Monday, May 28, 2012

Entrepreneurs and the Creative Rural Economy

By Mary Mathews, President & CEO, Entrepreneur Fund

Anna Anderson and Elizabeth Chapman are typical rural entrepreneurs: that is, they are completely unique. Sisters in their early 30s, they joined their father’s business five years ago in Angora, Minnesota (population: 277). Today, Art Unlimited is a dynamic and growing interactive media solutions, web design, marketing solutions, and graphic design company.

Well before joining the family business, Anna and Elizabeth demonstrated their entrepreneurial spirit. When they were 12 and 13, the sisters wanted animals. Their parents told them that they would need to raise the money to pay for animal feed. The girls wrote a business plan for a boarding kennel and a dog-food distribution business and won a national business plan competition. They then convinced a local bank to make them an $8,000 business loan--without their parents co-signing for the note. Elizabeth still runs the boarding kennel.

I met Anna and Elizabeth at one of the Entrepreneur Fund's “Be Strategic: Grow Your Business” series. During the eight-session, six-month “Be Strategic” series, the sisters clarified Art Unlimited’s company vision, developed a strategic plan for growth, and improved their skills in marketing, finance and operations. They are expanding their customer base into regional and national markets. They are clear about who their customer is and the value Art Unlimited provides. Now they are using the planning tools acquired in “Be Strategic” to help their clients clarify their own vision and strategy. They are adding three new high-quality jobs to their six-person company to facilitate their growth.

At the "Be Strategic" series graduation,
with Anna Anderson and Elizabeth Chapman (two at left)
and Mary Mathews (far right).
 After 30 years of working in rural development, I still regularly ask myself how we can accelerate the growth of our rural economies. How do we create more opportunities for our young people to stay in northeastern Minnesota and northwestern Wisconsin or move back to raise their families?

I believe that the answer lies with skilled rural entrepreneurs. Of course, investments in broadband, workforce education, infrastructure, and capital are critical components of rural development. But entrepreneurs are the ones who are capable of growing strong local companies, building regional wealth, and creating jobs. And they are tomorrow’s community leaders.

Helping Rural Entrepreneurs Succeed

Even for individuals with strong entrepreneurial instincts, skill development improves the opportunity for business success. Since 1989, the Entrepreneur Fund has worked in Minnesota and Wisconsin to identify, guide, and support local entrepreneurs that have drive and ideas. We work to accelerate their skills development and overcome barriers to their growth.

After four years of regional planning, in 2008 the Entrepreneur Fund launched the Greenstone Group initiative to build an organized, intentional system of entrepreneur support for northeastern Minnesota and northwestern Wisconsin. This initiative targets entrepreneurs who have been in business at least two years and have a vision and desire to grow their companies.

In 2003, the Entrepreneur Fund helped Don and Leanne Negley start Rural Living Environments (RLE), in Babbitt, Minnesota. The company specializes in creating supportive living environments for adults with developmental disabilities in a rural setting. We helped them with the initial business plan and start-up financing. Later, a Greenstone Group Business Performance Coach helped Don grow the company. RLE employs 40 people and Don has plans for additional growth.

We have developed and tested tools and activities to guide entrepreneurs toward growth and to measure the resulting changes in their entrepreneurial skills. All Greenstone activities, whether one-on-one or group, share common elements. We believe that entrepreneurs learn best from other entrepreneurs, so we:
  • provide networking opportunities,
  • build peer-learning groups among entrepreneurs at similar levels of development, and
  • include skilled, experienced entrepreneurs in every activity, as coaches and guides to accelerate and enhance the learning that occurs.
In addition, we work collaboratively with other public and private service providers to ensure the entrepreneur has the resources and support s/he needs. 
The Entrepreneur Fund also works to support diverse business ownership in the region. For example, our Women’s Business Center hosted its first three-day Women’s Strategy Weekend (WSW) in March. Ten women with existing companies refined their vision and developed strategic plans to grow their companies. 
As a result of her participation in WSW,
Art in the Alley's owner plans to expand to several more locations.
Pictured: Tami LaPole Edmunds (owner at right) and her daughter Gwen LaPole
Our Vision and Track Record
The Entrepreneur Fund’s long-term vision is of a regional culture where being an entrepreneur is an equal choice to getting a job, where young people can chose to stay in rural communities because they see creative opportunities for starting companies or finding jobs, and where the process of entrepreneurial thinking and business cycles are understood. Success is celebrated and a failure is learned from…and the process of creation goes on. 
Formerly the Northeast Entrepreneur Fund, the Entrepreneur Fund's development services have helped entrepreneurs start or grow over 1,300 companies since its formation in 1989. It $8 million loan fund has provided $15 million in loans to 450 companies. The Entrepreneur Fund is the developer of the CORE FOUR Business Planning Course® and Be Strategic: Grow Your Business. 
The Greenstone Group has so far worked with 150 entrepreneurs running companies with annual revenues ranging from $20,000 to $10 million. Their companies have increased profitability, grown revenues, and found new markets.
More about the Entrepreneur Fund
The Entrepreneur Fund's mission is to develop skilled entrepreneurs who build strong locally-owned companies in northeastern Minnesota and northwestern Wisconsin. We envision a strong regional economy with an entrepreneurial culture that cultivates thriving companies and vibrant communities.
The Entrepreneur Fund launched the Greenstone Group in 2008 with visionary support and a 10-year grant from the John S & James L Knight Foundation.
About the Author
Mary Mathews is a social entrepreneur and the founding president of the Entrepreneur Fund. She is a past board chair of the Opportunity Finance Network and Association for Enterprise Opportunity and a current board member of the Duluth Art Institute and NorthStar Aerospace. Mary is a northeastern Minnesota native, former business owner, and an Iowa State University graduate.
Photos provided by the author.

Tuesday, May 15, 2012

The New Natural Resource Economy and Rural Economic Development

By Susan Lurie (Oregon State University) and Michael Hibbard (University of Oregon)


Photo: Susan Lurie – 2012
A couple of years ago, while our research team was working on a project in Grant County in deep rural east-central Oregon (read our report or journal article), we had the opportunity to sit in on an “economic summit” for the county. The local extension agent pointed out that the two industries that formed the historic economic base of the county—timber and cattle—were both in long-term, permanent decline.

As a consequence, Grant County—like many resource dependent rural communities—is struggling with loss of jobs and local businesses and wealth, and generally declining community vitality. The problems are mainly due to forces beyond their control, such as globalization and economic restructuring, the dominance of the industrialized commodity production model, and changing societal demands for agricultural and natural resource products.

As we listened to the audience discussion of the presentation, we were struck by something. Everyone present had an abiding commitment to Grant County and was deeply worried about the future of the community. They also had a strong love for rural and small town life, especially as it related to making a living off the land.

A significant segment of the audience saw the only hope for the community in a return to traditional uses of natural resources. That last sentiment was not new to us, of course. What was new to the discussion was the significant fraction of the audience who were interested in considering alternative possibilities for natural resource management. They saw that there may be ways to make a living from natural resources based on emerging markets for products that reflect increasing societal expectations that natural capital should be managed and utilized in a more sustainable manner.

Photo: Country Natural Beef  
As researchers, we decided to look more closely into what this “new” natural resource economy (NNRE) comprises as a complement to traditional uses. We wondered whether it might help create a way for rural communities to think about economic development in response to contemporary economic and social realities.

Problems of Natural Resource-based Economies

The industrialized approach to agriculture and natural resource management—which includes specialization, standardization, and consolidation in pursuit of increased efficiency—has disconnected rural communities from the larger economy. At the same time, societal demands for protection and enhancement of rural communities’ key assets (their natural resources) has led to more stringent regulations affecting production.

Some rural communities with high amenity values have developed alternative economies as sites for tourism and retirement. For most communities, however, the decoupling from the larger economy has been an intractable socio-economic problem, and rural communities continue to lag behind urban areas.

How the New Natural Resource Economy (NNRE) is Different

The NNRE may offer a way out of the dilemma by reframing natural resources as assets to be managed for the long term. It emphasizes a multifunctional landscape that balances agricultural and natural resource production with amenities for recreation and cultural activities and protective natural services such as air and water purification, biodiversity, and flood and erosion control. Activities and businesses comprising the NNRE may not be new; what is new is accounting for them collectively as an emerging economic sector in its own right that can help diversify rural economies and increase local resilience and economic autonomy.

As we probed these ideas it quickly became apparent that the predicament is not limited to the U.S. Most developed countries are facing similar challenges and a variety of policy responses have emerged. To shed light on the U.S. situation, Oregon seemed a good place to start: many rural Oregon communities are struggling with economic change and the rural development grapevine gave us reason to believe there is quite a bit of NNRE activity at work, informally and without any overarching state or local strategy.

Preliminary Research

To get a sense of what types of enterprises currently comprise Oregon’s NNRE and what institutional challenges they face, we conducted a survey and three in-depth case studies of Oregon rural communities. Details of the study and policy issues identified can be found at the Rural Futures Lab website.

In summary, we found that some communities are engaged in NNRE economic development, although it is not typically identified as such. It was also clear that there is generally low or no understanding of how to define and develop a local or regional NNRE strategy in order to overcome existing barriers and foster institutional changes to help rural communities.

As research and action moves forward, it will be important to continue identifying institutional barriers that must be changed in order to encourage and nurture rural NNRE entrepreneurialism. We would like to search for answers to questions about the NNRE such as:
  • What other challenges are NNRE enterprises encountering, and what steps can be taken to remove those barriers?
  • What examples exist in different contexts that would help rural communities looking for innovative ways of building more sustainable futures?

As we continue to refine our understanding of the NNRE, comparative studies and examples of practicable NNRE economic development policies and programs will help create a framework that can be adapted to local circumstances in order to help the NNRE flourish and, with it, rural communities. 
Susan Lurie is a faculty research associate in the Policy Research Program at the Institute for Natural Resources, Oregon State University.

Michael Hibbard is Professor Emeritus, Department of Planning, Public Policy & Management, and Director, Institute for Policy Research & Innovation, at the University of Oregon.

Visit the RUPRI Rural Futures Lab here.