Every mayor wants to boost entrepreneurship. What actually helps?

Big business matters because they operate at gargantuan scale. Most Americans work at companies with 250 or more employees. Yet small business matters because they contribute local culture and tradition.

If you care about new jobs for your city’s residents, though, all the action comes with new business. ​​Entrepreneurship contributes new ideas, new wealth and new work for everybody. All net new jobs — all of them — were created by companies that were founded within the last 10 years, according to an influential 2013 MIT analysis.

That’s a big reason why local policymakers and economic development strategists encourage new business creation. (Find more in our report on inclusive entrepreneurship).

After directing tech policy recommendations to new Philadelphia Mayor Cherelle Parker that were largely translatable to other big city chief executives, entrepreneurship seemed an important follow up. Here, then, is brief guidance I would offer any local elected official or entrepreneur support organization, informed by 15 years of reporting and engaging on the topic.

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Remote work and distributed teams are especially popular among the tech founders who helped popularize American entrepreneurship in the 2010s. Local leaders might take a dimmer view of entrepreneurship. That’d be a mistake. Entrepreneurship comes in many different forms, and even the hottest new technology includes place-based sectors like robotics, life sciences and software teams that use an office from time to time.

Three reasons to engage entrepreneurship, then: Encourage solutions to real problems, help residents live wealthier and happier, and grow a tax base to improve city services.

And four ways to support that boost: Encourage innovation, make it easier to start, maintain a balanced regulatory environment and develop a workforce. Some of the steps to get there require collaboration between the legislative and executive function — and good thing. Other steps can be taken by the mayor alone.

Encourage innovation, don’t lead it

Mayors have far more limited powers than we commonly think. But they do set vision, tone and give permission.

What their priorities are trickle down in attitudes and perceptions. Entrepreneurship today should translate well to big city politics: Black women have led a boom in business starts, immigrants are disproportionately likely to start companies, and universities, city infrastructure and well-heeled professionals all contribute to an ecosystem.

Mayors then should get comfortable with the full entrepreneurial pathway in their talking points, from the R&D to the starting a business to growing it. Name drop entrepreneurs. Help homegrown founders grow far from home. Encourage procurement practices that allow experimentation with new business (supplier diversity is under perpetual reform, isn’t it?).

Don’t develop in-house programming for entrepreneurs. In 2015, the Kauffman Foundation, which focuses on entrepreneurship, released a report advising state and local governments to avoid developing their investment funds, accelerators and incubator programs. Better to contribute small funds to coordinate across private sector partners. In the fast-moving and ever-changing world of new business creation, government and other institutions are better conveners and supporters than leaders.

Make it easier to start

Government doesn’t exist to serve business. Government exists to serve residents who can often benefit from a dynamic business environment.

Among rich countries, the United States makes it reasonably easy to start a company. At the local level, added complexity varies widely. Arizona State University last published an Ease of Doing Business rankings in 2022, which serves as an accessible, if imperfect, benchmark across nearly 100 cities. Philadelphia’s top-15 ranking may surprise self-critical locals, though Pittsburgh (#43), Baltimore (#60) and Washington DC (#70) are also better ranked than the economic engines of New York (#74), San Jose (#77) and Los Angeles (#82).

Clearly then ease of doing business is no silver bullet, but a priority nonetheless. Experiences still vary greatly. For example, a group of Philadelphia property developers begrudgingly admitted to me last week that many processes have improved in that city over recent years, but that city’s health department bedeviled restaurateurs they hosted.

Across cities, there are generations-old projects tied to reliable open data, cross-departmental coordination, and online business services that can benefit entrepreneurs and remain important. Over the pandemic, a startup advocate launched Right to Start to push forward a pro-entrepreneurship agenda at the local level.

Reduce regulatory burden (and improve quality of life)

Few places in the United States, if any, have such onerous processes that they’d impede a committed entrepreneur from starting. It can be made easier, as mentioned above, but typically regulatory, policymaking and government relations advice come from bigger and more established businesses.

No surprise then that local business associations are chiefly associated with bigger businesses (such as the Philly Chamber and the Greater Baltimore Committee) or with specific industries (like the Pittsburgh Tech Council, Tech Council of Delaware and Life Sciences PA). None are intended to exclusively represent new businesses. In contrast, groups like Philly Startup Leaders, which celebrated its own 15th anniversary, and DC Startup Week are better known as clubs of tech founders and friends than cohesive lobbying efforts.

The result is a less well-defined set of regulatory priorities for entrepreneurs. Examples exist though. First, entrepreneurs choose a place to live before they choose a place to start a business. Make your city a great place to live to attract and retain people with choice. Crime, trash and schools matter. Local priorities, like shifting the wage tax in Philadelphia or adjusting property taxes in Baltimore, are pro-growth, too.

The Kauffman report identified other common priorities:

• Reduce overburdensome professional and occupational licensing
• Simplify tax and compliance processes
• Streamline zoning to maintain safety while speeding development
• Rethink noncompete agreements to encourage former employees to start their own thing
• Encourage immigration to attract the most economically vibrant residents

All affect different stages. One startup advocate told me he advises local governments to divide entrepreneurship programming into four stages: Start up, stay up, scale up and split up.

Keep workforce development competitive

Entrepreneurship is workforce development. Sole proprietors and small firms are extensions of other organizations.

Moreover, entrepreneurs benefit from being around other smart and effective people — who may be employees and later entrepreneurs themselves.

Our tech policy recommendations tied to workforce development, then, are relevant here too. Early-childhood education, upskilling and career development help both those residents and attract the companies that need to employ them. There’s a reason why the business-membership group Philadelphia Alliance of Capital and Technology, aka PACT, has invested in its MentorConnect program, and partnered with the Pittsburgh Technology Council to expand the Apprenti apprenticeship program.

Consider, too, how to encourage evolving employee-ownership models, which shares wealth creation and encourages career development.

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Entrepreneurship has lots to offer those across the political spectrum. Americans across demographic groups start companies, so encouraging more of them to grow may reduce racial wealth inequality. Starting a business is central to the American ethos.

With such popularity, the term is naturally bloated, too. Not every tech business is innovative. Not every big business is a civic actor. Not every new business is a startup poised for growth.

State and local governments need to get better informed and more intentional in how they support entrepreneurship. Understanding its importance, and these differences is a start.