In actively supporting entrepreneurs, business support organizations provide a range of services from entrepreneurial training, to market analysis, to technology, to mentoring, to access to microloans or financing.
What are business support organizations (BSOs)
Business support organizations are nonprofit, public and for-profit resource organizations that serve local businesses and support their growth and success. BSOs help client companies connect to talent, find co-working space, and test and validate business ideas. BSOs offer both services and network access:
NEInsight Practical assistance resources in Detroit
In Detroit, 313Strong provides customized support for small neighborhood businesses in Detroit, Hamtramck, and Highland Park. During COVID-19, 313Strong worked with businesses that remained open, eventually reopened, or were trying to determine how to best move forward. Hosted at TechTown, 313Strong’s team provides one-on-one coaching, and coordinates connections to expert advisors, to help understand, sustain and strengthen business operations in neighborhood commercial districts and coordinates with other expert advisers who are helping small business owners.
Other places that provide practical assistance in southeast Michigan include the Accounting Aid Society for finance and tax expertise and ProsperUS Detroit for entrepreneur training and business evaluation and counseling.
Government-funded resources for practical assistance also play a key role. Among these, Michigan Small Business Development Center (SBDC) provides business consulting and workshops. SCORE Southeast Michigan offers small business training and connects small business owners to experienced mentors for starting and growing a business.
NEInsight Lending resources in Detroit
Other examples of regional lending include:
- Detroit Development Fund provides loans and technical assistance to small business owners, developers, building owners, contractors, and subcontractors who cannot get all of the capital they need from traditional financing sources;
- Invest Detroit is a mission-driven lender, investor, and partner that supports business and real estate projects that will ignite economic growth in Detroit and the region; and
- ProsperUS Detroit Lending Program provides access to capital for start-up and existing small businesses that otherwise might not have access with traditional sources.
DIVE DEEPER: The 2018 Capital Access Report report examines the array of capital available to new and existing underserved small business owners in Detroit, Hamtramck and Highland Park.
NEInsight Startup Space leads entrepreneurs to points of assistance
In 2019, NEI partnered with the national community-building platform Startup Space to better connect entrepreneurs to local business resources in Metro Detroit. The online tool categorizes resources, or points of assistance, that can help entrepreneurs and small business owners.
As another example, Detroit Economic Growth Corporation is home to Detroit Means Business, an online COVID-19 resource hub for business owners to access everything they need, from personalized technical assistance to small business loans and help obtaining personal protective equipment (PPE).
As Pam Lewis stated in a Model D story about Detroit’s entrepreneurial ecosystem, “We are trying to ensure that it’s a place where the community of entrepreneur-support providers can find each other and resources, and connect.”
Trust and connections
NEInsight Community development organizations and immigrant support organizations as trusted connectors in Detroit
Osborn Neighborhood Alliance works to organize the communities of Detroit’s northeast side, a significantly underserved geography. ONA is a nonprofit organization that partners with service and government organizations, schools, churches, businesses, and residents who are dedicated to community pride. A trusted connector to those with English as a second language is Global Detroit, a regional economic development and community development organization with a focus on immigrants and global talent. Global Detroit is a nationally recognized advocate of strategies that drive equitable local, regional and statewide economic growth through immigrant inclusion.
NEInsight Detroit’s Inclusive Small Business Partners
In 2020, NEI’s inclusive small business support network consisted of many BSOs, including these 25, which were NEI grantees that fell across four entrepreneur resource categories:
- Detroit Development Fund/Detroit Community Loan Fund
- Detroit Economic Growth Corp
- Invest Detroit
- KIVA at Build Institute
- Michigan Women Forward
- ProsperUS Microfinance Program
Practical Assistance Providers
- Account Aid Society
- BUILD Institue
- Design Core Detroit
- LTU Centropolis Manufacturing Accelerator
- Michigan SBDC
- Michigan Community Resources
- SCORE Detroit
- StartUp Space
Business Resource Connectors
- Central Detroit Christian CDC
- Eastern Market Corporation
- Global Detroit
- Grandmont Rosedale CDC
- Jefferson East Inc.
- Midtown Detroit, Inc.
- Osborn Neighborhood Alliance
- Southwest Detroit Business Association
Resource Information Platforms
- Detroit Means Business
- Startup Space
- InGoodCo Detroit
From obvious to obscure: examples of BSOs
- Community Development Financial Institutions (CDFIs)
- Banks and credit unions
- Community Development Organizations (CDOs)
- Trade groups
- Industry-specific support organizations
- Online platforms for resources, storytelling
- Small business development centers (SBDCs)
- Local branches of SCORE
Since its launch in 2007, NEI has invested more than $19 million, or about 10 percent, of its investments to support the operations, capacity and physical structure of TechTown Detroit, an entrepreneurship hub that brings together entrepreneurs, investors, mentors, service providers and corporate partners. Its outcomes have been significant: as of October 2020, the organization boasts about 16,000 jobs created, 2,700 companies served, $160 million of funding leveraged into startups, and 684 coworking members and tenants.
DIVE DEEPER: Read a case study outlining NEI’s investment in TechTown and its impact on the inclusive small business support network in Detroit.
Role of CDFIs and microfinance organizations (MFOs) in the business support network
CDFI and MFO financing is more likely to flow into low- and moderate-income populations and other underserved areas. In addition to providing access to capital, CDFIs can be advantageous, because they provide technical assistance, guidance, and additional loans for business expansion. By supporting CDFIs, NEI has been able to enhance investment in underserved small businesses and bring to scale its history of success combined with its commitment to inclusion.
The Opportunity Finance Network, the industry’s trade group, defines Community Development Financial Institutions (CDFIs) as “the private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream.”
When the COVID crisis emerged, NEI and its partners identified that accessing federal funding for emergency support would be out of reach for many of the businesses it serves.
How to identify and find BSOs in a community
Direct surveys with undeserved small businesses about gaps and needs
Data surveys to identify current resources for small business owners and what organizations they turn to for support
Interviews with nonprofit, for-profit and public organizations that were identified in the data surveys
Requests for Qualifications (RFQs) followed by Requests for Proposals (RFPs) to begin building a neighborhood business network
NEInsight BizGrid: An early tool for NEI to find, vet and understand BSOs in Detroit
Several years ago, a group of NEI grantees came together on their own to create a tool to get entrepreneurs real information on where they could find help for anything from business planning to real estate. This was the start of what would become BizGrid, a physical infographic and online tool to help entrepreneurs in any stage of their business — a tool they could come back to time and again to find reliable sources of assistance.
Among the problems that the small business community was facing at that time was that many of the services that business support organizations (BSOs) claimed to offer were not actually accessible. The BizGrid team compiled a list of what services BSOs said they offered and then checked them out to see if they were as good as their claims. Only those hidden gems that were really helping entrepreneurs made the cut. The end result was a compelling visual framework for resources that functioned as a flowchart, providing a checklist of services offered by 54 governmental organizations, nonprofits and private enterprises to assist small businesses in Detroit.
It should be noted that earlier attempts to create a grid of resources for entrepreneurs had failed. It was not until the network of business support organizations was established that this project could get traction and eventually find success. The work done with BizGrid laid the groundwork for NEI’s Neighborhood Business Initiative and for Startup Space.
NEInsight Where small businesses in Detroit seek finance advice
For 50 years, Accounting Aid Society has functioned as a volunteer income tax assistance (VITA) site, providing financial technical assistance and coaching to residents and small businesses. When NEI began developing its neighborhood grantmaking strategy, it invested in Accounting Aid Society to provide financial assistance to small business owners.
As Pam Lewis, director of NEI, recounts “We conducted a scan of the landscape [to understand what supports small businesses tapped into already] and found that the Accounting Aid Society was already playing a big role.” NEI’s further support acknowledged the role that the society already played and helped move more resources to enlarge it.
NEInsight Funding community development
Inclusive BSO practices
expands the market of existing entrepreneurial organizations to include underrepresented populations and
influences programs that traditionally support women and people of color to better prepare their constituents for business ownership and employment.
BSOs play a critical role in this work. Communities, and their supporting philanthropic partners, need to set conditions around requiring BSOs to have inclusive practices. This involves activities around and requirements to…
- Meet businesses where they are; bring programming, supports, mentors and learning into neighborhoods where they are most needed
- Convene regularly to identify and address gaps in service offerings; cultivate shared dialogue, knowledge and impact; expand the feedback system to broader and more diverse stakeholders
- Share stories of success so that underserved business owners can see themselves in entrepreneurial roles
- Encourage diversity while building a pipeline of current and prospective talent
- Inspire and motivate culture change, rather than pick and dictate industry sector strategies
- Take time and resources to capture outcomes data around inclusivity and diversity
NEInsight Creative on ramps
A key ingredient to NEI’s success has been creating and cultivating relationships among and between organizations to help entrepreneurs first be able to access resources, and then be able to share and learn. For example, ProsperUS Detroit, is a place-based economic development initiative that helps neighborhood small and micro businesses. ProsperUS Detroit’s mission is to provide, “equitable, culturally appropriate programming to Detroit residents and in its neighborhoods.”
To accomplish its mission, ProsperUS Detroit provides three key functions: 1) entrepreneur training; 2) business support services; and 3) micro lending. All three are necessary to ensure the success of small businesses in Detroit. The program provides core support services and training combined with access to needed capital—helping Detroit’s neighborhood entrepreneurs economically. Unlike larger programs, the program provides financing up to $15,000 for startup businesses and $25,000 for existing businesses.
W.K. Kellogg Foundation and Global Detroit led the ideation and launch of ProsperUS, and it was supported by NEI as a key grantee partner.
NEI’s support for ProsperUS Detroit made it possible to conduct research to address disparities at the local level—breaking down barriers that can leave some businesses behind.
Assessing BSO impact and inclusiveness
Equity and inclusion should be critical measures when looking at the impact of the BSOs in any community. Measuring impact and collecting data about small business owners through the BSOs can provide a wealth of information for:
- Seeing patterns within the entrepreneurial ecosystem
- Sharpening the focus on specific populations or geographies
- Looking at what industries are thriving and where
- Analyzing how business capital is distributed across a neighborhood, city or region
- Identifying the sources of capital, who is receiving the capital and in what amounts
BSOs should be able to report out on their engagements with underserved populations (clients, program attendees, and capital by gender, age, immigrant or minority status, education, and geography). In the section Measuring Impact, further insight is provided about evaluation and sharing results. It’s a good idea to consult with other funders, local, and state government officials who also have interest in BSO clients to arrive at a common set of measurements. This helps to coordinate efforts and reach a wider group of underserved businesses.