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Training entrepreneurs is key to building wealth in the inner city

Rochester Business Journal
July 12, 2013

Efforts on economic development of the inner city historically have revolved around job training and housing. However, it is evident that providing urban residents with housing, and training them for jobs, has not ameliorated the problems of our inner cities.
 
I have a different philosophy: We can change the economic fortunes of a city by helping residents to get into business, helping existing businesses to grow, and attracting new businesses to the area.
 
Helping residents to get into business does require training, but of a different sort than is usually done to train people for jobs. Most entrepreneurs, or entrepreneurs-in-the-making, need training in the science of entrepreneurship-a term I coined, which means the basic knowledge needed to effectively run a business, the common mistakes many new entrepreneurs make and the lessons learned from successful entrepreneurs. They need to know how to correctly size the market, determine who comprises the market, and how to price their product correctly.
 
For example, I recently attended a session at RochesterGrowth with CEOs of entrepreneurial firms in Upstate New York. One CEO mentioned an entrepreneur he was mentoring who had chosen a market and was selling his product for hundreds of dollars. With his mentor's advice, he switched to another market where his product was worth $25,000!
 
As any entrepreneur can attest, working for oneself is a totally different experience from working for someone else, and even more so if one worked for a large company where she was surrounded by a bevy of supportive services and people.
 
During a recent meeting with a Rochester Institute of Technology alumna who worked as a marketing executive for Eastman Kodak Co., she confirmed that her field of work tended to become more and more specialized-and she often would call on others to share their expertise in different areas of marketing.
 
When you own your own business, there is no one to call; in essence, you have to call yourself. An entrepreneur cannot be a specialist; she needs to be a generalist with a broad understanding of multiple disciplines and specialist knowledge in an area-what we call a T-shaped person. I actually advocate that individuals should be, at a minimum, π-shaped (pi-shaped), with expertise in at least two areas. Having two areas of expertise greatly increases the odds that a person will be more creative in her decision-making and more likely to see new possibilities.
 
When you work for yourself, you need to wear many hats and make decisions in areas in which you are not accustomed to making decisions or, perhaps, don't have the skills or knowledge needed. Most entrepreneurs, at least in the beginning years, operate on a trial-and-error basis or by brute force and, if they are fortunate, survive those "first five years" to have a successful business. Unfortunately, many new business owners do not survive those early years. Training in the science of entrepreneurship increases the chances for a new business owner to be successful.
 
Such training is not just for new entrepreneurs-it is also for seasoned ones. At the Center for Urban Entrepreneurship & Economic Development at Rutgers, we offered a program for first-generation entrepreneurs, the Entrepreneurship Pioneers Initiative. That program trained first-generation entrepreneurs who had varying numbers of years of experience, from two years (the minimum required to enroll in EPI) to more than 20. Yet, all of those entrepreneurs felt they learned a lot about being an effective entrepreneur in that nine-month training program. During the recent recession, entrepreneurs in the EPI program not only survived the recession, their businesses grew in revenues and numbers of employees. Because they were learning so much, those EPIers in the first year of the program have not stopped meeting; they formed an alumni group that meets every month and succeeding classes of EPIers have joined that group. They continue to use that forum as a means of improving their business acumen and expertise.
 
RIT's new Center for Urban Entrepreneurship in downtown Rochester will be bringing this training program to our community and, with the help of existing Rochester organizations, will train existing and potential entrepreneurs in the science of entrepreneurship. We will help business owners develop a growth plan. Growing businesses hire and tend to hire locally. When people get good jobs in growing firms, their standard of living and quality of life improves. That is our goal.

dt ogilvie is dean of the Saunders College of Business at Rochester Institute of Technology.

7/12/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.
 


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