INTERISE INSIGHT: BUILDING INCLUSIVE AND EQUITABLE ECOSYTEMS
“The extent of and continuing increase in inequality in the United States greatly concerns me,” Janet Yellen, Federal Reserve Chair
Business ownership is a route to wealth creation and closing the racial wealth gap. The catch: Lack of wealth inhibits entrepreneurship. Small business owners often rely on their own savings, equity in their home, and loans from family and friends to start their businesses, grow their businesses, or even to meet the needs of day-to-day cash flow. Business owners without these resources bear a distinct disadvantage.
Capacity-building programs support small businesses to develop such assets as knowledge, know-how, and networks around contracting, financing, and strategic planning. Interise research has found that, through capacity building, minority-owned small businesses and businesses located in low- to moderate-income (LMI) communities increase revenues and create jobs at rates higher than other established small businesses.
- Capacity building matters. Businesses completing a capacity-building program powered by Interise’s StreetWise ‘MBA’™ create jobs at 9x the rate of the private sector as a whole.
- Capacity building yields impressive outcomes for inclusive economic development:
- Interise businesses as a whole increased revenues by 43%; businesses operating in LMI communities increased revenues by 44%; minority-owned businesses increased revenues by 48%;
- Companies across our network created 5.8 jobs per business, while minority-owned companies created 7.2 jobs per business.
Why do businesses in low- to moderate-income communities and minority-owned businesses perform better on some key business indicators after a capacity-building program? Interise hypothesizes that the marginal benefit of additional knowledge, know-how, and networks for these businesses is higher than that for white-owned businesses in more affluent neighborhoods.
Interise will be exploring these insights in future research to better understand the barriers facing underserved small businesses in pursuit of an economy that works for all.
#ImpactMattersInterise’s 2016 Impact Report is based on our annual assessment of StreetWise ‘MBA’™ alumni. The questionnaire was sent to 1,669 alumni from 2013, 2014, and 2015 cohorts to collect 2015 business outcomes and CEO behavioral data, yielding a response rate of 52%.