Across the nation, small business incubators, accelerators, and other resource centers have populated both urban and rural communities. These organizations work with entrepreneurs to turn ideas into full-fledged small businesses. Senator Martin Heinrich (D-N.M.), Ranking Member of the Joint Economic Committee, recently hosted a series of roundtables in New Mexico to learn more about small business incubation and the wide array of resource centers that help entrepreneurs launch their businesses.
These conversations help build on findings in a recent Joint Economic Committee Report, Investing in Rural America, that outlined some of the challenges rural small businesses face. Insights collected from roundtables shine a light on how national policy issues are felt at a local level and how incubation plays a critical role in creating the right economic conditions for a vibrant innovation ecosystem. Policy makers can use the experiences of New Mexico resource providers to better understand the needs of rural start-ups, assess what kinds of incubation are most effective, and direct additional resources to high-need entrepreneurs.
Making the Case for Entrepreneurship and Incubation
In rural communities and small towns, entrepreneurship can be a crucial pathway to wealth- building. Rural families have, on average, significantly less wealth than their urban peers. Starting a small business can help them close the urban-rural wealth divide.
In Albuquerque, small business incubators like WESST made the case that entrepreneurship can also help reduce poverty in minority communities with limited resources. This poverty alleviation element allows communities to simultaneously engage workers in meaningful enterprises and build new sources of long-term wealth.
In Deming, counselors at the local Small Business Development Center (SBDC) emphasized the critical role that resource providers play in convening talent and giving individuals a sense of ownership. In small towns, entrepreneurs are often hesitant to share information about their business and network with those in their industry. Resource providers, like SBDCs, help reduce this friction by encouraging entrepreneurs to seek out mentors, partner with similar businesses, and connect with the larger community. One local SBDC leader pointed out that in rural communities “you have to partner up and leverage assets.” Incubators and SBDCs nudge entrepreneurs in the right direction so they can best leverage those assets.
Finally, incubators help promote an entrepreneurial mindset early on, planting the seeds for the next innovative breakthroughs. The Arrowhead Center, an incubator at New Mexico State University in Las Cruces, delivers assistance to early-stage small businesses while also engaging with youth populations. The center’s Innoventure program, for instance, designs innovation challenges for K-12 students to solve real-life problems in a team environment. Such challenges immerse students in the basics of business planning and financial literacy, setting a strong foundation for future entrepreneurial endeavors.
Small business storefront in Silver City, New Mexico
Culturally Competent Incubation Gaining Traction
Small business incubation comes in many forms. Two things stuck out from roundtables with various resource providers.
First, effective incubation must be culturally competent and prioritize economic diversity. The South Valley Economic Development Center, for example, offers half-price applications for its incubator program to entrepreneurs who demonstrate financial need. And the Albuquerque Hispano Chamber of Commerce’s “Emprendedores” program delivers culturally accessible, affordable entrepreneurship training for Spanish-speaking New Mexicans. These efforts help cultivate an entrepreneurial streak across a diverse set of communities.
Second, high-touch technical assistance – rather than a hands-off approach – can ensure that small businesses have the crucial support they need at early stages. Small businesses stressed that successful incubators don’t “push companies out of the nest too soon” and take time to recognize each entrepreneur’s unique story.
This hands-on approach is especially critical for rural communities, where traditional markers of economic potential (like credit scores) often don’t tell the full story. Tierra del Sol, a Community Development Financial Institution (CDFI) that serves communities across southwestern NM, and other alternative capital providers, develop personal relationships with their business clients and adjust loan terms accordingly. Such a customized approach can help entrepreneurs turned away by conventional banks secure critical seed funding for their ideas.
Veterans Prime Candidates for Entrepreneurship
More than 150,000 veterans call New Mexico home, representing over 10 percent of the state’s adult population. The Albuquerque’s Veteran Business Outreach Center (VBOC), a resource center funded by the Small Business Administration, is one crucial outlet for veterans.
The center serves veterans through a wide variety of programs, including its flagship “Boots to Business” curriculum that helps transitioning service members learn more about entrepreneurship and small business ownership. These programs teach veterans the basics of business development and also help aspiring entrepreneurs avoid high-risk enterprises without doing the necessary market research.
VBOC leaders underscored that veterans are especially well-positioned for entrepreneurship. Unlike civilians, many service members assume heavy responsibility at a young age and navigate personnel and other management issues in a high-pressure environment. Such experiences give retired service members a leg up in an entrepreneurial setting, where they can apply skills learned on the battlefield towards managing employees and juggling multiple goals at once.
Looking Ahead
Investing in Rural America delved into how economic security and wealth-building are at risk in many rural communities. As such, incubation and entrepreneurship should be an important element in any rural community’s innovation ecosystem. Conversations with various resource providers confirmed that high-quality incubation and assistance should be affordable, tailored to each business’s unique needs, and culturally accessible. This approach will ensure rural entrepreneurs across the nation are not left behind and that incubators develop inclusive, high-impact programming.
As rural communities continue to hold tremendous promise in innovation and small business development, Congress should capitalize on their ingenuity and fully support resources centers like VBOCs and the Minority Business Development Business Agency. In addition, Congress should ensure that capital providers that rely on federal funds and specialize in relationship lending, such as Tierra del Sol and WESST, can maintain large footprints in high-need communities that mainstream banks fail to serve.
