Part One – Defining the Process of how businesses function, grow and contribute to the community.
I came at Economic Development sideways. I spent twenty-one years as a commercial banker, doing every job imaginable on the commercial lending, deposit and ops side of a number of regional commercial banks. When I first became a lender I was encouraged to join a community service group as a business development exercise – Chamber, Optimist’s, Kiwanis Club. I joined the local Chamber of Commerce and helped the Chamber organize a local Economic Development Group. At the time there was a great deal of concern in my community about empty storefronts. This was in the late nineties. Stil sound familiar? Personally, I thought this would be a great opportunity for an up and coming new loan officer. Those storefronts needed to be filled. People needed to buy and rent buildings and start and grow businesses. I needed to make new loans.
Soon after I got involved on the committee loan applications did start to come in. I got a chance to look at the cash flows of businesses that were looking for financing to continue to operate in a declining downtown. Most of these businesses did not cash flow unless they had owned their building long enough for it to be paid for. If they were buying an existing business that did cash flow, the cash flow went out the window when their new cost of financing was figured in. In those years I turned down more loans than I made. However, working on that committee I found out about many of the tools and theories that municipalites and communites have in their toolbelts to try to turn some of these things around.
Unfortunately, I discovered that many although not all of the tools, were directly responsive to requests from business owners that had bigger business problems than a community developer or municipality was equipped to deal with. This didn’t mean that the tools didn’t work. It meant something more was at play than how the tools were applied. Municipalities and Agencies typically operate under different constraints than entrepreneurs or developers operate under. They have broad constituenties they must be responsive to. Their budgeting processes are completely different than a private businesses. They are limited by law in the kinds of impact they can make. If they are elected officials a mis-step in one of these areas can result in the loss of a job, where success often seems to go unnoticed. I have seen many municipalites and agencies apply the tools at their disposal in efforts to stop naturally occuring trends. Interactions with their constitutiencies are often in the form of citizen or business owner complaints. Agencies and municipalites are forced into a re-active role.
I believe there is a better way. But, first we need to reframe the entire conversation and re-think how we can use the tools at hand in business terms. Economic development is a process problem. There are ways to reapproach solutions and rely on process analysis rather than product. I’ll go into more detail on process vs product in my next post.
Beth Plutchak Consulting 