Government programs can be effective, but only if entrepreneurs know about them.

Hundreds of cities across the country offer programs to aid small business owners in a myriad of ways – yet two-thirds of the target beneficiaries don’t even know the programs exist. 

That’s one of the findings in the latest survey from GoDaddy’s Venture Forward initiative, which studies the economic impact of microbusinesses on the economy, as well as the attitudes, demographics, and needs of the entrepreneurs behind them. The survey, taken in February 2022, found that only three out of ten microbusiness owners are aware of the existence of local government assistance programs.

This awareness gap is a huge obstacle for city and local governments that want to strengthen their economies by sparking increased microbusiness activity, which has been shown by academics and economists to raise household incomes and lower unemployment. Even the best-designed local economic development programs can’t reach their potential if they only reach a small minority of potential beneficiaries. 

Programs can range from classes on marketing, to hosting wine-and-cheese networking mixers, to grants and other forms of financial help. As in all of Venture Forward’s surveys, founders cite help with marketing and access to capital as the ways the government could be most helpful. Of the respondents polled, 61% said they needed help marketing their business, and 36% said they needed help getting their business online. Of those who actually utilized a local government program, 19% said “networking and mentorship” was the number one benefit, 13% cited “access to financial capital” and 12% cited “skills training.” 

Just getting the word out about programs has value in itself, even with business owners who choose not to participate. Of those who don’t know about any particular program, only 18% think favorably about the government’s ability to help them. That percentage doubles to 36% for people who know of the existence of a program. Awareness also tamps down negative sentiment about the local government’s potential to help: 30% of those who are unaware of any programs feel negatively about the way their city supports businesses, versus 21% of those who are aware.

The survey suggests there is a strong connection between participation in government assistance programs and business success. For instance, 36% of the respondents who had used public programs brought in more than $4,000 a month, but only 28% of those who did not participate reached that threshold. 

Mossberger cautions that this may say less about the effectiveness of the programs, and more about these particular owners. Maybe they do more networking, or are more resourceful about finding ways to get ahead. Either way, more engagement with government programs seems to be good for microbusinesses.

Why is the awareness gap so big?

There’s no simple explanation for City Hall’s marketing woes, but usually a raft of contributing factors. Here’s a common one: Experts say that most government staffers are hired to design and oversee the best programs, not for their marketing acumen. “These people tend to do the work, not talk about the work,” says Della Rucker, a Cincinnati-based consultant to economic development programs. Also, they are often constrained by local rules about how to communicate with the public. Sometimes they are limited to sharing news with journalists or advertising in publications, but are prohibited from directly communicating via social media,” says Rucker. 

The government staffers’ life experiences are often very different from those of the founders they’re trying to help. “I see people (in local government programs) who are trying like hell to do the right thing,” says Rucker. But those people are often constrained by their organization, a knowledge gap, or other factors, Rucker adds.

Overcoming Negative Bias 

One of the key challenges is to overcome the negative bias some communities have toward government programs. Less than 20% of microbusiness owners feel positively about how their local policies support their businesses, and more than a third of these people say the policies cater to the needs of larger companies. 

These negative sentiments run particularly strongly in underserved communities. “If you’re Black or you’re an immigrant or part of any other minority population, you probably regard the government with a high level of suspicion,” says Rucker. “I’ve had a lot of people tell me that their personal experience is that the government is not there to help.”

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Keys to success

The key to overcoming these challenges is for governments to connect with microbusiness owners in ways they are comfortable with. While there is no cookie-cutter formula to follow, here are five ways: 

1. Go where the entrepreneurs are: 

Microbusinesses are in all segments and strata of the economy, and most founders don’t have time to research government programs.

Find ways to get into the neighborhoods, such as by setting up pop-ups, leaving fliers at high-traffic locations like barber shops and churches, or even going door-to-door. In a recent interview with Venture Forward, Cleveland Mayor Justin Bibb emphasized the importance of “meeting people and companies where they are, and maintaining that proximity, because that’s how you build trust.” In Salt Lake City, staffers for the Department of Economic Development make 300 site visits a year to small businesses, often meeting entrepreneurs where they live. “You have to have face-to-face interactions,” says department director Ben Kolendar. “They’re so busy with the day-to-day of their businesses that you’re not going to get to them otherwise.”  

Engage with local economic development organizations and other NGOs: Many government agencies don’t have the manpower for door-to-door canvassing, but every city has advocacy groups that might. In the mostly-Hispanic Allapattah neighborhood of Miami, a group called the Allapattah Collaborative has distributed more than $3 million in grants and loans to local businesses, including many who learned of the programs from a flier on their doorstep or, better yet, a conversation. “Governments tend to overuse online distribution of information, assuming that if you build it, they will come. That doesn’t happen,” says Francesca Escoto, director of economic development and strategy for the group.

Salt Lake City’s Kolendar says one of his most valuable outreach activities is serving on the boards of organizations like Suazo Business Center, which helps minority entrepreneurs build businesses, and NeighborWorks Salt Lake, a neighborhood revitalization program. Sitting on these boards yields a double benefit: those organizations’ leaders become ambassadors for the city’s small business programs and spread the word around the community, and it sets up a feedback loop so that Kolendar and his team learn first-hand what microbusiness owners need most. 

In other words, lean on microbusiness advocates to be your eyes and ears. People like Rucker and Escoto have devoted themselves to understanding and helping first-time business owners. Community development financial institutions (CDFIs), community development corporations (CDCs), small business development centers (SBDCs) all exist to help new businesses get the resources they need. If government staffers don’t have the skinny on who is doing what in town, these organizations may be able to help.

2. Consider language and culture:

Programs designed for everyone can inadvertently cut out large swaths of potential beneficiaries through simple oversights, like publishing marketing materials and loan applications only in English, says Escoto, who represents a mostly-Spanish speaking neighborhood.

3. Winning local champions is critical: 

The best marketing for a program usually comes via testimonials of people who have benefitted. Until they hear about people like themselves that have benefitted, most microbusiness owners will cut one more head of hair or make one more delivery rather than giving a program serious consideration. “Every one of the businesses we helped during the pandemic are still open,” says Escoto. “That’s built trust in the community, and as a result we have a waiting list for newer programs.”

4. Create one office for microbusiness assistance: 

Microbusinesses in Allapattah have a range of programs available to them, but they are promoted by three entities – one from the City of Miami, another from the city of Miami Beach, and a third by Dade County. Finding a way to speak with one voice would be a great help, especially in an immigrant-heavy neighborhood where people have little experience dealing with government bureaucracy, says Escoto. 

5. Raise awareness about the economic impact of microbusinesses: 

Rather than focus on what you can do for microbusinesses, the Brookings Institute suggests elevating the conversation to talk about how microbusinesses drive prosperity for everyone. You can use tools such as the Venture Forward Microbusiness Activity Index to see how your county stacks up against others. 

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Conclusion

The need to close the awareness gap is particularly important right now. Millions of people created microbusinesses during the pandemic, many of them out of necessity as a result of layoffs. For a solitary microbusiness owner trying to figure out the complexities of entrepreneurship, meeting a mentor at a wine-and-cheese mixer at City Hall or receiving a $5,000 or $10,000 grant may make all the difference. 

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To learn more about how Venture Forward data is being used by economic developers and policymakers read the latest 2022 Summer Report here.