It’s all but impossible to overstate the importance of entrepreneurship and business formation to economic growth.
For example, businesses that are less than five years old account for nearly all net new job creation in the U.S. and almost 20 percent of gross job creation, according to the Ewing Marion Kauffman Foundation, an entrepreneurship-focused non-profit in Kansas City. In fact, every year an average of 1.5 million jobs are formed by companies less than a year old; small firms even remained a positive source of net employment growth through the darkest days of the 2009 financial crisis.
The 25 million-plus businesses in the U.S. with fewer than 50 employees represent 95 percent of all U.S. companies and account for more than half of the country’s gross domestic profit (GDP).
Since 1995, this group has been responsible for paying out 44% of the total U.S. private payroll.
They produce 13 times more patents than their larger peers, according to Paychex.
And yet, new and small businesses still have their fair share of problems to overcome.
Finding and retaining qualified help is an ongoing challenge — in fact, 23 percent of small business owners consider finding workers their top business problem as of 2018, according to the National Federation of Independent Business — and inflation and other macroeconomic factors are continuing concerns for owners and managers.
Given all this, what can larger, more established business leaders do to help these small companies start up and grow?
Buy from them: If there’s one thing that every startup and small business needs, it’s a customer. Beyond simply providing revenue and helping the new business get their operations off the ground, early customers can also serve as critical mentors and advisors to young companies, helping them shape their offering to the market and providing much-needed feedback from the buyer’s perspective.
Teach them: No successful venture has ever been completed alone, and that’s why mentorship and one-on-one help is so valuable to entrepreneurs. The business world is large and complex, and it can often be overwhelming to new entrants. Established businesses leaders — even if they never were entrepreneurs themselves — are well positioned to help their peers navigate this minefield, offering insights into everything from product market fit, to hiring, to operations, legal matters and more. Mentorship organizations can help facilitate these interactions. In Denver South, organizations like Innosphere, TiE Rockies, and a number of coworking spaces throughout the region offer opportunities to get involved with startups, small businesses and growth stage companies in a variety of ways and events like the new series launched by CU South Denver, Journey to the Top, create learning opportunities for the leaders of small businesses.
Vouch for them: The regional business community is just that, a community. It’s an open and accepting group, of course, but it can be intimidating for new entrepreneurs and small companies to get involved locally simply because they don’t yet know the right people. Established leaders can help bring these new business people into the fold by inviting them to events, introducing them to potential customers, recommending their services to others and more. Often, all a new business needs is a trusted ally in their corner. From there, they’re off and running.
Staff them: Given the tight labor market — the unemployment rate was 3.7 percent nationally as of October 2018, and less than 3 percent in Colorado — hiring at all levels of business is a challenge. But that doesn’t eliminate the fact that hiring the right team is a critical part of startup success. In fact, hiring those first few employees might actually be more important at a startup than hiring is at a large enterprise, where roles are established and employees are part of a well-oiled machine. Established business leaders can help by sourcing candidates from their personal networks, helping guide candidate evaluation and hiring, and even by sharing leads to potential candidates that might be a good fit. Connecting with organizations like the Denver Metro Small Business Development Center and Arapahoe Douglas Works is a great way to connect your network to businesses looking for qualified candidates.
Model them: So much of the first few years in the life cycle of most companies is spent on operations — determining what needs to be done, who needs to do it and how it should all come together. This is a process that every new leader needs to go through with their own team and focused on their own product, but established businesses can offer valuable insights into what works and what doesn’t from a process standpoint simply by showing off how they manage processes internally. Every business is different, of course, but there are enough similarities between enterprises of all sizes that there are some universal takeaways. Offering nuts-and-bolts advice like this — not by doing anything unique beyond simply showing them how it all comes together behind the curtain — can help speed up a small company’s development cycle dramatically by providing them with a proven, effective model to emulate.
Learning from and connecting with other businesses is important for every entrepreneur, and can be very rewarding for established businesses as well, providing new connections, new energy and even potential new customers.
There are opportunities throughout the region to connect with small businesses. Whether you’re looking to buy locally and support a local company, give time and mentorship to a budding entrepreneur or plug in to learning and networking opportunities that are happening throughout the region, Denver South EDP is happy to help connect you and get you plugged in.
And, after all, a rising tide lifts all boats, whether it’s a growing GDP or a robust local business community.