Nurturing Entrepreneurial Ecosystems in Appalachia

For the last two years, EntreWorks Consulting has led a major Appalachian Regional Commission-sponsored research project entitled Documenting and Strengthening Entrepreneurial Ecosystems in Appalachia.  With our colleagues at the Center for Regional Economic Competitiveness and the Center for Rural Entrepreneurship, we’ve been engaged in a deep dive to understand the entrepreneurial economy across the 13-state, 420-county, Appalachian region.  The results of this work were released today at an event in Cattaraugus County, New York.

This work, which can be accessed at, contains lots of interesting insights and data.  For those interested in the state of Appalachia, you’ll be interested to know that our research finds that most Appalachian counties perform well, and host levels of start-up and high-growth business activity that are similar to those found in other regions of the US.   The project also produced a report, Building an Entrepreneurial Future: Ideas for Appalachia’s Ecosystem Builders and Champions, that offers policy recommendations for building stronger regional entrepreneurial ecosystems across Appalachia.

Community leaders and economic developers may be most interested in our eight regional case studies that examine the challenges and opportunities around regional ecosystem building efforts.  They can also tap into a working resource inventory that provides background and contact information for key ecosystem partners operating in every county and state across Appalachia.

Last but not least, data geeks and policy wonks may want to check out the project’s data dashboard that tracks the entrepreneurial economy in every county across Appalachia.  For the first time, data on start-ups, high-growth companies, and Stage 2 businesses (with 10-99 employees) is provided for all 420 counties in Appalachia and their performance is benchmarked against state, regional, and national averages.  In addition, a project literature review assesses what the academic and policy literature tell us about nurturing entrepreneurial ecosystems.

This has been a fun and rewarding project that we hope will advance the conversations about innovation and entrepreneurship in Appalachia and across the US.   A thriving entrepreneurial economy is emerging in Appalachia.  This project details these trends, and will hopefully help support continued success and economic transformations.

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On the Road in October

October is shaping up to be another busy month on the road. Here’s some of my upcoming speaking gigs.  Hope to see you on the road.

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New(ish) Books for Economic Developers

There aren’t a lot of books that discuss the daily life and work of economic developers, so I’m always on the lookout for new ones that offer some insights and useful work tips.  If you’re looking for similar sources of new ideas, two new books are worth your time.  Maury Forman’s self-published The Wit and Wisdom of an Economic Developer distills Maury’s many years of working to advance economic development in the state of Washington and beyond.  It’s a funny—and insightful—series of essays on what works and what doesn’t work in the real world of economic development.

Eric Canada is another long time economic developer, and his firm, Blane Canada, is well known in the field.  His new book, Economic Development for the Team, is a similarly useful guide to the reality of economic development.   This guide is especially useful in its recognition that teamwork and partnerships are the reality in today’s world.  It offers tips not just for the professional economic developer, but also focuses on roles and activities for board members, elected officials and other partners. This guide is especially useful for folks who are brand new to the field and need an introduction to leading practices, procedures, and terminology.

Finally, a colleague recently recommended a newish book that I’ve found quite interesting:  What I Found in a Thousand Towns by Dar Williams. Williams is a popular folk singer who spends a lot of time on the road in smaller towns like Phoenixville, PA, Moab, UT, and Gainesville, FL.  She’s become something of community revitalization expert along the ways as she’s seen what works in building vibrant towns and communities.  The book’s subtitle does a great job of summarizing its content and conclusions:  “A Traveling Musician’s Guide to Rebuilding America’s Communities—One Coffee Shop, Dog Run and Open-Mike Night at a Time.” This is an interesting and entertaining read.

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Opportunity Zones, Take 2

In my quest to get a better understanding of the new federal Opportunity Zones program, I’ve been attending an excellent forum sponsored by the Council of Development Finance Agencies.   As a reminder, this Opportunity Zone program was created by Congress last year.  It provides generous tax credits for those who invest in projects located in opportunity zones around the US.  These zones are intended to be areas of high economic distress with unmet demand for equity investments in businesses and real estate projects.   This spring, states identified more than 8700 zones around the US, and most outside analysts think that they did a good job of targeting areas of great need.

But, now the devil is in the details.  My time at the CDFA event and outside research suggests (to me, at least) that the success of the Opportunity Zone program is going to depend highly on how key federal agencies opt to regulate and manage the program. These decisions are still under consideration so we’re in something of a waiting mode.

While we’re waiting, there are key questions still on the table.  The tax benefits for the program are generous, so it seems likely that investors will be attracted to Opportunity Zone investments. But, can we ensure that the investments make a difference in distressed communities?  After all, that’s the program’s purpose!  Here the jury may still out.  A few key issues include:

  • Geographic Diversity:  How can we ensure that these investments don’t just go to major urban markets, but also hit rural areas and zones located in smaller communities?  There is a short timeline for deploying funds, and this tight deadline may limit the ability of investors to seek out deals in out of the way places. Here’s another good look at these issues.
  • Small Business vs. Real Estate Projects:  Opportunity zone funds can be used to finance small businesses, but the market for these equity deals may be small.   There may be few companies located in zones that are seeking major equity infusions.  If this is the case, we should expect most investments to be targeted to real estate deals.  (This is the case with funding from other new programs like EB-5, the New Markets Tax Credit, and the Community Development Financial Institutions programs as well.) Of course, real estate projects can have transformational impacts, but we need more business investments too.  Also, if the funds are used to invest in luxury real estate (as we have seen in many EB-5 projects), we’re missing the purpose of Opportunity Zones.
  • Tracking Impacts:  At present, the program contains no mechanisms, beyond tax audits, to track whether and how investments help low income people and communities.   Many advocacy and research groups are seeking to address this problem by developing project clearinghouses and other tools.  We will clearly need better tools to understand if and how Opportunity Zones are bringing real benefits to at-risk communities.

While I have many questions, I’m still optimistic.  I think Opportunity Zones have potential, but they won’t be a panacea.  But, if we can find new and effective approaches to invest in and nurture distressed regions, let’s do it and let’s do it right!

If you want to track future directions, I can highly recommend Enterprise Community Partners Opportunity Zone Platform.

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See You in September?

As the long hot summer winds down, my work and travel schedule pick up.  I’ve got lots of speaking engagements planned for the fall.  In September, you can find me at the following events and locales:

September 18:  Presenting at the Community Indicators Consortium 2018 Impact Summit  in Minneapolis.

September 20:  Presenting at the National Association of Counties’ Strengthening Economies in Colorado forum in Delta, CO.

September 30-October 3:  Attending the annual conference of the International Economic Development Council in Atlanta. On October 2, I’ll be chairing a panel on “Supporting Rural Entrepreneurs.”

If you happen to be at any of these upcoming events, please stop by and visit.  Hope to see you on the road!

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What’s Up with Opportunity Zones?

Opportunity Zones were one of the big, and underreported, legislative achievements of this Congressional session.  Part of the late 2017 Tax Cuts and Jobs Act, the proposal provides generous capital gains tax credits to investors who back projects and businesses operating in designated Opportunity Zones.  These zones are intended to be located in low income census tracts or areas of particular economic distress.  States designate these zones, and, to date, the U.S. Treasury Department has designated more than 8,700 such zones around the country.

There’s still a lot of uncertainty about how this program will work.  Opportunity zone boosters estimate that the program could incentivize an additional $30 billion of new investments into designated zones.   That number seems high to me, but, for now, I remain hopeful and optimistic about the program’s potential.

I expect that we’ll be seeing a lot more discussion on the state of opportunity zones as the program’s rules and procedures are clarified and actual implementation begins.  Watch this space for further updates.  In the meantime, I encourage interested folks to check out a new Opportunity Zone update report from the Council of Development Finance Agencies which discusses how state officials are managing the programs.  In addition, the Urban Institute continues to be an excellent source of information on opportunity zone implementation as well.  A sampling of their recent studies can be accessed here.

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The Impact of Military Bases in Pennsylvania

Last week, the Pennsylvania Military Community Enhancement Commission (PMCEC) released a new study that assesses the impact of military installations on Pennsylvania’s statewide economy and in regions that host these facilities.  The research effort was led by the University of Pittsburgh’s Center for Social and Urban Research  (EntreWorks Consulting also provided support for the project).   The study finds that military installations are a key driver of state and regional economies, accounting for 56,000 jobs and $11 billion in total economic output in 2016.   The study examines statewide impacts, and also offers local assessments for each of Pennsylvania’s 13 major military installations.  The report will be of greatest interest to Pennsylvanians, but it offers a number of broader insights and lessons as well.   In many ways, Pennsylvania’s military bases are unique.  The state is not home to major training facilities, or large military operations.  Instead, nearly all of the state’s defense workers are civilians who work in sectors like logistics and distribution, manufacturing, and maintenance/repair.  As such, there are close linkages between military and civilian industries, and the potential for closer industry partnerships and synergies is great. The PMCEC and its partners are working closely to be good partners to DoD, and to help ensure that Pennsylvania remains a welcoming place for the military.   You can access the summary impact report and individual base reports here.

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Talent Development and the Expansion of Child Care Services

On my recent travels around the US, talent and workforce development is clearly the No. 1 issue regardless of location.   In urban, rural,and suburban locales, employers are facing big challenges in finding and retaining talented workers.  There are many factors at work here, and many workforce development programs have been addressing core challenges related to skills and training.  But, the causes are more complex than a skills mismatch.  Workforce shortages are driven by other factors too–including housing availability/affordability and child care.   If you can’t afford to buy a home or raise a child in a community, your prospects for a rewarding career there are pretty slim.

Forward thinking communities around the US are starting to proactively these issues.  (Check out some useful background from CED and the Upjohn Institute).  My home community of Arlington, VA is becoming a national leader on this front.  It has just released and approved an excellent plan as part of an ongoing Child Care Initiative.   The Arlington economy is booming, so housing costs and child care costs have been skyrocketing, creating great financial challenges for parents. In fact, the project’s research estimates that child care costs an average Arlington family around $42,000 per year.  The new plan takes a holistic look at the issue, and includes dozens of recommendations.  Big early steps include additional subsidies to defray child care costs, zoning revisions to encourage creation of new facilities, and new training programs to build a stronger local talent pool of child care professionals.  This is an ambitious plan, but it’s got potential.  If the talent wars continue, more communities around the US will need to take this type of holistic look at issues affecting local families and workers.

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Rethinking Retirement for the Gig Economy

Freelancers and gig economy workers have become a regular feature of the today’s economic landscape.  While these folks love the freedom and flexibility of the 1099 Economy, they also fear the precarious nature of freelancing, especially when it comes to paying for health care and retirement.  An interesting new survey sponsored by Small Business Majority examines small business owner and freelancer attitudes toward retirement savings and benefits.   To sum up, it’s not a good situation today.   A large share of surveyed small business owners (with less than 25 employees) uses freelancers on a regular basis, thanks to the benefits of these more flexible work arrangements. These freelancers receive no health or retirement benefits from these gigs, but full time employees face a similar fate as few small business owners can afford to provide benefits. In fact, 57% of surveyed small business owners provide no retirement benefits to their employees. This should not be a surprise, since the owners rarely fund retirement benefits for themselves either.  Only 39% of surveyed owners felt that they had sufficient savings for retirement.

The reasons for this lack of investment in benefits are not complex:  retirement plans are too costly and too complicated.   Nearly 75% of business owners would like to see more incentives to encourage retirement savings and to provide benefits to gig economy workers as well.   Sixty-nine percent supported the creation of multi-employer benefit exchanges as means to support the provision of health, retirement and other benefits.

Too many people are living and working in precarious conditions where they are one injury or one bad break away from financial ruin.  New structures for a new social safety net are clearly needed, and, as this survey suggests, there is growing support for action.

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What Matters for Local Government?

Local government officials must often operate in reactive mode, responding to crises or other pressing events of they day.  But, good leaders know that they must be reactive and proactive, acting to advance the future prospects of their community over the long run.  An interesting new survey from Government Business Council offers useful insights about what matters on this front.  The survey asked state and local government officials to identify the issues and focus areas that they deemed most important to their own and their community’s long term success.  Their top concerns relate to the economy and fiscal health, as the largest share of respondents identified taxation, budget and finance as their top priority.  Promoting economic development ranked number 2, followed by infrastructure and transportation.  I was somewhat surprised to see issues such as health care and social services rank low on the priority list, but this may be due to the fact that few local officials have a direct role in the provision of these services.

As an economic development consultant, I’m of course pleased to see economic development marked as a high priority.  It was the number one concern for officials operating in smaller communities and smaller states, reflecting the local importance of creating new job engines and perhaps reflecting the place-based economic divides facing America today.  This priority focus on economic development was strongest among elected officials (compared to professional staff), but was strong across categories and across all types of officials, regardless of their department or function.

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