Shuman workshop generates potential business initiatives
- Published: January 22, 2009
Top 10 local leaks
The easiest way to strengthen the local economy is for villagers to make their big ticket expenditures in town, according to economist Michael Shuman at last weekend’s “Going Local” workshop. Following are the largest household expenses for American families, followed by the average annual amount spent.
1. Drink locally ($800 annually).
2. Localize your car service (rental, wash, repair: $1,000 annually).
3. Make charity donations local ($1,200).
4. Cut your energy bill in half ($1,300).
5. Buy local fresh food ($1,700).
6. Use local health care ($1,900).
7. Find local entertainment ($2,100).
8. Eat out locally ($2,300).
9. Cut auto use in half ($2,400).
10. Own your home ($7,800).
Visit http://www.smart-mart.org for more information.
A Yellow Springs energy service company that offers villagers energy audits and also supports new start-ups that produce technology for alternative fuels.
A co-operative commercial loan fund that offers both financial support and mentoring for start-up businesses.
A local farm/garden cooperative which provides both workshops and opportunities for local farmers and gardeners to share equipment.
A discount card for local shoppers who frequent local stores.
A Time Banking system in which villagers barter goods and services.
These were a few of the possible new business opportunities that came out of “Going Local,” a weekend workshop with economist Michael Shuman. About 200 people attended a standing-room-only keynote talk last Friday night at the Glen Helen building, and 70 villagers took part in the workshop on Saturday and Sunday. Such a high turnout bodes well for the village’s ability to follow through with these and other new business ideas, Shuman said at the end of the event.
“I believe the presence of 70 people in a town of this size for a two-and-a-half day workshop is remarkable evidence of commitment and what is possible,” he said.
Yellow Springs also has the assets of “a lot of smart people, beautiful land, and terrific financial resources,” he said. “You have a leg up over most towns, even though you took some body blows in the past years.”
An attorney and the author of Going Local and The Small Mart Revolution, Shuman was brought to town by the Smart Growth Task Force and Village Council. On Friday night, he laid out the principles of his approach to economic development, which contends that small, locally-owned businesses are the key to a healthy and dynamic economy.
“It’s all about growing your economy through an expanded array and power of local businesses,” he said.
His approach also empowers citizens in a way that traditional economic development does not, Shuman said.
“The ability to solve our economic problems is not the responsibility of city council or the chamber of commerce,” he said. “It is everyone’s collective responsibility.”
Plug the leaks
On Saturday morning, Shuman passed out information on a “leakage analysis” that he had created for Greene County and Yellow Springs, identifying economic sectors in which the village is losing money because villagers are frequenting out of town businesses to fill their needs. Identifying these leaks and creating small businesses to fill them is the most effective way to make a local economy more sustainable, according to Shuman.
“The greatest boost for an economy is finding the biggest leaks and filling them,” he said.
Using employment figures from 2006, Shuman stated that in the village “in almost every sector of the economy there are profound leaks,” and the largest leaks are in the financial sector. Filling the leaks could potentially create about 500 jobs, he said.
The largest leaks in many communities are in the sectors of finance, energy use and food consumption, according to Shuman, who said that one of the relatively easy ways to strengthen an economy is to find ways to produce and consume more locally-grown food, rather than import food from outside.
On Saturday, Shuman shared many strategies that other communities have used to find ways to plug economic leaks and to strengthen existing businesses. Many of these strategies are used by members of the Business Alliance of Living Local Economies, or BALLE, a network that he helped to found. There are about 70 members of BALLE, and about 20 of them are of a similar size to Yellow Springs, he said.
“The key to a small community like Yellow Springs is to search for small scale models of success in every sector and learn from them,” he said.
An example of one strategy was that of Powell, Mont., a small community in which residents sold community stock to raise money to start a general store, to fill the need of a place to purchase everyday items. The venture has thrived, Shuman said, and has also enhanced residents’ pride in the community and attracted tourists.
Other strategies include Local First campaigns and festivals, Buy Local weeks, local currency, Buy Local coupon books, Buy Local debit or credit cards, or Buy Local gift cards. Some communities have instituted community stock to raise money for business needs, commercial loan funds or venture funds to link investors with entrepreneurs. Other towns created local shopping malls for entrepreneurs to sell their products or began local delivery of goods or services to offer convenience that big box stores don’t provide.
Workshop participants were invited to meet in small groups to identify possible businesses opportunities to fill economic leaks in Yellow Springs. Along with the examples mentioned above, participants suggested creating a general store, as in the Montana example, starting a commercial kitchen, opening a spa and wellness center, creating an arts and recreation space and starting a center to support entrepreneurs, among others.
A non-traditional approach
Shuman’s local-based approach goes against the traditional approach to economic development, in which municipalities create new jobs by attracting large outside businesses to a community. Most municipalities attempt to lure big box retailers or global businesses with huge tax breaks, while offering little incentive to the small local businesses that in fact are the bedrock of a local economy, Shuman said.
Small locally-owned businesses are better for a community for many reasons, including their stability and commitment to the town, Shuman said. Also, when people shop local, their dollars circulate in the community in what economists call the “multiplier effect,” so that dollars spent at locally-owned businesses have three times the impact on a local economy than dollars spent at a chain store or business, he said, citing a 2003 Austin, Texas study.
Locally owned businesses also have a smaller environmental footprint, and a variety of small, locally-owned businesses add uniqueness and dynamism to a community, Shuman stated.
“People are drawn to uniqueness,” he said. “A creative economy is rooted in small businesses and entrepreneurial opportunities.”
Recent world events, including the fluctuation of oil prices, global warming, the shrinking dollar and the global economic crisis, have created additional reasons to rethink traditional economic models, Shuman said. The current economic crisis resulted from attempts by financial institutions to “de-link place from investments.” However, he said, small banks and credit unions firmly rooted in a community have fared relatively well in the economic turmoil.
“Place-based investment is the key to financial prosperity,” he said.
What stands in the way?
On Sunday workshop participants talked about the challenges they envision in moving ahead with creating new local business opportunities.
People are already too busy to take on another significant project, several said. Stating that he had just finished two years of giving countless hours of volunteer time with the Electric System Task Force and felt exhausted from the effort, Pat Murphy said, “If we’re so clever and smart, why don’t we hire someone at the Village level?” to help implement the ideas.
Past community conflicts have led some villagers to lose trust in others in Yellow Springs, and to take on projects of this size, people need to collaborate, according to Marianne MacQueen.
“To be effective, we have to work smarter rather than work more,” she said.
Villagers need to feel threatened before they take strong action, according to Richard Zopf, who said that the effort to save Whitehall Farm worked because villagers felt threatened by an imminent loss of green space. Without a feeling of threat, Zopf said, “we’ll just talk about it.”
Most who attended the workshop didn’t want to just talk about it, according to participants. Rather, they felt energized by the workshop and wanted to move ahead.
“Between tomorrow afternoon and five years from now, how can we be successful?” asked Benji Maruyama.
Villagers can move ahead immediately with the ideas they sparked over the weekend, Shuman said. And the event provides a framework that will serve Yellow Springers well when the Village moves ahead with a visioning effort within the next few months, said Village Manager Mark Cundiff.
“I see this process as a first step,” he said.