Growing Businesses in Boston: InnerCity Entrepreneurs

InnerCity Entrepreneurs (ICE)

An initiative of the Entrepreneurial Management Institute and the Department of Sociology at Boston University

[tab name=”MEDIA COVERAGE”]Coming Soon[/tab]

[tab name=”VIDEO”]Coming Soon[/tab]

[tab name=”IMPACT”]Coming Soon[/tab]

[end_tabset]

Problem Statement

Over the past decade, microenterprise and other small business programs have done a credible job assisting the start-up of inner city businesses. However, 85 to 90 percent of all startups actually begin based on owners’ sweat equity, their own or friends’ and family money, and no formal training. In addition, eight out of ten businesses fail within the first three years. According to a National Commission on Entrepreneurship report,¹ “only later, when the business is ready to make the transition to a later, more developed stage, do planning, strategy, and research become prime considerations.” The report adds, “on a regional level, public policy should encourage extensive networks of entrepreneurs and professionals who can advise and mentor.”

According to the U.S. Census Bureau’s 1997 Survey of Minority-Owned Businesses, existing businesses owned by African Americans and Latinos lagged far behind Whiteowned businesses in sales. For example, Latino-owned businesses account for only 0.3 percent and Black-owned businesses account for only 0.2 percent of total business revenue in Massachusetts. As a whole, Black-owned businesses’ average annual sales are only $85,000, and Latino-owned businesses’ average sales are not much higher at $127,530—less than one-fifth of the typical White-owned small business. Furthermore, George Gendron, a professor of entrepreneurship at Clark University and former editor of Inc magazine states, “the future success for any entrepreneur without question lies in access to both financial and non-financial resources and networks to succeed in today’s system.” Moreover, successful business owners are also often important civic leaders in a community. Their success often is a breeding ground for civic engagement.

Three years ago, Boston University sociology professor Daniel Monti began to explore ways in which small businesses and entrepreneurs could help revitalize inner city communities. Monti’s research over the past 20 years had focused on how American cities became thriving business and cultural centers. He recognized that business leaders and ethnic communities brought about amazing change in cities but rarely worked together. As the U.S. and world economy became more focused on business as an important way to grow communities, Monti decided to combine these two forces. He proposed to offer direct assistance to small business owners in neighborhoods with minority or ethnic populations, to tap the informal networks and loyalties of the people living there, and assist local leaders in revitalizing their own communities. To learn more about how to accomplish these goals, he assembled a group of business men and women, entrepreneurs, and economic development specialists from different minority and ethnic groups in the Boston area and began to develop his vision to start InnerCity Entrepreneurs (ICE).

Around the same time, Andrew Wolk, a faculty member at the Boston University School of Management had just completed a business plan based on the work he had done at the Jamaica Plain Neighborhood Development Corporation. Wolk had been offering technical assistance to individuals in the inner city interested in starting a business. He recognized that an incredible amount of financial and human resources were being devoted to helping people start businesses, but very little attention was being paid to helping existing business grow. Wolk concluded that it was essential to provide existing businesses with additional resources, including a more sophisticated level of business education than what was currently available.

In April 2001, Monti approached Peter Russo, director of Boston University’s Entrepreneurial Management Institute (EMI) for assistance. Russo immediately became interested in the idea. With his support, Monti and Wolk began exploring how to bring ICE to market. In January 2002, with approval from Louis Lataif, dean of the School of Management, it was decided the new initiative would be housed at EMI and utilize the in-kind resources of the School of Management and the Department of Sociology to meet the needs of existing businesses in the inner city and assist in developing leaders and building stronger communities. While it was clear that Boston University could offer tremendous resources to existing inner city business owners, it was also clear that these resources needed to be brought to the inner city rather than bring the business owners to an intimidating ivory tower—and so ICE formed its first partnership with Roxbury Community College.

The time has come to focus more resources on growing existing businesses in the inner cities, particularly ones that are minority led, because this strategy has a better chance to generate more wealth, create more jobs, and build new community leadership.

The Solution: Innercity Entrepreneurs

ICE’s mission. InnerCity Entrepreneurs, through practice and applied research, promotes wealth generation, job creation, and capacity and community building by existing inner city small businesses interested in growth. ICE partners with communitybased organizations and offers a pre-selected class of entrepreneurs a nine-month series of classroom, peer-learning, coaching, and networking activities in order to facilitate access to new markets, capital, and knowledge. The graduates then may continue to work together as part of an InnerCity Entrepreneurs Alumni Network.

ICE’s accomplishments to date. ICE has successfully launched two classes working with a total of 28 entrepreneurs in the Boston area. These entrepreneurs were selected from over 50 business owners who applied to the program. In addition, ICE has built a Private Sector Network of 37 distinguished business professionals with a broad range of expertise to offer their advice to all participants throughout the program. An initial survey found that 90 percent of participants rated the program excellent and 93 percent rated the instruction excellent. Another indicator of success is zero attrition and nearperfect attendance in both classes. ICE officially launched its Alumni Network, designed to keep graduates connected.

InnerCity Entrepreneurs Boston Class of 2004

1. Kelley Chunn, president, Kelley Chunn & Associates, Boston
2. Patrick Cibotti, owner, Boston Body Works, Roxbury
3. Gillian Isabelle, president, Edenscapes, Inc., Roslindale
4. Edward Jones, president, America One Technologies, Inc., Braintree
5. Robert Katz, president, My Grandma’s of New England, Hyde Park
6. Susan Labandibar, president, Computer Warehouse, South Boston
7. Deilia Laing-Jackson, CEO, Geneva Baloon & Gift Shop, Dorchester
8. Glynn Lloyd, CEO, City Fresh Foods, Dorchester
9. Julio Nunez, vice president, Hispanic News Press, Boston
10. Ron Payne, president & CEO, Purchasing Services, Inc., Boston
11. Phillip Speiser, executive director, Boston Institute for Arts Therapy, Dorchester
12. Roosevelt St. Louis, owner, Nouvelle Creation Catering, Hyde Park
13. Matthew St. Onge, president, Boston Building Materials Coop, Roxbury
14. David Warner, president, City Feed & Supply, Inc., Jamaica Plain

InnerCity Entrepreneurs Boston Class of 2005

1. Mark Kaley, president, Above and Beyond Catering, Boston
2. Conant Brewer, president, Brewer’s Ledge, Jamaica Plain
3. Christopher Broughton, principal, CB Design, Boston
4. Joanne Washington, CEO, Chaps Services, Dorchester
5. Charles Clemons Jr., owner, First Choice Limo Services, Boston
6. Stephanie Hill, owner, Flowers Designed by Stephanie, Mattapan
7. John Laing, Jr., owner, Laing Enterprises, Dorchester
8. Barbara Flockhard, CEO, and Lori Becker, president, Publishing Solutions Group, Boston
9. Jeff James, president, Red Galoshes, Boston
10. Nancy Nichols, business manager, Red Sun Press, Jamaica Plain
11. Juan Guiterriez, owner, Siplas Research Organization, Boston
12. Brent Harding, CEO, State Wide Home Buyers Group, Adams Village
13. Rony Gary Jr., vice president, Tropical Foods Supermarket, Roxbury
14. Frank Poindexter, Jr., president, Wally’s Café, Boston

InnerCity Entrepreneurs’ Private Sector Network 

Zamawa Arenas, principal, Argus Communications Paige Arnof-Fenn, founder & CEO, Mavens & Moguls

Candida G. Brush, associate professor, strategy & policy, Boston University School of Management

Paul Capelli, vice president, public relations, Staples Inc.

Andrew C. Chen, managing director, Boston Community Venture Fund

Lyn Christiansen, professor of entrepreneurship, Boston University School of Management

Louis M. Corapi, director & team leader, Fleet First Community Bank

Derek Davis, Esq., Nutter McClennan & Fish, LLP

Kevin Dwyer, entrepreneur & writer, Mohawk Research Corp.

Michael J. Feinson, principal consultant, Engaged Strategies

Paula Groves, founding partner, Axxon Capital

Beth Goldstein, president & CEO, Marketing Edge Consulting Group

Joshua Gubitz, Minority Business Development Agency

Nicholas J. Guttilla, Esq., Nixon Peabody LLP

Laury Hammel, president & owner, The Longfellow Clubs

Ron Homer, founder & CEO, Access Capital Strategies LLC

Alan Indursky, president & owner, Norwell Inc.

Eric Korsh, Believe Media

Daniel Levin, president, Dream Machine Inc.

Lawrence Mintzer, president, Mintzer & Associates

Joseph Monteiro, director, Fleet Development Ventures, LLC

James Moriarty, vice president, Vitale & Caturano

Melanie Nayer, reporter, Banker & Tradesman

Karl Nurse, president & CEO, Karl Nurse Communications

Judith Obermayer, Obermayer & Associates

Christopher H. Richmond, president & CEO, E-Credit.com

Peter Russo, director and executive in residence, Boston University Entrepreneurial Management Institute

Jeff Schiebe, vice president of business development, OnePin, Inc.

Martin Tannenbaum, founder, Tannenbaum Associates

Fidel E. Vasquez, vice president, strategic investments, Fleet Development Ventures, LLC

Austin Westerling, principal, Charles River Ventures

Howard Wolk, co-president, The Cross Country Group

Grace Zimmerman, professor of entrepreneurship, Boston University

What differentiates ICE from other small business development programs?

Over a nine-month period, ICE provides entrepreneurs with an in-depth program that includes the training, tools, goal setting skills, and contacts they need to grow their businesses significantly. Rather than seeking to reinvent the technical assistance wheel for small inner city businesses, ICE complements existing community-based organizations that work with inner city entrepreneurs and community leaders. ICE differentiates itself from other small business development programs in the following ways:

• 
  While there are many small business development programs in the area, they all primarily focus on startups and provide assistance in writing business plans.
• There are no programs that use a wide array of program delivery methods to focus specifically on strategic planning for existing small businesses interested in growth.
  There are no programs that use a consultative, peer-to-peer teaching model in which the business itself is the source of the case study from which each participant learns. More often a lecture format is used that does not tap into the peer learning that is far more effective when a business is already established and facing common challenges associated with growth.
  
• ICE is working only with existing businesses that have employees, annual sales of $250,000 to $5 million, and are interested in significant growth. Each applicant must go though a two-step application process that includes a personal interview. Applicants are judged on (1) stability of business, (2) leadership, (3) strong interest in growth, and (4) interest in their community.
  
• ICE is a unique partnership between Boston University’s School of Management and Department of Sociology that has developed a multidisciplinary approach to business education, peer learning, networking, and research.
  
• ICE partners with community-based organizations to deliver the program and expects to have five self-sustaining sites in Massachusetts after five years that will benefit the host community-based organizations for years to come.

ICE’s unique program delivery methodology. ICE’s methodology is based on the premise that entrepreneurs will use their own businesses as the cases from which they learn. Upon completion of the program, each participant will have set specific milestones, developed a three-year strategic plan to grow his or her business, and worked with peers, experts, and coaches to gain greater access to new sources of capital, markets, and knowledge. Each participant will receive a Certificate in Small Business Entrepreneurship during a special graduation ceremony. ICE consists of four unique program delivery methods developed by professors in Boston University’s Entrepreneurial Management Institute:

• 
  Peer-to-Peer: There are professionally facilitated peer-to-peer sessions throughout the program. Emphasis is placed on building trust among the class, discussing important daily issues facing each business, topics that participants choose to discuss, and ways related to coursework to grow each business.
  
• Coursework: The coursework consists of 14 classes held approximately every two weeks. This provides ample time for participants to “learn by doing”—applying in-class skills to their businesses—and then come back to class to report on the results. Rather than deliver a flood of information in lecture format, the instructor facilitates highly interactive sessions. Particular focus of the coursework is on setting overall personal and professional goals, financial analysis, marketing and sales, and resource needs. During the final class each participant presents his or her three-year strategic growth plan to a panel of experts from the Private Sector Network.
  
• Private Sector Network: In each location, ICE creates an extensive network of business experts to serve as professional resources and provide advice to participants. Members of the Private Sector Network agree to give guest lectures in class, host topicrelated educational programs for ICE participants and stakeholders, and answer any questions a participant may have throughout the program. The Private Sector Network in Boston currently includes 37 prominent lawyers, accountants, public relations experts, bankers, venture capitalists, human resource directors, and other business professionals.
  
• Coaches/Advisory Board: Each ICE entrepreneur is required to form or build upon an existing board of advisors, of which one or more should serve as a coach to the entrepreneur. As the program progresses, participants will have a clearer idea of their growth plans and will determine who are appropriate people to join the advisory board and serve as a coach.

ICE’s role in economic development research. Having emerged from a world-class research institution, ICE is committed to developing a body of research on inner city economic development that will inform the academic and economic development communities and influence the public policy debate concerning the allocation of resources and public funds to startups versus existing businesses with growth potential. Each business that participates in the program has agreed to participate in a three-to-five-year research study.

The first phase of research has begun under the leadership of Monti and Candida Brush, professor of entrepreneurship at Babson College, along with two doctoral students. Each participant in the program has already completed a comprehensive intake survey, which focuses on the financial status of the business, his or her values, goals, and objectives as an entrepreneur, how the business is organized, and the relationship between the business and the community in which the business operates. This information will enable ICE to both measure its financial impact and explore in greater detail all the ways in which local businesses serve their community and customers beyond providing a service or selling goods. In addition, a doctoral candidate in the School of Management, Amy Gannon, is writing her dissertation on the values, goals, and objectives of the ICE entrepreneurs.

In the future, ICE will publish papers in academic journals, write opinion pieces in local newspapers, and develop case studies of different types of businesses that operate in the inner city, which will focus on the social as well as economic ways in which these businesses contribute to their communities. ICE will provide community leaders with the information they need to promote economic development in their communities and future investors with the information they require to make loans to and investments in existing businesses.

ICE’s mid-year and projected outcomes report card for the 2004 class. ICE participants achieved the following results in the first six months of the program:

• 
  18 new jobs created
  
• 150 hours of utilization of ICE Private Sector Network and coaching resources
  
• $825,000 in financing secured
  
• $100,000 in business conducted between participants
  
• $300,000 in business accessed through ICE networks
  
• 8 stories in the media about individual participants.

The following outcomes are projected:

• $1,500,000 in financing secured
  
• 2 new multi-million dollar ventures launched
  
• 46 percent growth in revenue among participating businesses
  
• 30 percent growth in full-time jobs
  
• 61 percent growth in part-time jobs.

ICE’s leadership. ICE’s leadership team consists of Andrew Wolk, Daniel Monti, and Andrew Goldberg.

• 
  Andrew M. Wolk, ICE co-founder and director: Wolk is responsible for the dayto- day strategic aspects of the program, including its replication to other sites. A faculty member at Boston University’s Graduate School of Management, where he teaches in the Entrepreneurial Management Institute and has developed several course curriculums, Wolk has worked extensively in small business economic development including Neighborhood Business Builders, a division of Jewish Vocational Services and the Jamaica Plain Neighborhood Development Corporation. Before earning his MBA in nonprofit management and entrepreneurship from Boston University, Wolk started, built, and sold his own business.
  
• Daniel Monti, ICE founder and director of research: Associate professor of sociology at Boston University, Monti is spearheading research efforts at ICE. He has written six books and is the recipient of a Woodrow Wilson Fellowship. His most recent book, The American City: A Social and Cultural History, spans 300 years of American history and touches on cities in all 50 states. It is a detailed description of the civic culture not just of cities but of the entire nation and the role business plays in a city’s development. In his next book, Civic Capitalism, he will explore the role of business as America’s first and foremost civic association.
  
• Andrew N. Goldberg, director of programs and development: Goldberg is responsible for recruitment, program management, marketing, communication, and fundraising. Previously, he worked for small and multinational companies, financial services firms, a quasi-state agency, and nonprofits in the environmental and small business development fields. Over the past dozen years, he has developed an expertise in designing and delivering programs and services for small businesses interested in growth. As the Latin American Trade Specialist for Massport, he counseled firms interested in growth through export. Goldberg also founded an international business consulting and publishing firm. He has an M.A. in international relations from The Johns Hopkins University.

Constituents and communities served by ICE. A diverse group of constituents and communities will benefit from ICE’s programs. They include ICE’s target inner city neighborhoods, small businesses, economic development agencies, public policy experts, and academic institutions.

ICE and the Small Business Development Institute (SBDI) at Roxbury Community College initially targeted small businesses in Roxbury, Dorchester, Hyde Park, and Jamaica Plain, although businesses interested in participating from other communities were welcomed. By stimulating the growth of businesses in these areas, ICE will not only promote the creation of jobs locally, but will also train the next generation of civic leaders in these communities. The program primarily targeted African American and Latino-owned businesses because there is a considerable disparity in the income earned by minority business owners versus their White counterparts.

Unfortunately, Boston has a reputation as a city in which people from different ethnic and racial backgrounds often have difficulty working together. At times this reality can create barriers to economic development and possibly to growth over the long term. All too often minority business owners compete with each other for the few morsels from state and federal contracts rather than working together to gain a more equitable share of an available market.

This behavior results in dependence through set-asides and preferences. Business owners typically do not move beyond this dependence because they lack the knowledge about how to partner and form coalitions. It is essential that people from different ethnic and racial backgrounds succeed as commercial leaders to provide long-term progress for their own people, communities, and the city as a whole. Regardless of one’s homeland, religion, or even what one sells, these business owners all speak the same language of commerce. Recognizing this, ICE is using its first class of 14 businesses owned by people of different ethnic and racial backgrounds as a laboratory to explore just how much these people really do have in common and simultaneously promoting stronger ties among them.

Starting next year, ICE will permit technical assistance providers from economic development agencies to participate in the program with a business owner from their neighborhood. This way they will also learn more sophisticated business skills and become better qualified to work with other neighborhood businesses.

Partnering with community-based organizations. A cornerstone of the ICE initiative is partnerships with community-based organizations to deliver programming. ICE’s preferred venue is a local college (state, small private, or community) because: (1) generally colleges are located in areas where ICE is likely to find potential applicants, (2) colleges will benefit from having participants as well as business leaders visit the school on a regular basis, (3) ICE participants at some point might be looking to hire and could find potential employees at the college, (4) ICE’s calendar corresponds to an academic year so that it can be easily replicated at other colleges and involve Boston University students, and (5) ICE is developing a sustainability plan under which the college will operate the program on its own after five years, reaping the benefits of the alumni and business relationships that have been built along the way.

ICE’s goals. One of ICE’s goals is to influence the process of inner city economic development by demonstrating the impact of its programs on business expansion, job creation, wealth generation, and civic/community leadership development in America’s inner cities. If successful, ICE will help level the playing field in terms of the allocation of public and private funds to start-up versus existing businesses with growth potential.

Objectives

• Provide small inner city business owners with the training, tools, and peer-to-peer support that will enable them to envision and fulfill their capacity to become community leaders.
• Stimulate economic development in Boston’s neighborhoods by delivering a high-impact program to existing businesses with the potential to grow, create jobs, generate wealth, and assume a leadership role in the community.
• Establish a network of business professionals (i.e. lawyers, accountants, bankers, venture capitalists, human resource directors) to provide the advice and one-on-one coaching that small inner city and minority business owners typically lack.
• Provide inner city small business owners with greater access to new markets, capital, and knowledge. Improve understanding among small business owners of different ethnic and racial backgrounds and the wider business community about the challenges of working, living, and building a successful business in the inner city.
• Develop a body of research to inform the academic and economic development communities and influence the public policy debate over the allocation of public funds to start-up versus existing businesses with growth potential. Create a replicable and scalable model. Become the leading economic development program that works with existing inner city businesses seeking growth. Establish ICE as a self-sustaining, multi-year inner city economic development initiative.

Activities

• Emphasize how a commitment to one’s community can have a huge payoff to the bottom line of a business. This message will be reinforced by bringing successful business and community leaders into the class to work with ICE participants, as well as serve as coaches and role models.
• Utilize a rigorous application, interview, and selection committee process to select high growth potential businesses for the program.
• Recruit and monitor a sufficient number of people in each professional category to provide coverage to all ICE participants.
• Monitor the value of classes and networking with bankers, angel investors, venture capitalists, lawyers, accountants, marketers, human resources directors, and other professionals who can help ICE participants access new markets, capital, and knowledge.
• Target specific inner city neighborhoods (i.e. Mattapan, Roxbury, Dorchester, Jamaica Plain, Roslindale) and select a diverse mix of participants for the first class that includes African American, Hispanic, and women entrepreneurs.
• Conduct extensive survey of ICE participants from the start of the program including field research.
• Develop case studies, publish articles in academic journals, track each ICE participant for three-tofive years for ongoing research purposes. Within five years ICE will have five sites running its programs throughout Massachusetts. ICE’s calendar is based on an academic year and held at a state, small private, or community college so that it can be easily replicated at similar institutions.
• Design and execute a media strategy and marketing campaign to promote ICE’s unique and visionary approach to inner city economic development at the local, state, and national levels.
• Develop non-philanthropic revenue streams that include tuition, fees for service, and other market generated revenues.

ICE’s next steps. ICE is in the planning stages of replicating the model in five other Massachusetts sites by 2007, as well as in other states around the country working with Michael Porter’s Inner City Economic Forum. Additionally, ICE will be publishing three case studies later this year, and will soon have an ongoing body of research based on its work with all ICE entrepreneurs. ICE will also be holding a mini-conference prior to the Inner City Economic Forum in November 2005 in Chicago to share lessons learned on the programmatic and research side of its model and how it can support more effective public policy. InnerCity Entrepreneurs’ unique approach of combining program and research to create tangible outcomes for existing businesses while also shining a spotlight on the need to focus more resources on existing businesses interested in growth is well under way.

Becoming a sustainable business model. ICE began with seed funding of a $100,000 grant over three years from Citizens Bank along with critical in-kind support from Boston University and Roxbury Community College to launch the program. Since then, ICE has developed strong relationships with a number of additional funders, including the City of Boston Department of Neighborhood Development, Staples Foundation for Learning, NSTAR, Boston Private Bank, Blue Cross Blue Shield, Mellon New England, and various individuals.

It costs approximately $100,000 to operate the program. A local ICE program combines tuition fees (currently $1,000) and the alumni network fees (currently $1,000) with philanthropy from three primary sources—institutional (city, foundation, and corporate) support, individual donations, and sponsorship of the graduation—to ensure the program’s long-term sustainability. The return on investment for the model in terms of job creation, wealth generation, and community building is clearly quite high.

Conclusion

InnerCity Entrepreneurs is having a major, measurable, and long-lasting impact on the future of inner city, minority-led business development by focusing on existing businesses interested in growth and cultivating the next generation of leaders in the communities it serves.

Ice Advisory Board

Candida Brush, associate professor and director of the Council for Women’s Entrepreneurship and Leadership at Boston University

Georgia Murray, director, Inner City Economic Forum

Tina A. Andrews, president, New England Minority Supplier Development Council

Derek Davis, partner, Nutter McClennen & Fish LLP

Bob Katz, president, My Grandma’s Coffee Cakes of New England (ICE 2004 graduate)

Andre Porter, deputy director, Office of Business Development, City of Boston

Stephen Kraus, director, Ironwood Equity Fund LP

Marc Lucas, community relations specialist, NSTAR

Monalisa Smith, vice president, community development officer, Citizens Bank

Joy Errico, community relations supervisor, Staples Foundation for Learning

Glynn Lloyd, president, City Fresh Foods (ICE 2004 graduate)

Susan Labandibar, president, Computer Warehouse (ICE 2004 graduate)

Terrance Gomes, president, Roxbury Community College

Peter Russo, director, Entrepreneurial Management Institute, Boston University

Dan Monti, ICE founder and research director; associate professor of sociology, Boston University

Endnotes

1. National Commission on Entrepreneurship: “Five Myths about Entrepreneurs: Understanding how Businesses Start and Grow,” March, 2001. http://www.ncoe.org