Welcome to this week’s rural entrepreneur weekly webinar. This week we are going to be doing a high level overview on the importance of mentorship, especially for underserved and minority owned businesses. 

My name is Addison Vang, and I am a Community Development Educator with the University of Wisconsin Madison, Division of Extension. This is just a quick overview of the breakdown of this video. 

Entrepreneurship is an important part of the local economy and has played an important role as a sustainable economic development strategy for many communities. A study has shown that over time, entrepreneurs not only support the local economy but also provides many benefits to its community as well. One of those benefits is job creation. About a third of all new jobs are created by new businesses. And while existing businesses do create jobs, they also cut jobs through layoffs and closures. 

Entrepreneurship supports the overall higher GDP for cities and counties, and it’s an opportunity to support underserved and marginalized populations to get out of poverty and reduce their dependence on welfare. 

Entrepreneurs tend to also be able to provide a lot of innovative products as well as services. Often they will fill niches that may not exist in the community, such as ethnic grocery stores. 

With the smaller businesses, they tend to be more local, where they have much more of a focus in the community, as compared to many franchises and much larger businesses. This commitment to community often results in them supporting the makeup and creating the character for many community identities. An example of this are the Chinatown’s that exist throughout the US, as well as right here in Wisconsin, with Milwaukee’s Third Ward. 

Mentors come in many different forms. They could be teachers, professors, other business owners, even bankers, and consultants, advisors, you never really know exactly who is going to be a mentor, or where they come from. 

One of the benefits of mentors is that they act as a compass. They help you navigate your business quickly and more efficiently in order to reach your goals to have a successful business. They allow you to reduce the learning curve as a new entrepreneur, and be able to really focus on just how to create a successful business as opposed to dealing with identifying finances and dealing with business obstacles. They also are able to help you with identifying programs to support your business just with their wealth of knowledge and experience. 

So why underserved and marginalized entrepreneurs? It is important to understand the challenges for the underserved in businesses owned by people of color, as they often deal with cultural language, and systematic issues as well as biases and racism that exist. 

So first off, under-served entrepreneurs tend to have a limited network, connecting them to resources due to institutionalized systems, cultural and language barriers, as well as a network that may share similar limitations to a path to success. Looking at business associations and local chambers, those who often support much larger business, as opposed to smaller, minority owned businesses. These associations also tend to be more white and male, making it much harder to break into these professional networks. In addition, small businesses often do not have enough resources to invest their time to play a much bigger role in these associations. Finding mentors feels much harder with a limited network. 

They also tend to have limited capital assets as well as access. Thinking about this, often people think of banks, and where banks are often majority white, they tend to encourage and trust in banks as a wise, wise choice. Black and people of color have historically been taken advantage of by these institutions. They tend to have higher interest rates, riskier investments, as well as, just completely being denied access to these banking institutions. 

This leads to business owners of color having just less history, less relationship and connections to banks. Often financial programs tend to also incentivize larger businesses to participate in, which are less likely to be businesses that are owned by people of color. These non-traditional entrepreneurs’ difficulties accessing capital are further compounded by other challenges, such as just a lack of formal business training, businesses located in distressed neighborhoods that may suffer from crime and blight, or just the perception that they are. They tend to have less foot traffic, as well as being in more gentrified areas with increasing rents. So all of this contributes to having a lack of relationship, lack of trust, more bias between these underserved business owners and financial institutions. 

Another issue is specifically with just capital assets. Many businesses that are owned by people of color, when they’re starting, they don’t have the disposable assets, the the financial assets, to hire consultants, and advisors to support in successfully starting up a business.

 Business owners of color already have an uphill battle with existing systematic disadvantages, even when programs are designed with an effort to support these small business owners. Looking at federal programs, such as most recently the paycheck protection program, as a COVID relief program to support small businesses, one of the focuses was on marginalized underserved small businesses, which did not quite get to them. One of the reasons was that a lot of these programs were administered mostly by large financial institutions who tend to not serve people of color. The program again incentivized larger businesses that are not owned by businesses of color, and it also prioritized existing bank relationships. 

Some of the strategies to address these systematic gaps and targets and resources to better support business owners of color includes, you know, accessing to direct and tailored support, interpretation, translation services, making sure that funds are channeled through local community organizations, or administered programs with very defined set mandates and guidelines targeting these underserved communities. 

As an example of of one of these programs is the Entrepreneur In Training Partnership which is a extension program and it offers free entrepreneurship job readiness, and personal development training program for currently and formerly incarcerated community members to help transform their lives, create future business leaders, and to create future business leaders of for those people with criminal back backgrounds and histories through a rigorous entrepreneurial training program, the program targets a underserved population, where many identify as a person of color. 

There are many opportunities throughout the year to participate, but also to participate as a coach or mentor as well. And there are other resources from extensions that provide entrepreneur support from all walks of life. 

Color Bold Business Association is an organization led by people of color supporting new and established entrepreneurs and nonprofit leaders of colors that provides resources, events, and highlights businesses of color. And there are many more businesses  like these organizations like this supporting throughout the state as well as locally. 

Again, a list of some resources to kind of think about our, you know, our Wisconsin Latino, the Hmong, Wisconsin and the LGBT Chamber of commerce, as well as SCORE for black entrepreneurs.  Then we also just have some typical local resources, our business associations with like such as the restaurant associations, looking at your local Chambers of Commerce, the Small Business Development Centers, and then looking for some of these innovation in business incubators, such as Generate out of Madison, and CoLab out of Eau Claire. And this is more resources that extension has to offer, sporting businesses, as well as entrepreneurs of color. 

With that, I want to leave you with this quote that explains how a lot of businesses owned by people of color operate.  “I have not failed. I’ve just found 10,000 More ways that won’t work.” Oftentimes, I feel like this is really how they operate. Always finding obstacles and trying to figure out how to get past that, and they make it work. But there’s an easier way, a better way to do it with just a little help and support. 

I would like to thank everyone for watching the webinar. Please watch some of our other webinars coming up or already done. If you have any questions, feel free to reach out to me or one of our Extension educators with any of the questions that you may have or resources that I have provided. Thank you!

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