Economic and Community Development Institute, Inc.

ECDI will expand its pilot program, to operate a rotating pop-up shop acceleration program for Black and Hispanic women entrepreneurs. The program has three parts: access to robust business/financial curriculum, access to capital and the opportunity to scale through pop up spaces.

Each cohort will take part in a 12-week program through ECDI’s SBA Women’s Business Center of Northern Ohio (WBC) which will cover topics including but not limited to branding, developing their business plan, cash flow/business finance, and ecommerce. Each participant will have access to the WBC’s suite of regular programming including weekly workshops, 1:1 coaching, networking events, mentors, and co-working space. The WBC will bring in partners to provide mentorship and peer to peer learning, including current partner YWCA. After the year ends, each participant will have the opportunity to continue to receive coaching and access to WBC programming.

ECDI will help participants access capital to support business expansion-through affordable loans or grants ECDI fundraises for.

Participants will start in one location in a Cleveland neighborhood for 6 months. Rent, utilities, furniture, and marketing will be paid by ECDI. They will then graduate to a second location in a different neighborhood to reach new markets. In the second location rent and utilities will be subsidized. 

Currently, the pilot has one cohort of seven entrepreneurs, and they are remaining in the one location for the pilot year. ECDI has a second location identified and is working to have everything in place by 2023 to launch the rotating cohort.

According to National Women’s Law Center, Black and Hispanic women earn $.64 and $.57 of every dollar paid to white, non-Hispanic men. Entrepreneurship can be a driving force of economic change. It creates opportunities to build your own schedule, pay yourself a living wage, and create meaningful jobs. However, Black and Hispanic women face systemic racial, gender, and income barriers which makes starting a business, and staying in business, more difficult. American Express’ 2019 State of Women-Owned Businesses report found that while “women of color account for 50% of all women-owned businesses...[they only account for] 23% of total women-owned businesses’ revenue.” A recent Lending Tree report ranked the City of Cleveland 48th out of 50 of the biggest metropolitan areas where minority entrepreneurs succeed.

Set up Shop will address and help remove obstacles women of color face when building their businesses while also offering wealth accelerating opportunities. These include a 12-week financial and business training program, expert coaching, opportunities to test products and grow a client base and access to capital. The program will subsidize rent, utilities, and pop-up furniture to reduce expenses and increase net revenue. Through this approach, ECDI will scale a program that will help Black and Hispanic Women in Cleveland, and eventually in other locations, overcome systemic barriers and drive equitable local economies.

In 2021, the U.S. House Small Business Committee released a report which states, “Closing the Black-owned small business gap is essential to economic growth, increasing American prosperity, and closing the racial wealth gap.”

The Inspire Challenge is to build better lives and communities by filling gaps in the current small business ecosystem. Black and Hispanic women make up the fastest growing groups of small business owners, yet they must overcome some of the largest hurdles to keep pace with other entrepreneurs. Reducing their barriers and creating opportunities for growth will help create racial economic equity, increase their generational wealth, and increase the economic output into the economy.

Business development programs and pop-up options exist in the region, but when offered on their own, they don’t have the ability to take micro home- or side-entrepreneurs and help them significantly scale, increasing clientele and revenue. SUS bridges the two, creating a holistic program to build a strong foundation for accelerated growth.

The 12-week curriculum and continued access to education and coaching through the WBC aligns with access to financial education. Clients will be taught about cash flow, business taxes, and how to plan for the future. In addition, as participants grow and need capital, ECDI/WBC will continue to help them find the source that fits their needs-whether that is through ECDI, a crowd-funding program, or a traditional financial institution. The full program, including the rotating pop-up opportunity, will address the dimension to support and foster growth to scale. As clients receive education and coaching (including access to the WBC’s suite of consultants who have specialized expertise), they will learn how to responsibly grow their business and then put their plan into action through the pop-ups.

68% of Black mothers and 41% of Hispanic mothers are breadwinners for their family, yet as cited earlier, they earn considerably less income than other groups. Unemployment rates for Black and Hispanic women are consistently higher than the rates for other women. According to JPMC, “[Per data from 2020-2021] Black and Latina women are more likely to be in households that have lost income, more likely to be facing food insufficiency, and more likely to be behind on rent or mortgage payments than other groups.”

In the Cleveland MSA, 38.8% of Black and 33.5% of Hispanic residents live below the poverty level. The Center for Community Solutions released a report in 2019 stating, “the median income for white residents is 2.1 times that of Black residents [and this disparity] is increasing.” They reported that “Black and Latino or Hispanic Cuyahoga County residents [where Cleveland is located] were significantly more likely than whites to experience problems, including in some areas which could help break generational cycles of poverty.”

The solution has been created to serve Black and Hispanic women in Cleveland and help improve their long-term economic situation through entrepreneurship. In addition to qualitative and quantitative data from the salon program, staff have been working with Black and Hispanic entrepreneurs to understand their barriers and needs. These conversations, surveys, and data have been instrumental in the development of the program. As staff have worked with the pilot cohort, they have listened and adapted components to betters serve clients.

The program will prioritize those with low-moderate income and those living in neighborhoods where the program has established SUS pop-up shops. Areas chosen for the program are underinvested neighborhoods. In addition to helping participants, the pop-up stores will drive economic growth to the neighborhoods, bringing cash flow from outside of the areas. 

The solution takes place in Ohio. ECDI as an organization also provides services in counties in Kentucky, Indiana, and West Virginia. 

ECDI offers support throughout the entire business journey. ECDI’s mission is to invest in people to create measurable and enduring social and economic change. As the leading SBA intermediary microlender in the United States, ECDI fills a gap in the credit industry by offering loans ranging from $750 to $500,000 to underserved entrepreneurs. Since 2004, ECDI has provided small business owners with over $140 million in startup or expansion capital, served over 29,000 individuals, and created or retained over 14,000 jobs.

ECDI offers a one-stop shop model that provides valuable services to underserved entrepreneurs. ECDI operates four SBA Women’s Business Centers, and three industry-specific incubation programs, which provide one-on-one coaching, workshops, networking events, mentors, training series, and access to expert consultants. Through this wrap-around life-long support, ECDI helps entrepreneurs both start-up and sustain or expand small businesses. 

The SBA has found that entrepreneurs who receive technical assistance, whether through coaching or through trainings, have higher financial performance and higher employment growth rates. A 2021 study, conducted through the London School of Economics, looked at incubator and accelerator programs and their effect on urban economic development. Their research and their evaluation of peer studies (in the U.S. and U.K.), found that “both accelerators and incubators have positive impacts on participant outcomes, in particular in relation to employment (and, for accelerators, in relation to finance.)” They also found that these programs may “help ‘non-typical’ firms, such as female- or [BIPOC]-headed businesses, where founders may have trouble accessing mainstream economic institutions.”

Set-Up Shop lead, Jasmine Dixon, created the original program that inspired the Set-up Shop pilot. In 2018, she convened a cohort of Black women home-based hair braiders and, in collaboration with the WBC, provided intensive technical assistance (TA), expense coverage, and subsidized chair rentals in salons. Participants went on to establish permanent occupancy in salons, grow their customer base, and increase their revenues. The success of this program led to the development of the pilot program currently being implemented.

The TA and programming offered through the WBC will help each participant strengthen their current business model and develop a plan with achievable action steps to grow their business over time. This expert-led education will create life-long business and money habits that will help their business weather unforeseen changes. Ecommerce education and the free subscription to a website platform will offer multiple revenue streams and increase the business’ market audience. The subsidized pop-up space will bring new clients. Over time, the business owner will grow their business and learn what products/services work best. Within 18 months, we anticipate businesses will increase revenue, at least 25% will hire an additional employee, and the majority will be ready to access capital to support business expansion needs. Over time, this strategic growth will continue as businesses enter their own brick-and-mortar and hire more employees—creating opportunity to build generational wealth and diversify the business ecosystem.

Pilot: 7 participants

One Year: 14 participants (2 cohorts of seven, rotating between two spaces)

Five years:  112 participants. By year three we would like to graduate to four locations and make it a two-year program. 4 cohorts of seven rotating between four spaces for 6 months

The solution is implemented in neighborhoods within the City of Cleveland. ECDI is looking to work in disinvested neighborhoods with significant Black or Hispanic populations. Stakeholders and influencers include local organizations including Community Development Corporations (CDCs), local council members, the City of Cleveland, and residents. The first location is in the Buckeye-Shaker neighborhood. Prior to launch, the team met with the local CDC, Burton Bell Carr, to discuss the needs they see in the neighborhood and make sure as they developed the program it would address them. The City has a Mayor’s Neighborhood Transformation Initiative which ECDI is working with as well. The team has spent time with and will continue to talk with entrepreneur clients and residents of neighborhoods to discuss what they need, what barriers they face, and what opportunities they wish they had to develop the program.

ECDI understands the importance of working closely with local organizations, other small business focused organizations, and residents when developing programming. While our staff spends considerable time in neighborhoods across the city, co-hosting workshops or office hours at partner locations, they are not in each neighborhood full time. When developing programs such as SUS, we meet with local CDCs who are in the neighborhoods to discuss and build the programs together.

ECDI is a member of the Business Growth Collaborative, a network of small business serving organizations across the city. Through monthly meetings, members discuss what they are seeing in their areas, what their clients are struggling with, and what support they need from other organizations. ECDI uses this information as well to provide expert business-centric components to the programs. ECDI also refers clients to the other service providers to make use of the varied expertise.

In addition to working directly with other organizations, ECDI makes use of City initiatives and community based strategic plans. These plans are developed after analysis of community data, round-table community events, and qualitative input from the residents. They are important tools to help create holistic programs that can link multiple initiatives together.

Most importantly, ECDI staff talk with the entrepreneurs in the underserved neighborhoods as they build their place-based programs. Through conversations and surveys, staff learn what the residents experience and what they feel needs to improve.

Through this multi-pronged path, ECDI is able to create impactful place-based programming that addresses the needs of diverse neighborhoods across the City. 

ECDI has been in the Cleveland market since 2012 and its WBC of Northern Ohio was established in 2015. Over the past decade, staff have worked to build relationships with local community organizations, government economic development departments and the small businesses themselves. This time spent attending local events, meeting with partners, officials, and working directly with entrepreneurs has helped ECDI build trust and a robust network in the market.

As we continue to build SUS and dive deeper into neighborhoods, ECDI intends to lean upon the network of local organizations to help spread the word. In addition, we will bring more traditional WBC programming, such as workshops and office hours, to each neighborhood to reduce transportation barriers for clients and get to know residents better within each neighborhood. Lastly, ECDI’s marketing department will work with the WBC to reach more clients through a marketing campaign and social media engagement. 

In the first full program year, ECDI intends to have two pop-up locations and two cohorts, totaling 14 participants. At the end of the year, participants will have increased their revenues, through the pop-up and ecommerce sites they create during the 12-week program, by at least 25%. As they move forward and continue to work with the WBC they will continue to scale. We anticipate that within 18 months of program start, 25% will have grown enough to hire another employee and at least 50% will access capital for business growth purposes. This creates a positive ripple effect in the community, through increased cash flow, jobs created, and the beginning of building generational wealth.

Within five years, we anticipate scaling the program to include 4 locations with four cohorts. Each cohort will stay in each location for 6 months, turning it into a two-year program. This will provide more opportunity to build out each business, determine what scale opportunities make sense for each client, and significantly increase their revenue. By the time they graduate from the program, participants will be in a strong position to continue to scale by entering a brick-and mortar location and hiring more employees. 

By year five, the pop-up shops will be well-known within the community and will bring in new clientele to the neighborhoods, increasing cash flow. We anticipate that these retail spaces will encourage other small businesses to come to these neighborhoods as well, creating more economic activity and opportunities for residents.  

ECDI’s target market is underserved and underbanked entrepreneurs. The Cleveland ECDI/WBC team works with entrepreneurs every day who must overcome a variety of barriers to achieve their small business goals. Since 2015, the WBC has worked with over 3,144 entrepreneurs, of which 68% are Black, 80% are women, and 63% report low-moderate income. In that time, they have helped clients become ready to access over $5 million in capital, which has led to the creation or retention of 562 jobs. They have built a robust network of partners to refer clients to for support and guidance in multiple areas, both entrepreneurial and otherwise.

The program team is made up entirely of Black women, most of whom are entrepreneurs themselves, who know firsthand what their clients are up against. As Black women they have faced their own barriers throughout their journeys and so they can connect with clients and build trust with them. During this process they have relied heavily on the experience of our Black and Hispanic clients, whom they work with every day, to guide their programmatic decisions. 

The five-month program will help guide the project lead and ECDI as we work to scale the program in a sustainable manner. The award will help address the financial barrier and provide leaders with more time to meet with funders, show them the outcomes, and secure other funds. In addition, ECDI will tap into the network of resource partners, mentors and coaches for guidance on the legal barriers our different vendors face that we do not have expertise in. ECDI is also interested in learning how the make the program sustainable as mentioned earlier, without placing more costs on the participants.

The monitoring and evaluation support is also a draw for the program. We have experience collecting certain information but would like to learn how to strengthen our long-term and secondary effect impact measurements.

The peer-to-peer network will enable the project lead to tap into institutional knowledge beyond our own and learn how other entrepreneurial-serving organizations are addressing the problems that we face or that our clients face. This collaboration will lead to stronger programs that are more impactful for our clients.

Ultimately, we would like to build a strong multi-site program that creates lasting change. If, with the support of SOLVE MIT and Truist Foundation, can build a such a program, it is our intention to bring the model to other cities, adapting it to meet the needs of entrepreneurs in their historically underinvested neighborhoods.

Business model: Beyond minimal membership fees, which are waived if a client cannot pay the annual $80, the WBC’s business development programs have never had revenue generating components. Our goal is to develop multiple revenue sources that can make the program sustainable.

Legal: The City of Cleveland has little flexibility for pop-up type programs, which makes some of the licenses and regulations more difficult to navigate, especially for any food-vendors. ECDI hopes for insight and guidance from the peer-to-peer networks or mentors.

Public Relations: The program will have far more success and have a greater chance of raising funds for long-term sustainability if we can successfully market the program across the City. Public relations support and guidance for such a unique program, that would interest funders and supporters across multiple industries and government departments, will be invaluable.

Monitoring and Evaluation: As mentioned, ECDI is interested in learning how to develop processes and procedures for long-term evaluation to illustrate the long-term impact of the program. 

ECDI is interested in partnering with business service providers that offer programs that are completely different from our own. Sharing and building upon new ideas will help broaden the potential for the program and strengthen it.

ECDI is also interested in working with organizations with experience in the workforce development sector. As clients scale, they will need to learn how to be effective bosses to employees. We would also like to learn what we can offer those hired, what education components can our coaches adapt to help employees succeed.

Women focused organization is another type of organization we’d be interested in working closely with. The women we intend to serve face barriers beyond those in the business world. By working with women-serving organizations, we can learn more about holistic programming and make sure to connect our clients with the right partners across the market to reduce other barriers in their lives.