Small businesses are like plants: They thrive in a robust ecosystem

During the 1990s, Rwanda was deeply damaged by genocide. Today, family businesses thrive and tourism grows there. In the 1970s and 1980s, Medellin, Colombia, was blighted by the illegal drug trade and related violence. Now, Medellin enjoys relative safety and a legitimate business environment.

These economic achievements, experts say, are due to “entrepreneurship ecosystems,” in which potential business owners have relatively easy access to mentoring, training and financing.

A good business climate doesn’t just spring up

To create an ecosystem, stakeholders — for example, businesses, government, universities, investors, banks, nongovernmental groups and foundations — talk with each other, often with a facilitator to help them agree on a common objective. In Manizales, also in Colombia, a private foundation took the facilitator role, and in Milwaukee, Wisconsin, a civic group.

Geographical concentration helps because local stakeholders understand the community’s strengths and know how to build upon them, says Daniel Isenberg, head of the Entrepreneurship Ecosystem Project at Babson College in Wellesley, Massachusetts. He says countrywide initiatives or those that try to transplant a foreign model are less successful.

“It’s about empowering the ‘flora and fauna’” of a particular city or province, Isenberg says.

The stakeholders work together to secure business-friendly regulations, educational improvements, investors’ networks or other initiatives.

Entrepreneurship ecosystems spur faster business growth. It’s been happening in Milwaukee since Scale Up Milwaukee launched in 2013, according to Isenberg. In Manizales, over a longer period, the city has become more supportive of business growth. The World Bank ranked it as the best place to do business in Colombia, and the city’s Manizales-Mas campaign aims to further accelerate business growth.

Creating small-business-friendly ecosystems around the world is a goal of the U.S. Department of State’s Global Entrepreneurship Program and related Enterprise Development Network.