Small businesses beat at the heart of thriving communities. They drive economic growth, create jobs, and foster entrepreneurship. Despite their vital role to the region, Stanislaus County small businesses face an array of challenges. These include access to technical assistance to a lack of culturally competent support.
Recognizing these pain points, Stanislaus 2030 committed to transforming the local small business ecosystem as one of its priority areas.
Barriers Small Business Owners Face
Stanislaus County small business owners grapple with a longstanding variety of hurdles. Amanda Hughes, Executive Director of Stanislaus 2030, highlights the data-backed disparities in support: "Part of our early work involves evaluating how accessible our current programs are, and we're really thinking about access for BIPOC and women-led businesses."
Challenges don’t end with equitable access. While Stanislaus County boasts a diverse range of partner organizations and government entities, their roles and capabilities often remain unclear to small businesses and first-time entrepreneurs. To address these imbalances, Stanislaus 2030 decided to take a more in-depth look at the existing support system.
As a first step, Stanislaus 2030 and its working group members compiled both quantitative and qualitative data to better understand the local small business landscape. Yolanda Meraz, Chief Strategy Officer at Stanislaus Equity Partners, co-facilitated listening sessions with key small business technical assistance (TA) providers. These TA’s represent a spectrum of stakeholders including the Valley Sierra Small Business Development Center (SBDC), local Chambers of Commerce, municipal partners, community development organizations, and financial institutions.
Hughes explained that their initial meetings revealed an essential insight – significant gaps in the ecosystem.
"We challenged everyone in the room – tell us what you think you are,” Hughes recounted. “A lot of folks said, we're TA providers, we're networkers, or we do advocacy work. There was really no one in the middle: capacity builders or funders."
By defining the various roles and assessing their distribution, Stanislaus 2030 identified both the need for certain crucial, unfilled supports as well as the service overlaps that contribute to confusion and inefficiencies within the small business landscape. These insights on how the current ecosystem operates will inform a collective approach to target businesses, ensuring that providers can match their services to businesses, and make referrals to other providers who are better equipped to help entrepreneurs in different stages of growth.
As Hughes put it, “we're trying to get everyone above the treeline so they can understand that they're in a forest. That they're actually sharing air, and they're a part of an ecosystem. Our partners want to know – just as much as I do – what everyone else does.”
With a clearer picture of the local small business landscape, Stanislaus 2030 and its coalition of partners can create journey maps for small businesses at different stages of growth. These maps will guide the provision of tailored support, addressing the unique needs of each business in their current form, whether that be in the ideation stage, funding stage, or scaling stage.
Harnessing Data-Driven Insights
Apart from organizational role mapping, this qualitative research revealed the pain points experienced both by Stanislaus 2030’s partners as well as small business owners themselves.
Meraz emphasized the importance of understanding these hurdles: “Solutions are always closest to the problem. The end user will tell you what their needs and barriers are. A lot of the time we just say, ‘oh, people need capital’ but we're not asking if people are equipped or ready for that.”
“Solutions are always closest to the problem.” - Yolanda Meraz, Stanislaus Equity Partners
Chris Hancock, Business Services Supervisor at Stanislaus County Workforce Development, echoed that sentiment: “Everybody knows how to go out and sell something, a product or a service. But it’s different as far as structuring a business: how do I incorporate, where do I get a license, what kind of license do I need?”
Occasionally, the challenges to structuring and growing a business can also rest on an overlooked barrier, namely building trust and culturally-focused communication with entrepreneurs. “Cultural and linguistic barriers aren’t front and center, but they are equally important if we want to build trust with our clients,” says German Zavalza, CIO of Valley Sierra SBDC. “Then we can start assisting them with some of the more concrete tasks.”
“Cultural and linguistic barriers aren’t front and center, but they are equally important if we want to build trust with our clients.” - German Zavalza, Valley Sierra SBDC
In identifying these non-capital hurdles to success, the coalition uncovered a crucial detail of the support process: accurately framing the scale of target businesses. Without access to the types and depth of data the working group gathered, most assumed “small” businesses were much larger than they are.
Through analyzing data compiled by Workforce Development, the coalition learned that there are approximately 22,000 businesses in Stanislaus County and 85% of these businesses employ nine people or fewer, accounting for a third of the local workforce or nearly 71,000 employees.
Hancock reflected on that insight: “We have a lot of big organizations here that I always considered the backbone of our community. Well, it turns out that they may be the backbone in terms of revenue, but when it comes to the amount of employees that they have – which I consider to be the lifeblood of our county – it's definitely the small businesses.”
"When it comes to the amount of employees that they have – which I consider to be the lifeblood of our county – it's definitely the small businesses.” - Chris Hancock, Stanislaus County Workforce Development
The data also revealed that the quality of jobs in these small businesses might be lagging. Many of these jobs are part-time, lack benefits, or pay lower wages. They also skew significantly toward retail and other frontline workers. Understanding this dynamic prompted Stanislaus 2030 to consider ways to improve job quality for small business employees by addressing the supports to entrepreneurs that allow for expansions of employee benefits.
Plans for the Future
The path forward for Stanislaus 2030 – beyond data generation and organizational capabilities assessments – will involve continued collaborating with community members as well as engaging experts who have successfully tackled similar challenges in other communities in the Central Valley and beyond.
Stanislaus 2030 announced an agreement with Next Street, an organization dedicated to growing small business ecosystems, to support these initiatives. Hughes deftly framed the organization’s experience and track record: “They basically wrote the playbook.”
They are also committed to bringing informal businesses into the ecosystem and encouraging them to formalize their operations by obtaining a business license. Hughes highlighted the potential value of this: "Just getting businesses to come out of the shadows and come into a more formal setting so they can qualify for more support would be huge. They don't realize that if you have a business license, there's a whole suite of free supports.”
In their quest to develop an inclusive ecosystem for small businesses, Stanislaus 2030 remains dedicated to collaboration. Hughes believes that creating a culture of collaboration is essential and will lead to more resources: "We have shared priorities around building an inclusive economy in our region. We are going to be more competitive for large-scale federal and state funding if we apply together as a collective rather than one entity."
Together with the rich cross-section of community leaders in the working group, Stanislaus 2030 expects to deliver an implementation plan in Spring 2024. The resulting small business ecosystem will be designed to benefit all local entrepreneurs and lead to a more inclusive future for Stanislaus County.
The path to achieving this is formidable with much work remaining, but Hughes remains optimistic: “If we have an understanding, clarity of purpose, and shared priorities around what we need to get done, we can solve these complex, challenging problems.”