RESEARCH SHOWS THAT minority-owned businesses can drive economic growth in underserved urban areas even more than in wealthier districts. And, yet, these businesses can struggle to find funding: Less than 2 percent of African-American-owned businesses in the U.S. received loans from the Small Business Administration in 2013, according to a report by the U.S. Senate Committee on Small Business and Entrepreneurship. This offers business schools a rich opportunity to support small businesses in disadvantaged neighborhoods.
Two business schools recently joined forces to amplify the reach of their own programs into inner-city neighborhoods in Chicago, Illinois. Northwestern University’s Kellogg School of Management in Evanston, located just outside of Chicago, and the University of Chicago’s Polsky Center for Entrepreneurship and Innovation and Booth School of Business have formed a three-year partnership to support minority-owned businesses located in Chicago’s South Side and West Side neighborhoods, where unemployment is high.
JPMorgan Chase has provided each university with US$200,000 to launch new programs as part of the partnership’s effort. For example, in July, the Kellogg School offered a four-day residential program for businesses in underserved neighborhoods. Participants attended sessions on creating business plans, making effective presentations to potential investors, and growing businesses through acquisition. Each business owner also was advised by two MBA students, who were available to the participants for several weeks after the program ended.
This fall, the Polsky Center at the University of Chicago launches a program that pairs student teams with business owners. As part of 11-week extracurricular consultancies offered during the fall and spring academic quarters, students will solve challenges for client companies with the guidance of adjunct associate professor of marketing Craig Terrill. Business owners will have access to the Polsky Exchange, the school’s 34,000-square-foot co-working facility.
That kind of support is crucial, according to a JPMorgan statement. A report from the National Business Incubation Association finds that new businesses with access to incubators and mentorship have a five-year survival rate of 87 percent, compared to just 44 percent for firms that did not have access to such sustained support.
JPMorgan’s funding helps expand universities’ existing community-building efforts, such as UChicago Local, a University of Chicago initiative in which the school supports local agencies that help residents find jobs with businesses in South Side neighborhoods.
This collaboration between Kellogg and Booth is part of Ascend 2020, a national program developed by the University of Washington Foster School of Business in Seattle to promote inner-city businesses. Ascend 2020 will launch similar initiatives in Atlanta, Los Angeles, Oakland/San Francisco, Seattle, and Washington, D.C., in 2017.
Learn more about JPMorgan Chase’s Small Business Forward program.
This article originally appeared in BizEd's September/October 2017 print issue. If you have comments or feedback on its content, please contact us at [email protected].