"Urban Entrepreneurship & Economic Development" Presentation for Leadership Newark and Leadership New Jersey

Urban Entrepreneurship & Economic
Development

Jeffrey A. Robinson, Ph.D.
Assistant Professor and Assistant Director
The Center for Urban Entrepreneurship &
Economic Development

The Center for
Urban Entrepreneurship &

World-Class Research
Innovative Education
Economic Development Impact

Mission Statement

Our mission is to build a world-class
research-driven, teaching, and
practitioner-oriented urban
entrepreneurship and economic
development program that will transform
the economy of Newark and other urban
centers, create wealth in urban
communities, and be a model for all urban
universities.

The Center for Urban Entrepreneurship
& Economic Development

CUEED Activities

Economic
Education Research Development
Initiatives

• Courses: • Newark Projects • Profeta Fund
• Urban Entrepreneurship & • Regional Research • Entrepreneurship Pioneers
Economic Development I, II
• NSF Research &
• Social Entrepreneurship Education
• Academic Papers &
Conferences

Dr. dt ogilvie, Director
Dr. Jeffrey Robinson, Assistant Director
Jasmine Cordero, Managing Director


Research Areas
Urban Entrepreneurship & Economic Development

– Urban Entrepreneurship (wealth creation, business
development, community entrepreneurship, job creation)

– Technology Entrepreneurship (technology transfer,
technology commercialization, incubators, technology
clusters, leveraging university patents, green business)

– Social Entrepreneurship (social problems solving, social
purpose businesses, social investments, green business)

– International Entrepreneurship (institutions and
entrepreneurial activity, SME’s and developing nations,
entrepreneurship towards economic development)

– Economic Development (urban institutions and
development, economic development and emerging
economies).


Education Activities
• New Courses
– Special Topics: Urban Entrepreneurship and Economic
Development I & II
– Social Entrepreneurship
– Introduction to Entrepreneurship (undergraduate)

• Course Materials
– Case studies
– Textbook or casebook (in future)

• Development of a Entrepreneurship
Major/Concentration
– Cross-disciplinary options
– MBA and Undergraduate


Economic Development Initiatives
• The Profeta Fund
– Partnership with the Profeta Urban Investment Foundation
– $1-2 M venture capital fund assisted by students
• Leveraged up to 3:1 debt capital from partners

• Entrepreneur Pioneers Initiative
– Funded by the North Jersey Partners of WIRED
– 1st Generation Entrepreneurs in North New Jersey
– 9 month program in collaboration with regional
entrepreneurship advocates


Businesses that our students have
assisted:
• The Coffee Cave
• Cravings, A Caterer
• Newark Art Supply
• Simply Britt
• Porta-Print Publishing
• Love My Cake
• Life Sandwiches
• Rhythm & Qs


Entrepreneurship Pioneers Initiative
In Collaboration With …
• The Institute for Entrepreneurial Leadership
• Greater Newark Business Development Consortium
• Rutgers-Newark Small Business Development Center


EPI - Program Description
Designed for small and medium sized businesses
ready for growth …

Through the program each entrepreneur receives:
– intensive training to help you grow your business,
– group and 1-on-1 counseling,
– networking opportunities
– mentoring over a 9-month period.


CUEED’s Impact on Public Policy
• Research  Better Policy  Economic Development
– Quarterly Meetings with Policy Makers
– Policy Briefings on Key Urban Issues and Research
– Policy papers based upon center research
– Conferences

• Upcoming Activities
– Policy Paper – “The State of Black Entrepreneurship in New Jersey”
– Policy Forum – April 2009
– Policy and Appropriation Proposal - NJ Urban Entrepreneurship
Development Initiative


Urban Economic Development
Primary Mechanism for Economic Development
• Job Creation
• Housing Development

Other Avenues
• Education Reform
• Entrepreneurship and Small Business Development


Quiz #1 – True or False?
• Small and medium businesses represent over 99
percent of all employer firms

• Small businesses employ half of all private sector
employees


Small business impact …
• 99.7 percent of all employer firms
• Employ about half of all private sector employees
• Pay nearly 45 percent of total U.S. private payroll
• Create more than half of the non-farm private GDP

Source: SBA Office of Advocacy


Small businesses employ about half of U.S.
workers. Of 116.3 million nonfarm private sector
workers in 2005, small firms with fewer than 500
workers employed 58.6 million and large firms
employed 57.7 million. Firms with fewer than 20
employees employed 21.3 million. While small firms
create 60 to 80 percent of net new jobs, their share of
employment remains steady since some firms grow
into large firms as they create new jobs.

Source: SBA Office of Advocacy

Social and Institutional Factors
that Influence Entrepreneurship

Nascent Entrepreneur
• Characteristics
• Status and Identity

Stratification and Process
Structure
Outcomes
• Creating
• Institutional • Traditional
• Business Entrepreneurship
Arrangements Planning • Self-Employment
• Social
• Social structure Local Context Factors • Funding Entrepreneurship
• Polices
• Culture • Execution
• Social networks
• Local institutions

Robinson, Robinson and Blockson, working paper


Newark Zip Code - 07103
• Population: 31,465
– 6.9 % White
– 84.3% Black
– 11.6% Hispanic
– 1.7% Asian

Home Ownership - 22.5%
Average HH income - $20.5K
Unemployment – 12.4%
Individuals in Poverty -40%
Self-Employed – 2%


Self-Employment
Neighborhood Rate
Newark Zip Code
Campus Area
1.6%
07102
West Station
2.0%
07103
Broadway/Mt Pleasant
3.1%
07104
Ironbound
5.1%
07105
Valsburg
2.4%
07106
Roseville
2.1%
07107
Clinton Hill
2.2%
07108
Lower Clinton Hill
2.2%
07112
South Station
3.3%
07114
2000 Census Data


Types of Entrepreneurial Activity
• Formal vs. Informal
• Traditional Entrepreneurship
• Social Entrepreneurship
• Self-Employment (solo) vs. Business Ownership (w/
employees)

• Number of establishments/new firms


Social & Institutional Influences on
Urban Entrepreneurship
• Five Types of Local Institutions
– Government
– Entrepreneurship Support Organizations
– Foundations (and other philanthropic organizations)
– Religious Organizations (i.e. churches)
– Multi-sector Organizations

• Social Structure
– Race/Ethnicity
– Neighborhood characteristics
– Social-economic factors


If you were mayor and had to choose …
Investing $500,000 in to one of these three programs,
which would you choose:

Option #1 - $500 K in tax incentives for large
manufacturing business (estimated 200 new jobs)

Option #2 - $500 K in small business development and
technical assistance program for 100 business

Option #3 - $500 K for a green jobs training program
(estimated 100 people trained )


Quiz #2 - Which one do you choose? Why?

Option #1 Option #2 Option #3
Manufacturing Entrepreneurship Green Collar Training
200 living wage jobs Training Program Program
100 entrepreneurs 100 jobs


WHAT DO WE MEAN BY
ENTREPRENEURSHIP?

High-Growth
Teams/ Entrepreneurship
Large Scale

“Lifestyle Companies”
Individuals/
Income Replacement
Small Scale

Economic Value Creation

The Landscape of Entrepreneurship

5.7 Million Firms with Employees in the US (2002)

$5-100 M in Receipts 4.5%
>$100 M in Receipts
.2%
$1-5 M in Receipts
14%

<$1 M in Receipts
81%


Types of Firms
• Lifestyle-Income Replacement Firms
– Generates income for the entrepreneur
– They do not require lots of financial capital to start
– You leverage your own skills, talents and abilities
– Can be self-employment (i.e. consulting) or part-time (i.e.
weekend retail operation)
– Ventures with <$1M in revenues
– Limited reach or impact

• High-Growth Wealth-Generating Firms


Types of Ventures
• Lifestyle-Income Replacement firms

• High-Growth Wealth-Generating Firms
– Generates income for the
entrepreneur/founder/owner and generates
wealth (equity)
– You leverage the skills, talents and abilities of
many others (including professionals)
– This is a full-time endeavor for managers and
employees
– Prepared for investment, acquisition, merger,
and other exit vehicles
– Ventures exceeding $1M in revenues
– Potential to scale up and expand (multi-units,
international, franchise, etc.)

Social Venture
High-Growth
Social Purpose Business
Teams/ Entrepreneurship
Social Entrepreneurship
Large Scale

“Lifestyle Companies” Nonprofit & Community
Individuals/
Organization
Income Replacement
Small Scale

Economic & Social Value Creation

Investor Backed Companies
Teams/ Franchises
Large Scale

Small Business Community-Based
Individuals/
(1-13 employees) Organizations
Small Scale



Other Types of Entrepreneurship
Alternatives to traditional entrepreneurship –
Entrepreneurship that has direct COMMUNITY (Social &
Environmental) BENEFITS!

• Social Enterprise
– Entrepreneurial non-profit organizations

• Social Entrepreneurship
– Using entrepreneurship to address social issues


SOCIAL
ENTREPRENEURSHIP


Social Entrepreneurship:
Formal Definition
Social entrepreneurship uses entrepreneurial and
business skills to create innovative approaches to
social problems.

These are mission driven organizations focused
on the double-bottom line of social impact and
financial sustainability or profitability.

Key Elements:
Pattern Breaking-Socially Important-Sustainable-Scalable

Café Reconcile

Café Reconcile is a working nonprofit restaurant and the centerpiece of
Reconcile New Orleans, a workforce-training program for the city’s at-risk
youth. While cooking, washing dishes, bussing tables, and welcoming
customers, young people who have been identified as high-risk or have served
time in jail gain the skills and confidence they need to enter the hospitality
industry.

Cuccia co-founded Reconcile New Orleans eight years ago in an abandoned
furniture warehouse in an underdeveloped part of town. Today Cuccia, a
licensed contractor–turned–restaurateur/community activist, is responsible for
site development, administration, marketing, and fund-raising for the
organization.

City Fresh Foods was founded in 1994 with the mission of
utilizing local culinary talent to prepare traditional and home-
style meals. Behind our delicious food is a successful business
model that incorporates community and economic
development to provide organizations with a cost-effective
method of meeting their food service needs.

City Fresh Foods is located in the Four Corners neighborhood in Dorchester,
MA, a community that has been historically bypassed by business
investment. Four Corners is evolving into a vibrant, bustling neighborhood.
We believe that business is a powerful vehicle for empowering our youth,
developing the community, and nurturing the environment.

As part of our dedication to our mission, City Fresh Foods:
1. Has relationships with local schools, providing exposure to young adults
who might consider the culinary arts profession.
2. Purchases from local organic farmers in season to use the freshest
natural ingredients.
3. Recycles and minimizes waste-flow to reduce our impact on the
environment.
4. Employs from the community, providing residents with an opportunity to
manage, and eventually own the operation.
Listed on the Inc. Magazine Inner City 100


Eden Organix
Valerie Mason-Robinson
CEO of Eden Organix of Highland Park, NJ
Day Spa and Organic Beauty Retailer

B.S. Chemical Engineering
Masters of Management

6 FT and PT employees

Harlem Children's Zone
Founded in 1970, Harlem Children's
Zone, Inc. is a pioneering, non-profit,
community-based organization that
works to enhance the quality of life for
children and families in some of New
York City's most devastated
neighborhoods. Formerly known as
Rheedlen Centers for Children and
Families, HCZ, Inc.'s 15 centers serve
more than 12,500 children and adults,
including over 8,600 at-risk children.
The emphasis of The Children's Zone
work is not just on education, social
service and recreation, but on rebuilding
the very fabric of community life.

Entrepreneurship

Opportunity

Capital

Innovation
Networks

The success or failure of your venture depends upon how your put these pieces together.

Investor Backed Companies
Teams/ Franchises
Larger Scale

Small Business Community-Based
Individuals/
(1-4 employees) Organizations
Smaller Scale



Take aways …
• Economic development policy can not leave out
entrepreneurship
• Comprehensive economic development initiatives
must include and understand multiple dimensions of
entrepreneurship
• Think wealth creation not just job creation

Urban Entrepreneurship & Economic
Development

Jeffrey A. Robinson, Ph.D.
Assistant Professor and Assistant Director
The Center for Urban Entrepreneurship &

http://business.rutgers.edu/cueed
cueed@business.rutgers.edu
LinkedIn Group - CUEED

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