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ED Now Feature: How to Help Disadvantaged Entrepreneurs, Part Two
Eli Dile   on Monday, July 9, 2018 at 9:05:00 am

By Della Rucker, AICP, CEcD

The first article in this two-part series examined the characteristics of disadvantaged entrepreneurs and the importance of supportive networks to their success. Unfortunately, we often find that disadvantaged entrepreneurs have not just weak networks, but limited social capital.

Social capital is our ability to benefit from the people and organizations we know. It has two dimensions: the number of people we know, and the degree to which we share with them some norms of behavior (i.e., assumptions and expectations) that make it easy to get help when we need it. Social capital determines if an entrepreneur can access the help they need, whether that help is information, support, funding, or something else.

Strong ties versus weak ties

When researchers analyze social capital, they usually look at two types of connections: strong ties and weak ties. Strong ties are your close personal relationships -- family, close friends, members of the community, etc. Weak ties are with people whom you do not have a close personal relationship, or are not obligated to provide mutual aid to, but nonetheless share common interests.

What happens to an entrepreneur who has a lopsided mix of weak and strong ties? Perhaps something like this:

 

Strong Ties

Weak Ties

Extensive Ties

-Trusted relationships

-Network effects

-Access to resources

- Complicated relationships

-Easy to get hurt - “personal”

-Trust is precious

   Limited Ties

-Few trusted relationships

-Limited means of differentiating good advice from bad

-Isolation

 

In the upper-left-hand corner, the entrepreneur with extensive strong and weak ties has a rich network. If she wants a recommendation or a loan, she can make a decision based on the merits of the offer, whether it comes from a strong tie (such as her father) or a weak tie (such as someone she knows from LinkedIn). She can not only consider the reliability of her source, but she can also think about how her choices may impact her relationships (if she does not use the accountant her LinkedIn connection recommends, it won’t be held against her).

This represents the experience of many immigrant and isolated communities. Extensive strong ties you find in a close-knit immigrant community with a shared language and traditions are valuable for a person’s sense of belonging and community. However, a reliance on strong ties comes with risks. It can strain family relationships; make it hard for the entrepreneur to determine who to trust if she needs resources outside the community; and constrain innovation, if strong ties oppose it.

The lower-left-hand corner reflects a common experience in communities subjected to long-term structural discrimination and isolation. Economic factors may have damaged family and community relationships, leaving the entrepreneur with few strong ties. If the entrepreneur is proactive, she may have built an extensive network of weak ties, some of which may become strong over time. However, her challenge is the lack of people in her personal life who understand and support what she is trying to do. Isolation and depression are well-documented among entrepreneurs, and a limited strong-tie network makes this entrepreneur more susceptible.

The lower-right-hand quadrant reflects the experience of too many disadvantaged entrepreneurs – a lack of both emotional support from strong ties and the resources offered by weak ties. In these cases, the entrepreneur has to rely on her own willpower, which may be strong but always is finite.

Building stronger networks for disadvantaged entrepreneurs

While access to funds, space, and information is crucial for any entrepreneur, programs that do not build a disadvantaged entrepreneur’s social capital – particularly their network of weak ties – risk doing as much harm as they do good. Without the ability to tap into these networks, the entrepreneur has less ability to generate sales, obtain operational support, or innovate.

Lack of social capital also impacts the entrepreneur’s personal resilience. If an entrepreneur is the first in her family to start a business, her family may openly question her decisions, especially when things do not go well and when money is tight. If the entrepreneur is trying to make an impact in a community that has been wounded by decades of neglect, disinvestment, or ostracization, then the entrepreneur may find herself very alone. Building weak ties that can develop into stronger ones can make the difference between her deciding to continue or to give up.

But building weak or strong ties requires much more than simply throwing a networking event or hosting a pop-up. For entrepreneurs who grew up in a disadvantaged community, establishing trusting relationships with persons who do not come from their backgrounds is not always easy. The process must be directed by the entrepreneurs themselves, if they are going to overcome those potentially deep layers of distrust. Though support organizations can help, it’s crucial that they facilitate, not prescribe or direct. Active listening, intentional checking of privilege, and deep transparency on what he or she doesn’t know are the most crucial skills of the facilitator.

How might one do this? Here are a few ideas.

  • Host standing meetups or events specifically for entrepreneurs from a disadvantaged background. Facilitate them by determining what ties need to be built and help them build them. For example, the group can invite a specialist from a different background to help them learn about a specific issue. This allows them to make valuable connections and to do so in a setting where they are not the “minority.” It is safer for them to ask difficult questions in a context where they don’t have to worry about being judged.

 

  • Help the target population identify their own needs. This process cannot simply be an open forum. It must be intentionally designed to develop a shared understanding of what success looks like for entrepreneurs in this community, what challenges they commonly encounter, and what kinds of support might have the greatest impact. It’s crucial to focus on building the assets and unique ties of this community, rather than falling back on a demoralizing needs analysis focused on deficiencies.

 

  • Develop strategies to target young entrepreneurs within the population. Though entrepreneurs are all ages, younger entrepreneurs may be more receptive to new approaches. If there is a history of distrust between the disadvantaged population and the dominant society, it may be easier for younger entrepreneurs to navigate those cultures.

 

  • Build leadership and team-management skills among disadvantaged entrepreneurs. As discussed earlier, one of the challenges disadvantaged entrepreneurs face is a lack of trusting working relationships with people outside of a close circle. This creates difficulties as a company grows and needs to recruit employees outside of that circle, not only damaging the business, but also potentially missing otherwise desirable expansion opportunities.

 

In an economy where innovation drives growth and where the majority of new jobs are created by small businesses, we need every potential entrepreneur to realize that potential. Entrepreneurs from all backgrounds rely on social capital and networks of weak and strong ties to fill in what money cannot: advice, recommendations, emotional support, and more. Disadvantaged entrepreneurs particularly depend on these ties, but they are often underdeveloped. As a result, efforts to improve the entrepreneurial ecosystem require more than just conventional networking; these entrepreneurs need opportunities to specifically build weak and strong ties.

Perhaps the most challenging aspect of this work is that it cannot be imposed by the majority culture or entrepreneurship experts. To grow social capital, the disadvantaged entrepreneur must make that first leap.

***

Della Rucker is a principal with Wise Economy Workshop and co-founder/operations lead for Econogy Talent Group. The first article in this series is available here.

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