Mayoral Discussion: How to Grow the Microbusiness Dividend

 | 6 min read
Opinion

Mayoral Discussion: How to Grow the Microbusiness Dividend

“We need microbusinesses and they need us,” Daniella Levine Cava, the mayor of Miami-Dade County, said during a panel with six other prominent mayors of U.S. cities on July 15. “Together we can keep our economy going and growing.”

“Together we can keep our economy going and growing.”

I couldn’t have said it better myself. Since we started GoDaddy’s Venture Forward initiative in 2018 to study the economic impact of more than 20 million tiny businesses that use our domain name services, we’ve learned the critical role that they play: Communities with a higher density of microbusinesses have lower unemployment, higher median household incomes and are more resilient. During the pandemic, they helped alleviate the impact of business closures and layoffs, particularly in low-income communities. 

The impressive group of mayors on the panel, which was hosted by The Hill and sponsored by GoDaddy, is testament to the rising awareness of the importance of microbusinesses on all of us. 

The group — which also included James Brainard of Carmel, Indiana; John Giles of Mesa, Arizona; David Holt of Oklahoma City; Brandon Scott of Baltimore; and Nan Whaley of Dayton, Ohio — shared ideas on what policymakers and government leaders can do to help microbusinesses thrive in their communities. In these six cities alone, there are more than 800,000 online microbusinesses, and two of them joined the panel to give their perspective: Denise Larell, who runs a hair salon in Baltimore, and Natasha Williams, whose Miami-based company makes hypoallergenic press-on nails

Historically, even leaders who sensed the importance of microbusinesses lacked the data to prove it, as many of these enterprises are either too small or too new to be tracked by traditional economic indicators. Through our Venture Forward program, policymakers no longer have to guess. We can now accurately study where microbusinesses are, what is influencing their success, and what they need.

For example, we know that adding one microbusiness for 100 people to a community drives up median household income by about $500. In a typical community, two jobs are created for every entrepreneur running a microbusiness. And new research shows a correlation between microbusiness density and ranking on the Milken Institute’s widely respected Best Performing Cities Index.

The conversation, moderated by The Hill’s editor-at-large Steve Clemons, focused on what the mayors have done to support microbusiness creation and growth, and about what policymakers can do in the future to tap into this often-overlooked segment of the economy. 

Some common themes emerged: 

Make microbusinesses a priority – Too often, policymakers lump microbusinesses in with small businesses as defined by the Small Business Administration, which can include companies with up to 1,500 employees or more, depending on their sector. But Venture Forward data shows that more than 90% of microbusinesses have fewer than 10 employees, and roughly half are “solopreneurs.”

“As we move from triage to rebuilding our economy, our big companies are going to be just fine,” said Carmel’s Brainard. “The best thing we can do for counties and cities is to make sure these small businesses have the opportunity to succeed, hire people and grow.”

Dayton’s Whaley, who became president of the United States Conference of Mayors on July 13, argued that the payback from such an approach is likely to have better results than trying to lure large companies. “For Dayton and cities across the nation, that’s where the potential for future growth is,” she said. “Most cities recognize that their success isn’t going to come from a magical company moving into the community.”

Focus on diversity ­– Data from Venture Forward and other sources show that minority- and women-owned businesses were hit particularly hard during the pandemic, highlighting the need for local governments to focus on their specific needs. 

“We were very particular about making sure that our small business assistance fund went to help businesses that we know typically didn’t get help from the city,” Baltimore’s Scott said. Nearly three-quarters of the $3.5 million in grants from the program went to minority-owned firms, the majority of them women-owned, said Scott, who was elected in 2020. “It’s going to take a long time to break down the results of decades of disinvestment in certain Black, Brown and poor communities.”

Rethink regulations – City governments should reform zoning rules that create unnecessary obstacles for microbusinesses, Brainard said. Fast-growing Carmel, for example, has changed zoning codes to allow smaller storefronts and to end restrictions that prevent entrepreneurs from having a few employees work with them in their homes. “There are too many regulations that tilt the scale against small, what I would call mom-and-pop businesses,” he said.

Mayors Brainard, Scott and Whaley also agreed it was important to make microbusinesses a bigger priority at the federal level, while giving mayors authority over how to invest federal funds based on the unique needs of their cities.

Create separate funding mechanisms – To support microbusinesses in a meaningful way, cities need to find ways to maintain programs even during tough times and in the face of competing priorities. Holt said he was glad that Oklahoma voters have twice approved measures to create funding mechanisms for entrepreneurs outside of general funds since 2007. “The first priority is always going to be core services like police and fire and streets and sanitation and parks. When you pit those services against support for microbusiness, you know who is going to win that battle,” he said. “I’d encourage mayors to create separate pots of money.”

Training and education – Venture Forward data shows that access to broadband, especially if available for the lowest-income residents, is critical for communities that want to increase microbusiness density. But access alone is not sufficient. Many would-be microbusiness owners need help with everything from creating a website to understanding how to market themselves effectively on social media. 

“A lot of our small businesses needed some very basic technical assistance to be literate and to communicate with their customers,” Giles said. “It pointed out that the digital divide is not just a reality in our low-income communities, but also in our business community.”

A little know-how can go a long way in terms of helping a microbusiness survive and grow. Larell shared how she saved her hair salon by quickly learning how to create a website and produce webinars to show customers how to take care of their hair at home. “I went from standing behind a chair to learning something new, and my customers learned along with me. COVID-19 brought out something in me,” she said.

As CEO of GoDaddy for the past two years, I’ve been blown away by the creativity, passion and potential of people like Denise and Natasha. To support them, and to support mayors focused on building back stronger, we are pledging to work in the following areas: 

  • We will continually enhance the Venture Forward website to make it an essential resource for policymakers. For example, we recently launched a city portal that anyone can use to get an immediate view of microbusiness change across their cities. 
  • We will continue our work with over 40 cities to train thousands of everyday entrepreneurs, and expect to help another 10,000 learn how to start their own microbusiness over the next 18 months.
  • We will be piloting a new public/private partnership with NGOs and local governments to bring digital training, entrepreneurial courses, access to funding, online tools and dedicated support. The program was conceived based on hundreds of interactions with U.S. cities and our ongoing work with the United States Conference of Mayors.

With a greater understanding of what they need, we can all do a better job of supporting microbusinesses. We hope this will be the beginning of a long partnership between GoDaddy and U.S. cities to do just that. Please reach out to our team if we can be of help. We’d love to work with you.