Small Business, Big Impact: How Entrepreneurs Are Boosting California’s Economy
Written by Cecilia Seiter
Thanks to its diverse industries, abundant natural resources, and penchant for innovation, California’s economy is worth a cool $3.9 trillion—the fifth largest in the world. But we don’t just have big tech and corporations to thank for that: small businesses are the backbone of California’s economy, and entrepreneurs deserve their share of the credit.
According to the state Employment Development Department (EDD), California has over 3.9 million small businesses. In fact, over 99% of California's businesses are small businesses, and they employ nearly half of the state’s private workforce. More than 40% of them are owned by non-white entrepreneurs.
These statistics aren’t just a win for the state: they’re an indicator of the economic vitality of local neighborhoods, especially Black and Brown communities.
California entrepreneurs impact local communities
Communities thrive when entrepreneurs open small businesses in the neighborhood. According to data collected by Pacific Community Ventures, 68% of every dollar spent at small businesses percent funnels back into the community. By comparison, only 46% returns when a dollar is spent at major retailers. The reason? Entrepreneurs are more likely to buy products and supplies from other small businesses in their area, bolstering the local economy.
Small businesses also inject job opportunities into local communities. In recent years, small businesses contributed a net increase of 769,454 jobs throughout the Golden State
Buying and selling locally also has big benefits for the environment. Sourcing supplies from the surrounding area and selling goods to local customers lowers the carbon footprint and shipping costs. And when you consider that communities of color are disproportionately impacted by environmental racism (perpetrated almost single-handedly by large corporations), the benefits to local businesses become more than just economic. By operating locally, entrepreneurs can actively contribute to the environmental well-being of their communities.
Small businesses have big challenges
Despite the vital role small businesses play in California, many face hurdles that jeopardize their longevity. Small businesses are struggling to rebound from COVID-19 and subsequent inflation rippling through the country. On top of that, the costs of living and doing business in California are much higher than the national average. Renting retail commercial space in California costs about $36 per square foot; retail space in states like Missouri and Texas costs $17 and $16 per square foot, respectively.
Black and Brown entrepreneurs, as well as their communities, are subject to additional barriers including underinvestment and systemic racism. While cities across the state, including Oakland, have programs in place to mitigate these issues, the pace of improvement for these communities remains sluggish. Without access to capital through traditional loans or investments, entrepreneurs either rely on depleting their own funds or risk running aground.
Small businesses need our support in California. ESO Ventures is here to make that happen.
Any entrepreneur who completes an ESO incubator program is eligible to secure funding directly through our Capital in the Community Fund (CICF). The fund is designed to provide the first investment in the ESO Portfolio with non-dilutive, zero- to low-interest capital, with awards ranging from $5,000 to $100,000. Plus, ESO’s finance rates are significantly lower than a typical small business loan, with more flexible repayment plans, making capital more accessible and affordable for our community.
Together, we can improve California’s small business landscape while championing the strides our communities have made. Contact us to learn how ESO can help your small business achieve sustainable, supported growth.
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