Urban Entrepreneurship Al Bogdan. Importance of Entrepreneurship Major industries or businesses are...
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![Page 1: Urban Entrepreneurship Al Bogdan. Importance of Entrepreneurship Major industries or businesses are located in a specific area because their founders.](https://reader035.fdocuments.in/reader035/viewer/2022062717/56649e545503460f94b4ab4b/html5/thumbnails/1.jpg)
Urban Entrepreneurship
Al Bogdan
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Importance of Entrepreneurship
Major industries or businesses are located in a specific area because their founders started there.• Ford in Detroit - This is Where Henry Converted his Bike
Shop into the Modern Auto Assembly Plant. • Stryker is in Kalamazoo, • Amway and Steelcase are in Grand Rapids; • Hewlett Packard in Silicon Valley• Starbucks is in Seattle, and • Compuware is in Detroit
The Future of Our Cities Depends on the Urban Entrepreneur• Entrepreneurs Who Mine the Richness of the City
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Importance of the Urban Environs
The City provides a Network• Creative Energy,
• Resources,
• Finances and
• People
to start and grow a business.
Entrepreneurism overwhelms the normal business site location criteria - this is where the entrepreneur’s personal support network is located
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Characteristics of the Entrepreneur
March to Own DrummerNeeds to be In ChargeNever Fail
• Every Failure is Only a Learning Experience
Hard WorkingSocial Creature
• Knows How to Listen
• Knows How to Network
Focus on the Vision
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Urban Entrepreneurism By Michael E. PorterPast Models Have FailedBased on Meeting Needs of Individual
• Income Assistance• Housing Subsidies• Food Stamps
Economic Development Based on• Subsidies• Preference programs• Expensive Models
• Housing• Real Estate• Neighborhood Development
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Urban Entrepreneurism By Michael E. Porter
AnswerPrivate, For-profit Initiatives based on
Economic Self Interest & Genuine Competitive Advantage
Inner City Businesses Must be Profitable, Positioned to Compete • Regionally• Nationally, • Internationally
Translate Competitive Advantageous to Profitable Business
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Urban Entrepreneurism By Michael E. Porter
Competitive Advantage Look at Clusters• Customer Relationships• Supplier Relationships• Critical Mass of Skills, Information, Relationships,
and InfrastructureCompetitive Companies Push Each other to
Improve Products & Processes• Grow New Suppliers or Find Existing• Create Firms in Related Fields• Form Training Programs• Form Technology Centers of Excellence
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Inner City AdvantageousStrategic LocationCompetitive Edge
• Communication Nodes
• Logistical Infrastructure• Food Processing Operations
• Printing industry
• Warehousing & Distribution
• Entertainment - Tourist Center• Museums
• Galleries
• Ball Parks
• Convention Centers
• Gaming
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Inner City Advantageous
• Dense Population• Medical Facilities• Universities
• Ethnic Market• Greentown• Mexicantown• Chinatown
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Inner City Advantageous
Overcoming Myths Inner City Residents Do Not Want to Work
• Industrious & Eager for Jobs Requiring Little Education
Only Entrepreneurs Are Drug Dealers• Thousands Trained in Social Service Industry
Skilled Minorities Have Abandoned Their Roots• African Americans & Hispanics Get 4,200 MBAs/Year
• Thousands Highly Trained People in Major Companies
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Inner City Development
New Model Old Model
Economic Create Wealth Social Redistribute Wealth
Private Sector Government & SS Agencies
Profitable Businesses Subsidized Business
Integration W Regional Eco. Isolation from Larger Eco.
Export Orientated Only Serve Local Comm.
Minorities Building Businesses Minorities in SS Sector
Mainstream Special Institutions Created
Address Disadvantages Directly Counter Balance w Subsidies
Government Improves Environ. Government Services
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Real Disadvantages
Land• Abundant• Small Lots• Expensive to Assemble• Expensive Demolition• Environmental Clean Up• Title Conflicts
Obstacles Create Opportunity
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Real Disadvantages
Building Costs• Negotiation w Community Groups• Extensive Permit Process• Government Required Minority Set Asides• Requirement to Pay Union Wages• Livable Wage Requirements• Regulatory Process Creates Uncertainty
Obstacles Create Opportunity
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Real Disadvantages
Other Costs• Permitting & Other Fees• Insurance • OSHA Compliance• Real Estate & Other Taxes • Entrenched Bureaucracy – Work Rules• Restrictive Licensing, Permitting, Safety & Health
Regulations• Stunts Entrepreneurship
Obstacles Create Opportunity
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Real Disadvantages
Security• Perceived & Real Creates Obstacle
• Full time Security Guards
• More Lighting
• Continuous Graffiti Cleaning
• Impedes Employee Recruitment
• City Police Focus On Residential Areas
• Stunts Entrepreneurship Obstacles Create Opportunity
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Real Disadvantages
Employee Skills• Average Education Low• Unskilled Workers
Obstacles Create Opportunity
Criteria 1970 1990
% Jobs Held W/o HS Diploma 29% 7%
% Jobs Held by College Grads 18% 44%
Unemployment Rate AA Men 19% 37%
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Real DisadvantagesManagement Skills
• Managers Lack Formal Training• Predictable Problems
• Strategy Development
• Market Segmentation
• Information Technology
• Securing Financing
• Interaction w Lenders & Regulatory Agencies
• Crafting Business Plans
• & Employee Training
Obstacles Create Opportunity
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Real DisadvantagesCapital
• Barrier to Debt & Equity Capital• Small Business Lending Only Marginally Profitable
• In Business to Attract Deposits & Sell Other Products
Community Reinvestment Act WorksDirect Government Financing Ineffective
• Duplicates Overhead
• Undermines High Quality Private Sector Expertise
Obstacles Create Opportunity
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Real DisadvantagesAnti-business Attitudes
• Businesses Perceived as Exploitive - Legacy• Poor Treatment of Workers• Departure of Companies• Damage to Environment
• Unreal Expectation of Firms Meeting Social Needs• Demand Scholarships• Cede Control of Hiring to Community Organization• Link Payments & Contributions
• Drive Businesses Away Obstacles Create Opportunity
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Changing Role & ResponsibilitiesCreate & Expand Business Activity
• Simply Do Business Seize Opportunities• Tailor Goods & Services to Local Market
• i.e., Sell Winter Coats in the Winter• Hire Locally
• Build Loyalty
• Organize to Reduce Security Cost• Special Assessment Districts• Create Large Campus Environment• Clean Up Transportation Entrances
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Changing Role & Responsibilities
Establish Business Relationships• Joint Ventures
• i.e., Bing Industries
• Not Charity – Based on Mutual Self Respect
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Changing Role & Responsibilities
Redirect Philanthropy to Business to Business Efforts• Build Around Industry Clusters• Training Should be Employer Certified to be
Relevant• Help with School to Work Transition• Provide Management Assistance
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Changing Role & Responsibilities
Adopt Right Model for Equity Capital• Attract Angel & Venture Capital• Not Technology Model – More Mundane
• Supermarkets
• Laundries
• Franchises
• Follow Principal of Competitive Advantage• Will Generate Appropriate
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New Role of Government
• Shift Focus From Direct Intervention to Providing Infrastructure
• Focus on 4 Goals
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New Role of Government
Goal 1 – Direct Resources to Areas of Greatest Need
Shift Funds to Area of Greatest Need• Crime• Superfund• Infrastructure
Programs Support Business on Race Ethnicity, or Gender – Change to Economic Need
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New Role of Government
• Goal 2 - Increase Economic Value of Inner City• Change Regulations To Streamline Permitting
Process, i.e., Indianapolis
• Single Government Entity to Produce Building Ready Sites – Streamline
• Permitting
• Zoning
• Inspections, etc
• Develop Transportation Infrastructure to Move Goods, Employees, and Supplies
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New Role of Government
• Goal 3 – Deliver Economic Development Services Through Mainstream Private Sector Institutions
• Biased Against Quasi Public Institutions
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New Role of Government
Goal 4 Align Incentives Into True Economic Performance• No Direct Subsidies• Phase Out Set Aside Over Time• Government Funds
• Site Assembly
• Extra Security
• Environmental Clean Up
• Investments to Improve Business Environment
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New Role for Community-based OrganizationsGoal 1 - Identify & Build on Strengths,
Based on• Unique Competitive Advantages• Realistic Assessment Capabilities, Resources &
Limitations• In Conflict with Community Based Mission
• Needs to Seek Outside Entrepreneur• Need to Permit Dismissing Poorly Performing
Workers• Assign Prime Sites to Businesses instead of SS Needs
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New Role for Community-based Organizations
Goal 2 – Change Work Force & Community Attitudes• Use Advantage to Change Community Attitudes• Help Create Hospitable Environment
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New Role for Community-based Organizations
Goal 3 – Create Work-readiness & Job Referral System• Play Active role in Preparing, Screening, and
Referring Employees to Local Businesses• Urban League, Churches
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New Role for Community-based Organizations
Goal 4 – Facilitate Commercial Site Improvement• Help Form Merchant’s Association to Identify
Business Needs & Barrier’s to Meeting Them• Pushed for Increased patrols• Pushed to Board up or Demolish Abandoned
Buildings• Remove Trash & Abandoned Cars•
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Overcoming Impediments
Issue Is Complex• Requires changing Attitudes by All Sectors• Rethink Inner city in Economic Terms• Redirect Resources to Economic Terms• Foster Wealth creation• Fostering Cooperation Between Business &
residents•