Entrepreneurship in Americas Inner Cities

1
Entrepreneurship in Americas Inner Cities

• Stephen Adams
• Director of Research Strategy
• NGA Policy Academy
• November 16, 2000

2
ICIC Spark new thinking about the economic
potential of inner cities

• Leverage market forces to increase jobs, income
  and wealth of inner-city residents.
• Encourage private sector to think differently
  about inner cities as economic spaces.
• Help civic leaders develop strategies for
  business growth based on the competitive
  advantages of their inner-city location.

3
Inner City Competitive Advantages
Strategic location

• Located near regional transportation and
  telecommunications infrastructure nodes

Underserved local market
Underutilized Workforce

• Largest pool of available workers in the US amid
  a tight labor market

• 85 billion of annual spending power

Inner city
Linkage to industrial/regional clusters

• Opportunity to leverage proximity to city and
  regional clusters

4
Focus on EntrepreneursICIC/Inc magazine Inner
City 100

• Project to identify and celebrate fast-growing
  companies located in Americas inner cities.
• Proof of Concept
• Inner cities as economic spaces -- successful,
  legal entrepreneurial activity.
• Inner city competitive advantages
• Strategic guidance for inner-city business
  development

5

• Criteria
• Companies must be headquartered in the inner city
  or have 51 or more of physical operations in
  inner-city areas
• Employ 10 or more employees at year-end 1998
• Have a five-year operating sales history that
  includes sales of at least 1 million in 1998
• Cannot be a holding company, regulated bank, or
  utility

6
Performance matching and exceeding the nations
best companies

• 12 Inner City 100 companies are on the 1999 Inc
  500
• 26 Inner City 100 companies grew at rates
  matching or exceeding 1999 Inc. 500 companies.
• 23 are minority owned compared to 11
  nationally.
• 17 are women-owned, well above average among
  companies over 1 million.

7
Inner City 100 -- Not Mom Pop Operations

• Inner City 100 represent range of sizes
• 19 companies employ 100 or more
• 24 employ between 50 and 100
• 67 employ less than 50
• Broad sector distribution
• Service firms 50
• Manufacturing 31
• Distribution/wholesale 14
• Retail 5

8
Inner City 100 -- Fast-growing companies
Total IC 100
Top 3

• Average Compound Annual Growth (CAG) rate
• Average revenues in 1998
• Collective sales in 1998
• Average sales growth rate

50
202
12M
10.2M
1.2B
30.7M
742
9,330
Collectively, the Inner City 100 created 4,300
jobs between 1994 and 1998
9
Inner City 100 -- Providing Quality Jobs

• Average hourly wage for rank file -- 12.82,
  above national average
• 96 provide employer-subsidized health insurance
• 76 provide bonus plan
• 72 provide retirement plan
• 66 provide life insurance
• 53 provide tuition reimbursement

10
Inner City 100 -- Succeeding because of
location, not despite it

• Top 3 competitive advantages of inner-city
  location
• Access to highways
• Proximity to customers
• Access to available and diverse labor force

11
Inner City 100 -- Succeeding because of
location, not despite it

• Competing on factors other than costs
• Seldom low-cost provider
• Competing on customer service
• Ability to quickly customize and deliver goods
  services

12
Tapping competitive advantage of inner city
location.

• 1 Caribbean Shipping Cold Storage
  (Jacksonville, FL) Access to ship, rail, and
  highway infrastructure to serve restaurants and
  stores in growing Latin American markets.
• On-Target Supplies Logistics (Dallas, 63) uses
  inner city location to source, distribute,
  warehouse and manage office products for
  fast-changing telecommunications and energy
  firms. Tucker Technologies (Oakland, 3)--
  Designs, installs and maintains
  telecommunications systems for high growth Bay
  Area telecom cluster. Sites access to inner city
  labor force as his prime locational advantage.

13
Inner City 100 -- Some disadvantages are
perceptional

• Perception of crime was greatest competitive
  disadvantage
• Actual crime was third among disadvantages
• Cost of security systems was second highest
  ranked competitive disadvantage -- high cost of
  false information about inner city security.

14
Inner City 100 -- Strategic Guidance

• Leverage competitive advantages
• Deal directly with disadvantages
• Work force sourcing is biggest barrier to growth.
  
• Recognition has economic value

15
List is making a difference for inner city
companies

• Tucker Technologies (Oakland)-- As a result of
  being on the Inner City 100, my company has
  experienced meteoric growth including a
  multi-million dollar contract with Lucent
  Technologies.
• NuStyle Development (Omaha)-- Due to the
  recognition, we have had several financial
  institutions show interest in our company by
  offering us their best interest and term rates to
  benefit them, the community, and NuStyle.
• TCG (El Paso) Our participation has resulted in
  the opening of doors that before were only
  slightly ajar.

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Entrepreneurs A Beacon of Hope for Inner City
Communities

• Shining the national spotlight on 100
  entrepreneurs with the vision to see opportunity
  in places others failed to look, and to find
  success where others see only risk.
• Through their everyday business activities the
  Inner City 100 companies are propelling a dynamic
  economic recovery in inner cities.