The Credit Crunch and the New Economy in Appalachia

What will the world look like once the financial crisis passes? Mark Penn has a worthwhile take on things:

The economic crisis will ... dramatically affect the rising elites, their lifestyles and kids.

For them, Wall Street was becoming the career of choice. But with markets plummeting, will young people now switch to careers in the nonprofit sector helping to combat climate change? Will they go back to founding small businesses after both Big Business and the financial community have proved unreliable employers? The number of law school applications will certainly rise as society becomes even more contentious and litigious, fighting over a shrinking pie.

Maybe we will finally see more young people put their faith and their studies in engineering and science, as people become disillusioned with careers based on moving around information and derivative financial instruments. People will want to make something tangible again, and the government is likely to help by pouring billions into new public works projects.

Telecommuting and four-day workweeks will surge as businesses look to cut back on hours and travel expenses.

Until recently, Americans were buying second homes like crazy — millions of middle-class families have two mortgages. That market has collapsed. But the silver lining will be for first-time home buyers who will find it easier than ever to afford a house, as prices have tumbled by 25 percent or more.And the love affair with the SUV and the truck seems to be fading. Even as oil prices come down from their sky-high summer peak, Americans’ tastes will now permanently shift to smaller (but not too small), higher-mileage cars. Function will gain on form as the most important factor in car purchases.

Full article: http://www.politico.com/news/stories/1008/14531.htmlSome potential ways the above might affect Appalachia, economic development and entrepreneurship:

1. Big business has never thrived in Appalachia- with a few notable exceptions such as mining. Perhaps entrepreneurship will experience some boom times as more and more investors look to put their money in ventures they can more easily get their arms around.

2. Non-profits have always been a thriving sector of our economy. The Christian Appalachian Project is the 12th largest non-profit in the nation. MACED does terrific work, both with the bully pulpit and, more importantly, by putting money where their mouth is. If we’re about to enter a new era of non-profits then it could be good for the mountains.

3. If we see a rise in opportunities for telecommunting then it’ll be good for Appalachia. After all, as Hal Rogers likes to say, we may not have the highways but we do have the skyways… i.e. broadband. (Thanks partly to another non-profit that does great work in Appalachia, ConnectKy.)

4. If cars turn towards the functional and we do, for better or worse, see added costs to reflect the environmental impact of automobiles, perhaps the used car market will boom. Appalachia has historically had a car culture. I have a neighbor who can’t get to Lexington and back but who can take apart and rebuild a motor, transmission, etc. with ease. My wife says he could fix a car with aluminum foil. This surplus talent could find a market someday soon. After all, the carbon footprint for buying a used car is much lower than a new Prius ever thought of being.

Admittedly, predicting the future based on Mark Penn’s work is a little risky. Just ask Hillary. Still, I think some of the above has a pretty good chance of coming to fruition over the next few years as we move away from the credit glut and into an era of more frugality.

Don McNay Preaches the Virtues of Entrepreneurship

I spend quite a bit of time on these pages railing about the importance of entrepreneurship. Skills in small business (and enterprises in general) will be crucial for millions of American as our economy changes from one that favored big industry to one that smiles more brightly on small business. The reasons are simple: globalization and technology. Our economy is moving away from one that favored capital investment to one that favors human capital.

Don McNay gets that. Here are snips from his most recent op-ed, the entirety of which I strongly suggest folks read:

Every person in the financial world has skills that can be transferred to a business they own. Media people have a “brand name” with the public. Both groups can take the skills honed at large institutions and use them to make their own fortune.

Entrepreneurs in the next generations won’t have the opportunity of training at a large company. They will have to start business for themselves from day one, instead of learning their craft from experienced hands with vast resources.

[…]

In 1900, only 10 percent of Americans worked for large companies. The other 90 percent were self-employed farmers and shop owners. By 1970, the number of people working for large companies reached 90 percent.

It’s been dropping every year since 1970. We are on a steady march back to that 10 percent number. The recent economy is quickening that march.

So what do we do about it? McNay notes that it’s a challenge to prepare folks used to working for a big business to run their own business. But as he says: “it’s a challenge that must be met.”

So how do we meet it? For starters, we need to get it. I really think that Governor Beshear gets it. More so than any recent Governor he preaches the gospel of growing Kentucky companies here in the state rather than recruiting them from elsewhere. If you read press releases from the Cabinet for Economic Development you’ll see that the Guv is relentless on message about this point.

We should build on this kind of attitude. Pols should actively preach the virtues of that funny French word entre-pruh-neur-ship. That’s important. Because an entrepreneur is more than a small business owner. An entrepreneur is someone who creates new enterprises, taps new markets, does things innovatively.

In the legislature there are periodic attempts to promote math and science education in schools. What about entrepreneurship? The Kentucky Entrepreneurial Coaches Institute has long advocated for and actually implemented on a smaller scale youth e’ship programs. It’s time we get serious about these here in KY. Pols could play a vital role in the promotion of e’ship here in the bluegrass. Their bully pulpit and the fact that Kentuckians still look to them to do things to foster economic growth means that they can spread this message with ease.

Further, we should evaluate the myriad economic development programs and agencies in KY to see which ones are and which ones aren’t promoting entrepreneurship. We have to let our children know that they should align their college education with the realities of this new economy. And kids should know that lifelong learning is a must. No matter what entrepreneurial endeavor you launch, odds are it will change, possibly even die, in this rapid new economy. This means that business owners must be nimble and flexible and willing to learn new skills.

The dinosaurs are becoming extinct folks, but the mammals are rising in their place. Don McNay gets that: “When people decide they’re not going to depend on a big boss to hand them opportunity, it is a liberating experience. Like our forefathers, we have the chance to thrive in an environment where we control our own destiny.”

Cross Posted at the Kentucky Entrepreneurial Coaches Institute Blog.

What do New Economy Bizs Need? From Jakarta, Indonesia, the Answer

A few people around the world get it when it comes to economic development. They disdain bald protectionism and subsidies and emphasize what's really important to small bizs: access to capital and training in entrepreneurship. From the Jakarta Post, here's one of the leading business experts and economists talking about what Medium to Small (Business) Enterprises, aka MSMEs, really need:

I think the approach used so far in nurturing MSMEs has been inappropriate because most of the programs emphasized subsidies and protection from market competition. This is the wrong way to nurture MSMEs.

In our experience at Bank Mayapada, MSMEs don't need charity, subsidies and excessive protection. What they mostly need is easy access to financing and technical extension services (consultancy) on various aspects of their business operations.

They don't have assets as securities for loans and they are not comfortable with, and sometimes even hate, arduous bureaucratic borrowing procedures.

We design our lending programs specifically to meet the special characteristics of MSMEs. Hence, we don't focus on collaterals but cash-flow or revenue-stream prospects based on their business feasibility. (Ed. Note: Very intriguing idea)

We have developed a body of experienced experts to assess the MSMEs' commercial viability. We have opened what we call the Mayapada Business Partnership in various areas.

These business units are assigned to look out for viable MSMEs, nurture them with financial and technical assistance and constantly monitor their development and their needs as they continue to grow and expand. Each business unit also operates as a complete business advisory center. We decentralize credit assessment and decision making to these units.

[...]

To put it briefly, our approach is market oriented and designed to transfer not only financing capability but, and most importantly, business competence and entrepreneurship to MSMEs.

Here in KY, I think there are two great examples of programs that blend the need for entrepreneurship training and access to capital: the SBDC, which has a longstanding relationship with the Small Business Administration and the KY Innovation Network (I'll admit I'm biased on this one), a program that provides additional access to capital for New Economy companies and the hands on business training that entrepreneurs need.

Can we improve on this? Yes, but this is the template.

EKU Offers Grad Level Course on the New Economy

Great course offering from EKU. If you want to understand the New Economy and New Economy companies' value proposition better (they are different, after all, from the value proposition of many old economy companies), this would be a great way to learn: If you are an entrepreneur, business owner, aspiring to create your own business, or working in an industry that requires entrepreneurial or innovative thinking and you currently hold a bachelor degree, EKU may have the perfect course for you. EKU is offering a graduate level course which focuses on entrepreneurship and innovation. If you would like to understand the ins-and-outs of entrepreneurship on a more intense level to help you gain a better understanding of business development concepts, then read further and contact: Jean Arthur at jean.arthur@eku.edu.

Here are some of the topics the class will cover:

The emphasis in the course will be on the role of innovation and creativity in the creation of new business enterprises, and in the management and marketing of new ideas, concepts, ventures and knowledge. The course will also include case discussions of business start-ups and exercises inside and outside of class to generate innovative business ideas.

The major project in this course will be the creation of a “business concept”. The business concept is a framework for a more extensive business plan that can be used to generate the interest of potential investors in your proposed business. It is somewhat less extensive than a full-scale business plan, but contains the same elements. This concept will be developed by each student, individually, or in a small group (2-3 students, max).

The course will cover the following topics. Some will be covered more in depth than others. Related topics can also be included, depending on the direction the class takes based on specific interests of students.


·The entrepreneurial mind –principles for creating a personal entrepreneurial strategy
·The entrepreneurial process - types of entrepreneurial ventures
·Idea generation, improving ideas, market opportunity analysis, new product promotion
·Methods for screening new venture opportunities
·Social entrepreneurship
·The business planning process - developing a business concept/plan
·Financing entrepreneurial ventures - obtaining debt capital
·Start-up & beyond – managing rapid growth, family e'ship, valuing a business, harvesting
·Intellectual rights - the patent and copyright process.

Cross Posted at the KY Entrepreneurial Coaches Institute Blog: http://www.kybizcoach.blogspot.com/

Art Croft Creative Center Offers Refuge for Artists in Rural Kentucky

When people talk about the new economy today one of the topics you hear discussed quite frequently is creativity. Daniel Pink has written that Americans should cultivate the right side of their brain to flourish in the New Economy: "To flourish in this age, we'll need to supplement our well-developed high tech abilities with aptitudes that are "high concept" and "high touch." High concept involves the ability to create artistic and emotional beauty, to detect patterns and opportunities, to craft a satisfying narrative, and to come up with inventions the world didn't know it was missing. High touch involves the capacity to empathize, to understand the subtleties of human interaction, to find joy in one's self and to elicit it in others, and to stretch beyond the quotidian in pursuit of purpose and meaning."

Richard Florida, one of the leading thinkers on the New Economy, has posited that regions with a strong artsy feel are more likely to flourish than more traditional communities. (A thesis that has been somewhat controversial for some of its prescriptions, but one that nobody disputes at its core: namely that creativity is key to the new economy.)

And in an economy that’s increasingly splintered into a multitude of choices Chris Anderson showed us with his Long Tail thesis that when it comes to entertainment consumers “are going deep into the catalog, down the long, long list of available titles, far past what's available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further from the beaten path, they discover their taste is not as mainstream as they thought (or as they had been led to believe by marketing, a lack of alternatives, and a hit-driven culture).” The upside of course is that cultural niches, like Appalachian art and culture, can now find markets in places that would have impossible previously.

Enter Art Croft Creative Center, a center dedicated to creativity and artists in Carlisle, Nicholas County, KY. According to their mission statement: “Artcroft’s mission is to provide direct support to the artist and the community. The residency program allows literary and visual artists a rural and serene environment in which to work creatively without distractions. Support to the community is via arts programming, collaborations, small venue presentations, and partnerships.” By utilizing the web the center tries to attract artists into the area to stay at their 400 acre rural farm. Once there the artists have carte blanche to work on the projects of their choosing.

The Art Croft is helping create the New Economy by giving stimulus to those right brain thinkers Daniel Pink described as being essential to a modern economy. And in the process they're extending the essential elements of Richard Florida's vision- a trendy, creative community as a basic ingredient for the New Economy- into the central highlands of Appalachian, KY.

A footnote: A founder of the Artcroft, Robert Barker, is a graduate of the Kentucky Entrepreneurial Coaches Institute, a program designed to help provide mentoring support to entrepreneurs in rural KY.

Voice of Appalachia: Appalshop Registers

When Mike Bryant and I first brainstormed to create this site I don’t think either of us imagined we’d have a company registered that’s nearly 4 decades old, but that’s exactly what we got with Appalshop, our first non-insider registrant.

The gang down at Appalshop has been churning out “content”, to use a New Economy buzz word, for decades. From challenging documentaries to lively radio programs these guys are the voice of Appalachia.

And don’t let the fact that they once made a documentary about Richard M. Nixon’s first public appearance after he resigned the Presidency (in Leslie County, no less) fool you… these guys are both high tech and avid world travelers... students of- and sometimes critics of- globalization.

They use the latest tech to deliver the culture of the hills throughout the world and they travel around the world communicating with similarly challenged peoples as those who live in Appalachia. We’re proud to have Herb E and the rest of the crew down at Appalshop on our site.

Three Breathitt County IT Entrepreneurs Register First

Our New Economy Census page is already home to three Breathitt County IT firms. Whodathunkit? THREE I-T FIRMS IN JACKSON, KENTUCKY!

Here they are:

The tech guru behind this project, Mike Bryant and his company Dogwood Technologies (Company web site: http://www.dogwoodtech.net/)

Jarad Fugate, who’s slaved away for months getting this project going. Jarad is Breathitt County’s technology Wunderkind… see, ConnectKy told us so! Jarad is the owner of Clarion Solutions, LLC (Company web site: http://www.clarionky.com/)

And last but certainly not least, fellow Leslie County native Travis Smith’s Prosum Tech (Company web site: http://www.prosumtech.com/)

Check Out Our Web Site Too

It's located at: http://www.ekyneweconomy.org/.

Special thanks to Breathitt County companies Dogwood Technologies and Clarion Solutions, LLC for their donated effort at this site.