- Be laser focused on the needs of small businesses
- Offer solutions, not just advice, to do more for small business
- Partner with organizations that create positive impact at scale
These commitments are more important than ever. Small business ownership is helping to bridge the wealth gap in our country and create a more inclusive economy. The median net worth of the family of a small business owner is five times that of someone who works for someone else. But not all small businesses are able to access what they need to be successful. We are committed to helping underserved small business owners access the capital, customers, and services they need to grow, and spent 2019 partnering with like-minded organizations to make it a reality.
Together with our clients, we served 567,000 businesses last year and moved more than $15 million in capital. 87% of our work focused on businesses owned by a woman, a person of color, or a low-to-moderate income individual.
As we wrap up the first month of the new year, we’ve been reflecting on the themes that helped guide our efforts throughout 2019 and will set the stage for our focus in 2020.
Building equitable ecosystems
We know now more than ever that creating equitable opportunity for small businesses requires working at the ecosystem level – not just understanding the small businesses themselves, but the services available to them and the capital they have access to. In 2019, our teams worked in seven cities across the country to understand and make recommendations with a common focus on how to meet the needs of underserved small business owners.
Though the findings and recommendations vary for each city, a common outcome was to establish an “ecosystem builder” function to effectively manage, prioritize, and implement the recommendations. In Chicago, Columbus, Houston, and Dallas, ecosystem builders are now turning our recommendations into on-the-ground solutions. They are expanding awareness of resources, building the capacity of business service organizations, developing industry-specific strategies, and identifying opportunities for more flexible capital products to meet the unique needs of their city’s small businesses.
Transforming the business models of CDFIs
To create positive impact at scale, last year we worked with some of the country’s leading Community Development Financial Institutions (CDFIs) to transform their business models to bring more and new types of capital into communities to support small businesses. CDFIs face an uncertain future with pending changes to the Community Reinvestment Act on the horizon, limited balance sheet capacity, and increasing competition from online and other alternative lenders. We believe that CDFIs fill a critical gap in the capital continuum in underserved communities, and we are committed to helping them have the greatest impact they can.
In 2019, we helped MEDA think about how to evolve their products, services, and geographic footprint to expand their impact; we worked with Opportunity Fund to think about how they can deploy capital through non-traditional distribution channels and saw them launch their partnership with Lending Club; and we explored new business lines with LIIF that will help them increase their impact.
Bridging capital divides
Another focus of ours in 2019 was connecting the dots across stakeholders to bridge supply and demand for capital – helping organizations move from being capital constrained to capital enabled in order to tackle the $87 billion debt capital gap for small businesses. We helped structure the partnership between Opportunity Fund and Key Bank to launch a program to offer $140 million in loans to independent truck drivers. Our team also helped identify the range of capital needs among maritime small businesses in Washington and explored structures that could provide the capital that currently isn’t flowing into the sector. At the end of the year we hosted a convening of alternative lenders and community organizations in NYC to help build relationships and brainstorm strategies to furthering equitable small business growth via capital access and responsible lending.
Leading by example
Next Street has always been committed to diversity and inclusion, and we strive to “walk the walk.” We are proud of our diverse team and being a majority female-led firm. Of our 41-person team, 73% are female or non-white. Over the past year, we invested in our internal approach to equity and inclusion, launching the Next Street for Inclusive Impact committee to push our firm, our culture, and our team to place diversity, equity, and inclusion at the forefront of everything we do. We also sent our senior leadership team to Anti-Bias Anti-Racism training, from which they returned with tactics for all of us to take a more active role in dismantling racism.
We are also intentional about living our mission every day. We aim to create a more inclusive economy by ensuring that our offerings reach as many underserved small business owners as possible. We push our clients to think about inclusion and the underserved communities in which they operate. In 2019, 87% of the small businesses that were the focus of our projects were owned by a person of color, woman, or low-to-moderate income individual.
As a small business ourselves, Next Street has firsthand experience overcoming some of the challenges we see our clients trying to tackle every day. We try to leverage that experience to help our clients better serve small businesses. Last year, Next Street executives led trainings with participants of several small business programs on topics ranging from strategic planning and marketing to financial management and accessing financing.
We’re proud of the impact we had last year, but we know that this is just the beginning. It will take concerted effort from all of us to fuel the small business revolution.