Any Hartford Business Journal reader can tell you: small business drives Connecticut’s economy.
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Any Hartford Business Journal reader can tell you: small business drives Connecticut’s economy.
According to the U.S. Small Business Administration’s 2019 Small Business Profile:
• Small businesses make up 99.3% of Connecticut’s businesses, and employ nearly half (48.9%) of our workforce.
• Small businesses created 26,960 net jobs in our state, with firms employing fewer than 20 adding half of them (13,803).
• Connecticut ranks sixth in the country for the average number of employees per woman-owned business (9.9), and 25th for average number of employees per minority-owned business (8.4).
Still, small businesses do more than generate revenue. They support the well-being of our region.
Small businesses keep money local. Local businesses tend to spend more on labor, goods and services from other local sources. The Andersonville Study of Retail Economics found $68 of every $100 spent with a local firm stayed in the local economy, compared to $43 spent at a chain store.
Small businesses employ more people. Locally owned businesses employ more people per unit of sales, retain more employees during economic downturns, and recover more quickly.
Small businesses promote income growth and help reduce poverty. Economists have found that local entrepreneurship has a positive effect on personal income and a negative effect on poverty. Communities dominated by large retail often see increased demand for supports including Medicaid, food stamps and housing assistance.
Small businesses promote a healthy community. Various studies have found that cities with more locally owned businesses tend to have stronger social networks, more engaged citizens and better success in solving local problems.
While small business ownership is valuable across a community, it is not easy. Overall, 21.5% of small businesses fail in the first year and 30% fail in the second.
Running a successful minority- and women-owned business enterprise (MWBEs) is made even more difficult by structural disparities around race and gender that limit access to capital and other resources. A recent report by Brookings found that structural exclusions depress the number of businesses owned by MWBEs as well as their revenues and numbers of employees.
In response, the city of Hartford, Hartford Foundation for Public Giving, HEDCO and Capital For Change launched the Small Business Emergency Assistance Grant Program in April. The $1-million program is aimed at Hartford’s small businesses that may have difficulty obtaining funding from other federal or state programs, and focuses on those owned by women and people of color in Hartford’s low-income neighborhoods.
In May, Bank of America, Travelers and the city each contributed an additional $125,000, bringing total funds available to $1.375 million. More than 300 applications were received during the one-week application window, with a projected 160 grants between $5,000 to $10,000 being awarded this month.
Among the applications received, 62% identified as being located in a low-income census tract. In addition, 15% of applicants self-identified as being minority-owned; 32% self-identified as being woman-owned; and 17% self-identified as being both minority- and woman-owned.
While it is too early to share other results, we will continue to monitor outcomes.
The public health and economic crisis created by COVID-19 devastated many local small business owners, their employees and neighbors. While there is impact across our region, it is most pronounced among those who can afford it least — minority- and women-owned businesses in Hartford’s lowest-income neighborhoods.
Small business is integral to thriving neighborhoods, no matter where you work or live. But by working together, we can support those that have been left behind before and during the COVID-19 pandemic.
Calvin Vinal is president and CEO of Capital for Change; Erika Frank is senior community investments officer at the Hartford Foundation for Public Giving; Fernando Rosa is president and CEO of HEDCO Inc.
