About 40 percent of Detroiters consider themselves entrepreneurs, and many are not completely aware of government and nonprofit resources for small businesses, according to a report by Detroit Future City’s Center for Equity, Engagement, and Research; the University of Michigan’s Detroit Metro Area Communities Study; and the New Economy Initiative.
“Entrepreneurship and Economic Opportunity in Detroit – Perceptions and Possibilities” surveyed 733 Detroiters in 2019 (before the COVID-19 crisis) to better understand perceptions so these organizations and others can address and advance the needs of the city’s entrepreneurs and others seeking economic opportunity. In the report, entrepreneurs were defined as people who own, manage, or invest in a business of any size, including informal businesses that may be temporary or not licensed. The report team also considered entrepreneurs as people addressing challenges within their communities.
“To create economic equity, we need to create equitable opportunity. Our data reveal the stark reality that many programs in our city aren’t reaching many of the Detroiters who need them most,” says Anika Goss, executive director of Detroit Future City. “This information helps government, civic, and philanthropic organizations and others, better align resources to address this gap in accessing the support they may need, and that we need to empower community networks to serve as ambassadors of these resources.”
Detroiters lean on their social capital as a key resource for business advice, the report found. For white respondents, 80 percent would seek resources from other business owners and 70 percent from friends and family, compared to 60 percent of African Americans who would seek support from other business owners and 48 percent from friends and family. These numbers are 56 percent and 44 percent, respectively, for Hispanic respondents.
In Detroit, the majority of employers are small businesses, according to the report. They account for 14 percent of the jobs in the city, which the report says indicates barriers for growth. The report outlines recommendations to help scale these businesses to become more significant job creators, including entrepreneurship programs. The report also recommends increasing public information campaigns for existing programs and financial credit improvement strategies to address financial insecurity in the city.
About 70 percent of Detroiters surveyed experience financial insecurity, regardless of whether they identified as an entrepreneur. The report also found that nearly twice as many Detroiters saw becoming an entrepreneur as a better path to financial success than working for an established business.
African American residents were more likely than those of other races or ethnicities to identify an entrepreneur as someone self-employed. Hispanic residents were more likely to consider someone who does extra independent work or loans money to a friend to be an entrepreneur.
“The COVID-19 crisis continues to impact Detroit’s most vulnerable small businesses, and now more than ever, Detroit entrepreneurs need equitable support to sustain their small businesses in our community,” says Pamela Lewis, director of the New Economy Initiative. “To address this crisis, NEI immediately began working with partners to create a set of small business interventions to provide rent and loan relief, technical assistance, access to capital, and leverage the network of small business support that now exists in our community. Our work is dedicated to equitable access for entrepreneurs, especially women and entrepreneurs of color growing small businesses in Detroit.”
New Economy Initiative’s COVID-19 Small Business Relief Fund at the Community Foundation for Southeast Michigan has granted $5.2 million to support 22 organizations that are reaching more than 2,700 small businesses in Detroit and other parts of southeast Michigan.
The initiative is a philanthropic project working to ensure equitable access to capital, resources, information, and social networks are available to entrepreneurs, especially women and entrepreneurs of color. In the last three years, the work of the organization and its partners have assisted 7,400 small businesses, of which 65 percent are led by owners of color, 51 percent by black and Latinx owners, and 55 percent by women.
U-M’s Detroit Metro Area Communities Study (DMACS) conducted the survey using a variety of outreach methods to build a representative panel of respondents’ observations of issues facing the city and track how they change over time. Respondents were asked about their perceptions of entrepreneurship, opportunities available to them, and barriers faced by aspiring entrepreneurs.
“Our inspiration for conducting this research was NEI’s work on supporting an inclusive network of entrepreneurs in and around Detroit,” says Jeff Morenoff, the co-director of DMACS. “We recently launched DMACS as a vehicle for providing timely public opinion data on key issues that matter to Detroit’s future. So, we jumped at the opportunity to work with NEI and DFC and gain a better understanding of how Detroiters experience and perceive entrepreneurship. This project also enabled us to collect baseline data on the financial well-being and economic insecurity of Detroiters before the COVID-19 pandemic, and we are continuing to track these issues during the pandemic.”
The report is available here, along with more information.
Detroit Future City was launched in 2013 to advance the DFC Strategic Framework, a 50-year vision for the city of Detroit. It became an independent nonprofit in 2016.