shipping operations right there onsite alongside the manufacturing production.

The company hopes to find the requisite space also in inner city Lowell—as this is where most of the company’s employees reside.  The majority of Unwrapped’s employees are of Cambodian descent (Lowell has the second highest percentage of Cambodian descendants in the U.S.), live within walking distance to the company, and send their children to nearby public schools.

Firms like Unwrapped are particularly important to the inner city economy because these manufacturing jobs pay substantially more than the U.S. average. In 2010, the average U.S. manufacturing worker earned $77,186 annually, including pay and benefits—while the average worker in all industries earned only $56,436.  And while it’s true that manufacturing positions increasingly require high-skilled workers, much of the training for these positions can happen on the job. This makes manufacturing jobs a great fit for low- and middle-class residents, many of whom are living in our inner cities like Lowell.

Tell us a story about a company in your area that is beating the odds by taking advantage of an inner city location. Are manufacturing companies moving back to the industrial spaces in your city?

BY Alex Rodriguez on January 18th, 2012

TAGS: manufacturing | business | jobs | industrial | ic100 | small business

Revitalizing Cities via “Placemaking”

Above: “Chalk Flood” at Rosa Park Circle, Grand Rapids

Back at the CEOs for Cities conference in October, a panel of mayors all overwhelmingly described their interest in attracting young, talented workers to their cities. Mayor Mick Cornett explained how he went as far as attracting the Oklahoma City Thunder basketball team to the city – because all young people love sports, right? It must give them a way to identify with their city.

Aside from this example, few mayors explained how they planned to attract this young, “creative class.” And certainly, cities should not haphazardly start bidding for sports teams as a recruitment strategy.

So what can cities do?

There’s a rising movement toward “placemaking” – i.e. strategically creating places that people gravitate to because they are appealing and enjoyable.

Grand Rapids is just one of the several cities championing placemaking as a way to attract Millenials and mobile entrepreneurs.

It began when Rob Bliss, a Michigan native in his early-20s, started asking questions like, “Why not have a waterslide downtown?” Or “What would it look like to launch 100,000 paper airplanes off the roof of 12-story city buildings?”

Bliss found that these types of events helped to galvanize residents. People wanted to feel like they were a part of something, actively engaged in their community. In an interview this morning with radio host Dr. Katherine Loflin, Bliss explains that trying to herd residents via community service simply won’t create the sense of place that energized communities.

Why is this sort of placemaking needed?  In January 2011, Newsweek published an article naming “America’s Dying Cities.” Grand Rapids was #10 on the list. Such a reputation is certainly not going to help the city’s efforts to attract people back to the former “Furniture Capital” of the world.

But Zombie Walks, Chalk Floods and Annual Downtown Santa Invasions might do the trick. Oh, and there was that widely publicized “LipDub” video, too. With over 4.4 million views on YouTube, the Grand Rapids residents’ rendition of “American Pie” was created in response to the Newsweek article to showcase the passion and energy of the city. 

It seems to have worked.

Newsweek responded by posting a Memo to Grand Rapids on their Facebook page, stating:

First off, we LOVE your YouTube LipDub. We’re big fans, and are inspired by your love of the city you call home.

But so you know what was up with the list you’re responding to, we want you to know it was done by a website called mainstreet.com–not by Newsweek (it was unfortunately picked up on the Newsweek web site as part of a content sharing deal)–and it uses a methodology that our current editorial team doesn’t endorse and wouldn’t have employed. It certainly doesn’t reflect our view of Grand Rapids.

That’s one way to attract attention to your city.

While Grand Rapids is trying to use social activities to draw young people to their urban enclave, other communities are using the arts.

Dennis Scholl, Vice President at the Knight Foundation, explains that thousands of people in 26 cities were surveyed to ascertain what attracts them to their community. For the past three years, the overwhelming answer was “social offerings, including the arts.”

He goes on to explain that workforce development and job creation aren’t the only ways to create vibrancy in communities. Investing in art is another way. Artists often move to depressed urban areas where space for studios is inexpensive. Before long, coffee shops and restaurants start to pop up. It changed how the neighborhood is perceived. Small businesses then move in to service the needs of the artist communities. As a result, real estate prices increase (i.e. that dirty word—gentrification).

Regardless of whether you’re pro- or anti-gentrification, the reality is these placemaking efforts are helping to revitalize distressed communities and promote urban economic development.

And these placemaking efforts – which often include creating parks and spaces for outdoor entertainment – are much more practical and fiscally prudent than trying to invest taxpayer money in chasing sports stadiums. City officials: take note. 

BY Amanda Maher on January 17th, 2012

TAGS: economic development | cities | community development | jobs | workforce | grand rapids | knight foundation

Starbucks, Silicon Valley, and US Government Take Aim at Local Biz

What do Starbucks, Silicon Valley, and the Obama administration have in common? While it sounds like the lead-in to a bad joke, they’re all trying to jumpstart job growth by facilitating local commerce and investment at scale. We’ve written many times in the past about inner city companies’ capital access challenges and their unfavorable growth compared to their non-urban peers. It only seems right to start off the New Year on an optimistic note about ambitious projects being executed to remedy these disparities.

Starbucks Create Jobs for USA Project

“Thanks to my CDFI’s investment, we can bring our products to new markets and continue to lead in the fast-growing market of at-home pizza making.”

                                                                          - Brad Sterl Jr., Rustic Pizza

Starbucks is teaming up with the Opportunity Finance Network to provide capital grants to CDFIs that will then invest in underserved economies across the nation. If they had just written a check to CDFIs, they could have justifiably patted themselves on the back for fulfilling their corporate responsibility to society. Instead, they created a recurring revenue stream for the fund by creating a product that takes advantage of their massive national scale and selling it to their adoring customers alongside their drinks and snacks. Consumers can now support American companies in distressed areas by buying wristbands at any Starbucks location. It’s no wonder The Economist recently named Shared Value as one of its trends to watch in 2012—companies like Starbucks are taking action to support their local communities, one urban business at a time. Given the success of AMEX’s Small Business Saturday event at the end of 2011 and the sheer scope of Starbucks’ ambition in 2012, it’s hard to argue with The Economist thus far.

Startup America Partnership

“As a startup, it would be bad management to not take advantage of every opportunity that was offered. The Startup America ‘Growth Kit’ has given us tangible resources to cut the costs of our startup as well as a valuable network of other startup companies.”

                                                                     -  Robert Madsen, SynapticSwitch, LLC

Dell, Intuit, Microsoft, and Intel headline a group of Silicon Valley elite partnering with the Obama administration to create entrepreneurial clusters and aid startup companies around the country. Fulfilling a relatively underserved market, they seek to grease the wheels of commerce from the idea stage onward by providing free services and networking to entrepreneurs around the country. If you’re a talented entrepreneur or small business, be sure to apply to take advantage of their free Growth Kit. As Daniel Isenberg, executive director of the Babson Entrepreneurial Ecosystems Project, talked about in this critical review of Startup America, the program must “translate Start-up America into hyper-local activities” if it is to succeed. If you’re interested in participating locally, apply to help create entrepreneurial clusters in one of the 8 existing regions or lead your own.

While some will always denigrate these public-private partnerships for promoting self-interest, at the end of the day these programs still accomplish a social objective. Any programs trying to support small businesses – the backbone of our economy – should be applauded for their leadership and willingness to take ownership of social problems. It should not be forgotten that the greatest poverty and unemployment alleviator is widespread economic growth. Far from the recklessness that resulted in the 2008 financial crisis, these companies have taken it upon themselves to shoulder society’s burdens in an innovative fashion. Their work should be encouraged, not demeaned.

BY Sathya Vijayakumar on January 11th, 2012

TAGS: jobs | start-up | capital

Why Your City Matters to Your Business

Here are 5 reasons your city makes a big difference to the success of your business.

We all hear about the critical role that businesses play in the competitiveness and economic growth of our cities. But it’s important to note that the reverse is also true: Your city has a tremendous impact on your bottom line. Your city means more to your business than just an address on the front door. Your company’s location drives business formation, strategy and performance. It’s called economic geography – and it’s a two-way street.

I’ve challenged my graduate students – all of them entrepreneurs and small business owners – to consider the question of place: How does your city support your business growth?

City industry clusters help businesses thrive.
If birds of a feather flock together, so do similar businesses: biotech companies gather in Cambridge, energy companies gravitate toward Houston, athletic apparel is huge in Portland, Ore., and finance clusters in New York City. The close proximity creates a synergy that enables companies within the cluster to easily collaborate, influence local policy investments, share specialized training programs and partner with service providers.

To read the entire article from Inc. Magazine, click here. 

BY Steven Pedigo on January 10th, 2012

TAGS: clusters | business | workforce | anchors | capital

One Small Step for Anti-Sprawl, One Giant Leap for Houston Economic Development?

Big houses. Big cars. Big hair. Welcome to Texas: the state where “everything is bigger” – including big dreams of turning absolutely nothing into empires.  No city more accurately embodies this spirit than my hometown of Houston.

The fourth largest city in the U.S., Houston is largely known for being the epicenter of the energy industry, home to NASA and site of one of the largest hospital districts in the world.  The city boasts assets like the Houston Ship Channel, which allows oil and petrochemical tankers easy access to local refineries (the city has the largest concentration of oil refineries in the world).

Houston is also a major immigrant hub from cities across the globe. One little known fact: Outside of California, Houston is the largest home to Vietnamese immigrants in the country.  As a result, the city has a dynamic, cosmopolitan culture that has resulted in a diverse local economy that is the envy of much of the rest of the country.

But for every positive thing about Houston, another challenge exists. 

Houston also has a warranted reputation for being crowded and polluted.  According to The American Lung Association, Houston has some of the nation’s dirtiest air. And that air can get really hot, too.  Squelching temperatures are another characteristic of this southern city. 

But perhaps the greatest hurdle that Houston must overcome is a problem that it has brought upon itself—sprawl.

Houston, like many other post-WWII cities, was developed on the basis that land was cheap. This made it easy for real estate developers to build horizontally, rather than vertically like we’d see in our older, dense cities where land is hard to come by.

In Texas, the price of land was a nonissue when building these new-age cities. Harris County, where Houston is located, has a land area bigger than the state of Rhode Island. The result is a geographically vast city where residents drive everywhere. Sure, public transit exists—but it has not been well-executed in terms of either needs or efficiency and as a result, is underutilized by the locals.  

As a native of Houston, it was not until 3.5 years ago when I moved to Boston that I began to really understand the impact of living in such a sprawled city. Boston, in many ways, could be viewed as Houston’s antithesis.  In Boston, there's no good Mexican food, only dismal college football weather that freezes tears to your face. More importantly, I was stunned to realize the lack of density in Houston.

Houston, a city with nearly 2.1 million people, has merely 3,600 residents per square mile. Boston, a city 1/6 the square mileage of Houston, has a population density close to 19,000 residents per square mile. It wasn’t until I moved to such a dense city that I began to recognize the importance of density in our cities.

Density allows me to live closer to where I work. Living in one part of the inner city, and working in another, commuting is a breeze—a commute that I can take by subway, because high population density makes public transit more feasible. As the price of gasoline continues to rise, I’m all the more thankful that I live in a dense city where I no longer need to drive from point A to point B. The fact that Houston has the 15^th longest average commute in the United States is no longer lost on me.

Observations such as these have apparently reverberated within Houston, because change seems to be on the horizon. As the Houston Chronicle highlighted last week, the Houston City Council has voted for changes to the city’s development codes that will allow for more townhomes and multi-family properties to be build within the 610 loop towards downtown Houston. 

Any move to combat Houston’s problem of sprawl should be heralded. For Houston, this could be a giant leap toward new urban economic development possibilities.

In cities where the vast majority of the population must drive to work, long and expensive commutes can be highly problematic towards future economic growth. Housing that is closer to work would shorten commute times, lessen our dependence on oil, put money back in to residents’ paychecks, and help cities reduce their carbon footprints.

Such a change would also be beneficial to local urban businesses. Gridlock makes it nearly impossible for a person to travel from one side of Houston to the other for business purposes. As a result, people primarily shop in their own sections of the city, thereby limiting the markets inner city businesses are able to serve.  As density increases, it makes small businesses more accessible to the population.

As a place to live, Houston is one of our country’s forgotten gems.  While usually thought of as a massive collection of highways and strip centers, Houston also has green space as aesthetically pleasing as anything I have seen in Boston.  Memorial and Hermann Parks are located just outside of downtown, close to where the proposed development would likely take place.  This is an exciting opportunity for Houston.  Similar cities should take note to identify how similar development would change the landscape of their urban areas.

Tell about how your city is developing dense geographies.  What are the small business implications in your community?  How will this affect the long-term health of your hometown’s economy?

BY Alex Rodriguez on January 9th, 2012

TAGS: houston | sprawl | economic development | density | transit | business

CDFIs Starting to Show Their Potential

We’ve heard it time and time again. One of the biggest barriers to growth for small businesses and early-stage entrepreneurs is access to capital. In inner cities, this is a hurdle that can be especially difficult to overcome.

The Community Development and Policy Studies Division of the Chicago Fed recently featured CDFI banks as the topic of its “Profitwise News and Views Spotlight.”  We’re excited to read about the recent developments in CDFIs (Community Development Financial Institutions), not only because the program’s mission is to help financial institutions provide capital and financial services to America’s underserved communities, but also because we have been examining its impact within inner cities as part of our capital research.  

The report outlines the importance of CDFIs and then suggests how the program might be able to expand in the future. Here are some highlights of the Chicago Fed Spotlight:

• CDFI banks increased by over 35% from 2009 to 2010 (with 30 newly certified banks) thanks largely to the launch of the U.S. Department of the Treasury’s Community Development Capital Initiative (CDCI), which required CDFI status to be eligible for its low-interest secondary capital deposits.
• The newly certified banks have generally healthy balance sheets and are enhancing the quality of the CDFI banking sector’s collective balance sheet.  This new trend diverges from the veteran CDFI banks’ recent performance, which have been adversely impacted by the weakening of local economies where they are most active.
• More bank certifications translate into increased funding for community development.  Given the social mission and purpose behind CDFIs, they havea strong presence in low- and moderate-income areas. With CDFI status, many banks have been able to realign their strategic business plans with their community’s image, allowing them to find a niche in lending.
• In conjunction, many CDFI certified banks are creating advisory boards. So what? Don’t most companies have advisory boards? Well, yes. But in this case,the advisory boards are key to helping CDFIs proactively seek the people, groups, and communities that represent the best fit for the bank, and ensure that the institution remains responsive to community needs.
• Newly certified banks are predominantly located in rural, southern states.  While new certifications have enhanced the depth of CDFI coverage, there is still a need for greater geographic diversification in CDFI lending.
• Increased bank certifications also underscore the need for technical assistance to certified banks, including direct communication from the regulators to help CDFI banks gain comfort with sometimes competing regulatory objectives.

Growth strategies for the sector need to take into account the different challenges in various markets served by CDFI banks, particularly as they pertain to rural versus urban locations.

These insights into the CDFI banking sector are helpful in understanding how the program can better carry out its mission. While we found in our research that CDFIs are effective at providing loans to inner city businesses, we also found that the pro­gram has the potential to have a much greater impact, on both the debt and equity sides. 

One of our recommendations for the program is to address the disparity in CDFI activity across locales, since just 10 inner cities account for 82% of all CDFI lending.  This further underscores the need for greater geographic diversification in CDFI lending.  As the Chicago Fed Spotlight suggests, more bank certifications is one way to create more CFDI activity in local communities.  But in order to increase CDFI lending coverage and further grow the sector, there must also be more direct communication with regulators, with peer CDFIs and the CDFI Fund regarding regulatory objectives and sharing of best practices.

Spotlights like this one from the Chicago Fed are important for opening the dialogue about improvement and future action.  Expansion of the CDFI program could significantly impact small business’s ability to access capital, especially in underserved communities—the communities that need this capital most.

Share your thoughts on the CDFI program’s strengths and weaknesses.  What can be done to scale the program or  make it more effective?

BY Mary Duggan on January 6th, 2012

TAGS: capital | cdfi | small business

How a Unique Vision Attracted International Financing to Akron's Urban Core

Above: UP Akron's new Executive Director, Eric Johnson 

By: Diane Evans

You do not have to look too closely at our nation’s checkbook to realize the extent to which cities will struggle in 2012 to transform into increasingly competitive and lively communities. Urban redevelopment will happen in cities that are creative, specific and unified.

Akron, Ohio, is an example of a city that is positioning itself well, having a master plan for growth that seeks to trigger hundreds of millions of dollars in development in 2012 and beyond.

Surprised? If so, it is understandable.  Akron is the former Rubber Capitol of the World, a city with an industrial heritage.  As such, its economic challenges reflect that of many other “legacy cities” struggling to recover from deep manufacturing losses. 

Consider this profile of Akron from the U.S. Census Bureau’s American Community Survey 2010:

       ·  Unemployment at 16.2 percent in Akron, compared to a national average of 10.8 percent;

       ·  Median household income of $31,171, compared to $50,046 for the nation as a whole;

       ·  Population that declined 8.3 percent since 2000 while the nation’s population increased by 9.9 percent during the same period.

With major support from the Knight Foundation, Akron’s nonprofit real estate development corporation, University Park Alliance (UPA), is drawing on existing resources – including a community spirit of collaboration – to help turn the tide.  In July 2010, UPA hired Dr. Eric Anthony Johnson as its executive director -- giving Akron a leader in urban development with world-class credentials and hands-on experience at national, state and local levels. 

When he came to Akron, Johnson recognized a city ready for new opportunity.

Even in the worst of times, Akron’s mayor of 24 years, Don Plusquellic, had aggressively pursued downtown redevelopment projects.  What’s more, University of Akron President Luis Proenza was about to complete more than $500 million in capital spending on new and upgraded university facilities and landscaping.

Johnson saw a growing university that interacted with downtown Akron, a committed philanthropic base and three nearby high-quality regional hospitals, all with close ties to a regional medical school (Northeast Ohio Medical University in Rootstown). 

Under Johnson’s leadership, UPA identified five anchor institutions: the university, the three local hospitals and the Akron Public Schools. UPA then commissioned a study by Pittsburgh-based consulting firm Tripp Umbach to quantify the institutions’ economic impact. In an April 2011 report, Tripp Umbach estimated that these five institutions alone supported 20,612 jobs in the immediate area around the university, and more than 29,000 jobs in the state. In addition, these same institutions directly employed 15,547 people in Akron’s urban core.  Their combined economic impact: more than $2.5 billion of economic activity in the area around The University of Akron and downtown, and $3.5 billion of economic activity within Ohio.

Included in the numbers: institutional expenditures for employment, operations, capital improvements, goods and services, along with spending by staff, visitors and vendors.

Having defined the scope of this combined economic strength, UPA engaged EE&K

Architects to develop a master development plan. EE&K is a firm already well known for its design of many successful urban revitalization projects such as New York City’s Battery Park and Baltimore’s Inner Harbor.

The firm’s plan for Akron’s core  includes loft apartments along the refurbished Ohio & Erie Canal near Akron Children’s Hospital and downtown Akron, space for research and development firms, and retail development.

Key to the plan is the creation of a biomedical corridor with the help of the Austen BioInnovation Institute. The institute seeks to establish Akron as a leading location for biomaterials and medicine, health care innovation and commercialization. Because of the University of Akron’s nationally-ranked programs in synthetic materials and polymer research, Akron’s leaders chose to focus new job development around innovations that draw on existing competencies.

This vision -- coupled with UPA's determination to implement it -- recently attracted the real estate development firm KUD International to Akron as a key strategic partner in managing and financially backing new building and renovation.

KUD’s decision to come to Akron positions the city for hundreds of millions in new capital investment. It amounts to the remaking of an entire urban landscape with the help of a development firm that could spend its time and investment in many other places—but instead, saw the promise of Akron and came here.

Interestingly, KUD says it landed in Akron for the same reasons that attracted Johnson to the city:  Collaborative leadership, common goals and a compelling vision for a better tomorrow.

Challenges remain. But with the KUD partnership, we can expect shovels to be in the ground in 2012. The cranes you’ll see represent not just a new skyline, but also a new economic future for this once tire-dominated town.

BY Guest Blogger on January 4th, 2012

TAGS: economic development | akron | university park alliance | anchors | knight foundation

Cities have lower mortality rates, and that’s not all: Why cities matter

Above: Image from the cover of Glaeser's new book "Triumph of the City"

It should come to no surprise to anyone familiar with the work of ICIC that we’re a firm believer in cities acting as engines of economic growth and opportunity. That’s why we were delighted to read a recent article in European Magazine that interviewed one of our favorite urban economists – Harvard Professor Ed Glaeser, who also happens to be a huge proponent of investing in our cities.

We’ve heard Glaeser speak several times this past year, perhaps as a result of our overlapping work, or perhaps because Glaeser is on a whirlwind speaking tour for his new book, Triumph of the City. We had the opportunity to chat with him at the “Smaller Industrial Cities” conference here in Massachusetts, and were excited to see him speak at the CEOs for Cities annual conference in Chicago back in October. And of course, there are the two copies of his book sitting on my own desk at home (excessive? Perhaps…)

Yet, despite the times I’ve heard him speak, or the chapters of his book I’ve flipped through, I still found the interview with European Magazine to be captivating. He reiterated a few things we already knew about cities, but brought to our attention some interesting new perspectives about cities and their governments.

What we knew:

·  Cities help to preserve the environment. Though it may sound counterintuitive (namely, because cities have long been perceived as filthy, pollution-ridden environments), cities are actually good for the environment. When we increase density, we become less dependent on fuel (we drive less) and energy (single-family homes, like those found in the suburbs, use on average 83% more electricity than urban apartments).

·  Cities make us smarter. Despite our increasingly globalized world and instant communication across national borders, smart people and innovative companies still choose to congregate in cities. Why? Because proximity allows us to share ideas with one another, leading to new innovation. As Glaeser explains, cities allow for the creation of new ideas. Cities act as engines of economic growth an opportunity. This is why we’re seeing rural residents in developing nations (think: India) flock to the cities at an alarming rate. Opportunity exists here where it couldn’t in areas where people are disconnected from each other.

Interesting new tidbits:

·  Cities have lower mortality rates.  Again, this may seem surprising given the perception that cities foster high rates of crime. However, in this article Glaeser notes that the two biggest causes of death in the U.S. are suicides and car accidents. He explains, “There are just far fewer people driving drunk in big cities than there are in rural areas. It is just a lot safer to take the public transportation after a few beers than to get behind the wheels of a car.”

But suicide? How is that explained? Glaeser says that there is a correlation between density and suicides, at least partially because of hunting licenses being more prevalent (and therefore guns) in rural areas. Increased access to guns = easier access to suicide weapons.  

·  We don’t have to save every city. Both here in the U.S. and in Europe, there are countless examples of cities that were once economic powerhouses. But now, as industries have shifted, some of these cities have begun to die. Glaeser says we don’t have to save every city, or try to make it the city it once was. He cites Germany as a place that has done too much to prop up its declining cities—instead, we should focus on making sure there is equality for the citizens left in t hose cities (something Germany has also excelled in doing, despite heavy investment).

·  Cities need strong governments—until they’re strong cities—in which case the government should step out of the way.  Sound confusing? Well, the rationale is that emerging cities (especially in third-world nations where residents are moving to cities in droves) need strong governments to make the needed investments: in infrastructure, education, policies, etc. Density without strong government can lead to water pollution, disease, corruption and other horrors that were once associated with cities in the developed world.

But once cities are developed, the way to foster innovation and help cities to thrive is by the government taking a step back.

Glaeser explains, “I often say that the best economic development strategy is to attract and train smart people and then more or less get out of their way which suggests the limits of what you can do. In many senses the most important government policies are to focus on dealing with the downsides of density, dealing with the crime congestion, contagious disease – issues that just can kill a city rather than thinking that the government can be engaged in playing venture capitalist and choosing particular industries.”

One could certainly surmise that he’s referencing cities like Cambridge, MA – the city in which he works (Harvard).

The article in European Magazine is a bit long, but certainly worth the read. You can read it in its entirety here. For anyone who is interested in cities, not just here in the U.S. but across the globe, this is a must read – even, if like us, you’ve had the chance to see Glaeser speak times before. 

BY Amanda Maher on January 3rd, 2012

TAGS: cities | environment | ed glaeser

Local Food Movement and the Intergenerational Factor

Photo courtesy of www.theburlapbag.com

By Sharon McMillan, New Urban Mom

Consider this statement: The local food movement is a romantic movement that gives urban cheerleaders and regionalists an anchor upon which to turn ideals into practical strategies. I think many well-intentioned people would agree that the effort we are putting into keeping more dollars in our community is not the magic pill for our economic challenges.  It is, however, a step in the right direction that requires a fully integrated and inter-generational approach to sustainable cities and regions.

Countless publications have already asserted that initiatives established to re-jig our economies by boosting local food production aren’t about to replace the thousands of jobs being lost in this current economy. In fact it won’t even come close at this point in time.

Yet, even with that knowledge I think there’s an understanding that pushing for the growth of local food clusters and an appreciation for an economy rooted in local resources – natural and man-made – sets the foundation for creating a mind-set and a generation that will in time, I believe, bring prosperity back to many regions in our country.

I’m not a planner or economist, but my perspective on what our cities and regions need is shaped by my role as a parent, working woman and resident. I’m not being narcissistic when I say my perspective is critically important, though I am being slightly facetious. “My” perspective is the perspective shared by the very people who will make the decisions to live and work in the urban centers we need to revitalize.

So as we think about the initiatives that our economies need to be more self-sufficient and attractive to the everyday residents who will have the courage, commitment and vision to turn blighted areas into real communities, let’s look at what “we” want:

• We want safe communities where our children can learn and grow in their environments
   
• We want our regions to attract forward thinking, successful companies that will provide jobs or business opportunities for ourselves and our neighbors
   
• We want housing options and cultural amenities that will boost our quality of life

There are, of course, thousands of initiatives established to address all these “wants.” We have, however, an opportunity created by economic circumstance and changing world affairs to turn one such initiative, the local food movement, into a cultural, national movement that can impact various areas of our lives.

Domestic needs of this nation have never been more important. Our communities have so much to offer but they will have to rely on both our older and younger generations to realize the full potential of our urban centers and regions.

As author Andrew Blechman pointed out in his New York Times bestseller, Leisureville, our communities’ economic and social vitality depend on the taxes, social insight and experience contributed by our senior residents – the 78 million baby-boomers in the U.S. Their influence on our younger generations – those who will lead our urban centers and regions – is critical to the success of all of our efforts, including the local food movement.

My hope for the New Year is that we see more joint-inter-generational efforts to make local food a driving and influential factor in our schools (healthy living curriculum), our business sectors and our residential communities. 

BY Guest Blogger on December 30th, 2011

TAGS: food | community development | clusters

2011 in Review: Our biggest hits

As some of you may have noticed, 2011 was the year ICIC decided to embark on a new social media adventure. We reworked our website, created a Twitter account, and began blogging. It has been a great way to connect with so many of you out there, to share ideas, and to trade best practices for what make our cities and urban small businesses tick.

With 2011 winding down, we thought it would be interesting to look back on our journey and capture what were some of our biggest social media hits of the year.

On Twitter @icicorg:

We’re so glad you enjoyed.. Keep up the great work! RT @corybooker: A provocative article. RT @icicorg http://ht.ly/5MCcF

Young talent: what do they choose first: where they want to live (or) the job they want to do? Mayors weigh in http://ht.ly/6XM0P

What do civic leaders think is the No. 1 driver of economic growth? http://ht.ly/6WeaA #ceosforcities

@ryanavent you might be interested…our response to cities, density argument http://ht.ly/6q8NK thx for a great @nytimes article

Is it possible that Hurricane Irene had a net-zero impact on the economy?  http://ht.ly/6hNJl

High Line project among the best economic development initiatives of Bloomberg tenure, +12k jobs and 2x rent http://ht.ly/882T6

Will inner #cities suffer from the #debt ceiling deal? $2 trillion in spending cuts over ten years points to “yes” http://ht.ly/600yB

On ICIC’s Blog:

“An Economic Development Case for Building Sports Stadiums—or Not”

In this entry, we looked at the growing trend for cities trying to attract sports stadiums as an economic development strategy. In Boston, it’s undeniable that Fenway Park (Red Sox) and TD Garden (Celtics and Bruins) have been a boon for the local economy. Fans in Boston injected $300 million in to the local economy while coming to support their favorite home teams. Other cities (like Brooklyn which will be the new home to the New Jersey Nets) are following suit, but offering steep tax breaks in the process. Are the foregone funds really worth it? 

“What I heard at the CEOs for Cities Conference” 

Only a week after ICIC’s own Chicago-based economic development conference, we joined CEOs for Cities for their annual meeting. We once again learned of the importance of anchor institutions to their local communities. We heard how imperative it is to improve urban K-12 education. And we heard mayors detail their desire to attract the young, “creative class” to cities. But what didn’t we hear at the conference?  Well, for starters…how about how mayors plan to attract the creative class? 

“Urban Food Clusters and New Urbanism”

A guest blogger joins us to detail how the growing food cluster is at the heart of the “New Urbanism” movement – i.e. the movement by planners, architects and concerned citizens to make our communities more sustainable places where we can live, work and enjoy the natural environment. Cleveland is offered as a city utilizing its vacant land for urban agriculture, and leveraging its university system for food research and education. It is suggested that food cluster may be a way to promote inner city job growth and business development in to the future.

“Investing in Inner Cities as a Business model, Profits First Priority = ‘Shared Value’”

In response to a New York Times article that touts major corporations, such as IBM and General Electric, engaged in creating “shared value,” ICIC explains how the concept can be further applied to our cities’ anchor institutions. Our anchor institutions (think: hospitals, universities, museums) are deeply rooted in their communities – often inner city areas – so it only makes sense for them to invest in their urban environments are part of their business models, when it makes sense to do so.

“Newark’s Mayor: Ruffling a Few feathers to Produce Extraordinary Results”

Almost everyone in the urban economic development world knows something about Newark Mayor Cory Booker. The progressive, action-oriented mayor has brought down the city’s $150+ million deficit and balanced the city’s budget. He’s helped to grow businesses by creating a small business loan program providing $150k loans to minority- and women-owned business. And he’s more than doubled the city’s affordable housing stock. How is he doing all this? As Booker himself explains, he’s using Newark’s preexisting assets (airport, universities, hospitals, etc.) to promote job growth and recovery during a period of fiscal austerity. And it looks to us like it is working.
 

The stories above are just a sampling of what we’ve been writing about the past year – but they are topics that you all seem most interested in.

Is there something we missed in 2011? What are some of the areas you’d like to see us research and write about in 2012? 

And of course, if you’re tired of hearing us jibber-jabber so much, do get in touch with us about guest blogging! We’re always seeking talented writers who share a passion for urban economic development and inner city business growth. 

BY Amanda Maher on December 27th, 2011

TAGS: cities | economic development | food | clusters | shared value | newark | cleveland | nyc

Top 5 Inner City Small Business Predictions for 2012

As ICIC’s research on inner cities has shown, inner cities don’t benefit from regional investment alone; instead, they require targeted strategies and investments to prosper.

In the spirit of this Entrepreneur.com article identifying the top 10 small business predictions for 2012, it seems only right to do the same for small businesses located in the inner city given that macro predictions might not trickle down to distressed urban areas. So, taking the most relevant insights from the broader national picture and ICIC’s own expertise, below are my top 5 Inner City Small Business Predictions for 2012.

1) Public and Private Uncertainty Ahead. While small to even moderate large-scale shifts don’t particularly impact inner cities, Euro troubles herald volatile future consequences for the American financial system and broader economy. Inner city firms wouldn’t be insulated from tightening underwriting standards, write-downs on their assets, or fearful customers.

With Congress seemingly paralyzed and state budgets contracting, the availability of public funds to jumpstart targeted investment is also seriously in question.

2) The Return of Retail. ICIC proprietary research shows that retail sites declined both nationally and in inner cities over the last decade—likely making this my boldest claim.

However, leaner practices from consolidation and the reinvention of competitive advantage through customer service and design brought on by Apple’s success are strong headwinds.

Couple that with the fact that simply, more young people and seniors are moving from the suburbs back to cities – and these demographics, people without kids at home or hefty mortgages, like to spend money. Many “Main Street” communities are having success at attracting retailers back downtown because there has been an increase in urban housing production. As city density increases, it makes sense for retailers to follow suit. 

Bob Wilson, director of the Mississippi Main Street Association explains: “Over the years as merchants moved to big boxes and malls, it left a void in downtown. When retailers and recruiters look at that, they see areas that are severely underserved.”

Look no further than past Inner City 100 winner Sneaker Villa from Philadelphia, Pennsylvania for proof that urban retailers may be poised for a comeback in 2012.

3) Shared Value.  More and more, we’re hearing about the importance of companies not just trying to make a profit, but doing “good” for their communities in the process. According to Mark Kramer and ICIC founder Michael Porter, “Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center.”

Past Inner City 100 winners like Sweetriot, City Feed and Supply and FutureNet Group can attest: shared value works. For example, Perry Mehtra, President of FutureNet based in Detroit, MI explains:

Our commitment to Detroit has never wavered. We purchased a warehouse in the inner city, which is the base of our operations, and hire locally as much as we possibly can. We strategically manage the relationship between the company’s economic success and that of the city by providing job opportunities for the people who live in this community. Our success is their success and vice versa.

In 2012, expect to see more companies utilizing the concept of shared value to bolster capitalism’s reputation while simultaneously generating profit and improving nearby communities.

4) The Rise of Social Media. According to a recent Constant Contact report on small business attitudes, small business owners are becoming increasingly more comfortable with social media. 67% of small business owners said they used social-media marketing because it was easy, up from 54% six months ago.

As social-media general manager at Constant Contact Mark Schmulen says about small businesses, “They’re realizing that it’s easy, affordable, and a great way to connect and engage with customers.”

5) Increased Mobile Footprints. Contrary to the caricature of inner cities as places lacking dynamism, inner city companies we’ve worked with over the years have unearthed and taken advantage of unique advantages endemic to their locales.

So don’t be surprised if 2012 sees a movement of inner city firms to the burgeoning mobile space. How fast is this medium growing? If trends persist, mobile internet use will exceed desktop use by 2014!

Of course, if I had a magic ball that gave me more than a “yes,” “no,” or “maybe” – then I’d probably be playing the lottery instead of studying urban business trends.  But given what we have seen over the past year, these are just a few educated predictions of what inner city small businesses can look forward to in 2012.

What do you think small businesses can expect to see in 2012? What did we miss?

BY Sathya Vijayakumar on December 23rd, 2011

TAGS: retail | shared value | small business | business

Cleveland Really Does Rock: My Trip to Lake Erie’s Shore

Above: View of the west bank of the flats in Cleveland from the lower deck of the Detroit-Superior Bridge

In early December with the end of the year fast approaching, I realized I had some time off that I needed to burn. So I booked a quick trip to Cleveland.

Cleveland? Wait, what? Why?

That seems to be the reaction I got out of folks here in Boston. But truth be told, the urban enthusiast that I am, I was actually really excited to go visit this post-industrial city that I’ve read so much about but never experienced first-hand. And it didn’t hurt that I have friends living out there, to boot.

I can best summarize my 72-hours there by saying: Cleveland really does rock.

Some points of interest:

Airport/Transit:  The international airport was a breeze to get in and out of – well, aside from the unexpected snow that delayed us upon arrival. But the actual airport was small, easy to navigate and is pretty close to downtown Cleveland. Then, once on the road, there was virtually no traffic anywhere I went: to Tremont, to downtown, to the suburbs—clear roads awaited me. This is so unlike Boston, and so unexpected for a city in which everyone owns a car and is expected to drive.

That said, it’s a city in which everyone owns a car and is expected to drive. I was shocked that a city of this size could have such little public transit. Apparently, my friends told me, the train system was once an asset to the city. But after a spike in crime, ridership declined. There seemed to be quite a few public buses, so maybe this captured the former train riders.

Housing:  Housing in Cleveland presents the city with unique challenges and opportunities. First, the cost of living is a fraction of the national average. A legal downtown apartment charging only $1000 for rent would be unheard of in Boston, San Francisco or New York City—but not in Cleveland. And with decent homes selling for as low as $50,000, this presents an opportunity for people looking to get more out of each paycheck.

But the housing stock is deteriorating. The adorable single-family homes located near downtown (or conversely, the massive historic homes I saw in Tremont) are in major need of renovation which can be costly. As residents begin to move back to downtown Cleveland (there has been a 96% increase over the past decade), people are less eager to take on big home improvement projects. Instead, they are looking for new rental units or condos. Developers are building $350k condos in a market that just cannot support such prices (for that, people could buy large homes with backyards in the suburbs—and given that everyone, downtown or in suburbia—needs a car, city living offers fewer benefits as in dense, transit accessible cities).

Meanwhile, little rental housing is being built. While some rental buildings face 98% occupancy, developers still cannot decide whether new rental units in Cleveland will provide the returns to make the projects conducive. “Downtown needs more apartments, and it’s just that simple,” says Ralph McGreevy of the Northeast Ohio Apartment Association.

Food/Restaurants:  Who knew that Cleveland would have such great food? Among the places I visited were Ginko (Sushi, in the Midwest?!) Lolita, The Velvet Tango Room and—saving the best for last—Dante. All this great food didn’t even touch the places on the popular East 4^th Street. What’s the secret to Cleveland’s growing food culture?

As pointed out back in August, Cleveland has found a way to leverage its food cluster. According to SustainLane.com, Cleveland ranks second in the nation for sustainability in local food. There are 30 farmers’ markets in the Cleveland metro alone. And as Green City Blue Lake notes, the  largest portion of Cleveland’s local food and agriculture cluster is in the retail and wholesale sectors (45% of gross regional product); followed by food services (31% of GRP).

Simply, restaurateurs now have access to two assets in Cleveland: (1) inexpensive restaurant space (often paying only one-fifth of the $150/sq. foot it costs in NYC); and (2) access to locally grown food. Many restaurants purchase their food daily from the West Side Market—a huge open-aired market that has resulted in a spike in nearby urban business development.

If a good food and restaurant/bar scene is one way to attract people back downtown, Cleveland is sure on the right track.

Waterfront Access:  After doing a tour of the once-vibrant Flats neighborhood along the Cuyahoga River, it became clear that the area still boasts potential for redevelopment.  Indeed, most of downtown Cleveland (particularly, behind the Browns’ Stadium and Rock & Roll Hall of Fame) is along Lake Erie. As Boston, Detroit and other cities are beginning to realize, this waterfront access can provide a prime opportunity for urban revitalization. A quick trip to Chicago would illustrate the success of a full-fledged waterfront revitalization effort.  Cleveland should be looking to reverse its trend towards sprawl by concentrating development efforts back downtown, especially along its waterways. Cleveland may even hold an advantage in that the architecture along the water (bridges, in particular - it's the only city with every type of bridge possible: from draw bridges and vertical-lift bridges to swing bridges) is so visually stimulating (at least to those of us who enjoy old industrial design). 

Clearly, there’s a lot happening in Cleveland. Sure, a better public transit system and more affordable rental housing would fantastic, but these are projects that cannot happen overnight—especially in cities facing tight budget constraints (as most nowadays are).

Despite needing infrastructure and housing upgrades, the Cleveland business community has been quick to point out that Cleveland already had most of what could make it a vibrant city. Larry Miller, president of Global Cleveland, noted just last week that:

There are five qualities that make up a successful city: Cost of living, access to health care, quality of life, cultural/sporting activities and weather/climate. “We have an advantage in at least four of them,” he said referring to the first four on his list. “Cleveland has a competitive advantage in terms of accessibility to all those things.”

And it’s true. Comparing the weather/climate of Cleveland to other major cities like Chicago, Boston and Minneapolis—cities whose talent Cleveland would like to attract—the climate is not much different.

With some minor tweaks needed along the way, it seems as though Cleveland is making strides in its urban revitalization efforts.  With the food cluster and healthcare/biomedical industry (with the Cleveland Clinic at the heart of this providing tremendous shared value for the local community) providing strong growth opportunities in the private sector, the public sector now must find ways to keep pace with the requisite transit, housing and zoning (i.e. for the waterfront development) policies that will ensure Cleveland is a sustainable, livable city in the future.

And to the skeptics, I urge you to visit the city and see what all the fuss is about. I’m sure glad I did.

Rock on, Cleveland. 

BY Amanda Maher on December 22nd, 2011

TAGS: cleveland | economic development | food | transit | housing

California SBDC Shows Small Businesses How to Maximize Business via Profit and Loss Statements

In a Q&A with the Los Angeles Regional Small Business Development Center (SBDC), Loan Advisor Bill Sorotsky explains how small businesses can use Profit and Loss Statements to boost their businesses. As the direction of the economy remains uncertain, is it all the more beneficial for small business owners to heed advice such as this.

So what is a Profit and Loss Statement (P&L)?

Also known as an income statement, it is a summary of the company’s profit or loss during a given period of time – traditionally a month, quarter or year. The report details all revenues and operating expenses for the business.  The beauty of a P&L is that it outlines for the business areas in which they can reduce costs and boost profits.

But why would you need this instead of just a traditional cash flow statement?

A P&L is useful for two reasons. First: a P&L helps to secure SBA and commercial bank loans. As Sorotsky explains, a P&L “provides evidence of historical and current profitability, establishing your business’s cash flow and your ability to repay the loan.” Second, P&Ls are based upon accruals, whereas a cash flow statement is based upon a cash basis. Though they are interrelated, a P&L adds back non-cash and non-recurring items.

P&L statements also help small businesses project businesses growth (or decline) in to the future. For example, a P&L will tell you whether if you’ve got increasing sales and declining profits—and then you’ll be able to look for the costs to explain why this is the case and adjust accordingly. Perhaps your rent has increased more than you had expected; a renegotiation of the lease or move would help correct for declining profits.  

For other tips on how and why to use a P&L statement, read the entire Q&A article here. For additional small business related information, visit the California SBDC. 

BY Amanda Maher on December 21st, 2011

TAGS: small business | business | capital

3 Ways the Government Can Fund Your Business

Image courtesy of flickr user vgm8383

BY Steven Pedigo on December 15th, 2011

TAGS: nmtc | small business | cdfis | capital | entrepreneur | business

Helping Inner City Residents Help Themselves

Guest blog by Myron Belej, MCIP, AICP

Our inner cities are often marked, characterized and blighted by older, deteriorating houses; higher crime and fire rates; lower incomes; disempowered residents; an array of higher costs; and a need for marketable job skills.

Yet as large as these problems appear, the situation is far from hopeless.

Imagine an initiative whereby we train and empower our citizens to fix their own neighbourhoods. Our more progressive cities should take the lead on what I call “Trades-For-Citizens” programs that address all of the above issues, and support every citizen’s right to safe, stable housing.

What Needs Fixing?

Our inner city housing stock has been neglected far more than it ever should have been. Devoid of resources, these homes have fallen into states of disrepair and now face problems like structural issues, flood damage and high fire risks.

These problems can often be fully addressed, or at least mitigated, with basic-to-intermediate skills in plumbing, electrical and carpentry trades.

Let’s not forget that, historically, many families and communities built their own homes. In rural areas, many still do. But in our present day cities focused and raised on mass production, our youth are no longer taught these comprehensive building skills in school; they’ve been taught to depend on and hire an array of “experts,” from engineers to financial planners—even for the smallest of projects.

Inner city families struggling to make ends meet tend to lack the income needed to hire these "expert" tradepersons. Too many also lack the resources to obtain a trade education and purchase the materials to repair their homes themselves. If they have an unresponsive landlord, the challenges can be compounded by having limited options and abilities to improve living conditions.

Who Can Help?

Multiple resources exist to launch a Trades-for-Citizens program, but these resources are often disconnected from one another and from the larger issue of neighbourhood stabilization. A coherent strategy is needed to link people to these resources.

Several cities already have workforce training programs. Many colleges and trade schools have the infrastructure (professors, classrooms, tools, equipment, materials, etc.) to train students. We could introduce trade programs back in to public schools, especially urban school systems that serve primarily disadvantaged students. Several related scholarships and grant programs already exist to support this—they’re just waiting to be tapped.

The downturn in the economy has left many tradespersons out of work.  A Trades-for-Citizens program could leverage these un- or under-employed workers to train inner city residents; in return, the supervisor gains management experience that could help him or her move into higher positions within the industry. Many opportunities for sponsorship and funding support from foundations are available for goodwill and civic improvement initiatives such as this.

Where?

School systems and neighbourhood associations that have buildings in need of repair can be offered as “teaching environments” to show eager students of all ages how to tackle home repairs in a real-world setting. In turn, these community spaces will be structurally upgraded and can be better utilized for neighbourhood activities.

Vacant and foreclosed properties can be used as testing and teaching grounds as well. Each one offers unique challenges to be solved, unique opportunities to learn. 

And with cities all moving forward with sustainability agendas and recycling movements, a growing number of “re-stores” and “architectural clearinghouses” are starting up, with (gently) used building materials – such as doors, handles, baseboards, and scrap lumber – for sale at reduced costs. Some are run as independent businesses. Others are supported by non-profit organizations like Habitat for Humanity.

These “re-stores” can become hubs in the inner city, perhaps eventually growing in to gateways for other community services.

“Re-stores” can help inner city dwellers access building materials to improve their homes – materials that would otherwise be unaffordable. People who offer to help extract usable materials from neighbourhood homes undergoing renovation may even be able to get reusable materials for free.

Who Can Participate?

Basic to intermediate home repair skills are valuable life skills that should be taught to anyone who has the time and interest to learn them, especially in inner cities where the need is so great.

Residents who develop and hone their repair skill sets, with enough practice and experience, may eventually get to a point where they feel comfortable offering their services to others at an affordable rate; perhaps even to pursue further education and profession certifications in one or more trades.

There are opportunities for people with the full range of abilities. More able-bodied community members can be a big help on projects requiring heavy lifting or the use of equipment such as jackhammers. Patient citizens with lower mobility may be well-suited to updating electrical switches. And youngsters with nimble fingers and agility can help to run and connect new plumbing lines in tight corners and cabinets. 

Who Benefits?

The entire community would benefit from the "Trades-for-Citizens" concept. Here's why:

It’s well known that a deteriorated housing stock can debilitate entire neighbourhoods. Vandalism surges, squatters occupy vacant homes, fear and crime rates increase, property values decrease, residents lose hope and the downward spiral continues. 

But renovating homes in neighbourhoods like this, especially home exteriors, creates noticeable, positive physical changes in the urban landscape that change public perception and can help stabilize entire communities.

Moreover, increased community interaction leads to renewed civic pride. Empowered residents with new skills improve their ability to help themselves economically and socially, as well as their families, friends and neighbours. Before long, flower boxes will be blooming and crime will decrease as neighbours begin looking out for one another.

Indeed, the city benefits as well. As delinquent properties come back on to the tax rolls, the city reaps the benefit of a higher tax base. The same is true for properties that experience an uptick in value due to their renovations. Lower crime and fewer fire hazards will reduce strain on our often over-committed police, fire and emergency services.

Municipal governments that benefit from these cost savings could then, theoretically, choose to offer reduced or waived fees to inner city residents who complete home improvements requiring permits and inspections.

As the proposed “Trades-for-Citizens” program shows, there’s a host of ways we can be working with our inner city populations to empower them and improve their neighbourhoods. Especially in times of financial difficulty when every dollar counts, we need to be actively seeking and testing cost-effective and creative ideas such as these to make significant positive changes in our urban areas.

To hear more about Myron's ideas, visit http://www.cityplanner.ca or on Twitter @ifixcities.

BY Guest Blogger on December 14th, 2011

TAGS: cities | workforce | jobs | housing | community development

Achieving Greater Cluster-Based Economic Growth by Incorporating Inner Cities

Above: Michael Porter at the 2011 Inner City Economic Summit as he explains the importance of inner cities to regional cluster-based economic strategies 

Over the past week, there have been multiple articles discussing the importance of clusters in promoting economic development strategies. Authors argue that while technology has made it easier than ever to connect with one another in a globalized world, proximity to other like businesses is still paramount.

How do we know that place still matters? In a post by Area Development, the author explains:

Sixty percent of the respondents to Area Development’s 2010 Corporate Survey said the presence of activities similar to theirs was a consideration when selecting a site. More recently, a 2011 Brookings Institution report showed that “strong clusters foster innovation through dense knowledge flows and spillovers; strengthen entrepreneurship by boosting new enterprise formation and start-up survival; enhance productivity, income levels, and employment growth in industries; and positively influence regional economic performance.”

Industry clusters, as defined by Harvard Business School professor and ICIC founder Michael E. Porter, are geographic concentrations of interconnected companies, specialized suppliers, service providers and associated institutions in a particular field that are present in a specific geography. Clusters arise because they increase the productivity with which companies can compete.

In a separate article on Area Development, Christopher Steele notes that, “From a competitive perspective, the cluster permits access to specialized information on the market. This includes general market conditions, technical information on the network of providers and partners. It also provides real-time information on one’s competition through direct interaction in the local network. This in itself can drive innovation.”

The importance of clusters has not subsided, as some have argued.

Indeed, we’re increasingly seeing how the emergence of underutilized clusters, like the food cluster, can help foster urban economic development.

Sure, clusters are important to regional economic development. But a concerted effort must be made to include inner cities as part of a regional strategy. Poverty, especially minority poverty, is concentrated in inner cities. Inner cities have a younger and more diverse population than the rest of the U.S., and they are important sites for minority-owned businesses. Creating jobs in the region isn’t enough for supporting the urban core; often inner city residents cannot access jobs in rest of the region.

As Porter explained at ICIC’s 2011 Inner City Economic Summit, the regional cluster-plans adopted by many of our metros often fail to include strategies for inner city economic development. As it stands, the correlation between regional and inner city growth is only 20%--indicating that the conventional growing of regional jobs is helpful but not sufficient. He states:

Inner cities have a different rhythm. They have different drivers. Yes, if the regional economy grows, that’s a good thing. But there’s a very weak correlation between the regional economic growth and the inner city economic growth in terms of jobs…What this says is we have to have a regional strategy, and that’s critical, but if we care about equity, if we really care about tackling poverty in economically disadvantaged areas, we actually have to add an additional set of dimensions.

In other words, regional cluster-based growth doesn’t automatically lead to inner city growth and strategies developed to leverage regional assets and opportunities can overlook unique and valuable opportunities for inner city growth. By including inner city strategies throughout the regional planning process, regions can better achieve growth and equity.

So how do we promote cluster-based economic development that directly benefits inner city economies?

Porter explains that we should invest in growing local clusters, specifically in business-to-consumer (B2C) clusters. These serve local consumers, such as local health services and local hospitality establishments. Inner city employment growth in B2C clusters has been 6.6% from 1998-2009. Compare this to business-to-business (B2B) and hybrid (B2B/B2C) clusters, which have resulted in -5.7% growth in inner city employment growth over the same period. Moreover, B2C clusters like retail serve local populations, improve quality of life and provide the most accessible entry-level jobs.

How should economic development practitioners identify which B2C cluster to leverage?

First, they should assess their distinctive competitive position given geographic location, legacy, existing and potential strengths. What unique value does this inner city have as a business location? And for which types of activities and clusters?

Equipped with this knowledge, cities can then hone areas in which they’re strong, and address weaknesses where they lag behind peer locations.

Strengthening inner cities can (and should) be done within a regional framework.  Approaches will be most successful when there is collaboration between multi-levels of government, teaching and research institutions and private sector organizations. Working together helps to strengthen relationships between inner city firms and leading cluster actors. Individual firms, largely thought of as abiding by policy as opposed to participating in the creation of it, can help by creating linkages with capital access and business development services.

By including inner city economies in broader regional economic development plans, it helps urban businesses leverage the tailored training, education and programs that many states and regions already have in place to build existing clusters or foster the development of new clusters. 

Ultimately, a collaborative approach that includes inner city economies will provide the strongest regional cluster-based economic development—because regions that proactively address issues of poverty and equity enhance their overall competitiveness.

While we know that cluster-based economic development can promote job growth and prosperity in urban economies, few cities are actually using such a strategy. Do you know of a city using local clusters to encourage growth?  Where are regions making a concerted effort to include inner cities in their cluster-based strategies?

Join the discussion via Twitter @icicorg or read more from @amandammaher. 

BY Amanda Maher on December 12th, 2011

TAGS: cities | clusters | food | economic development

When Government gets it right: Public Programs that helped one Inner city company expand

The 661 unique Inner City 100 winners have been illustrations of the grit and tenacity necessary to make it in today’s extremely volatile business climate.  With worries of economic uncertainty at home and financial uncertainty abroad in Europe and elsewhere, our Inner City 100 winners have had to find opportunity wherever and whenever it comes knocking.  They have had to find the right segments to serve within the private, public and non-profit sectors.

Team Henry Enterprises found its growth potential through public sector financing programs and then public sector contracts. This 2-time Inner City 100 winner (#59 in 2011) is based in Newport News, Virginia with CEO Devon Henry at the helm.

The company is an SBA certified 8a participant, a registered Disadvantaged Business Enterprise, is located in a HubZone – all of which open funding opportunities for the growing business. They can use these certifications to leverage government contracts, grow networks to fund the scaling of their operations, and even find other small businesses within the area with which to conduct their business.

But how did Team Henry get to this point?

Devon Henry had always had an entrepreneurial spirit. After completing General Electric’s Corporate Leadership program, he felt comfortable enough with business operations to start his own enterprise. With this executive education in hand, he purchased The Silty Lady, an environmental contracting company in business since 1986. He – not surprisingly – used a public program, this time the SBA 7J loan, to make the purchase possible. He then renamed the business Team Henry Enterprises to convey the new look and feel of the company. Using home equity and SBA loans, Team Henry was born.

The company’s growth strategy has since been based on four pillars: 

• Use existing strengths to identify new business areas they could enter. This required an evaluation of their core competencies for both human capital and equipment. The goal was to expand without significant new expenditures.
• Provide a low-bid environment with high-quality service and work. To do so, Team Henry needed to develop a keen understanding of their customers and the business environment in which they operate.
• Strengthen relationships with the SBA and Virginia Department of Transportation in order to leverage technical assistance and resources around the development of their operations needed in order to grow.
• Build strategic partnerships with older and larger firms to learn the most effective ways of scaling a firm and running it efficiently.  

For advice and strategic planning, Team Henry was a part of a two-year program at the Virginia Department of Transportation’s BOW Center that assigns consultants to companies to help them develop growth plans.   Much of Team Henry’s work is contracted by the government at the federal, state and local levels. 

The company has made a concerted effort to subcontract parts of projects to other small and minority business owners.  As a native Newport News inner city resident, Devon understands the value in supporting other small and disadvantaged businesses through their projects. After all, that’s how he rose to become an Inner City 100 company.  Just recently, Team Henry created a Disadvantaged Business Enterprise consortium—a collection of 30 different small disadvantaged businesses—to collaborate on a large FAA contract.

As a member of organizations like the Association of General Contractors, the Virginia Transportation Construction Alliance and VA Peninsula Chamber of Commerce, Team Henry has found ways to network and pool project costs. They have also been sure to take part in any training programs that these organizations offer. This external training, combined with internal professional development of team members has helped the company grow rapidly from within.

Devon finds numerous advantages to Team Henry’s inner city location from which both he and the company hail. The workforce is quite strong due to the presence of the Newport News Shipbuilding company. Team Henry also receives HubZone incentives and is near public transportation.  As an additional bonus, Newport News has also created a 3-year plan to rebuild the corridor in which Team Henry is located.

What has your company done to expand relationships with public sector entities? What governmental benefits are most useful during this turbulent economic climate? What networks does your company use to establish or expand relationships? Share your stories with us below. 

BY Alex Rodriguez on December 8th, 2011

TAGS: ic100 | small business | sba | entrepreneur | partnerships | mwbes

Transforming an Industrial Weakness in to an Asset

Above: NYC's "High Line" 

Cites with industrial histories often face questions as to what should be made of former industrial space. Should old factories be turned in to schools? Should warehouses be converted in to loft-style apartments? Should railroad tracks be torn up so a bike path can be installed?

Similar questions were raised in New York City back in the 1990s. What should be done with the 1.5 mile elevated industrial railroad track that was built in the 1930s? This “High Line” was once used for freight traffic, but hadn’t been in operation since its last run in the 1980s. Shortly thereafter, residents began fighting for the unsightly tracks’ demolition. Others urged a new rail service to be created. The battle over the High Line as compounded in the late-1990s when another group began pushing for a project that would turn the infrastructure into a system of public parks.

Adaptive reuse won.

In 1999, Joshua David and Robert Hammond, who both lived in the neighborhood, founded “Friends of the High Line” (FOHL)—the organization that rallied support for the preservation of the rail into a set of public parks. It took time to convince their critics that the park was worthwhile. Opposition flyers argued, among other things, that “Money doesn’t grow on trees, and it doesn’t grow in the weeds on the High Line.” During a time of budget deficits, public investment in a new park system would certainly be difficult.

To drum up support, FOHL commissioned a study to show that preservation could prove economically beneficial for the surrounding neighborhood. By 2002, the project had Mayor Bloomberg’s blessing (in an interview some time later, Hammond indicated that the High Line’s transformation would have never happened under prior mayoral leadership—Mayor Guiliani had moved to abolish the High Line). One City Councilman, Gifford Miller, explained his rationale for supporting the High Line: “I believe – and I think the administration has also seen – that when you consider the possibilities for a preserved and reused High Line as a public space and a signature moment in the New York City landscape, that the positives are almost limitless.”

CSX Transportation, Inc. then donated the defunct tract of land to the city in 2005. A design competition solicited the best ideas for what the new park system might look like; 720 entries later, a design team was chosen.

In April 2006, the High Line’s makeover began. The project was completed in two distinct phases: Section 1 opened to the public June 9, 2009 and Section 2 opened June 8, 2011.

The project has since had a profound impact on New York City’s economy. After the city invested $115 million in the park system, over $2 billion in private investment has occurred surrounding the park. Over 8,000 new construction jobs were added related to the project, as well as 12,000 additional jobs as a result of the neighborhood’s redevelopment. In many cases, the values of residential and commercial properties around the park have more than doubled (admittedly, this has caused some gentrification—as some apartments now sell for $2,000 a square foot).

Rather than being an eyesore, the High Line is now a place where residents and tourists alike come to enjoy the parks’ intricate design and beauty. 

Other cities are now looking to the High Line as an example of what can be done when quality design is brought to our urban spaces. Our cities have a plethora of preexisting assets, and to reimagine them can have widespread impacts on local economies—particularly in the most depressed areas where abandoned buildings and land can be brought back to the city’s tax rolls.

What adaptive reuse projects has your city explored? Where is design being used in public spaces to encourage greater economic development? Share your stories with us below. 

BY Amanda Maher on December 5th, 2011

TAGS: nyc | economic development | industrial | urban design

Flying Back from the Brink

With American Airlines being the most recent high-profile bankruptcy, one has to ask what you do with a company that still has a market that needs to be served but has been driven to the brink. 

This brings us to number 40 on the 2011 Inner City 100, Aztec Promotional Group, a promotional licensing company (t-shirts, pens, mousepads, etc.) based out of Austin, Texas. It was originally owned by Alejandro Vazquez with whom its current CEO, Patti Wistanley, became familiar through her son, a student at the University of Texas.  At the time, the business was in serious decline and Vasquez was looking to get rid of it.  Patti and her family had an operation where they took over companies that were in trouble (often in bankruptcy); they were appointed by the courts over the management of the Aztec when it filed for bankruptcy in 2004.  Patti, however, bought the company with the hope of turning it into a high-growth firm that, in 2009, did $1.8 million in revenues.

Aztec’s location near University of Texas at Austin—one of the largest universities in the United States—has proved beneficial in turning the company around. The company develops promotional materials for the University, as well as many of the student organizations affiliated with the University.  The majority of the company’s business comes from universities looking to print items such as championship t-shirts or promotional items.  As Aztec adds more universities to their wingspan, they will be able to add more and more clients. 

Patti has found the procurement networks for the universities to be difficult to navigate; she believes you have to know the right person to gain some sort of access.  The progression is further drawn out when the company has to explain its supply chain processes and unique competitive advantages. These are challenges she was ready and willing to combat.

Getting a bankrupt company back to a point of sustainability was going to be quite an obstacle.  The biggest challenges included re-building the company’s reputation and showing customers that they could follow through on jobs despite the company’s financial circumstances.  As market conditions have evolved over the last few years, organizations have tightened budgets.  Companies now shop around more than ever before.

Another challenge was upgrading the equipment that had started to deteriorate. Patti and her team had to ensure the equipment would hold up long enough to fulfill orders and retain business.

Both Patti’s husband and sons are technology gurus, and she firmly believed that she could take their interest and apply it to making a high quality product faster and more efficiently.  The business had a history of previous success under the old regime, but in order for it to become high-growth, Patti thought Aztec needed to optimize its operations.  To do so, her sons helped developed new computer software. This software helped streamline their processes, especially their art approval system.  Patti said, “No one else has anything like it.”

Additionally, Patti made sure to diversify the clientele to mitigate risk. No single Aztec client makes up more than about three to four percent of the business.  As a result, she thinks the company is well-positioned to take advantage of a rebound once the economy begins a solid recovery.

Patti plans to continue growing the business through sound strategy, efficient operations and mergers and acquisitions.  She believes that in order to maximize Aztec’s potential she must hire additional sales representatives, especially if she wants to scale her business to the size of her competitors—many of which gross $50-60 million annually.  Eventually, she’d like to pass the business on to her sons, a simple transition given her sons’ involvement in the company’s growth and development.

Despite the aforementioned challenges, Patti sees the opportunities that result from working within the inner city. She hires locally and invests in each employee by offering inordinate amounts of cross-training. This helps employees work across departments; it allows employees to have a comprehensive understanding of the business operations and makes processes more streamlined.

By locating near the university, Patti can offer internships to students. She can also give back to the community by offering pro bono services to universities and nonprofit organizations. She even has a sales agreement with the East Side Community Connection, which picks up her extra stock and resells it – with all profits donated to the local homeless shelter.

Not bad for a company that was once on the brink of total collapse!

Did you take over a seriously distressed firm to not only bring it back from the brink, but also make it a sustainably profitable operation?  Tell us your story below.

BY Alex Rodriguez on December 2nd, 2011

TAGS: small business | jobs | ic100 | entrepreneur

Urban Business-Owners Share Their Biggest Challenges

Photo: Executives from Energetic Energy at the ICCC National Matching Day

Earlier this month ICIC and Bank of America convened over 125 urban business-owners in New York City for the Inner City Capital Connections National Matching Day.  This day was dedicated to helping inner city entrepreneurs access capital which, according to ICIC research, has proven an obstacle for the vast majority.  While the business owners were practicing their pitch to investors through speed-dating sessions, BusinessNewsDaily caught up with some of the participants to get an idea of what some of their biggest challenges were. 

Below are the top 10 challenges the ICCC participants reported facing as urban small-business owners.  

1.   Access to capital

"Our primary challenge as a small business is having access to capital in order to facilitate our exposure," said Clarence McCollum, president and CEO of Exergetic Energy, an energy company specializing in renewable energy sources. "It is a dual challenge, but [obtaining] capital is a bit more important because with access to funds we can garner more exposure. With capital we can also get out and find business opportunities so we can provide our technological solutions to other companies. We also have some innovative technologies that we are bringing to the forefront.  Therein we need capital to help develop those prototypes and file patents."

2.   Finding ways to grow

"Growing the business with limited access to capital and resources presents a big challenge," said Shyam Gulati, CEO of Infopeople Corporation, an information-technology firm.  "To grow the company we are looking for an equity investment so that can facilitate the growth to the next stage, but it is hard to find."

3.   Competition for government contracts

"The biggest challenge that I have is with government contracts and increasing competition," said Ana Chertien, president of ABC Security Service. "They usually go for the lowest bid, which means the margins continue to shrink. Sometimes companies go out of business trying to compete. The margins are shrinking and it leaves you asking yourself, ' how do I compete?' Before, I used to compete with three companies and now there are 15 or more companies I compete with."

4.   Keeping up with demand

"Our biggest challenge thus far has been having enough space to handle all the kids that need childcare," said Harold McMillian, vice president of McMillian's First Steps Child Care Development Center in New Orleans. "After Hurricane Katrina, many day care centers left New Orleans, so we are overpopulated right now. Our present enrollment is200 and my facility can only hold 200 kids. I am trying to buy a new property now to allow us to have more space."

5.   Getting access to potential customers

“The biggest challenge has been trying to identify who the buyers are," said Kehinde Olajide, president and CEO of Hemisphere Beverages, an all-natural-beverage company. "It is very hard to crack that code.  Even when you do crack that code, it is always hard to get a return phone call or email.  These people are getting hundreds and thousands of emails and phone calls a day.”

6.   Transitioning from being self-funded

"Being, as we are, a technology company transferring technology from the inventors to our commercial company was our first challenge," said Chris Melancon, founder and CEO of Spyglass, a company specializing in portable water laboratories. "We did that through our manufacturing partner and a lot of time, energy and resources. Now that we have accomplished that, we want to scale the business and to do that we need money. Our current challenge is in raising capital for the company to go from having self-funding and bootstrapping to being able to hire people and sell more products.  It is a pretty classic problem, but we are in the middle of that."

7.   Getting paid on time

"Our biggest challenge right now is the marketplace," said Jennifer Brown, marketing and sales representative at coffee supplier Jamaican Gourmet Roasting Company. "Our challenge is that many of the companies that we do business with are unable to pay their bills as a result of the economy.  We [coffee products] are one of the first things that goes in that situation. Our customers still want the product, but they will often times delay the payment and that eats into our working capital.  With the economy the way it is, it becomes harder to borrow and many times they are taking away credit lines. It is hard to get that back once it is gone."

8.   Getting a fair price

"For our company, the biggest hurdle is getting over manufacturers' price sensitivity in the United States," said Cara Aley, president and COO of Mojo Socially Responsible Apparel, a U.S.-based apparel-manufacturing company that focuses on providing sustainable employment opportunities in apparel manufacturing for single moms who are living below the poverty line. "So much of apparel manufacturing has gone overseas. We have tried to find a niche in mass customization, where we customize hoodies and tees, but getting people to pay more for our clothing when competition produces it cheaper overseas is a great challenge."

9.   Finding the right people

"The biggest challenge is being under-resourced," said Jai Jai Greenfield, co-owner of Harlem Vintage and Nectar wine bar. "Not having enough talent and the right amount of capital to do what you really need to do is the challenge for us. We have gotten a lot of really great stable growth through our own organic bootstrapping, but when we think about growth and where we can take the business, we need capital to do that."

10.   Affording marketing

"The issue we have is finding more capital as you are growing," said Martin Ekechukwi, founder and CEO of Village Tea Company, an all-natural-tea company. "You find yourself having to spend money on inventory and that money gets tied up. That means you are not selling your product immediately. You therefore need more money for operations to help turn over the product to store level. It is hard to see a great product that is sitting on the shelf and it is not moving simply because you don’t have the resources to help move it."

If you’re a small business owner, share with us some of the challenges you face while running your business.  ICIC continuously tries to address these challenges with informational webinars, educational programming and written resource guides.  The most recent resources, including a guide on “Utilizing Capital Resources to Grow Urban Businesses,” are posted on the executive insights and business tools website page.

BY Mary Duggan on November 28th, 2011

TAGS: capital | small business | business | entrepreneur | jobs | iccc

This Thanksgiving, We're Thankful for Small Business Retailers

Gearing up for holiday shopping? Looking to fill those stockings and find the perfect gift for your loved ones? Below you'll find 4 retailers around the country that you should not miss visiting on American Express’s Small Business Saturday.

According to a study by Civics Economics, analysis and strategic planning consultants out of Austin, Texas, 68 cents of every dollar spent at a small business stays in the community. The same study found that only 46 cents of each dollar spent at big box retailers stayed in local communities.

On November 26, support local communities by shopping at your favorite local retailer and take advantage of a host of promotions surrounding the event. ICIC, over the years, has worked with a lot of excellent firms and we would feel remiss if we didn’t highlight a few must-visits for the holiday season.

• City Feed and Supply– Jamaica Plain, Massachusetts: A stone’s throw from ICIC headquarters in the Jamaica Plain community, City Feed and Supply is a neighborhood grocery store, café, and deli focused on supplying the neighborhood with a fine selection of natural foods
• The South Bend Chocolate Company– South Bend, Indiana: If you’re looking for Christmas gift baskets or specialty chocolate products, visit the South Bend Chocolate company for a unique alternative to generic big-boxes. We've also heard that reindeer LOVE chocolate!
• Sneaker Villa– Reading, Pennsylvania: Time to retire those old sneakers after your Turkey Trot? Here's a specialty retailer of urban-inspired apparel and footwear, they are planning big promotions for the holidays.
• Extreme Pizza– San Francisco, California: Try their innovative, freshly made pies in-store or grab a “take-n-bake” pizza to cook at home and surprise the family. After all, you can't eat turkey leftovers forever!

This holiday season, make a commitment to support local merchants and get more value for your money by shopping small.  And of course, be sure to check back in with us and share your stories about the local small businesses you support.

BY Sathya Vijayakumar on November 23rd, 2011

TAGS: small business | business | jobs | entrepreneur | ic100 | retail

TRE Networks: Uncovering Regional Cluster-Based Economic Development Strategies

As you may recall, in October ICIC held its annual Inner City Economic Summit – or “Urban 2.0” – to address the challenges facing our inner city economies.  One of the most riveting presentations at the Summit was by ICIC founder, Dr. Michael E. Porter. Porter, an expert on inner city economies, indicated that the debate about cluster-based economic development is over; it works.  He explained that it’s now time to move on to the implementation phase, or the “next frontier.”

TRE (Transformative Regional Engagement) Networks is hosting its annual roundtable, Dec. 5-7th, to uncover what this “next frontier” might look like. With cluster-based economic development at its core, the roundtable seeks to identify ways to “make regionalism work.” 

Topics at the TRE Roundtable vary, but include: how to form a coalition to promote advanced manufacturing in the Great lakes mega-region; the topic of “economic development and equity: achieving scale” – which will look at how people and places can connect to growth and opportunity rather than holding back progress; and the role of universities in promoting regional economic development.

Those familiar with ICIC may recognize that these topics (industrial clusters, the geography of poverty, and anchor institutions) are key areas of interest to ICIC and our urban cores.  While TRE Networks is focused on regional approaches, we also understand that what works for the region does not necessarily work for the inner city.  Porter highlighted this at the Summit when he said:

Inner cities have a different rhythm. They have different drivers. Yes, if the regional economy grows, that’s a good thing.  But there’s a very weak correlation between regional economic growth and inner city economic growth in terms of jobs…what this says is we have to have a regional strategy, and that’s critical, but if we care about equity, if we care about really tackling poverty in economically disadvantaged areas, we have to add specific strategies to build on the assets of our inner cities.

We’re looking forward to joining TRE Networks as a partner, and look forward to joining in these vital conversations about regional cluster development. At the same time, we cannot lose sight of our inner city areas. By including inner city strategies throughout the regional planning process, regions achieve economic growth that benefits all parts of the region and all its residents.  

For more information about the TRE Roundtable, visit http://www.trenetworks.org/events/2011roundtable/index.php

BY Amanda Maher on November 22nd, 2011

TAGS:

Small Business Saturday: Free Promotions to Help You Get the Most Out of November 26

"Nine in 10 Americans believe small business success is critical to the health of the U.S. economy, and Small Business Saturday translates this sentiment into dollars and cents for independent retailers." – Maryann Fitzmaurice, senior VP of American Express OPEN

Inaugurated last year, American Express’s Small Business Saturday aims to drive holiday shoppers into local, independent retail stores across the country on the Saturday after Thanksgiving (November 26, 2011). Building on last year’s success, sponsors across the corporate landscape have created promotions to make this year’s installment even bigger. For your convenience, we have compiled a list of free promotions whether you’re a curious small business or an excited shopper.

Small Businesses:

• American Express is giving $100 in free Facebook advertising to the first 10,000 business owners who sign up
• Google and American Express are partnering to offer My Business Story, a tool for companies to create and post free videos on YouTube about their businesses
• American Express OPEN is offering YourBuzz, an application to view and respond to customer reviews and online mentions from a centralized dashboard
• Constant Contact is offering Small Business Saturday-specific email marketing templates, webinars and marketing tools
• Fedex Office has announced a special 20% savings on all Small Business Saturday materials that are printed through FedEx Office Print Online
• American Express is offering free in-store signage and e-marketing materials
• American Express’s Small Business Saturday Facebook page is promoting offers customized by small business owners
• Experian has created an EBook entitled “Ten Tips to Maximize Small Business Saturday” to supplement a bevy of existing small business tools
• Twitter is making it easy for small business owners to place a “Follow” button  on their websites, so consumers will be able to follow them on Twitter with a simple click
• American Express is making it easy to reach customers through social media with its Go Social mobile service

Consumers:

• American Express is offering a $25 statement credit to Card members when they spend $25 or more at any qualifying small business
• FedEx will inject $1 million into the economy by distributing 40,000 $25 Shop Small American Express gift cards for use at small businesses on November 26^th
• Verizon is giving away $500 American Express Gift Cards to 100 people who enter to win on its Small Business Facebook page
• For every person who “likes” Small Business Saturday on Facebook, American Express will donate $1 to Girls Inc., an organization that empowers young women to be future entrepreneurs

For more information on how you can take advantage of these great promotions, go to www.smallbusinesssaturday.com. Also, be sure to support the retail firms that we have recognized for their growth and commitment to the inner city.

BY Sathya Vijayakumar on November 17th, 2011

TAGS:

Convening Anchors to Promote Shared Value

ICIC was back in the Big Apple this week after having just been there last Thursday for ICCC’s Match Day. 

ICIC Chairman Michael Porter and CEO Mary Kay Leonard were there to join Deputy Mayor Robert Steel and Department of Small Businesses Services Commissioner Rob Walsh. Jointly, they convened local higher education leaders and city officials at Gracie Mansion. The session – “New York City’s Anchor Institutions: From Social Responsibility to Shared Value” – included a presentation and discussion led by Professor Porter on how the city’s colleges and universities can build shared value with the economically distressed communities around them.  

Turnout for the event exceeded expectations due to much excitement about the day's agenda. The 80+ attendees included presidents and top deputies from 23 of New York City’s leading colleges and universities across the five boroughs. 

By way of background, anchors are large institutions, typically educational, medical or cultural, that are deeply rooted in their local geographies. They play an integral role in the economy and can have deeper local impact by targeting their core activities. Nationwide, urban-based colleges and universities provide 2.4% of private sector jobs and spend $175 billion on goods, services, and salaries and benefits. These institutions have added 12.5% of jobs from 1998-2009.

Anchors create shared value with their local communities when they pursue activities that promote both community vitality and the anchors’ own competitiveness.  ICIC encourages anchors to focus their activities around seven roles in a Strategic Framework for Shared Value (see above).

The University of Pennsylvania provides the classic example for how an anchor can do well for itself by doing well for its community.  In the mid-1990s, the university suffered because West Philadelphia was unsafe and economically blighted. Over the next decade, President Judith Rodin worked to improve the long-term vitality of its neighborhoods through improvements in safety, provision of affordable housing, increased retail activity, improved K-12 education options, and access to the university’s goods and services procurement.  These efforts span multiple anchor institution roles and because of them, UPenn was able to achieve a better experience for students and staff, increases in recruitment and enrollment, enhanced reputation that helped rankings and fundraising efforts, applied learning opportunities for students and faculty, and Improved community relations.

New York City boasts over one hundred colleges and universities that hold enormous potential to build shared value with their local urban neighborhoods. New York City is a college town: some 550,000 students call it home, and colleges and universities spend an estimated $17 billion annually and employ 3.3% of the NYC workforce.  Institutions such as Columbia University, Fordham University, and CUNY have undertaken major real estate developments recently.

ICIC research discovered promising examples of New York City anchors that are active in select roles across the Framework. As Purchaser, Columbia University strives to focus 35% of its construction spending with minority and local vendors and enjoys superior, nimble, and speedy service from these vendors. As Community and Real Estate Developer, Pratt Institute has completely transformed its neighboring Myrtle Avenue corridor and has boosted its brand, enrollment, and financial situation as a result. As Workforce Developer, LaGuardia Community College provides a holistic approach to help students access in-demand jobs in the healthcare sector and has an average program completion rate of 90%. As Core Service Provider in education, The New School applies a community-based learning model that engages students and faculty in hands-on learning experiences across the city.  As Cluster Anchor, SUNY Downstate Medical Center has helped develop the biotech cluster through its incubator facilities and associated workforce development activities. Exposure to this entrepreneurial activity has been highly valuable to students and faculty.

Yet despite pockets of success, enormous untapped opportunity remains. NYC anchor institutions lag leading institutions across the country in promoting inner city economic and community development. For instance, in FY2011 University of Pennsylvania purchased $115M worth of goods and services from local vendors in seven zip codes in West Philadelphia; this amount represented 16% of total goods and services spending, nearly double what the university had done in 1999. New York City colleges and universities are still far behind in this area.

Monday’s Gracie Mansion event identified next steps for how the City’s colleges and universities can build shared value. Specifically, high potential areas include programs in local purchasing of goods and services, innovative ways to re-think workforce development, and geographically-based collaborations across anchor institutions.

With a clear understanding of what is possible, we know that NYC’s anchor institutions are capable of creating additional shared value for their local inner city communities.

BY Amanda Maher on November 16th, 2011

TAGS: economic development | nyc | anchors | upenn

ICCC's Match Day: Filling an Inner City Capital Gap

Image courtesy of Fortune.com and CNNMoney.com 

Last Thursday, November 10, hundreds of investors and companies flocked to Fortune headquarters in NYC for the 7^th annual Inner City Capital Connections (ICCC) match day.

Inner city companies are nearly five times more likely than non-inner city companies to finance growth through personal assets, friends, and family. Exacerbating the problem, the number of commercial bank branches located in inner cities declined by 8% between 1998 and 2007, even as the number of commercial bank branches nationwide increased by 27%. Through targeted sessions and live investor feedback on pitches, ICCC serves an unmet need by increasing the financial sophistication of inner city entrepreneurs and introducing them to capital providers.

After a brief introduction, company presentations began by Dero Bike Rack Company, InfoPeople Corporation, Dental Kidz LLC, Victory Personnel Services, and AVPOL International. These firms ranged from one company that makes artistic bike racks to a software project development firm; the pitches and subsequent feedback not only primed companies in the audience for their own pitches later in the day, but also upended caricatures of inner city firms. Far from the uncreative, traditional mom-and-pop shops some investors might have expected, these firms set the tone for the day with their enthusiasm, preparation, and sophistication.

Next, both the investors and companies were treated to individualized presentations on “Growing Your Business” and “Limited Partner Perspectives.” At the “Growing Your Business” panel, representatives from capital providers (including CDFIs and the SBA) educated companies on finding and targeting capital. In return, the companies legitimized the event’s purpose by vigorously questioning financiers on the tightening of credit since the 2008 financial crisis.

For the finale, the companies and investors split off into small groups to directly pitch investors for either debt or equity financing. Since ICCC’s inception in 2005, ICCC participants have successfully raised $406 million in debt and equity—so these pitches were not taken lightly.

I was fortunate enough to facilitate a small group session for debt, and it really impressed upon me the unique nature of the program. My session included a representative from an angel fund, a small boutique investment bank, a representative from Bank of America’s lending practice, and an investor specializing in factoring. Leading up to the event, ICCC allows companies to practice their pitch and receive feedback. Perhaps as a result, it was evident that companies were prepared to pitch for specific investment vehicles and had been gearing up for this moment for weeks.

Private sources of capital have an influence on small companies that goes beyond money; often, private funders help entrepreneurs with things like refining their business models. This sort of mentorship and support was on full display during this year’s ICCC event. It was clear that these gained valuable experience—even if they didn’t receive assurances for funding on the spot.

Prior to attending ICCC in past years, only 6% of the equity raised by ICCC companies came from private sources; after attending ICCC this number soared to 68%. If my small group was any indication, we can expect even better from this year’s crop.

BY Sathya Vijayakumar on November 15th, 2011

TAGS:

In just two years, over 500 small businesses experience growth

Above: Angelica of Colmex Construction, one of the Goldman Sachs 10,000 Small Businesses initiative participants.  

It’s no secret: small businesses drive our economy. According to the Small Business Administration, they account for 99.7% of all employer firms, half of all private sector workers and have generated 65% of the net new jobs over the past two decades. Here at ICIC, we realize that finding ways to support small businesses will help to revitalize our inner city economies.

That’s why we’re proud to partner with the Goldman Sachs 10,000 Small Businesses initiative— a national, multi-year investment to create jobs and economic opportunity by providing entrepreneurs with greater access to business education, financial capital and business support services.

The initiative’s unique model is implemented nationwide by community colleges, Community Development Financial Institutions (CDFIs) and community organizations. It is currently operating in New York, Chicago, Houston, Los Angeles and New Orleans—with more cities in the near future! By year end, more than 500 businesses will have benefited from the program and significant growth already has been achieved.

Angelica of Colmex Construction in River Ridge, Louisiana is just one of the many small business owners who have excelled as a result of the program. She explains, “I’ve always felt I have the mind of an entrepreneur, and Goldman Sachs 10,000 Small Businesses has given me the confidence to make that a reality. Having the opportunity to interact with other small business owners has been refreshing.” The ability to connect with other companies in a new setting allows CEOs to share ideas, devise business solutions, and collaborate with each other.

But the cost of such a program must be steep—only businesses that are already successful would be able to afford this type of education and support services, right?

Wrong.

The cost of the program is free to accepted business owners who have a company poised for growth. Participants benefit from the approximately 100 hours of business education, and additional 6-8 hours per week of business support services, and expert advice to help participants create and refine business growth plans.

Participants in the program embody the diversity and potential of American small businesses: they represent a broad range of industries, business types and sizes. 10,000 Small Businesses is designed for business owners who have limited resources but boundless potential. Applicants must demonstrate a commitment to growing their business and creating jobs within their community. Business owners targeted include, but are not limited to:

• Applicant must be an owner or co-owner of a business
• Business in operation for at least two years
• Business revenues between $150,000 and $4 million in the most recent fiscal year.

Part of the success of the 10,000 Small Businesses initiative is finding companies with high-growth potential who could benefit from such training. This is where ICIC has stepped in. Using our knowledge of successful urban entrepreneurs, our team identifies and selects companies that will excel in the program.

Consequently, those of us here at ICIC have seen first-hand the impact that this program has on the success of small businesses. As the program enters its third year, we encourage small business owners in the selected cities to apply to the program. In a world where seldom is free, this is an opportunity that few business owners should ignore.

And to our friends at Goldman Sachs, congrats on the first two years of service! We look forward to watching new small businesses grow and thrive as a result of the 10,000 Small Businesses initiative. 

BY Amanda Maher on November 14th, 2011

TAGS:

Today is CAPITAL DAY here at ICIC!

A key driver of business success is access to financial capital. Businesses often have capital needs that are not met, especially businesses in inner cities.  

We’re on a mission today to change all that.

How? We’ve got two ways.

First, we’re in Washington, D.C. at the Federal Reserve. Our research team is presenting Capital Availability in Inner Cities: What Role for Federal Policy? As the title suggests, the paper looks at the role federal policy has in ensuring access to capital for inner city businesses.

To help digest the findings, the ICIC team has broken down the paper in to five Inner City Insights. The topics include: Framing Capital Policy for Inner Cities, Measuring the Capital Gap, The Impact of SBA Loan Programs in the Inner City, The Impact of New Market Tax Credits in the Inner City, and The Impact of CDFI’s in Inner Cities.

Some of the key findings include:

• Inner city businesses are dramatically split between the “haves” and “have nots”
• 71% of inner city companies are dramatically undercapitalized, operating with only one quarter of the capital compared to their industry peers
• Most NMTC money deployed in the inner city is used for real-estate transactions
• CDFI lending is highly concentrated--just 10 inner cities account for 82% of all CDFI lending to inner cities nationwide

To solve the capital gap, stakeholders must understand the depth of the problem. By disseminating these research findings, we hope there will be a renewed interest by organizations, government agencies and financial institutions that want to support urban small business growth.

Simultaneously, we’re in New York today with Bank of America for the Inner City Capital Connections (ICCC) National Match Day at Fortune Magazine’s headquarters. ICCC brings entrepreneurs and capital providers together, helping inner city companies raise money and create jobs. ICCC companies, time and again, prove that when given access to capital, inner city companies generate the jobs and wealth that are crucial to the transformation of their communities.

Some fun facts about ICCC, per the program’s new impact report:

• 275 inner city businesses have participated, representing 104 cities and 30 states;
• 150 investors have been involved in the program;
• $406 million in capital has been raised by ICCC companies--$154M in equity, $252M in debt;
• 2,790 jobs have been generated by ICCC companies;
• 38% of ICCC employees are inner city residents

We’re hoping to beef up these statistics even more after today. We’re expecting more than 125 companies and 50 investors to participate in today’s Match Day alone.

Equipped with better knowledge and the ability to foster relationships between lenders and urban businesses, we’re tackling the capital access gap—two steps at a time!

BY Amanda Maher on November 10th, 2011

TAGS:

With ICCC education, Facilities Connection Soars

Policymakers often talk of helping “job creators” with temporary programs like tax credits in exchange for new hiring or “Cash for Clunkers.” While ameliorative and perhaps necessary given institutional constraints, the dominant problem that has plagued global industry since the financial crisis hit in 2008 is credit access.

In a macro environment of tight capital, it comes as no surprise that already capital-scarce inner cities are still struggling to grow companies and communities. Of interest to policymakers may be that significant gains can be made just by educating inner city companies on how to attract financing, and then letting the market choose winners.

Facilities Connection, a global modular solutions company from El Paso, Texas provides an excellent case study.

The mention of ‘fast-growing firms’ probably evokes images of nimble Silicon Valley software startups glamorously creating new industries with the ease of Mark Zuckerberg in The Social Network. However, powerful growth occurs often in mid-size firms that see and pounce on new opportunities to execute time-honed value propositions. With the planned expansion of Fort Bliss in 2005 by the Obama administration, Facilities Connection saw such an opportunity. For the first 20 years of its business, it had focused on small commercial businesses and developed expertise at designing turnkey solutions too small for general contractors to complete but too complex for smaller firms to successfully execute. For example, they implement modular walls, furniture, and IT infrastructure. At that critical 2005 juncture, they began the process of deciding how to find capital to execute on their Fort Bliss vision.

Whereas financing was once almost synonymous with bank loans, the last two decades have seen an influx of financial products ranging from mezzanine debt to factoring loans. Helping firms learn about their options represents an underserved market and a lost opportunity for private equity providers to realize excess returns and for companies to attract growth capital.

“The people at ICCC told us what we needed to focus on and what we needed to say in our elevator pitch” says CEO Patricia Holland-Branch. “We changed our presentation and stopped confusing people with information about our security clearances.”

With the aid of tailored ICCC pitch preparation, Facilities Connection increased their working capital $5 million and boosted their revenues to $42 million, a hefty amount for a firm that isn’t a general contractor. They further diversified their financing mix away from their supplier, thereby allowing the company to extend their reach into lucrative IT contracts.

Facilities Connection represents not only a case study for new policy, but, in some senses, a validation of existing government policy and certification procedures. In gaining 8(a) status and locating in a HUB zone, they worked their way up the contracting chain to the point that they merited security clearances. Gaining these clearances serves as a screening mechanism for defense contracting firms that need assurance that their work spaces would be completed both confidentially and satisfactorily. Facilities Connection has progressed to the point that most of their business is now in the federal intelligence space and their aspirations have turned global. As CEO Patricia Holland-Branch says, “We’re thinking big and knowing we can do the big stuff. We recognized there was a whole wider world out there.”

Without new capital sources, without ICCC, this urban company’s growth would not have been possible. See how ICC has helped other companies by reading the newly released impact report. 

BY Sathya Vijayakumar on November 9th, 2011

TAGS:

Hiring Less Highly-Skilled Workers as a Business Model? How this IC100 Company makes it work

The term “urban revitalization” has often conjured up images of rapid gentrification. Firms of all shapes and sizes have often contributed to such an epidemic, seeing urban development as a solid market opportunity where value can be maximized.  Some firms, however, have located in inner cities because they realize there’s an existing opportunity to create shared value—i.e. making a profit while simultaneously making the neighborhood a better place for the residents and businesses that call it home.  

Boulevard Group of Atlanta is just one of those companies—and it landed them spot #73 on the 2011 Inner City 100 list.  The company provides planning and management services for affordable housing developments. In addition, the Boulevard Group is starting to create their own private communities that they will own and operate; this business line will be fully developed within the next five years. The company has operations in Huntsville, Alabama and Chicago, Illinois.

Boulevard Group was established in 1997 by James Brooks as a planning and program management firm specializing in capital projects for public agencies.  As the former Deputy Executive Director of the Atlanta Housing Authority from 1994 to 1997, Brooks was responsible for the planning and development of the Olympic Legacy Program which consists of five mixed-income communities that reuse of the Olympic Village from the Atlanta Games. The development was viewed a successful model nationwide and earned Brooks a reputation as one of the leading authorities in affordable housing development and management.   

Brooks actually started Boulevard Group when he was tapped by Secretary of Housing and Urban Development Andrew Cuomo to provide expertise and consulting services to a number of communities across the country that were struggling with their housing developments and associated problems.  The company initially started with just Brooks but has grown to over 20 full-time employees in three U.S. offices. Boulevard Group positions itself as one of the country’s only full-service community planning firms, providing a one-stop for the project development, management and social services needed to operate an effective housing development.  

Because Boulevard Group relies heavily on large government contracts, the company has not experienced the full pains of the economic recession like many other businesses. In fact, the company has shown a steady increase in revenues in spite of the surrounding economic climate    With renewed focus on urban housing developments, Brooks believes his company could double in revenue and employee size over the next three years.

In addition to government contracts, Boulevard Group has drafted plans for developing and operating their own housing communities.   This would represent a significant business model shift for the company, moving from solely a service provider to a real estate and community development.   Due to the recession and decrease in property values, Boulevard Group has been able to secure several real estate properties at a reasonable rate, positioning the company for a run at development once the market stabilizes.

Brooks credits his company’s growth to two factors: (1) its comprehensive one-stop approach with both development and management services (usually firms provide one or the other); and (2) the human capital that the firm has been able to attract from across the country. 

Although Boulevard Group’s human capital has been an asset for the company, Brooks finds that recruiting the talent is one of his company’s most significant challenges, as the company relies on a highly-specialized workforce that involves people skilled in architecture, project planning, economic development, and housing management. Boulevard Group has developed a new recruiting strategy to overcome this difficulty, opting to hire more “generalists who share the company’s values and philosophies” and training them to understand and execute Boulevard Group’s approach and processes. In addition, the company has placed an emphasis on promoting from within the company, opting to rely on the institutional knowledge of employees who have worked their way up in the firm rather than searching for new project management talent.

Boulevard Group has always been located in the inner city.  The company is housed in a 1903 Victorian house that Brooks purchased and remolded in the late 1990s.  Its inner city location has been critical to the firm’s identity, setting the right image and ethos for team members and customers alike.   This is especially true given Boulevard Group’s work with urban housing developments.  According to Brooks, the company’s inner city location also allows the business to “put its money where its mouth is….If you’re going to serve inner city residents,” according to Brooks, “you have to be located there.”

In addition to setting the right image and tone for the business, Boulevard Group’s inner city location is an asset when recruiting and retaining talent.   Brooks explains, “Our workers want to be downtown and in the inner city; our location helps us attract the type of workers that are critical to growing our business’ capabilities and customers.” In terms of infrastructure, the Boulevard Group has found its location’s proximity to the main freeway (I-80), City Hall and the State Capital (both house important local customers for the company). Additionally, Boulevard Group employees have direct access to the Atlanta’s Hartsfield-Jackson Airport via the MARTA train (public transportation) in fifteen minutes.   In terms of Boulevard Group’s inner city location, Brooks did not any infrastructure challenges or limitations.  

To find out more about Boulevard Group or the rest of the 2011 Inner City 100 that are changing urban communities all over America, you can visit the spread in Fortune magazine from this past summer.  All Inner City 100 winners are honored in Fortune and also receive free management education which includes a day of case studies and presentations led by professors from Harvard Business School.  To find out more about the program, visit the Inner City 100 page.

BY Alex Rodriguez on November 7th, 2011

TAGS:

Today, we're in NYC to build Opportunity

The Big Apple: It’s an iconic U.S. city that represents our nation’s history of immigration, economic opportunity and freedom.  It’s no wonder that NYC was chosen as the host city for Opportunity Nation’s annual Summit—and we’re happy to join them today to hear stories of inspiration, to learn about new growth opportunities, and to hear leaders share their vision for the future of the American Dream.

By way of background, Opportunity Nation is a coalition of nearly 200 businesses, non-profits, educational institutions and military organizations founded to promote economic opportunity and social mobility. They strive to create better skills, better jobs, and better communities. Opportunity Nation is a campaign run through Alan Khazi’s (founder of CityYear) Be the Change, Inc. organization.

ICIC was an early coalition partner of Opportunity Nation because we believe that America cannot succeed if we do not address the economic inequality in this country. Our inner cities disproportionately suffer from high unemployment and poverty rates. For example: inner cities comprise only 0.1% of U.S. land area, are home to 8% of total U.S. population but comprise 19% of U.S. poverty and 31% of U.S. minority poverty. Clearly, we need to identify the opportunities for these residents in order to promote upward economic and social mobility.

Couldn’t make it to NYC to join us today? You can follow the conversation online by visiting http://www.livestream.com/opportunitynation. We look forward to sharing ideas and building partnerships with all of these folks in the near future!  

BY Amanda Maher on November 4th, 2011

TAGS:

Meeting the Right Financial Partner

Inner City Capital Connections (ICCC) is just around the corner!  Next Thursday, over 100 inner city entrepreneurs will pitch their companies to potential investors in New York City.  The matchmaking event will include a series of “speed-pitches” with investors representing private equity, venture capital, angel networks, mezzanine financing and debt.  The day is not only about making deals—but making the right deals that fit with the entrepreneurs’ business growth plans.  

Coming off of the October 20^th capital education training in Detroit, these entrepreneurs are equipped with the knowledge needed to communicate with investors.  The 125 companies participating in the program were selected out of a record-setting 3,200 company nominations based on their strong growth potential and commitment to the inner city.  Many of the participating companies are ready to grow, and after attending ICCC, are able to do just that.

Micron Electrical Contracting of Detroit is one of those companies.

Dwayne Coleman and Les Alexander, the owners of Detroit’s Micron Electrical Contracting, are in a very capital-intensive business. They have to finance payroll for months before clients start paying, and with electricians earning a median salary of $90,000, payroll gets expensive—and fast.  “If you want to be a $12 million business, you need about a $2 million line of credit to get there,” says Coleman.

When they attended ICCC, the partners had a $2 million business, but only a $400,000 line of credit. At ICCC, Micron’s owners learned that their net margins of between 7% and 13% were unlikely to be attractive to venture capitalists. “Having the question-and-answer session was very helpful in figuring out how we should position ourselves in the marketplace,”says Coleman. Plus, he says, “We’re not the type of company where you could make an investment and then would want to get out after three to five years. We can do very well over five to 10 years. But those investors are hard to find.”

The solution was one that surprised the partners: factoring. At ICCC, they met executives from LSQ Funding Group, which uses a different business model than other factors, making them less expensive.  “Thanks to factoring, we’re starting to go after other contracts,” says Coleman. He clearly expects to win them; by 2012, he expects Micron to nearly double in size, creating about 30 jobs. “Detroit will be on a steep growth curve,” predicts Coleman. “We want to participate in it.”

We’re excited to follow the growth of Micron, and the other companies that are partaking in the ICCC program next week!

BY Mary Duggan on November 3rd, 2011

TAGS:

Small Business Owners, Rejoice! 10 new tips to help you find your angel

Happy November, friends! As we've learned here at ICIC, access to capital is one of the strongest barriers facing inner city companies. We've heard countless stories about how, when able to access capital, urban businesses can thrive. As such, we thought there was no better way to kick off the month with a few new pieces of insight from someone who is all too familiar with small business development. On the agenda: How small business owners can better connect with angel investors. 

The Los Angeles Regional Small Business Development Center (SBDC) Network offers "10 Tips for Finding Angel Capital". The Los Angeles Regional SBDC Network provides FREE one-on-one business advice (by appointment only), low-cost training and technical assistance in all aspects of small business management. We found their advice to be pretty useful, and wanted to share her tips with you as well. So here goes: 

• Understand angels. Angels are private investors or groups of investors who invest in small businesses. Unlike venture capitalists, who invest and manage other people's money, angels invest their own money.

• Determine whether your business is a good fit. Angels often fund companies in the early stages, before they are ready to qualify for bank loans or venture capital, explains SBDC Business Advisor Nina Grooms-Lee.

• Know how much capital you need. Angels typically fund anywhere from a few thousand dollars to $2 million, says SBDC Business Advisor Mike Grimshaw. If you need more than $2 million, angel investors may not be the right choice for you.

• Be prepared to give up some ownership. Since angels generally provide funding in the form of convertible debt or in exchange for an ownership stake, Grooms-Lee says, you need to be comfortable with sacrificing some equity.

• Demonstrate potential for return. Because they make risker investments than banks do, angels expect a higher rate of return. You must be able to show how your business will make money, how the angel/s will benefit and a clear exit strategy.

• Pinpoint the right angels. Angels often focus on certain industries, so you can improve your chances of success by targeting angels that specialize in your type of business. Tech and biotech, medical services and appliances, green products and services and social media tools are all popular industries for angel investment right now, according to Grooms-Lee and Grimshaw.

• Use all your resources. You never know where you'll find an angel, so search both online and off. Grimshaw recommends visiting gust.com to find angel investor groups nationwide. Capital conferences, referrals from business contacts, and your nearest SBDC are good resources as well, says Grooms-Lee.

• Show your management strengths. Unlike VCs, who may replace your management team, Grimshaw explains that angels often pick their investments based on a good management team already in place. Instill confidence in the angels by demonstrating your team's expertise and credibility.

• Be prepared with a strong package. When you make your presentation to the angel/s, be ready with a clear, concise pitch and a well-thought-out business plan. Also use the meeting as a chance to understand the angels' approach and build rapport, says Grimshaw

• Be willing to listen and learn. In addition to capital, many angel investors provide resources, contacts and advice based on their industry experience. Don't miss out on theadvantages this valuable knowledge can provide.

  ---

What do you all think? Do you have other tips for small business CEOs seeking angel capital? What have been your own experiences in trying to access such investment? Share your thoughts below. 

BY Alex Rodriguez on November 1st, 2011

TAGS:

Housing led us in to this recession. It will have to lead us out.

In back-to-back weeks, I found myself sitting alongside industry peers at The Boston Foundation. This time, we were there for the presentation of the 2011 Greater Boston Housing Report Card—an annual report put together by Northeastern University’s Dukakis Center.

Briefly, the report explains that at the core of our nation’s recession is the collapse of the housing market. The authors write that until the housing market recovers, there is little hope for increased economic growth.

As for Greater Boston, the region’s housing market has outperformed national averages. Production has not declined as much as in other areas (think: Las Vegas and cities that were in the midst of a construction boom when the housing bubble burst), and housing prices have not tumbled drastically. 

The report finds that despite this (relatively) good news, Greater Boston’s inner city areas continue to be plagued by foreclosures. These areas (including Lynn, Lowell, Lawrence, Revere and Dorchester) saw home prices skyrocket from 2000 to 2005, leading to an extraordinary bust period from 2005 to 2010.  In the city of Brockton, MA, for example, there were 299 foreclosure deeds in 2008, and home prices are down more than 31% since 2004 (nearly double the loss experienced by Greater Boston as a whole).

High concentrations of foreclosures adversely impact neighborhoods by decreasing overall property values and increasing the number of abandoned properties. The report notes that, “more importantly, [high concentrations of foreclosures have] sown the seeds of doubt in the minds of potential homebuyers, who have stayed away from these communities out of fears of further price declines.” A 2008 report from ICIC echoes those fears, stating that the foreclosure crisis could undermine decades of hard-won gains in inner city neighborhoods across the country.

Furthermore, potential homebuyers, skeptical of the current market conditions, increasingly remain in the rental market. A dual pressure on the rental market has thus developed: first, by those who continue to rent instead of buy; and second, by those who have lost their homes to foreclosure and now must rent. In Greater Boston, the rental market is further compounded by the high number of college students who rent while studying at local universities. As a result, the report finds that Boston has one of the tightest and most expensive rental markets in the country. Low-income families disproportionately suffer from this, as an increasingly high percentage of their incomes go towards housing costs. Nicolas Retsinas of Harvard University’s Joint Center for Housing Studies explained that this will lead to overcrowding and homelessness, particularly in our inner city areas.

Certainly, there was some gloom and doom presented in the research findings. But perhaps most interestingly, and newest to many of us in the audience, were the policy initiatives helping to alleviate the housing burden for our cities’ low-income residents. The report outlines several new housing policies as well as pending proposals, including:

• Successful defense of Chapter 40B: In 2010, there was a bruising campaign to abolish The Massachusetts Comprehensive Permit and Zoning Appeals Act—aka Chapter 40B. Under this legislation, there have been 22,000 affordable housing units built in the past 10 years, resulting in the creation of almost 50,000 jobs and $9.25 billion in economic activity. This law helps secure housing for low- and middle-income residents.
• Passage of HomeBASE: This program, passed by the Massachusetts legislature and enacted in July 2011, makes housing assistance—not shelter—the primary response to assisting the homeless. Families will pay no more than 35% of their income towards rent and utilities while enrolled in the program. Such programs are going to be critical if Retsinas’s prediction of increased homelessness comes to fruition.
• An Act to Stabilize Neighborhoods was passed in 2010 by Massachusetts Governor Deval Patrick. This delays foreclosure by an additional 60 days (to 150 days total) if the financial institution neglects to consider loan modification. The law also protects tenants of foreclosed properties from unnecessary displacement. This legislation will help to alleviate the blight that otherwise spreads as a result of foreclosure concentration.

Not to be forgotten are the programs or policies being rolled out at the national level—including HUD’s “Project Rebuild,” which seeks to rehabilitate commercial and residential properties in our nation’s hardest hit neighborhoods.  There are also local programs that vary from city to city. But in this time of fiscal jurisprudence, cities are increasingly reliant upon federal and state programs. By highlighting these programs, The Greater Boston Housing Report Card not only nicely presents the state of the Greater Boston’s housing market, but also the opportunities for the region to draw support and stimulate our inner city economies. As Barry Bluestone, the report’s author concluded in his presentation, “housing led us in to this recession; it will have to lead us out.”

BY Amanda Maher on October 31st, 2011

TAGS:

GROWING Community and Business

Last week the Inner City Capital Connections (ICCC) program hosted an unprecedented number of participants at its training session in Detroit. Over one hundred investment-ready inner city entrepreneurs gathered to learn about equity and other sources of capital to help them grow their businesses.  Detroit was well represented by its entrepreneurs, with 24 small business CEOs participating and one alumna CEO providing baked goods for all the participants. Avalon International Breads participated in ICCC in 2010 and has since grown its business in Detroit.

Avalon International Breads has always been more than just a bakery. The two founders, Jackie Victor and Ann Perrault, wanted to build a business that would, in their words, “rebuild, respirit and revitalize” Detroit.

That’s a tall order for any business. Yet by 2010, Perrault could remark that Detroiters didn’t refer to the company as “Avalon”—it was known simply as “the bakery.”  When Perrault would deliver loaves to the suburbs, buyers would thank her for the work her company was doing in inner city Detroit: hiring a local and diverse workforce, providing healthy affordable food and building a sense of community with a Midtown retail store. “My whole motivation is to create jobs,” says Perrault. “We’ve lost a lot of jobs in Detroit, and I want secure retirements for people who put 14 years into the business.”

But there’s only so much even the savviest entrepreneur can accomplish without access to capital. Avalon hit a wall in 2010 when it realized that its future was in retail, not wholesale, and that it didn’t have the money to open the storefronts and hire the staff it needed.

Perrault attended ICCC hoping to identify appropriate sources of capital for this new
stage of her business. “Being a $2 million business is very different than being an entrepreneur,” Perrault says. Perrault returned to Detroit “inspired to connect locally. ” She’s now a member of a CEO support group, and her company recently raised $2.3 million from the Michigan Economic Development Corporation.

That money will put Avalon on track to open five new storefronts in the next few years and to double its staff of approximately 45 employees. “There are so many neighborhoods in Detroit that need a place for residents to gather,” Perrault says. Avalon’s initial success bears her out: The current retail location is in an inner city neighborhood, and many residents stop in every day, knowing they can get good food and a sense of community. The bakery also hopes to do a retail business out of its new, larger space, which is in an industrial area. “There are 16 manufacturing facilities nearby,” Perrault says, “but nowhere to buy lunch.”

Learn more about ICCC and its impact on inner city businesses.

BY Mary Duggan on October 28th, 2011

TAGS:

How Can Interest-Based Bargaining Improve our Inner City Economies?

Over the past few weeks, I’ve attended both our own Inner City Economic Summit and the CEOs for Cities annual meeting. These meetings convened top-level private, civic and nonprofit leaders from across the country to discuss ways to improve economic development initiatives in our cities.

A prevailing theme from both conferences was the need to improve education. At the Summit, education focused primarily on workforce development initiatives and creating a strong education pipeline (particularly for jobs in the industrial sector). At the CEOs for Cities conference, I learned about improving K-12 education, community colleges and investing in our research institutions. But the same conclusion could be drawn from both events: education is vital to the health of our inner city economies. 

Last week, I visited The Boston Foundation for the release of Toward a New Grand Bargain, a report by Northeastern University’s (and my graduate school advisor) Barry Bluestone and Professor Tom Kochan of MIT.  At its core, the report acknowledges that cities are in a time of fiscal austerity—and as such, public sector unions are being attacked, and in some cases, dismantled. In order to protect total breakdown between political leaders and civil servants, we should move from a system of adversarial bargaining to “interest-based bargaining” (IBB). The report focuses primarily on doing so in Massachusetts’ educational system; but the same approach could be applied to all public unions.

According to the report, IBB is “an adaptation of basic problem solving techniques, starting with a clear statement of the problem (each party’s interests or objectives), a joint analysis of the data needed to evaluate root causes of the problem and alternatives for addressing it, articulation of the criteria to be considered in choosing among alternatives, choice of an option, and implementation, monitoring and evaluation of the results achieved following implementation.” A move away from demand- / counter-demand bargaining would result in anywhere from 15-20% increased productivity, better services and decreased taxpayer burdens.

One of the chief components of IBB, when implemented in our school systems, is that it must include some sort of “peer assistance and review” (PAR) process. This review process, coupled with professional development would lead to greater teacher compensation, promotions and assignments. In cities like Baltimore, Toledo, and New Haven this model has already proven a success.

So, what does this have to do with our cities?

First, we often hear that our inner city teachers face an uphill battle: they claim that they teach the most difficult students and are paid the least. As a result, some of our cities’ best teachers either move to the suburbs or they leave the teaching profession entirely. A system of IBB would reduce the stringency of contracts (for instance, the report notes that there are 80 pages in the Boston Teacher’s Union contract dedicated entirely to “staffing” and “working conditions”) and provide for performance-based rewards and upward mobility potential.

Second, the report finds that when IBB is used in public sector contracts, it increases productivity anywhere from 15-20%. Increased productivity means taxpayers are paying for more efficient services and it will save taxpayers money.

Third, if we can eliminate the tug of war between unions and administrators, the focus can turn to who deserves it: the students. When students get more attention, they tend to do better in school. When our students are better prepared in school, they are more likely to pursue higher education and better compete in the job market.

At the gathering of urban leaders at the ICIC Summit and CEOs for Cities conference, attendees all recited the need to improve our educational systems (both K-12 and higher ed) in order to foster economic growth and development in our inner cities. While a transition to IBB is only the very first step in improving urban education, it is a move that can be promulgated during this time of fiscal constraint. 

BY Amanda Maher on October 26th, 2011

TAGS:

Cluster Development as an Economic Driver for Inner Cities

Earlier today, our friends at UC Berkley’s Network on Building Resilient Regions posted a blog entry on their website that looks at how cluster-based economic development can be used to drive inner city growth. The entry draws on a recent presentation by Harvard Business School professor, and ICIC founder, Dr. Michael Porter, at ICIC’s Inner City Economic Forum earlier this month. Here is an excerpt from the blog: 

“Latch on to any cluster you have and upgrade it. There is no bad cluster.” 

                             —Michael Porter, professor, Harvard Business School, [founder] ICIC

When casting about for ways to spark innovation and economic growth, many metro areas opt to poach from neighboring states or court a certain industry with tax breaks and other incentives. Rather than looking at one’s neighbors as competitors, metros should look across state or local lines to their region’s strengths, legacy industries, and population, and band together instead.

At a recent conference of the Initiative for a Competitive Inner City, founder and chairman of  Michael Porter, spoke of such cooperation in the form of clusters and their power to spark development. Clusters are a critical mass of firms in a given location in a given field. A food cluster, for example, would include wholesale providers, inspection firms, distribution firms, machinery, and so forth. As a critical mass, clusters promote efficiencies that individual businesses or industries cannot. They take advantage of pools of employees or suppliers or other economies of scale.

“You don’t do skills training for just one firm, for example,” Porter said. “You can do it for a cluster.” The same is true for export promotion or attracting business. In other words, working collaboratively with neighboring regions is beneficial to all. “If there’s a similar cluster in a neighboring region, both clusters do better,” Porter finds.

Clusters come in three forms: local, business, and traded clusters.

• Local clusters exclusively serve local markets (e.g., retail). There is very little trade across regions or across clusters in these forms.
   
• Traded clusters, in contrast, trade across regions and countries. They might be biotech clusters or auto clusters, for example. Traded clusters often offer much higher average wages, innovation is greater, and there is much higher trade.
   
• Business-to-business clusters are like local clusters but serve businesses. They include local commercial services, real estate, utilities, and the like. If an area is weak in these b-to-b clusters, the environment is eroded for traded clusters.

Clusters can also benefit inner cities—with some tailoring. (ICIC defines inner cities as continuous census tracts that are continually distressed based on higher poverty and unemployment rates relative to the metropolitan statistical area and lower median household income).

Inner cities have a different rhythm and different drivers from other areas in the metro region, Porter says. Often, in fact, growth in the regional economy does not signal growth in the inner city. ICIC has found a weak correlation—only 20%—between regional growth and inner-city growth.

“In this tremendous movement to think regionally, we can’t lose sight of this weak correlation,” Porter says. “Inner cities need their own distinctive strategy to complement the regional strategy.”

To read the entire blog entry, click here.

BY Steven Pedigo on October 25th, 2011

TAGS:

IC100 Companies: Using Market Knowledge to Identify High-Growth Market Opportunities

Many CEOs of high-growth firms, specifically those seen on the Inner City 100 over the past 13 years, have taken the skill they knew best (artistic design, programming, building and fixing things around the house, etc.) and made a business of it.  In many instances, the leaders of these companies worked for another firm when they realized there was an opportunity for them to step in, offer better services and fulfill a market need. 

This strategy has not been lost on one particular 2011 Inner City 100 winner, Pittsburgh, Pennsylvania-based Network Deposition Services and its CEO Terri Urbash.  Founded in 2005, Network Deposition Services (NDS) is a full-scale court reporting and legal videography firm and finished #16 on the 2011 Inner City 100 list after posting a five-year compound annual growth rate (CAGR) of 64%.   As of 2009, the company had 29 employees and approximately $1.8 million in revenue. 

Urbash was a full-time court reporter with another firm, but found that she wanted to spend more time with her children so she became an independent court reporter.  From there, she decided to start her own firm where she contracted out to other court reporters. She quickly realized that to be a full-scale court reporting firm, she would need full-time employees.  Urbash began with just her equipment and $100 in the bank to buy letterhead.  Within a year, she opened an office in downtown Pittsburgh and the company was born. 

Given her vast experience as a court reporter in Pittsburgh, Urbash not only had a wealth of knowledge of the industry but also unique knowledge of the local market. She knew the company would be a success if they provided the absolute best service, quality and turnaround time.  Many of the owners of the existing court reporting firms were getting ready to retire, and she was able to recruit who she knew were the best reporters to her firm. In identifying these opportunities, she capitalized on a high-growth opportunity. 

As part of the successful NDS model, everyone on the team spends every two weeks in every position before starting their own, which fosters better collaboration and cross-functional teams. 

In her community, Urbash also operates a number of programs at local colleges to teach court reporting. She provides internships and scholarships to students at Community College of Allegheny County, her alma mater that has programs for court reporters and videographers.  She finds this particularly important because in her past experience, she found that few court reporters are actually trained to do the job. As a result, Urbash’s employees are highly competent and exceed industry standards on quality, turnaround and price.  Her employees participate in continuing education in order to keep up with the latest trends in the industry.  Ultimately, her investment in her employees has fostered superior boss-employee relations, which she finds one of the most unique aspects of her company.

The company’s success has allowed Urbash to expand operations throughout Pennsylvania, another growth market.  She hopes that one day one of her children will take over her high-growth operation, but if they decide that they do not want to take over the company, Urbash would like to give it to her employees to whom she attributes the company’s rapid growth. 

Is your company a growing inner city operation, like Network Deposition Services, that is creating well-paying jobs and opportunities your workers?  If so, apply for the 2012 Inner City 100 by its deadline of October 30, 2011 so that your firm can be recognized in Fortune magazine. CEOs of winning companies receive free management education at Harvard Business School.  To apply for the program, please visit our online application.  Please direct any questions you may have about the Inner City 100 to Alex Rodriguez by e-mail at arodriguez@icic.org or 617-459-7479. 

BY Alex Rodriguez on October 24th, 2011

TAGS:

The Inner City Economic Summit: Identification of Assets and Burgeoning Opportunities

Earlier this month, ICIC convened a group of high-level corporate, nonprofit and civic leaders from across the U.S. to address challenges facing our inner city economies.  Yet as ICIC’s research has shown, our inner cities are also flush with assets. From a readily available workforce, to anchor institutions, to (in some cases) an abundance of land – unique assets in inner cities offer significant opportunities for job growth and prosperity. At the Inner City Economic Summit, we explored these opportunities.  

Through presentations and individual conversations, we were not only able to share ICIC’s own research, but we also learned from the 250+ attendees at the conference. Here are a few of the themes that seemed to boil to the top and really stuck with us:

• The debate about cluster-based economic development is over; it works.  This is where the key assets to economic development are, including our public services, universities, large firms and clusters (or groups of interrelated businesses). During a presentation by Harvard Business School professor and ICIC founder, Dr. Michael Porter explained that cluster-based economic development is a model that has proven successful in growing economies.  It’s time move on to the implementation phase, or the “how-to’s” of cluster-based economic development.  (For more information, watch Dr. Porter’s presentation here.)
   
• “Jobs anywhere” is not enough. Regional growth plans adopted by many of our metros often fail to include strategies for inner city economic development. Dr. Porter explains:
  
  Inner cities have a different rhythm. They have different drivers. Yes, if the regional economy grows, that’s a good thing. But there’s a very weak correlation between regional economic growth and inner city economic growth in terms of jobs…What this says is we have to have a regional strategy, and that’s critical, but if we care about equity, if we care about really tackling poverty in economically disadvantaged areas, we actually have to add an additional set of dimensions.
  
  In other words, regional growth doesn’t automatically lead to inner city growth and strategies developed to leverage regional assets and opportunities can overlook unique and valuable opportunities for inner city growth. By including inner city strategies throughout the regional planning process, regions can achieve economic growth and equity objectives. 
   
• Stagnation can arise from the supply side or the demand side; identifying existing roadblocks is critical for developing strategy.  For some cities and some clusters, economic development challenges arise from supply side conditions; in other cases, challenges can be traced to demand conditions.  Take urban manufacturing, for example.   In Detroit and the surrounding region, tens of thousands of highly-skilled manufacturing workers are currently unemployed.  To address this, the Detroit Economic Growth Corporation and dozens of other groups in and around Detroit are working to identify new markets for existing firms and workers.  The exact opposite is true in Chicago, where the demand for skilled manufacturing workers outpaces the supply. To address this, local organizations like the Chicago Manufacturing Renaissance Councilare are developing programs to train interested high school students for careers in manufacturing.
   
• Land-rich and land-constrained cities both offer promise for various economic development strategies. Land-rich cities tend to have lower population and income densities but also more and better quality available land. For a long time practitioners saw low density and excess land as a weakness. But as recent work by ICIC and its partners highlights, these features can be used to a city’s advantage.In a case study between Boston and Detroit’s food cluster, panelists were quick to point out that opportunities for jobs and entrepreneurship are very specific to locale. Boston, for instance, is a land-constrained city but remains a growth market in which the food cluster’s wholesale production, aggregation, distribution, retail and restaurants are strong. The institutional opportunities (think: Boston’s universities and hospitals) alone are enormous. Meanwhile, Detroit’s shrinking population has left it with an abundance of available land and buildings both of which can be used to leverage the growing food cluster (think, urban agriculture, food processing). As John Aram of Next Street Financial explained, “What’s exciting, about food in particular, is that both cities have tremendous assets…assets that can form the foundation of distinct, but also complementary cluster strategies moving forward.” 

Certainly, these are just a few of the many themes that resonated with us over the two day event. We were incredibly excited to hear the on-the-ground, practical examples of these themes being implemented in our cities. From land-rich Detroit’s use of available buildings for large-scale processing in clusters like food, to the city of Fort Wayne’s collaboration with private corporations to build six high-tech schools to train today’s students for the transformed manufacturing industry – there were a plethora of practical examples presented at the conference, leaving leaders with case studies to bring home to their home districts.

Were you at the conference? What were some of the main themes that you heard? Was there a particular case study that you found interesting?

For those who were unable to join us: do you have examples of the above themes to share with us? We’d love to hear about these models in action in your city.

BY Amanda Maher on October 19th, 2011

TAGS:

Through Diversification, One Company Brings Value to Inner City Oakland

“One thing we know about creativity is that it typically occurs when people who have mastered two or more quite different fields use the framework in one to think afresh about the other… But if you spend your life in one silo, you will never have either the knowledge or mental agility to do the synthesis, connect the dots, which is usually where the next great breakthrough is found.” – Marc Tucker, President and CEO of the National Center on Education and the Economy

As facets of our society continue to become more specialized, it is useful to remind ourselves that, for much of Western history, diversity of achievement was exalted as the truest testament of talent.

While the mention of Leonardo Da Vinci evokes images of the Mona Lisa and the Last Supper, less well known are his visionary sketches of tanks and helicopters and his contributions to the futures of manufacturing and geology. Perhaps then, the modern trend towards specialization can be viewed as a lens through which distinct problems can be solved. Just as Facebook brought another layer to Myspace and Pandora (number 2 on last year’s Inner City 100 list) combined the best of radio, professional taste, and individual preferences, firms across the country are creating value by cross-applying expertise.

So it was for Santiago Cuenca-Romero, CEO of Premier Organics, #21 on last year’s Inner City 100 list.

With a food science background and experience in the meat grinding industry in Spain, Cuenca-Romero went about applying his previous experience to the higher margin organic and raw foods markets through artisan nut butters and coconut products. After putting his life savings into the project, Cuenca-Romero and his two partners turned their idea into roughly $3 million in revenue last year and an average year-over-year growth rate of 70% over the last 5 years. Now, Romero not only wants to scale his existing operations, but also wants to diversify into other ingredients and create a stronger brand for consumers.

Continued growth will not be easy. The fact that American banks are currently sitting on $2 trillion in cash reserves makes finding capital tricky even for highly successful inner city firms like Premier Organics. Although research has shown that inner city companies generally garner less capital than their non-urban peers, part of Dr. Porter’s rationale for starting ICIC was that firms in the inner city – particularly those near urban clusters – have unique advantages that can be leveraged to create value. Located in inner city Oakland, Premier Organics has close proximity with many of its suppliers, access to public transportation, and a useful collaboration with Inner City Advisors, an organization that provides vital strategic support and services for growing inner city firms.  

Premier Organics is foremost an example of the power of trade clusters to create jobs in the inner city and a validation of ICIC’s ideas about urban economic growth. To entice companies in the emerging cluster to stay in the area, the City of Oakland has passed packages of tax incentives and built new real estate to improve surrounding neighborhoods. Presumably, better neighborhoods will result in increased pressure on local government to improve schools, thereby increasing the area’s talent pool and the firm’s competitiveness.

The virtuous cycle of commercial growth encouraging the public sector to take responsibility for previously neglected neighborhoods is what we at ICIC think can herald in a new dawn for American inner cities. If Premier Organics’ growth is any indication, Oakland and other urban communities are in good hands.

Are you the CEO of another high-growth company capitalizing on the natural advantages of being located in an urban area?  If so, you should apply for the 2012 Inner City 100 where your company will receive recognition for its success in Fortune magazine as well as a year-round management education offering including a day at Harvard Business School. The program is free and includes networking opportunities that have led to new business opportunities for program participants.  To apply for the program, please visit our online application. 

BY Sathya Vijayakumar on October 17th, 2011

TAGS:

What I heard at the CEOs for Cities Conference

After a multi-hour flight delay at O’Hare, I am finally situated and in the air; finally heading back to Boston. For the past two days, I’ve been in Chicago at the CEOs for Cities conference. With Lee Fisher at the helm, the organization brought together civic leaders from across the nation for two days of discussion about the challenges faced by our cities.

The panels ranged in expertise and scope: we heard from the Secretary of U.S. Housing and Urban Development (HUD), Shaun Donovan, about how the federal government is supporting cities; we learned that Chicago’s public-private partnerships were generating a bottom-up approach to the city’s revitalization; we discussed the metrics needed to measure exactly what makes a city successful (interestingly, a city’s “weirdness” was a factor!); we heard from thought-leaders like Henry Cisneros and Ed Glaeser on the future of our American cities; and Bruce Mau joined led a provocative conversation about the design of our urban environment.

Throughout these (and others, to be sure) discussions, I noticed a few general themes to what panelists were discussing. Despite the nature of the panel, speakers harped (and, deservedly so) on the following topics:

1)      Anchor institutions (think: ed’s and med’s, corporate HQs and cultural institutions) are too often an untapped resource that, when leveraged, can lead the way in a community’s revitalization. Paul Grogan, Secretary Shaun Donovan, and Henry Cisneros were just a few who emphasized the importance of anchors. Specifically, Chris Kennedy singled out research institutions’ ability to generate economic prosperity for cities. As Boston College graduate himself, he singles out the Boston university infrastructure: throughout Boston’s history, it’s had boom and bust eras; each time it looked like Boston was about to die, the research institutions led the way in innovative research that resulted in job growth and prosperity once again. He says that other cities need to find a better way to create partnerships between university leaders, civic leaders, business leaders, and politicians – in doing so, they can collectively fight for additional funding in Washington and bring home the bacon to their city’s research institutions.

2)      Education is the single-most important factor in driving economic growth. While others may disagree (often we hear that rates of entrepreneurship and number of small businesses are also “number one” indicators of a city’s economic vitality), those in the room came to an agreement that without improving our education system – starting with K through 12 education and continuing through advanced degrees – we will be unable to improve our economy. Some sobering statistics included: only 1% of the world’s population holds a bachelors degree; 58% of a city’s success is dependent on number of residents with a college degree; if the 51 largest metro areas each increased their college attainment rates by just one percent, the nation could realize $124 billion in additional personal income (talk about a stimulus!). Clearly, if cities had a stronger education pipeline, the economic benefits would be vast.

3)      All cities are fighting for the “creative class” – or the innovative, energetic and increasingly mobile recent college graduates.  Recognizing that (without the aforementioned improvement in education) cities must compete for these residents, we heard civic leaders talk about the varying ways they seek to seduce the creative class. In Oklahoma City, Mayor Cornett explained that he needed to rebrand the city to create a new image: to do so, he began by bringing a professional sports team to town in order to attract young, passionate professionals. In Grand Rapids, Mayor Hartwell is investing in infrastructure. He believes that without transit, creative young talent will be hard to capture. As such, the city is developing its first street car and investing in a 12.8-mile bus rapid transit system. Jim Dunlap, also of Grand Rapids, claimed that “talent first chooses where it wants to live,” then what it wants to do (jobs); therefore, city leaders must build a place where young people want to move. Cities must learn to say “yes” to Millennials—what they like, matters.

You can build transit, art museums and riverside cafes; but just doing so doesn’t spur the settlement of our nation’s young, innovative minds. Indeed, there is a reason why talent seems to congregate in places Silicon Valley, New York City, Boston, Durham and Austin. An entrepreneurship competition in Cincinnati will not suddenly divert the creative class to Ohio (especially, if after the competition is won, the winner takes their business and prize money to San Jose).

Given these themes, I would have liked to have heard more of two things at the conference:

First, it seems like trying to attract the creative class from the nation’s thriving urban centers is an up-hill battle. Instead, it seems to me that creating a home-grown creative class would be a more viable option for many of these cities. How are struggling cities trying to cultivate their own young, innovative creative class—and then retain these bright minds in to the future?

Second, with the heavy focus on the three themes above, there was little discussion of how these themes can improve the lives of our inner city residents. During the brainstorming session with Bruce Mau, group manifestos all envisioned the future as a just, equitable and prosperous place for people of all backgrounds, ethnicities and skill-sets. With the heavy focus on college graduation rates and attracting young talent, there seems to have been a lack of discussion on how to improve life for our most economic disadvantaged urban residents—aside from hoping that cities were successful in capturing the creative class, who would then be so brilliant and innovative, that they could then solve problems of workforce development, minority-owned businesses’ lack of access to capital, and other social ills (think: poverty, unaffordable housing, etc.) facing our cities.

Admittedly, these are tough questions—questions that I certainly do not have all the answers to.

There is only so much a group can cover in two days of discussion. The challenges faced by our cities are numerous, and the topics covered at the CEOs for Cities conference are a fantastic place to begin. There are myriad, exciting initiatives happening in our nation’s cities, and this conference was a great platform for civic leaders to share the work happening in their own cities. I’m grateful that I was able to take part, and look forward to collaborating with these leaders in the future.  

BY Amanda Maher on October 13th, 2011

TAGS:

"Jobs Anywhere" is Not Enough

Guest Blogger: Andriana Abariotes, Executive Director, Twin Cities Local Initiatives Support Corporation (LISC)
Originally posted on Leadership and Community

This was the mantra at the Oct 3-4 “Urban 2.0” Inner City Economic Summit in Chicago.  Convened by the Initiative for a Competitive Inner City (ICIC), this day and half-long conference focused on the next generation of jobs and business needed to improve the vitality of inner city communities and opportunities for the people who live in them.  I was one of roughly 250 participants, representing the public, private, philanthropic, and community and nonprofit sectors, who are all returning to their own communities better informed (and a bit jazzed) about some of the latest thinking in urban revitalization and community development, especially as it pertains to jobs, small business, and workforce development.

The challenge put forth by Harvard professor Michael Porter, chairman and founder of ICIC, was that if we’re to see dramatic change in meeting the employment needs of inner city residents and economic growth in these communities, more focused and customized strategies are needed.  He also proposed that focusing on industry clusters, which is much more prevalent globally and increasingly utilized in the United States, can and should be an economic development strategy within distressed urban areas.

Why?  Because regional growth and prosperity depends on it.

So what does this take?  In example after example, panelists and presenters highlighted key elements that need to be present:

• Clarity of vision
• Coordinated leadership, aligning and leveraging stakeholders (their strategies, strengths and resources)
• Communicating transparent and relevant information to all involved
• Creating trusted relationships
• Bridging social capital, especially across race and class
• Committing to the long-term

These elements reflect the “how” rather than the “what.”  Far too often, we get focused on the next best thing.  And while I believe in the sharing of approaches that work (and even sharing those that didn’t), when it comes to developing and implementing strategies in communities–whether at the neighborhood or regional levels–the “what” becomes highly customized to the local environment.

I will contend, however, there were some really great approaches shared, too.  Transformation of Chicago’s City Colleges system to help students achieve economically relevant credentials for the jobs of today and the future vs. jobs in the past 25 years.  Re-framing the industrial/manufacturing sector as cluster development in inner cities and preparing the workforce to be able to obtain those jobs.  Focusing on small business development, particularly minority-owned businesses, as assets in inner cities helping to create employment and wealth creation opportunities.  An inspirational story of Revolution Foods, a social enterprise producing and distributing fresh food to schools.  And the list goes on.

ICIC is promising to continue the dialogue started at the summit on their blog and on Twitter using the hashtag #ICICSummit.  I’m looking forward to hearing more from ICIC and other participants.  More importantly, I’m interested in figuring out how to put this wealth of information to work.  Let me know your thoughts.

BY Steven Pedigo on October 12th, 2011

TAGS:

Small Businesses with Big Community Impact

“The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.” – Michael Porter in “Creating Shared Value”

Looking at the small businesses that participate in the Inner City Capital Connections (ICCC) program, one cannot help but notice how deeply today’s companies seem to be incorporating the concept of “shared value” into their core business models. Whether out of conviction or economics, firms are incorporating standards of excellence above and beyond what is legally required and reaping the benefits of their benevolence on their balance sheets. FutureNet Group, a four time Inner City 100 honoree as well as three time participant in the ICCC program, has achieved success far beyond its modest urban accommodations by growing at an annual rate of more than 100% over the last five years. Located in Detroit, Michigan, a city devastated by manufacturing losses, FutureNet Group merits particular attention for its commitment to distressed communities at home and abroad.

“Our commitment to Detroit has never wavered,” said Perry Mehta, President and CEO. “We purchased a warehouse in the inner city, which is our base of operations, and hire locally as much as we possibly can.  We strategically manage the relationship between the company’s economic success and that of the city by providing jobs and opportunities for the people who live in this community. Our success is their success and vice versa.”

Some companies have their employees volunteer locally a few times a year and justifiably consider their societal obligations met. FutureNet Group, a general contractor on construction and IT environmental projects, offers computer education to over 20,000 disadvantaged students each day in founder Perry Mehta’s native India. Not to be outdone domestically, the company utilizes its construction expertise to buy and rehabilitate housing for low-income residents. Given Detroit’s recent manufacturing crisis, Mehta’s work contributes crucially to the viability of his community.

Yet, the company likely impacts society most through its commercial work. For example, FutureNet crucially took a lead in repairing infrastructure in post-earthquake Haiti. Additionally investing in technology to help the world cope with looming water scarcity, the firm plans to sell water desalinization products at 1/10 the price of its nearest competitors – all while prioritizing manufacturing jobs in Detroit. While most inner city companies garner only half the capital of their non-urban brethren, standouts like FutureNet beat the odds for growth and lift up their inner city communities in the process.

FutureNet Group provides an exceptional example of how today’s small businesses are anything but small with regards to their community impact. We are proud to work with deserving small businesses like FutureNet through ICCC.  By helping promising firms find the right investors, everyone truly wins. Investors get high returns, distressed communities find sources of pride, and companies realize the outer limits of their commercial aspirations. At a time when the primacy of financial markets is being questioned, FutureNet affirms the power of prudent capital and a responsible value proposition to effect positive change.

BY Sathya Vijayakumar on October 6th, 2011

TAGS: small business | shared value | iccc | detroit | community development | entrepreneur

Thoughts on Food 2.0 by a New Urban Mom

Guest Blogger: New Urban Mom

We are in the midst of tremendous evolution with respect to the relationship between food and urban communities. During the Food 2.0 discussion at the 2011 Inner City Economic Summit, we heard again and again that urban food is evolving and the whole “local food” movement is growing.  That’s evident in the thousands of farmers markets springing up not just in far flung suburban rings but smack dab in the middle of our urban cities.  

Food is such a core contributor to our emotional and physical well-being that it is no wonder the growth in food clusters in our urban cities is influencing not only our personal food choices but how we feel about our neighborhoods and cities.

More urban communities are re-imagining gardening and urban agriculture not as a solitary pursuit but as a healthy, altruistic and entrepreneurial effort benefiting the community as a whole. Abandoned lots in struggling cities like Detroit and Cleveland are being converted into cultivated plots of land growing produce for commercial output and community education purposes. This is social and economic change at its best.

As a parent and someone who is particularly sensitive to the impact of our community behaviors on the development of our children I have to say this “movement” is long overdue but so very much appreciated.

For too long inner city families have been inundated with limited food choices that threaten their health and vitality.  The move towards healthy, locally grown, cultivated and processed food options not only helps to create jobs but helps to improve lives from the inside out.

To ensure the sustainability of these efforts the ICIC discussion panel examined the unique assets in our cities, especially the institutional urban anchors often ignored but so essential to sustaining the businesses that comprise our urban and regional food clusters.   

We learned that we can and should leverage the buying behaviors of anchor institutions like universities and hospitals to stimulate job growth and demand in our local economies.

While city boosting initiatives like those sponsored by ICIC will continue to inspire and encourage support, to move these ideas from concept to implementation requires local leadership. Food 2.0 panelists rightly identified the need for leadership in key places that can create the local policy and behavioural changes required – places such as the mayor’s office, city agencies, hospitals, universities, foundations and neighborhoods.

Investing our creativity, innovation and political capital into the growth of local food clusters appears to offer a welcome and effective strategy for reinventing our cities as places where people can live, thrive and contribute to the success of the nation’s economy.

BY Steven Pedigo on October 5th, 2011

TAGS:

ICIC Summit Live: Two Days is Never Enough

We’ve spent the last two days gathering urban leaders from across the nation to discuss the future of our inner city economies. We’ve learned how cities can improve access to capital for small businesses. We heard how Chicago, led by the Civic Consulting Alliance, has formed strategic public-private partnerships to promote economic development. We were informed that the largest remaining barrier to growing the industrial economy is lack of education as to what the sector entails and which skills are needed.

Food? We covered that too. After an inspiring keynote by Kristin Groos Richmond of Revolution Food, we heard a cast of panelists discuss the ways we can grow the emerging food cluster to promote job growth and economic prosperity in our nations’ most distressed locations. Rounding things out, we heard that our inner city economies must not be forgotten about in this age of regionalism, as their assets and needs are often very different than the region as a whole.

While we’ve learned a great deal, the reality is that the conversation about our inner city economies cannot end after two days.

We would like this blog entry to serve as a connection point for all of the conference participants – both in person and the hundreds who joined us online! Please share with us, and with each other:

• Your thoughts on the conference
• How your city is applying the models discussed at Urban 2.0
• Best practices from cities we may not have heard about
• Discussions that we may have overlooked
• Questions for panelists that you weren't able to ask

And of course, if you met someone at Urban 2.0 that you want to get back in touch with, this a forum to do that as well. Here at ICIC, we hope to be the beginning catalyst as part of a longer, ongoing discussion. Only if we attack these challenges together can we truly make an impact on our inner city economies.

Miss part of the conference? Visit www.icic.org/live for forthcoming videos and related presentation materials.

BY Amanda Maher on October 4th, 2011

TAGS: