Schafer: Invest In Minnesota Small Businesses, This Is Where The Economic Recovery Is Boiling
There is an old nugget of wisdom that goes: the only thing that generates wealth for a business, city or region is producing more than it consumes.
Many more pacemakers were produced here than Minnesota patients ever needed, and pioneer Medtronic became one of the companies that led the region to higher standards of living through the manufacture of his pacemakers.
Political leaders will eagerly praise small business owners, but every economic development program of the past 40 years seems to target a different Medtronic.
This pursuit of big business – or at least great potential – can be one of the reasons small business owners are often underestimated. No one is really excited about another burger restaurant or a landscaping contractor. They often cannot “scale” which means to get much bigger. No region is really moving forward if all they do is feed on burgers and plant each other’s birch trees.
That’s why a startup with nothing but a free software application can always get more attention than a landscaper with 50 employees.
We in the region really want more businesses that can get big, said Louis Johnston, professor of economics at St. Benedict’s College and the University of St. John’s, but there is still more to do. .
He explained that local machine shops and other small vendors solved many manufacturing and design issues for companies like Medtronic, which helped fuel the Twin Cities‘ growth in prosperity in the second half. from 20e century.
The value of small businesses is confirmed by research which convincingly shows that chasing chimneys – trying to attract a big employer with taxpayer grants – is often a game for losers.
A region will be better off if its people work for themselves instead.
While state and local governments want to use taxpayer money wisely, they can provide these entrepreneurs with services such as technical services or invest more in training the entire workforce.
We must also stop thinking only about what these small businesses are doing for our regional economy and appreciate what they can do for their owners.
It has long been known that immigrants are more likely to start businesses than native-born people.
Starting a successful business is hard work, of course, made even more difficult if you started the business out of necessity or if you are doing it in a second (or fourth) language.
This is one of the reasons the Federal Reserve Bank of Minneapolis added a section to its regional analysis of economic conditions which focuses on businesses owned by women and people of color.
The effort dates back a few years, when “we were interested in highlighting a little more and understanding the contributions of immigrants a little more, not only in the Twin Cities but in many of our small communities,” said Joe Mahon, the Minneapolis regional director of Fed outreach.
Service companies of all kinds were crushed during the COVID-19 pandemic as people stayed at home – and didn’t want other people in their homes. And the bad news has only been worse for businesses owned by women and people of color.
A greater proportion of these entrepreneurs worked in businesses that offered in-person services, such as serving food. They were less likely to have a financial cushion. They had more trouble getting bank loans the Paycheck Protection Program or other financial aids because many did not have a relationship with a commercial bank.
Mahon said the Minneapolis Fed could not be sure which business owners had stopped responding to its surveys because they had closed.
There are indications, however, that new business creation has increased, including in areas most severely damaged by the unrest in Minneapolis last year. It makes sense that much of that startup activity could be made up of owners who went out of business last year by simply starting over.
“East Lake Street will be back,” said Pinky Patel, co-owner of the Elite Cleaners of Minneapolis rebuilding earlier this fall. “We are hard working immigrants who need to work.”
This is the kind of courage you would expect from people who have decided to go into business. And that may be the reason for appreciating small business owners even more. As clients, we have come to depend on their courage, or whatever made them keep working and adapting, for a few very difficult years.
That was the purpose of an email that arrived just before Halloween, as a friend shared his COVID-19 vaccine recall confirmation from a Thrifty White Pharmacy. A grateful new customer as well as a keen business watcher, he wondered why he had never read much about Plymouth-based Thrifty White, which has virtually all of its more than 50 Minnesota stores outside. of the metropolitan area.
It reminded me of my own COVID-19 booster shot, hand-delivered by John Hoeschen, the owner and pharmacist of an even smaller retailer in Minnesota. His St. Paul Corner Drug, a single store next to Macalester College Stadium, cannot exceed 1,200 square feet. It was closed to foot traffic last year as it is difficult to stay 6 feet from anyone in such a tight space. Staff called orders and walked them outside.
During the major spring vaccination campaign, Hoeschen had the entire front of the store cleared of shelves and merchandise to make room for stalls where customers could be vaccinated.
In this traditional pharmacy, there was nothing old-fashioned about the nifty online scheduling app that customers used to make appointments. The job of filling other prescriptions didn’t slow down, and the store remained on staff to continue vaccinating throughout the day, with the owner himself happily strutting his weapons.
When I stopped there last month to receive my reminder, part of the store had been put back in place, but the soda fountain counter was still busy with the vaccination operation. No ice cream cone was available that morning.
Hoeschen and his small team got over it all.
We again highlight the work of entrepreneurs in this country. Business media publish almost daily updates on billionaire entrepreneurs funding their own personal space race, for example, and make fun of the net worth. Now, God bless their greatly undersized hearts, they’ve really accomplished a great deal.
But if you want to celebrate the contribution of American entrepreneurs, better candidates are right down the street. Their local businesses may well lead the recovery.
More from this series
A comprehensive look at how the COVID-19 pandemic has changed the landscape for small businesses in Minnesota.