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Creating an environment in your small town for entrepreneurship to grow

Taking the first steps to build a thriving entrepreneurship ecosystem in a small town can be daunting and prone to failure. There are ways to take the community with you, increasing your chances of success, and at the same time make it fun! Here is one way.

Hunterville, New Zealand

I consider myself lucky, but I wouldn’t count on luck in life – or a lotto ticket for that matter. But I do count on recognising opportunities, understanding my strengths and limitations, my willingness to take on a challenge, the strength and support of ‘my team’ and the resources and knowledge I have.

The same can be said about entrepreneurship. Hardly ever is it just a lucky coincidence or a lone effort that makes successful entrepreneurship happen. Entrepreneurs need to be part of an environment – an entrepreneurship ecosystem – that will provide them with good access to markets, skills, finance, mentorship and talent.

Elements of a thriving entrepreneurship ecosystem

In my research journey for this article, I found the SGB website and was immediately drawn to what it stands for: Small and GROWING Businesses. What a positive spin on the SME! It provided a good overview of what they consider the necessary elements of an entrepreneurship ecosystem. A 2013 World Economic Forum Report (WEF) also offered an excellent insight into the global entrepreneurship environment. Over 1000 entrepreneurs were surveyed (28 from Australia/New Zealand) for that report.

In no particular order, here’s a summary of the most common elements that need to be present and aligned in a thriving, supportive entrepreneurship ecosystem:

  • Education, Training and Human Capital: Includes available workforce from high schools; universities; technical training institutes/polytechnics. Education and research institutions playing a major role in idea formation, the promotion of entrepreneurship and research. Includes available workforce with technical talent, management talent as well as with specific entrepreneurship training. Access to immigrant workforce and availability of and access to outsourced workforce and task specific expertise.
  • Accessible Markets (domestic and international): includes consumers, SMEs, large businesses/corporations, distribution networks, retail networks, marketing networks
  • Business Support: includes industry networks/network of entrepreneurial peers, incubators/accelerators, legal/accounting services, business mentors and technical advisers
  • Policy/Regulatory Structure: includes favourable tax rates, tax incentives, ease and cost of starting a business, business-friendly legislation and policies
  • Funding and Finance: Includes access to grants and government finance, venture capital, debt, angel investors, banks and micro- and development finance institutions. It is noteworthy that ‘friends and family’ are top of the list in this category in the WEF report.
  • Infrastructure: includes good access to providers of electricity, transport, communications (mobile, internet) and other utilities
  • Supportive culture: includes media, government, education providers, professional associations and social organisations. Culture needs to support self-employment,  celebrate success, talent and innovation (success stories, role models) show a tolerance for risk and failure and promote a positive image of entrepreneurship.

How does this work for small towns?

Even a cursory glance at the various elements of the ecosystem makes it immediately clear that it is highly unlikely to have the skill sets and other aspects all in place by chance in a small town.  This environment needs to be developed purposefully by a variety of stakeholders in the town.  Very often it needs to be supplemented by external capability, which is often only available intermittently. 

Growing an entrepreneurship ecosystem in such an environment can be challenging but can be done if planned well and purposefully managed to grow. Doing it in phases is the best way forward.

Phase one:  Find your early adopters.  Arrange a few workshops and maybe even run a competition for business ideas, with winners getting a small prize to set up their idea.  Start young, incorporate schools (and maybe even start with schools).  Make it a community effort and start to build a culture of “trying new things and see if they work”.  Maybe have a temporary microbusiness popup space, where microbusinesses have a small space to trial their proposed product for a period of six months or so. This makes learning from failure a part of life, because at that point, none of these businesses is planned to exist beyond six months.  BUT it’ll also highlight the ones that have a good chance of ongoing success, and those can then choose to continue their business start-up journey with more confidence.

Phase two:  Support new microbusinesses with a stick factor. Once you have a few ongoing efforts to start up new businesses beyond the initial six month period, get external help for them, and wrap more community support (celebratory, micro investment etc.) around them.  Make use of this external help to broaden the local interest (have general workshops that everybody can attend).  Definitely celebrate progress regularly, at least once a year.

Phase three:  Make it more formal. For instance, make an agreement with nearby incubators to offer workshops in your town at regular intervals if possible, or provide support for those who have to regularly drive to another town or city to attend meetings etc. 

At that point start to pro-actively develop an ecosystem locally so new start-ups have it easier in the future, as a culture of entrepreneurship has shown itself to “stick”, so it warrants the effort.

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