Opening a small business can be challenging, exhilarating, rewarding – and good for the community. This was the message from several Washington, D.C.-area small business owners who gathered earlier this month forthe Atlantic’s Small Business Forum in D.C. to discuss their paths to success and the challenges that face would-be entrepreneurs.
For small businesses, a strong company culture can be a powerful employee retention strategy during the unprofitable startup phase. Union Kitchen, a food incubator, purposefully keeps starting salaries low, but gives frequent raises for good work. Coaching small businesses on building company culture to attract talent for less money could be a new or expanded role for EDOs.
To grow a business, knowledge and capital are key assets. Michele Markey of the Kauffman Foundation – who will speak at IEDC’s Leadership Summit in New Orleans next month – emphasized discretion when hiring (i.e., best friends might not make the best CFOs). Great tools exist to help small businesses to expand without the responsibility of handling employees benefits. Professional employer organizations allow small business to outsource human resources, employee benefits, payroll, and workers’ compensation.
Community benefits: Jacques Panis, president of Shinola– best known for its affordable luxury watches and for “bringing manufacturing back to Detroit” – explained that his company’s brand is intertwined with the city’s. Shinola employs Detroiters, many of whom used to work in auto manufacturing. Although the company has been criticized for sourcing parts from elsewhere, its success has been a win for lifting Detroit’s image (CBS News).
Several small business owners emphasized the importance of connecting with their communities. Michael Lastoria, founder of made-to-order pizza franchise &pizza, hires local employees and decorates according to the personality of the neighborhood. Lastoria talked about the importance of appealing to the neighborhood’s original inhabitants, not just affluent new residents. Brandon Skall of microbrewer DC Brau encouraged small businesses to engage with the community through volunteering, hosting events, and being neighborly.
These points were hammered home by Andy Shallal, founder of Busboys and Poets (D.C. residents and visitors may know the local restaurant chain as the cool hangout in several neighborhoods). Each establishment has a restaurant, bar, bookstore, and a space for cultural activities and speakers. Shallal noted that small businesses can do more than create local jobs – they can also provide a space where people can come together for food, culture, and community.
Challenges: Access to capital remains troubling. Insight from Bank of America’s Robb Hilson shed light on a missing ingredient of many loan applications: confidence. Bankers typically don’t lend to entrepreneurs that aren’t confident in their business plans.
Kellee James of Mercaris reminded the audience that being able to start a small business is, in fact, a luxury. Small business owners have the ability to leave their day job; go some time without steady income; can tap into a support network; and can take it for granted they won’t face discrimination from clients or service providers. James also called for diversifying types of female-owned startups. She pointed out that women typically start businesses in the service industry, which delivers lower average wages.