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Supporting Entrepreneurship in Distressed Populations Creates Gains for All

Many minorities and severely distressed populations, such as the incarcerated and ex-offenders, turn to entrepreneurship as a last resort. They are locked out of traditional jobs due to a lack of resources, education, or past criminal history. In order to survive, they create businesses. Yet, they often have little or no access to entrepreneurial resources and support needed to build new businesses---access to capital, business skills and education, and mentors and networks.

Why should communities care about and support these fledgling entrepreneurs?

According to the National Minority Supplier Development Council, minority businesses produce more than $400 billion in annual revenue and contribute close to $49 billion in local, state, and federal tax revenues. These are major numbers that lead to a positive impact.

In addition, minority populations will comprise the majority of America's workforce in the coming years. Kaufman Foundation's research on race and entrepreneurship asserts that"the demographic shifts of 'minority to majority' will create a need for the ‘new majority’ to be economic drivers to the economy in order to preserve the U.S. standing as a market leader and producer."

In fact, the U.S. Census Bureau reports that minority populations will comprise 56 percent of the American population by 2060, compared to 38 percent in 2015. And it's no surprise that people of color — who face much greater rates of poverty — are dramatically over represented in the nation's prisons and jails.

Moreover, ex-prisoners and people with past crime histories also struggle with severe employment challenges as they try to reintegrate into communities. Each year over 2,500 people are released from prison in Indianapolis-Marion County alone. The United States Department of Justice reports, over 10,000 ex-prisoners are released from America's state and federal prisons every week and arrive on the doorsteps of our nation's communities. More than 650,000 ex-offenders are released from prison every year, and studies show that approximately two-thirds will likely be rearrested within three years of release."

One of the main reasons people re-offend is due to unemployment, costing states millions in prison expenditures. The ex-incarcerated face serious economic challenges. Many mainstream employers will not hire those who have served prison sentences or have felony convictions. Unable to find stable employment, they turn back to their former criminal habits.

Removing Barriers to Access

Distressed populations biggest hurdles to entrepreneurship are access to the resources that help most small businesses get off the ground and thrive:

  • access to capital

  • business, management, and leadership education

  • mentors and networks

Communities that create support systems for entrepreneurs in distressed populations and impoverished areas are beginning to see the benefits.

For example, in 2016 to reduce recidivism and improve employment opportunities for the ex-incarcerated, Indianapolis Chamber of Commerce created a program--Re-entry Entrepreneurship Development Initiative (REDI)---to help make the transition from prison to community easier by teaching the formerly incarcerated to run their own businesses.

So far, REDI has helped launch 7 businesses and trained around 500 people. The training alone provides job skills, mentors, and education that can ease the transition from prison into communities for this population.

Why it Makes Good Economic Sense

Understanding and supporting the needs of entrepreneurs in distressed populations is not only an act of good will, but also makes good economic sense. It can play a vital role in economic growth and community development in impoverished, declining areas. People who were formerly locked out of traditional jobs become productive members of the economy and they help extend the opportunity to others by creating jobs. These programs are also focused on inclusive entrepreneurship, so they support a variety of sectors and businesses, not just the technology and creative fields.

In areas of high unemployment, these businesses provide amenities and goods that were lacking, filling a need.

And like all entrepreneurs, they bring unique perspectives and experiences to their businesses.

Why it Matters

As communities look to create sustainable growth and vitality, they can't afford to overlook these populations. In fact, in an article published by Kaufman Foundation, Melissa Bradley argues that for America to continue as an economic leader and driver in the global economy, its business policies and investment will have to be much more diverse than they are now.

Inclusive policies and entrepreneurship programs that rise up all, including vulnerable populations, also improve conditions for a whole host of other people, creating cascading benefits. They contribute to overcoming chronic social issues--crime, poverty, neighborhood decay, and hopelessness. They bring new jobs, skilled workers, ideas and innovations that help communities and cities thrive. They are a win-win for all.

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