New Economy initiative strengthens Detroit’s small businesses

When the world came to a standstill in 2020, Detroit entrepreneurs Wendy and Dom Da’Cruz saw their future wide open. A missing ingredient led to a brainwave, and the Mushroom Angel Company was born. Today, the couple’s mushroom-based Cruz Burgers can be found in restaurants and grocery stores across six states, and they’re getting bigger every day.

Small businesses like these are the backbone of Michigan’s economic growth. Our state is home to over 900,000 small businesses, accounting for nearly half of all jobs in the state. The future of our region and our shared prosperity depend on our ability to nurture, grow and strengthen these businesses. To do that, we must first take a holistic look at Michigan’s business climate.

A 2023 report from the Michigan Venture Capital Association pointed to a shortage of seed capital, which is critical to launching the state’s startups and small businesses. In April, Michigan lawmakers came together across party lines to address this challenge by creating the $105 million Michigan Innovation Fund, which is designed to make long-term investments in Michigan startups, create jobs and encourage others to invest. If our state wants to take this step, it can learn from the successes achieved in Southeast Michigan, where initial progress has been made in building equitable prosperity and reducing inequality by investing in underserved communities.

By paving the way for strong local businesses and giving them the means to attract and retain local talent, we can build trade corridors that lead to more successful neighborhoods and a better future for all.

A practical example of this approach is the New Economy Initiative, a project of the Community Foundation for Southeast Michigan. Since 2009, the initiative has worked to build a support network for entrepreneurs and small businesses with the goal of creating new businesses and jobs and encouraging investment in Southeast Michigan. By leveraging donor funds, $142.5 million has been invested to strengthen small businesses and underserved communities. The initiative has supported more than 29,699 businesses, including Mushroom Angel Company.

The initiative’s approach is centered on the neighborhoods it serves. Local ambassadors are deployed to connect with entrepreneurs in their area who need help growing their businesses. Capital is provided through grants and loans, which are more easily accessible than traditional commercial and public sources.

These programs are coupled with business support programs that provide companies with coaching and tools in areas such as accounting, finance, marketing, technology, human resources, legal issues and day-to-day operations. NEI launched the Michigan Microbusiness Coalition to build support for emerging entrepreneurs and small businesses as essential drivers of economic growth and job creation.

In a recent survey of businesses in southeast Michigan conducted by Detroit Future City and the New Economy Initiative, over 60% of respondents said the region’s overall business climate was somewhat or mostly positive. But they are divided on the direction it is heading in: Just under half believe the environment has improved in the past two years. When it comes to their own businesses, however, entrepreneurs are overwhelmingly confident. Four in five are somewhat or mostly positive about their financial future. When asked what is standing in their way, more than half cited a lack of access to capital.

Companies in Southeast Michigan that participated in the business support ecosystem had a better idea of ​​where to find resources than companies that did not. Companies that participated more in the support ecosystem were more likely to have financial statements on hand than companies that did not.

Investing in small businesses in southeast Michigan, especially in communities whose residents have been underserved, can create profound change. A report by JP Morgan Chase and ICIC examined Detroit and four other large U.S. cities and found that helping existing small businesses hire a few more employees each could reduce unemployment in the least-served areas of those cities.

Inclusive investments in underserved small businesses can transform trajectories in struggling neighborhoods, create wealth for entrepreneurs of color and women, and improve the overall economy. These businesses create accessible, well-paying jobs for local residents. They provide needed products for local residents, creating wealth that stays in and benefits the immediate community.

As Michigan takes steps to encourage greater investment in our communities, it’s important to remember that we can all help make this happen. Public, private and philanthropic funders can create economic development strategies that provide capital, services and support to small businesses in communities that have been historically marginalized. As individuals, we can make sure we support the businesses in our own communities.

The next Ford Motor Company will be in this region, and with the right support, it will be able to thrive in this economy. Investing in entrepreneurs like Wendy and Dom Da’Cruz and strengthening businesses in underserved communities creates shared prosperity that benefits us all.

Wafa Dinaro is the executive director of the New Economy Initiative (NEI), a project of the Community Foundation for Southeast Michigan..

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