Economic Gardening Strategies

In these tough economic times when communities are struggling to retain existing businesses and to prevent more storefronts from closing up, attracting new businesses that will create new job opportunities is extremely challenging. Many communities are working hard to overcome these ills by creating an environment that fosters entrepreneurship. Research has shown that small businesses are the leading job creators in this slow recovery. 

In his article titled “Fostering entrepreneurialism: Making economic gardening work downtown,” Chuck Eckenstahler lists seven things to consider when developing an “economic gardening strategy.”

1.       Help surmount the hurdles – Provide assistance with navigating through and completing legal and regulatory requirements of establishing or expanding new businesses.

2.      Host entrepreneurial cafes – For many new entrepreneurs, traditional physical space is not as important as it once was. Providing a ‘space’ (bricks and mortar or cyber) where entrepreneurs can network and share ideas, if applicable to the locality, should be part of the strategy.

3.       Carve out opportunities within the economic landscape – It is important for both the entrepreneur, as well as the host community, to identify the existing supply and unmet demand of retail goods and services. This typically lies on the shoulder of the entrepreneur, however, Eckenstahler and many economic development practitioners would argue that to ensure successes, this should be a shared responsibility.

4.       Raise capital to create a Shark Tank – Many businesses fail due to lack of capital. “Community economic development strategies may require assembling social venture capitalists,” or other creative financing mechanisms like crowdfunding.

5.       Support population diversity – “Create support programs that celebrate population diversity and embrace groups that have a high propensity to form new businesses.”

6.       Create a “Match-up” marketplace – Create opportunities to match the “entrepreneurs’ needs with available support capacities.”

7.       Celebrate success – Create a media campaign that regularly highlights new business formations and promotes the locality/region as one that supports new business startups.

“Adding some or all of these suggestions to your economic gardening strategy will enrich the soil for planting the seeds of new business.”

Entrepreneurs. Better with age?

Entrepreneurs are the lifeblood of the economy. They’re innovators, experimenters and risk takers, the driving force behind capitalism’s “perennial gale of creative destruction,” in economist Joseph Schumpeter’s evocative metaphor.

So says Chris Farrell in this week’s Bloomberg Businessweek.

But Mr. Farrell goes on to remind us that entrepreneurs are not only young, brash, rule breakers.  They also include older, more seasoned innovators.  Fully 20.9% of all new entrepreneurial ventures are started by people 55-64 years old.

These entrepreneurs may be forming enterprises because they finally have the security to follow their dream, or maybe they were laid off and found finding a new, challenging job toward the end of their career arc to be difficult.  Others may be looking for a little more control of their work-life balance as they make a 20- or 30-year transition to retirement.

Regardless of their reasons, there businesses may be well suited to the scale of your downtown.

Well-wired Winchester is as close to Dulles Airport, in terms of travel time, as downtown D.C. and is better hooked into the Ashburn “home” of the Internet than almost any place in the world.  A transitioning entrepreneur might find the housing, rent and tax rates beneficial, while cherishing the more relaxed lifestyle that a pedestrian-oriented comercial district, closely abutted by historic residential neighborhoods, can provide.

USAToday printed a similar article last month, and Slate published one as far back as 2010, detailing reasons why older entrepreneurs may be more successful, not the least of which is access to capital.

Farrell, too, gives several reasons that older entrepreneurs may have a leg up on their younger competition, but a successful community could use both.  Making sure you are providing the necessary tools and amenities for all entrepreneurs is vital.

Resources for Small Business Financing

The Federal Reserve Bank of Richmond (FRB) recently posted an issue of Marketwise Community, a web publication which highlights community development best practices  and emerging issues that impact communities in the southeastern United States.  The current issue, New Alternatives in Small Business Financing, addresses small business lending in the wake of the recession.  The message – banks started to loosen some lending standards in mid-2010, a year after the recession ended, but loans remain hard to get by historic standards.  The good news is that there are some loan products available to businesses in need of working capital.

The Small Business Administration (SBA), a federal agency mandated to increase small business access to credit, refers to three types of nontraditional lending partners along with the examples of the credit products they offer to small businesses.  Loans range from $5,000 to $35,000 and can be used to pay short-term debt obligations, free up cash flow to purchase inventory, or provide capital for start-ups. 

Small businesses need to be the ones to determine what alternative business sources best match their financial state and funding needs, but Main Street programs can play a critical role to help direct the business owners to the available resources by highlighting them through an e-blast, blog, or an office binder.  Consider including the information from this SBA article: Five Critical Steps to Securing Small Business Capital.  

As effective partners, both the FRB and SBA provide support systems and tools. You can play a big part in connecting your businesses to these available resources to ensure  that your district is performing to its full economic potential.

 

Guest Blogger: Jennifer Heyns on Warrenton’s Emerging Latitudes

When people shop locally, they know they are helping to support their community and the shop owners who live there. At Warrenton’s Latitudes Fair Trade, shoppers know they are supporting not only a local business, but also artisans from developing countries around the world.

Latitudes buys handcrafted items from overseas either directly or through a wholesale distributer, ensuring that much of the profit reaches the hands of the original creator. Each item it sells is unique, with deep cultural ties to its country of origin. It not only sells jewelry, scarves, and bags, but also practical household items such as baskets, vases, and table linens.

Latitudes owner Lee Owsley is proud to support artists in less-fortunate countries. Her business allows both buyers and sellers to feel good, she says, because “instead of improving their lives and the lives of their children via handouts or illegal means, these producers are able to live with the self-respect of knowing they are engaged in an honest and fulfilling enterprise.” She believes each item sold represents an artist digging himself out of poverty with dignity.

Latitudes ties the community of Warrenton with communities from around the world—economically and culturally. In Warrenton, it represents the community’s own entrepreneurial spirit. Owsley is a fulltime teacher, who started her business with a temporary store set up for the holiday season. She partnered with a full-time artist in sharing the space. “It really helped me to feel that I wasn’t alone in this,” said Owsley, who advises anyone hesitant about opening a shop to find others who can help with costs, labor and courage.

For more information about the store and the artisans it helps to support, please visit their Web site at www.latitudesfairtrade.com.

Designing a Marketplace

Is your economic restructuring committee effective?  Challenges like recruiting businesses and interpreting expensive and technical market studies discourage eager volunteers. There’s no immediate result after hours of meetings and planning.  Pressure to see results from business owners, local government and the community compounds the frustration. It’s easy for this committee, in particular, to go inactive.

Main Street organizations all over America have faced this challenge, and many are beating it–by creating compelling and specific visions for their downtown marketplace.  To illustrate the best strategies Todd Barman, Program Officer for the National Trust Main Street Center (NTMSC), features Altavista, a Virginia Main Street designated community, in a recent issue of Main Street Now. 

Barman says “It will take a concrete and compelling vision of a fully functioning future marketplace to attract the entrepreneurs and investors who will eventually realize [their] vision.”   What works for Main Street communities is similar to the strategy of successful commercial developers that are good at communicating their development vision using verbal descriptions, architectural renderings, and diagrams/schematics.  Along with this are specific steps for filling vacancies in historic commercial districts.

“The NTMSC is working to empower Main Street programs to use similar tools to attain similar results.”

Check out the details in the Main Street at Work column of the July/August 2010 issue of Main Street Now, The Journal of The National Trust Main Street Center.

The unexpected entrepreneur

If you were asked to describe an entrepreneur, what words would you use?  Maybe terms like “bright, energetic, or magnetic.”  This 2004 article in the aptly named magazine Entrepreneur, gives a whole host of other terms, not all of them complimentary. 

Two descriptions of an entrepreneur that most people would not use are “ex-felon,” and “non-English speaking.”  However, it may just be these often overlooked sectors of your community could be an integral piece of your community’s economic restructuring.  In the classic Republic, Plato said, “Necessity is the mother of invention.”  If this is true, then those least able to obtain traditional employment should be those with the most entrepreneurial spirit.

Upholsterer and entrepreneur Troy Graves. Photo by Tara Bozick, Danville News.

Take Troy Graves.  This Danville resident spent a few years in prison, where he apprenticed as an upholsterer, eventually redoing a chair for the Governor’s office.  When he completed his incarceration, he had trouble finding steady work but was determined not to go back to his former ways.  With the help of a partnership with Virginia Enterprise Initiative, New Visions New Ventures and the Small Business Development Center, Troy was able to get business skills training, write a business plan, and obtain a microloan that allowed him to set up shop.   When this newspaper article hit the street, his phone rang off the hook and he has business lined up for the foreseeable future.  Troy is still building his credit, and hopes to own his building one day soon. 

And consider this positive story from National Public Radio from a place where positive stories have been few and far between.  It seems the one part of Detroit that is flourishing is the predominantly Latino neighborhood known as “Mexican Town.”  Many less developed economies have a strong entrepreneurial tradition; again, harkening back to Plato’s words about necessity.  The most entrepreneurial members of these societies often find a way to come to the United States and bring that spirit with them. 

Make sure you consider all aspects of your local business environment when planning your community’s future.  You just might find success in the most unexpected places.

Quality v. quantity

Last Thursday, at the Virginia Main Street 25th Anniversary Milestone Achievement Awards, keynote speaker Chuck D’Aprix spoke about the importance of making your downtown attractive to entrepreneurs.  One way to do this is to focus on the quality of the experience rather than the quantity of products you sell.

In short, it is difficult to compete with big box store prices and the accompanying scale that makes those small margins possible.  So why not try delving into high quality products that carry a much higher margin and offer a much richer experience? 

If you focus on giving your downtown customers a quality, authentic and unique experience, you will become an attraction for those with quality in mind who don’t mind paying a little (or a lot) extra for that quality.  To quote an article on Kansas’ Prairie Marshes in Legacy Magazine,

Happy and satisfied visitors stay longer, return often, and “spread the word” both about the joys of visiting our region and the importance and significance of the resources found here. This has raised the visibility of the tourism industry at the local, state, and national levels.

From $10,000 boots to stagecoaches to ballgloves to guitars, watch this short slideshow on successful “craftpreneurs.”  And yes, I just made up that word.

Bob Mills, owner of Angle Hardware in Rocky Mount, VA, once told me that Wal-Mart didn’t bother him.  Their product knowledge and quality was poor.  Lowe’s has a much wider selection and is more specialized than Wal-Mart, but do you think you can get someone at Lowe’s to tell you whether a machine screw or a hex bolt will hold better?  Angle Hardware is the real deal.  You don’t wander for hours past spa tubs to find your drill bits.  You walk in and you get greeted by name and with a handshake and a sincere, “What can I help you with?”  If you need one screw, you get one screw, not a box of 25. 

Quality customer service is a rare commodity; but one you can find readily on Virginia’s Main Streets.

Blackstone holiday events keep local elves busy

Downtown Blackstone, Inc. (DBI) has been full of activity this holiday season, successfully coordinating retail promotions and image building events.

The Second Annual Downtown Holiday Open House kicked off the season November 27. Following the Grand Illumination in the town park, DBi drew crowds into downtown by coordinating activities with the local merchants, such as carriage rides, choral groups, storefront decorating, and a drawing at the locally owned Bevell’s Hardware, where the premier model train and Christmas village were on display.  A “Win the Window” contest capped the event with 27 businesses contributing gifts valued at more than $2,000. The event highlighted the local shops while creating a wonderland sense of nostalgia.

Bevell's Hardware holiday train display

DBI closed the holiday event season with the image-building Blackstone Christmas Parade on December 11.

DBI partnered with the Town of Blackstone, Chamber of Commerce, the Volunteer Fire Department and local businesses to organize 15 dazzling floats fit for marching bands, beauty queens, fire trucks and, of course, Santa.

Each event drew close to 2,000 people to downtown Blackstone, a fantastic turn-out to promote the downtown and its merchants. DBi has continued to get out the word by posting photographs and videos of the holiday events through Flickr and YouTube. Check out their Web site for a calendar of events and links to these media postings: http://www.downtownblackstone.org/.

Video: Culpeper’s thriving foodshed

Downtown Culpeper’s focus on farm fresh food through the farmer’s market, destination restaurants, and special food themed events has contributed to the revitalization of the historic community. 

Watch “Meet the Farmer” host Michael Clark talk with community leaders involved in the new vitality of Culpeper.  The segment features Culpeper Renaissance, Inc. in a success story that builds on the area’s rich agricultural heritage. 

The new normal

Before you get too excited about the coming recovery, have you heard about the “new normal?” 

The “new normal” is the term that many have been using for economic growth that is slower than what we became accustomed to over the past decade or so.  Doug Dachille, of First Principles Capital Management, says in this clip from CNBC that the “new normal” is really the “old normal.”  His position is that the economy really only grows in great bounds when technology increases productivity in a dramatic fashion.  That happened in the 1990′s, and the growth in the 2000′s was not based on “real growth” but by financial machinations, according to Dachille.  In statistical terms this is called “regression to the mean,” but in layman’s terms we can just call it average. 

The video is informational throughout, but the pertinant part starts at about 3:30 and runs about two and half minutes.