Category Archives: Think Local Umpqua

Did you know that from 1992-2008 in Douglas County
- Employment grew by 8281 positions (excluding Government).
- Non-locally owned business added 1081 positions (all sizes of business).
- All locally owned businesses employing over 10 people added 1921 positions

- Locally owned businesses, employing less than 10 people added 5279 positions. That is far more than the larger businesses and non-locally owned businesses combined!

If you look, in all 3 recessionary periods during that time, the stability and help in employment from small business tremendously outpaced larger and non-resident owned businesses combined.

These statistics and much more can be found at the following two websites:

http://www.ces.census.gov/index.php/bds/data_state_bar_charts

http://www.youreconomy.org/

While investing in small business does come with greater risk, I believe there are things that can be done to significantly reduce the likely hood of small business failure. My observation has been that many of the entrepreneurs in our area are trying to start a business with a lack of business experience or training, and capital. If we were to tie capital incentives to training, it could have a profound effect on the survival rate. I’m not suggesting that all new businesses receive growth capital, but having access to an attorney and a CPA are something that would be of benefit, and probably not require a significant investment by an economic development entity.

A relationship between the training programs and the capital source could go a long way toward making sure any monetary investments are directed toward the businesses most likely to succeed. Business performance requirements would be a method of making sure the investment remains a beneficial one. I feel these sorts of investments could be self sustaining at some point, provided they are structured correctly.

The public revenue implications are significant when comparing small business to the non-locally owned. Its times like these when Americans are known to dig in and make things happen. Changes are happening all around us, let’s make sure we’re thinking about and doing what we can to steer them in a direction that will have a lasting benefit to the community.

Tim Allen

Vice President – Think Local Umpqua

Owner – Roseburg Rental

Business Performance 10, Access to Capital 0

By: Tim Allen

In my last article I indicated a disagreement with one of the statistics in the information received from an American Rental Association survey. They had indicated that the credit markets were loosening up (as does Fed Chairman Ben Bernanke), and I challenged that perhaps either regionally or for large business that may be the case, but not locally for small businesses.

I won’t bore you with details, but with a 53% year to date growth over last year in gross revenue, my 8 year old business continues to find ways to grow substantially. However, I was recently turned down by our local banks for capital to finance further growth. I’ve had several professionals in the field look through our financials and indicate the business is doing quite well. I have to wonder, if a business with growth and financials such as ours can’t access capital, what business can? In Think Local Umpqua, a local non-profit geared toward independently owned small business, the topic of access to capital comes up frequently. While many of the member businesses are relatively young such as mine, many have been around for a very long time, most contribute to the local employment pool, yet none are able to find financing for growth.

Unfortunately I’m not able to come up with a silver bullet for this issue, or even a lead pellet for that matter. There are many local entrepreneurs with good ideas that could create jobs in small scale manufacturing, or service related fields such as ours.  While the economic conditions in general aren’t good, in some markets the pull back by large corporations has left a potential for local businesses to gain significant market share.  In this void are significant employment opportunities.

I would guess that any of the large corporations that left town with the downfall of the economy could (and very likely have) access to bank financing options for their business. Bailouts for large companies have been prevalent, but none of this has helped our local economy. It seems to me investment locally is the logical best bet for our community. The question is, what methods exist if not through the local banks? There is a great deal of effort being put into local economic development. I am continuously amazed by the amount of volunteer hours I see being put in by highly capable local residents, as well as the efforts put in by paid staff and elected officials. Unfortunately, financing this development is one area that doesn’t seem to come up, as though it will just work itself out.

In a business class several years ago, the instructor made a comment that growth beyond 20% per year will typically require capital from outside the business. That is just one more bottle neck that will need to be resolved to get our employment figures back on track. If we could figure this dilemma out, and get more market share into our locally owned businesses, the increased tax revenue that results (from profits and professional/administrative investments made locally) would be a substantial boon to the local public budgets. I would certainly welcome any idea’s you may be able to share.

Tim Allen

Vice President – Think Local Umpqua

Owner – Roseburg Rental

How exactly is economic development defined? I believe it’s as simple as comparing it to your own financial situation. Ideally, we’ll bring more in than we send out. Our local economy, in order to “develop” needs to bring in more revenue than it sends out. If the population remains the same, and we accomplish this, then there is more money to divide amongst us. Similarly, if the economic revenue as a whole increases at a faster rate than the population growth, we again have positive economic development.

There are really just two components to this, money in and money out.

Money in is accomplished when people from outside our economic area spend their money here. It could be tourists, a wine sale, lumber products, health care or any of the other goods that we process in our local communities. If it is grown here, processed here and sold outside of our area it will have the most positive effect on bringing money into our economy. If we purchase a commodity elsewhere, but bring more value to it by manufacturing a finished product here, it brings more Read the rest of this entry »