Local Policymakers

Dedicate a small percentage of current funding to new entrepreneurs and young businesses, and track the impact.

5% of Government Contracts:
Redirect 5% of government procurement dollars to businesses under 5 years old.

• Government contracting is increasingly biased against new entrants. Local-level data is rare, but federal data shows that the number of small businesses entering the federal procurement marketplace as new entrants declined by 79% from 2005 to 2019.

• Research suggests that government procurement practices – particularly basing decisions on past performance – may hinder new businesses.

• Ways to lower barriers for entrepreneurs include: faster approvals and certifications, faster payment terms, lower costs of entry, broader outreach marketing, prioritizing innovation as a selection factor, measuring past performance based on other customers, giving a pricing advantage, establishing set-asides, and/or providing concierge services.

• Policymakers can give new entrepreneurs direct assistance to navigate procurement bureaucracy and get paid faster, such as in Washington, DC or with private financing vendors like Now.

• Measure contracts to businesses under 5 years old by tracking the age of businesses awarded.

5% of Workforce Development: Redirect 5% of workforce training funding into helping Americans start businesses through local and online entrepreneurial support organizations.

• The Workforce Innovation and Opportunity Act (WIOA) of 2014 made “microenterprise and entrepreneurial training and support programs” allowable activities, but insufficient metrics and incentives have resulted in little uptake. Some of the few early innovators in this space include Make Startups (Georgia), City Startup Lab REEP program (North Carolina), and the Wisconsin Division of Vocational Rehabilitation. Workforce boards should allocate at least 5% of their WIOA funds to train and support people starting and growing their own businesses.

• Local organizations that deliver strong support programming for entrepreneurs (through mentoring, networking, training, educating, incubating, and investing) include past Kauffman Foundation grantees nationwide, here and here.

5% of Economic Development: Redirect 5% of economic development funding to bottom-up efforts that build entrepreneurial ecosystems.

• Traditional economic development incentives do not lead to desired jobs and growth. They are often focused on attracting larger companies, rather than growing new businesses.

• The City Inclusive Entrepreneurship Network includes more than 175 cities that have committed to implementing policies, programs, and practices to support entrepreneur-led economic development.

• New economic development practices for building entrepreneurial ecosystems are available from Startup Champions Network, SourceLink, Kauffman Foundation Ecosystem Building Playbook, and the International Economic Development Council.

• Rural entrepreneurial economies can learn from resources such as e2 Entrepreneurial Ecosystems, Rural Rise, and Center on Rural Innovation.

“Entrepreneurship Czar”: Designate a lead coordinator on policies affecting entrepreneurs across the entire government. Serves as official liaison to voice the concerns and needs of entrepreneurs throughout government and facilitate the removal of barriers.

• Track data on new business creation and growth and the lowering of barriers for entrepreneurs. Governments are generally poor at measuring entrepreneurial activity.

One-Stop Shop: Provide a single “customer service desk” for entrepreneurs to navigate government red tape.

• An array of local agencies intersect with and influence the entrepreneurial process in ways that are often opaque to entrepreneurs. Entrepreneurs need a single place to go.

• One-stop shops can help entrepreneurs overcome the complexity of navigating bureaucracy, avoid delays in opening a business, and create a more supportive environment for new business creation.

• Less than 25% of business license services in mid-sized cities are available online.

• Miami’s e-Start digital services, Kansas City’s BizCare one-stop virtual concierge, and Atlanta’s ATL in Business integrate business services so entrepreneurs can get rapid approvals and assistance.

Entrepreneurial Support: Work with stakeholders, communities, and entrepreneur support organizations to provide information, support, and access to entrepreneurs.

Reduce or eliminate registration costs and fees for new businesses in their critical early years.

An Institute for Justice report that examined the process of starting a business in 20 U.S. cities found that to start a restaurant, entrepreneurs had to pay an average of 13 different fees for permits and licenses totaling more than $5,300.

The same Institute for Justice report found that starting a business is a complex process. To open a barbershop, for example, an entrepreneur has to complete an average of 55 steps with eight different government agencies.

Riverton, Utah eliminated all license fees for all businesses. Sacramento County passed a license waiver for veterans. East Lansing waived fees for all new businesses during the pandemic.

During the pandemic, many cities (including Chicago and Washington, DC) streamlined “public way use permitting” to expand onto the sidewalk or parklet in front of stores with approval in under 48 hours. Other cities allowed businesses more flexibility to change business models.

Provide relief for young businesses in their crucial first 5 years.

Reducing tax burden helps emerging businesses keep more of their hard-earned money to reinvest in growing and creating jobs.

Clarify the impact of new laws and regulations on young businesses starting and growing in their critical first 5 years.

Studies have found regulations disproportionately burden new and small businesses. One study, for example, found that regulations reduce the number of small and medium-size businesses but are associated with an increase in the number of large businesses.

Entrepreneurs and aspiring entrepreneurs identify regulations and legal issues as substantial challenges.

Create Entrepreneurial Capital Catalyst Grants to invest in starting and restarting businesses underserved by the capital marketplace.

Over 4 out of 5 entrepreneurs don’t access venture capital or banking when starting a business, so they need alternative capital mechanisms.

Some local programs (such as Latino Economic Development Centers in metro DC) provide young businesses small introductory loans to build up their credit scores.

Funds using innovative investment models – such as revenue-based investing or profit-sharing – can reach more underserved entrepreneurs. Examples include Collab Capital (Atlanta), 1863 Fund (D.C.), Founders First (San Diego), Novel Growth Partners (Kansas City), Calm Company, Lighter Capital (Seattle), Capacity Capital (Tennessee), MainVest (online), LocalStake (online), and StreetShares (online).

Nonprofit evergreen funding models that invest in new enterprises and recycle funds continuously include Fountain Innovation Fund (Kansas City), MassVentures (Massachusetts), JumpStart Evergreen Fund (Ohio), and Vested for Growth (New Hampshire).

Nonprofit lenders can sell loan portfolios to commercial banks, thereby freeing up money to invest into more entrepreneurs. Examples include the Entrepreneur Backed Assets Fund, inspired by the work of Revolve Capital with success in places like Minnesota.

Funds that invest in catalyzing new fund formation can generate amplified impact. Examples include the Capital Access Lab (Kauffman Foundation), Renaissance Venture Capital (Michigan), Yozma Fund (Israel), and Multilateral Investment Fund (Latin America).

Strengthen local libraries as hubs of knowledge and digital tools for entrepreneurs.

Urban Libraries Council has launched entrepreneurial library hubs in cities such as Austin (TX), Baltimore (MD), Washington (DC), Durham (NC), East Baton Rouge (LA), Kansas City (x2) (MO), King County (WA), St. Louis (MO), and Toledo (OH).

American Library Association has launched Libraries Build Business, a program to support entrepreneurs at Baltimore County Public Library, Laramie County Library, Spokane County Library District, Topsham Public Library, Yakama Nation Library, Independence Public Library, Ferguson Municipal Public Library, Richland Library, Gwinnett County Public Library, Providence Public Library, Appleton Public Library, Broward County Public Library, and Los Angeles Public Library.

Here are links to Orlando (FL), Mid-Continent Library (Kansas City), and Kansas City Public Library providing dedicated resources for people starting businesses.