Economic development

Blue Ridge Crossroads: Best place to start a business in the U.S.?

Submitted by acohill on Wed, 10/01/2008 - 16:32

The Blue Ridge Crossroads region in southwest Virginia may be the best place to start a business in the United States, if the results they rolled out this week are any indication. Three years ago, the region's leaders started an aggressive program to diversify their economic development strategy to include more focus on entrepreneurs and business start ups.

In less than three years, Carroll and Grayson counties and the City of Galax (the three local governments that comprise the Blue Ridge Crossroads region) have helped start 85 new businesses. Those businesses have created 391 new jobs, and there has been more than $19 million in direct capital investment, with an estimated total economic impact of nearly $80 million.

The EDA is building a regional high speed fiber and wireless network that will eventually provide service to every home and business in the region, so that entrepreneurs can start businesses from home and have access to high performance, business class telecom services, including VoIP phone service and Internet access. In 2009, as part of that effort, fiber will be installed at the three existing business parks in the region.

The EDA is also building a major new business park close to two of the busiest interstates on the East Coast (the intersection of I-81 and I-77), and planning is already underway to have fiber and wireless services at that location.

A key success factor in spurring new business development has been Crossroads Institute, which took an old, empty big box building and converted it to a world class business incubation and higher education facility. The facility is home to dozens of public and private entities, and the availability of high speed Internet access has been important for attracting jobs and businesses.

Jobs creation and broadband: a case study

Submitted by acohill on Mon, 09/22/2008 - 08:04

Perhaps the most frequently asked question we receive is, "How will broadband help our local economy?"

The answer is, " ways you can't even imagine."

Broadband and the expansion of connectivity via both fiber and wireless is creating entirely new businesses and jobs that simply don't appear in the strategic plans of most economic development agencies.

A case in point is Trism, which is a $5 game for the iPhone. Trism's popularity has netted the single developer $250,000 in revenue in just two months. He is now seeking investment capital and is making plans to hire new workers and to expand substantially.

What enabled this? New technology in the form of the iPhone, sophisticated new software written by Apple to deliver software like Trism cheaply over the network, and the network itself.

I have not been able to verify this, but I'm willing to bet that Trism was developed at home, and that that home has a broadband connection.

eBay has said that it believes more than 500,000 people in U.S. make a full time living from buying and selling on the auction site. That's a whole industry, and virtually of those jobs represent home-based workers. The economy is changing, and new jobs and businesses are emerging wherever affordable high speed broadband is available.

9% of workforce already working from home

Submitted by acohill on Wed, 08/13/2008 - 09:07

A new study out from Forrester says 9% of the workforce is already working from home for their employer, and another 22.8 million are running their own businesses out of their home. This adds up to a major demographic that is turning neighborhoods into business districts.

The report also highlights what Design Nine has been telling communities for a long time--you have to have business class broadband services in residential areas or you are choking off economic development. A major reason for communities to get involved in broadband infrastructure is to ensure the community can compete economically. If people can't work from home in your town, businesses and workers are going to go elsewhere. In other words, do you want to lose 10% to 20% of the jobs in your community because of a lack of broadband in neighborhoods?

Did quality of life win Volkswagen to Chattanooga?

Submitted by acohill on Tue, 08/12/2008 - 08:34

According to Suzanne Morse, a long term commitment to quality of life issues in Chattanooga won the city a coveted Volkswagen manufacturing plant, which is estimated to be worth up to $1 billion in investment for the area.

Is the global economy over?

Submitted by acohill on Mon, 08/04/2008 - 08:07

An article I saw in the local paper about hair dryers and a blog article from local curmudgeon on the high cost of shipping furniture both suggest the same thing: we may be very near the point (or already at the point) where making everything in China and shipping 7,000 to 10,000 miles is no longer economical.

The note about hair dryers was in response to a question to the paper about the availability of U.S. made ones. The reply indicated a firm had just moved its manufacturing facilities back to the U.S. in part because of high shipping costs. The manufacture of furniture is even more interesting, since the wood for that furniture often comes from U.S. forests. So we ship the raw materials 10,000 miles, then ship the finished product another 10,000 miles.

But the global economy is not going away; it is simply going to shift resources around to find the lowest cost of production. It may be that the U.S. will be able to compete again. Communities with broadband will have a leg up, because manufacturing firms are not going to place factories in places where they can't receive orders 24/7 reliably. Global businesses want redundant telecom providers, redundant cable routes in and out of the community, and redundant electric power feeds (from more than one substation). It's an easy checklist for communities:

How many of these can your community check off?

Suburbs down, Main Street up

Submitted by acohill on Wed, 06/25/2008 - 09:10

This article provides more data on the fast-shifting but likely permanent change in how we decide where we want to live. We are probably seeing the biggest shift in housing since the end of World War II and the rise of the suburb. Suburbs are not going away overnight, but the cost of commuting to and from often rural subdivisions has caused sharp drops in the value of homes in such locations, and there will be a counterbalancing increase in the value of homes closer to work and shopping--welcome back, downtown neighborhoods.

Smart communities will aggressively begin rehabilitation of neglected older neighborhoods--street and sidewalk repairs, park improvements, fiber to the home--as this will help draw workers and families that want to reduce or even eliminate commuting costs. It also suggests a tremendous opportunity to finally bring back Main Streets, which have been struggling since the sixties as commerce moved out to the edge of town.

The "new" Main Street will be focused primarily on business and professional companies and food/entertainment--things to do after work and places to eat for business professionals. Class A office space on Main street and Main Street business incubators will draw businesses looking for "quality of business life," where walking to work, walking to lunch, and easy access to professional services (copy services, banking, accounting, legal) are all within a few steps of the office.

And as always, downtown fiber will make this work.

Why VPNs are important to communities

Submitted by acohill on Mon, 06/09/2008 - 07:11

VPNs, or Virtual Private Networks, are fast becoming a major issue with respect to broadband. A VPN is a way for a remote user (e.g. from home, traveling) to be connected to the corporate or business network as if he or she was in the office. It gives the home-based worker or business traveler complete access to all the documents and services he or she would normally have sitting at their desk.

But here's the rub: VPNs work best over high performance, well-designed broadband networks. I'm on vacation right now, and have to connect through a wireless signal. The VPN barely works. I can connect, but transferring files is painfully slow, and I keep getting time outs.

As more and more people start working from home part time to avoid the high cost of driving, community broadband efforts will begin hearing more and more about VPNs. If we are going to save energy, community broadband networks have to support business class connectivity and bandwidth. Neighborhoods are going to be business districts in the Energy Economy.

Small businesses creating more jobs

Submitted by acohill on Sat, 06/07/2008 - 08:58

Despite high oil prices, small businesses created 61,000 jobs in May. Too many communities discount small businesses in their economic development strategy, and fail to include small businesses needs in their broadband planning. Big industrial companies get lots of attention, but those firms are the ones shedding jobs. Fast, nimble small firms can adapt more easily to changing economic conditions and changing customers needs.

Broadband Properties '08: Ft. Wayne leverages fiber

Submitted by acohill on Wed, 04/30/2008 - 09:55

Graham Richards, the former Mayor of Ft. Wayne, Indiana, spoke at the Broadband Properties Summit about why Ft. Wayne pushed fiber to the home. Some of the services and benefits included:

A green affordable housing initiative cut monthly energy costs for lower income families, and the broadband network was used to monitor energy use.

The network enabled live video monitoring of latchkey children whose parents had to work. Parents could have high quality video chats with their children as soon as they arrived home in the afternoon.

Local schools were able to offer enhanced distance learning opportunities to their students, including afternoon and weekend mentoring with tutors (enabled by the fiber network).

Their vision was fiber everywhere: a community broadband network dedicated to equality of opportunity and universal access.

They began a pilot initiative to have the city use hybrid plug in vehicles to reduce fuel and transportation costs for city workers.

They set a goal of saving 5% of the city budget through IT/broadband and green strategies--helping to conserve taxpayers dollars.

While Richards was mayor, he was able to turn the economic growth of the city from a deep loss of jobs to a dramatic turnaround in jobs creation and new businesses, and he attributed it to setting a vision, sticking to it, and broadband.

Broadband Properties '08: Fiber is part of the ED toolkit

Submitted by acohill on Mon, 04/28/2008 - 14:47

Dan Rogers, President of the Kendall County, Texas Economic Development Corporation, just spoke at the Broadband Properties Summit here in Dallas-Fort Worth. Kendall County is a rural area between Austin and San Antonio, and is part of the Texas Hill Country--a beautiful area of mostly very small towns.

Kendall County is served by a rural telecom coop that is deploying fiber to the home, and Rogers indicated it has had a significant impact on economic development. He now views fiber as a relocation "eliminator," as he termed it, meaning that communities without fiber services are eliminated early in the relocation process.

Rogers also said something interesting about retention. He indicated he viewed fiber as part of Kendall County's retention strategy. Businesses already in the region are telling him that they are able to stay because the high capacity fiber services are enabling them to get bigger contracts with companies that expect them to have the same kind of broadband connectivity that is available in bigger metro areas.

Rogers also talked about "big broadband" and "little broadband." He viewed "little broadband" as areas with copper-based DSL and cable modem services, and noted that he saw Kendall County as having a significant advantage because they had "big broadband," meaning fiber-based broadband.

The notion of "big" and "little" broadband is a useful shorthand for cutting through the fog of just what kind of broadband is available in a community, and could be a useful marketing slogan: "Bring your business to our community, where we have BIG broadband."

When an audience member asked Rogers what he would tell elected officials who are reluctant to make an investment in community-wide broadband, he had sobering advice: "Tell them they won't be able to bring in the kind of businesses they want."

Find your spot

Submitted by acohill on Sun, 04/06/2008 - 10:04

Find Your Spot is an online relocation service that helps business owners and prospective employees find a place to live that matches personal preferences like the weather, arts & culture, recreation, education, the cost of living, health care, and the local economy.

Here is a key quote from the FAQ portion of the site:

Thanks to advances in technology and the economy, more people than ever are choosing where to live based on the factors that really matter to them — the weather, schools, recreational activities, cost of living, and general quality of life.

Notice that they are saying job seekers and relocating businesses are interested in personal and life style factors, not the availability of water and sewer in the industrial park. A community that is offered as a pick is going to be much more likely to get someone to move there if that community has a lively community portal, lots of recently updated community and civic Web sites, and attractive government, Chamber, and economic development Web sites.

Who in your community is responsible for the long term strategy of ensuring the community or region looks great on the Web? What specific activities are they doing regularly to ensure a job searcher or a relocating business thinks, "This community looks like a great place to live and to work?"

Best small places to live and to work

Submitted by acohill on Wed, 04/02/2008 - 08:18

In a just released Forbes survey, Blacksburg, Virginia is ranked tenth in the nation as one of the best small places to live and to work. If you live in a small community, it is worth spending some time reviewing the Forbes study. Of the nine factors they use to rank communities, four of the nine are related directly to quality of life. These factors are Culture and Leisure, Crime Rate, Educational Attainment, and Cost of Living.

Among the other factors, Cost of Doing Business is one that any community can work on quickly. Our work at Design Nine takes us to small communities throughout the United States, and one of the most glaring problems I see over and over again is the lack of good "Class A" office space in smaller towns and regions. Too many communities are still trying to bring retail back to Main Street, when they should be rehabbing storefronts and second floor space for small businesses and entrepreneurs.

When Norton, Virginia rehabbed an old downtown hotel for high tech start ups, including affordable fiber to the building, Main Street blossomed as the office workers in the building shopped and ate downtown. The spacious lobby of the building regularly hosts community dinners, weddings, and special events, so the investment does double duty--how many weddings have been held in the typical industrial park incubator building?

The biggest mistake a small community can make these days is to put too much emphasis on business and industrial parks far from traditional downtowns--by making modest investments in high quality office space in traditional downtowns, you get a much bigger community and economic development impact. And as always, fiber has to be part of the mix.

Fiber pulls relocating businesses

Submitted by acohill on Fri, 02/22/2008 - 07:55

This article [link no longer available] from a rural update New York paper illustrates the power of fiber. The Adirondack region of upstate New York has a regional community fiber backbone that is pulling companies to the region--a region that would not give a second thought without the community fiber.

Fiber is basic economic development infrastructure. It is not a luxury for business anymore, it is a necessity. Communities that have competitive fiber today, or even have a plan for getting some in the next twelve to eighteen months, have a distinct competitive edge over communities that do not.

One million dollars an hour

Submitted by acohill on Wed, 02/13/2008 - 08:07

There are still a lot of community leaders who doubt the importance of broadband, but one city official I spoke to earlier this week said they had a Fortune 500 company that told him the firm loses a million dollars an hour for every hour their Internet connection is down. This firm is urging the city to help get additional fiber cable paths in and out of the community so those kinds of outages can be avoided.

Reverse job fair

Submitted by acohill on Mon, 02/04/2008 - 08:59

A group of economic development and technology organizations are holding a reverse job fair tomorrow (February 5th) in Blacksburg. A traditional job fair has employers at booths, and job seekers walk around looking for a job. In this reverse job fair, graduating students (mostly from Virginia Tech) are at tables, and the employers walk around.

This is an interesting idea born out of the understanding that many workers are now picking a location and lifestyle first and then looking for a job. The advantage to employers who attend is that there is a room full of prospective workers who are interested in living and working in the area.

Digital Cities: "My business can't survive without broadband"

Submitted by acohill on Wed, 01/23/2008 - 12:48

Galen Updike, with the State of Arizona, opened the Digital Cities Expo this morning, and told of speaking to a woman who was trying to run a business out of her rural home.

She said, "You know, I can do without public water--I can have my own well. I can do without public sewer--I can put in my own septic system. I can do without a paved road to my house. I can even do without electricity--I can generate my own. But without Internet access, my business will fail."

And that story illustrates the relative importance of broadband with respect to economic development.

465,000 new businesses every month

Submitted by acohill on Tue, 12/18/2007 - 14:28

A new report by the Kaufmann Foundation indicates that 465,000 new businesses are being created every month in the United States. This probably represents a million jobs or more being created by small businesses every single month. The growth in start ups demonstrates why a community or regional economic development strategy has to include not just business attraction as a strategy, but also business creation.

Show them the numbers

Submitted by acohill on Tue, 12/18/2007 - 14:08

Here is an interesting analysis done by Stuart Mease, who works for the City of Roanoke, Virginia. Mease's job is trying to recruit young people to live and work in the Roanoke area. He has provided a cost of living comparison between Roanoke and some of the bigger towns and cities that are more likely to attract younger workers.

Roanoke compares very favorably; you can make less money and still live as well or better than you could in some bigger towns. Most smaller towns and cities would also fare very well with this kind of analysis, and could be an important factor when trying to convince a business to relocate to your area. The ability to pay lower salaries but still offer employees a great standard of living could be very attractive.

Rural America: 40% less costly

Submitted by acohill on Mon, 12/03/2007 - 09:24

Here is an article about how Northrop Grumman is moving jobs to small towns and cities. The company reports that labor savings can be more than 40%--a substantial amount that pays off year after year, and more than covers the initial cost of moving facilities. One of the locations cited is the small Virginia town of Lebanon. Lebanon is a small town located deep in the heart of the Blue Ridge mountains, a good 30 minute drive from the interstate.

Why did Northrop Grumman put 600 jobs there? Lebanon had participated in a regional fiber project that assured Northrup they would have the broadband connectivity the firm needed to get its work done.

Hat tip to Ed Morrison's excellent economic development blog.

Affordable housing draws workers

Submitted by acohill on Mon, 12/03/2007 - 09:18

In yet another indication that quality of life is increasingly affecting economic development, a HUD newsletter had the following snippet:

“California has begun losing college-educated residents, on net, to other states, in large part because of the high cost of housing,” Virginia Postrel notes in Atlantic Monthly. “The South’s population growth since the 1980s has come from the lure of cheap housing created by liberal permitting policies, according to new research by the Harvard economists Edward Glaeser and Kristina Tobin. By lowering the cost of housing, these policies give residents higher real incomes compared with similarly paid workers elsewhere – a strong incentive to move, even if you don’t like bugs or hot summers. The mobile middle class gravitates to the cities where housing is affordable.”

Smaller cities that have affordable housing and affordable broadband would seem to have a valuable edge over communities that can't offer one, the other, or either of them.

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