Local investing opportunities are worth seeking out
Are there real, local investing opportunities in our area? If so, how can we introduce local entrepreneurs and business owners to local micro-financing opportunities and local investors? More importantly, is it worth the effort?
Notice the word “local.” According to Michael Shuman in his recent book “Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity,” we should focus on community-based investing. Instead of chasing large manufacturing or high profile retail and trying to bribe companies to relocate, why don’t we invest in and nurture our best small businesses? Support economic diversification and encourage high labor and environmental standards that are consistent with our professed desire to sustain the character of our small towns and our quality of life.
Why should investors shift their funds from Wall Street into local businesses? The investment returns may be more modest, but many local businesses have good revenue models and growth prospects. And local businesses spend more locally. It’s the local economic multiplier — the more times a dollar circulates in a community the more income, wealth and jobs are created in that community. Every job in a locally owned business generates two to four times as much economic benefit as a job in an equivalent nonlocal business.
How? Local businesses and business owners reinvest their money locally. They hire local people. They work with schools, mentor, train and volunteer, and donate locally. They serve on boards, and they are less likely to leave town.
Instead of attract and relocate, let’s focus on: planning. What are the most plausible opportunities for new or expanded local businesses to meet local needs? Funding. How can local capital be mobilized to finance these new or expanding local businesses? Partners. How can local businesses improve their competitiveness by working together as partners? People. How can a new generation of entrepreneurs and employees be trained for new local business opportunities? Purchasing. How can the community help these businesses flourish with concerted buy-local efforts by consumers, businesses, and government agencies? Public Policy. How can government rules and regulations be recalibrated to focus on policy incentives instead of regulatory requirements?
Let’s create and develop a culture of local investing. We can raise the consciousness and public awareness of “local” and encourage innovation and information sharing. Let’s find ways to invest in our local communities and the people we know.
There are a variety of ways to accomplish the task. We can create and foster more local revolving loan funds to provide public and private capital to local businesses. We can encourage venture funds for high-growth small businesses (yes, there are a few in our area). We can target our technical assistance programs and our community efforts to identify and create industry clusters to bring together businesses with related products and services, such as health, technology, food or creative industries. We can create business networks with industry connections. And we can work with municipalities and counties to improve our sense of place and livability (sidewalks, parks, etc.).
The Roaring Fork Business Resource Center (RFBRC) is working on a project, with funding from the Laura Jane Musser Fund and the city of Glenwood Springs, to find sustainable ways to introduce local stakeholders to local micro-financing/investing opportunities. Since venture funds and angel capital networks are available for early-stage, high-potential, high risk, growth-oriented startup companies, we are focusing on ways for local investors to provide funding for local, investment-worthy businesses. We also hope to develop ways to find and present projects of mutual interest for investors and public/private partnerships.
Real economic benefits and strong regional impact — engagement in the community; adding to the diversity, identity and independence of each community and the region; employment of local workers; spending profits locally; and increasing tax contributions to help pay for local services — will be created as investment opportunities are identified and more local businesses succeed.
In short, we are trying to find sustainable ways to encourage local investing. We hope to create opportunities for collaboration among a growing list of stakeholders, convene discussion groups, formulate initial recommendations, solicit feedback, and present final recommendations. A number of community meetings will be scheduled, ranging from “roll-up-your-sleeves” workshops to smaller discussion groups with business owners, investors, financial managers, and other stakeholders. If you are interested in participating at any level, please contact me at firstname.lastname@example.org or 970-945-5158.
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