Column: Opportunities, Even Now
Even in down economic times, there are opportunities – I’m seeing this in my work with the local food, agriculture and natural resources sectors. In fact, in some cases the economy that is hurting so many of us is making it possible for new businesses to find surplus equipment and commercial real estate at incredible discounts relative to prices of just a couple of years ago.
It’s all about perspective. I can remember a time, just a couple of years ago, when there was a high level of consensus among economists and analysts. Unemployment was much lower then, and the stock market was strong. I even heard of people borrowing money from the bank to purchase stocks with the firm belief that they couldn’t lose. The same view of the marketplace convinced people to purchase highly priced real estate based on the belief that the escalation of land and property values would extend far out into the future. Experts, analysts, and lay investors all said the ink blot looked like a bull.
So, here we are in 2009. Most people have become very conservative when it comes to spending and investment. News reports offer the interpretation that people are building cash reserves based on the possibility that they, too, could join the ranks of the unemployed. U.S. government institutions are pouring cash into the marketplace because we, the consumers, will not. As we watch the government fill the gap that has been created by our sudden frugality, we can gain an appreciation of just how affluent we used to be and what it looked like to the rest of the world when they watched us transform our paychecks into consumer goods. Spending during the fourth quarter of 2008 clearly illustrated that the spending spree is over for now.
The question is, when we look at the marketplace now, is there consensus that the ink blot looks like a bear? Surprisingly, the answer is “no.” Only in a capitalist economy could plummeting asset values increase the flow of adrenaline within certain sectors of the marketplace. At any point in time there are businesses which are doing well and those which are not. Businesses with strong cash reserves have been snatching up assets at bargain prices. Also, employees in the marketplace motivated by fear, anxiety, or optimism are planning and launching new ventures.
Washtenaw County communities and individual entrepreneurs can gain and learn from innovative initiatives in nearby communities. In Detroit there are two emerging bakeries, formed by faith communities, designed to create jobs for people coming out of prison through the production of baked goods.
On the Rise Bakery is affiliated with the Capuchin Soup Kitchen of Detroit. What started out as a project that used soup kitchen facilities during off-hours has blossomed into a new standalone bakery. Down Home Cookin is a project of New Creations Community Outreach. Joseph Williams, executive director, turned from life as a drug dealer, went on to earn a master’s degree from Wayne State University, and now works to help others make successful transitions from prison life to full community participation. His bakery focuses on production of sweet potato pies and pound cakes using traditional African-American recipes.
Church congregations have lent strong support to these ventures, purchasing baked goods to meet their needs as consumers while also investing in the rebuilding of broken lives. Michigan has approximately 50 prison facilities in addition to local jails. Jail and prison populations have been chronically high, resulting in budget overruns and a revolving door phenomenon that is often cited as unacceptable. Starting effective vocational centers through new food system ventures housed within the private sector is a cost effective, mutually beneficial strategy for meeting needs of regional consumers and of those coming out of prison. Starting new ventures of this type will never be more affordable.
Cooperative business structures are relatively uncommon in our region. People’s Food Co-op in Ann Arbor and the Ypsilanti Food Co-op are two examples of successful local cooperative ventures. During difficult economic times, normal business overhead expenses can become deadly to otherwise healthy enterprises. That’s why several emerging businesses have approached Calder Dairy, a strong and respected food system landmark in this region, to experiment with the formation of a marketing cooperative of sorts.
The emerging businesses gain strength by associating with Calder’s brand recognition. Calder gains the advantage of being able to add a roster of new products which are not widely available in regional grocery stores. Participating businesses include Bizzy Lizzy Bakery, Tiger Bakery, and Gwen’s Cobblers. This approach to business improvement keeps all participating ventures responsive to consumer needs and interests during a period when costs of innovation need to be closely managed.
Mike Score, an Ann Arbor resident and agricultural innovation counselor with the Michigan State University Product Center, can be reached at score@msu.edu. The MSU Product Center provides existing businesses and emerging food system entrepreneurs with business counseling services. MSU is an affirmative-action, equal opportunity employer. MSU Extension programs and materials are open to all without regard to race, color, national origin, gender, gender identity, religion, age, height, weight, disability, political beliefs, sexual orientation, marital status, family status or veteran status.
Recessions often offer an opportunity for entrepreneurs with a dream. When the security of a steady job looks illusory, ‘being on your own’ looks less like a risk, and more like controlling your own destiny.
Recently, the Michigan Department of Agriculture issued a report that noted that the ONLY business in Michigan that is currently growing is associated with agriculture and food. Not bad for an industry declared ‘dead’ in Michigan not all that long ago.
Keep up the good work!
Thanks Susan. Michigan agriculture will remain in the shadows of other industries, like the auto sector, for some time to come. In the industrial mid-west agriculture is viewed as inferior and outdated.
Eventually regional leaders will explore the potential of the agri-food sector for job creation and regional improvements in quality of life. There are exciting new initiatives in urban agriculture which could revitalize existing brownfields and create work for the chronically unemployed.
It has been a privilege to work with the businesses featured in this article. They are creating jobs while traditional employers have been laying off and shutting down.
Could not have been worded better Mike. There is deffinitely a inverse relationship between the manufacturing and agricultural economies. As a local agricultural entrepeneur I noticed this relationship during the 90′s when prices for our producst were below fair market value and land was hard to secure. Now ten years later what a difference. New market driven opportunities exist for our products at fair market values and land is easy to secure. Agriculture is our best industry now and is the industry that is keeping Michigan afloat and providing the needed tax base. Opportunities to market Michigan products are still growing.
Very true Mike.
Some how many thought they would always have jobs and pay checks, money would never be an issue? A few years ago a really dumb movie (sorry that is my opinion) Fun with Dick and Jane came out; the characters felt they were untouchable. They were living the American Dream until one day neither of them had a job. They became desperate; I think the best scene in the whole movie is when they are showering using the neighbor’s sprinkler system. It is ironic the things we take for granted like our land and natural resources. I heard Granholm is thinking about letting the federal government take over our water quality laws. We need to get on the bandwagon and speak up. Michigan needs to keep control of their resources.
Susan had a good point when she said agriculture is an industry in this state that is growing and will always be overshadowed by the auto industry. That is somewhat our fault though we (farmers or farmers’ daughters) just don’t use our outside voices enough when speaking about the industry. We need tell others about what we are doing or no one knows.
I had a college professor that once said, “Sheila if you don’t tell people about your programs no one will know and your funding will end and you will be out of a job.” I spent 11-years teaching and over those 11-years it was my goal to get a monthly article in the local newspaper telling what we were doing in the classroom. While other Home Economic Classes (Family and Consumer Science Programs) were being cut, my programs continued to receive funding.
Mike your articles are vital for the growth of the food industry in our state. However, it is also the responsibility of “ALL” people in the industry to write articles, do press releases, promote via the internet do radio and television programs. Many media outlets are looking for stories and those who use their outside voices are the ones being heard. We need to out volume the auto industry.
The challenges of doing business in this economy will make you better at what you do. The level of difficulty bar has been raised, but the opportunities are there. The public has recoiled in spending making buying decisions on purpose instead of impulsive. People still want a good value in their food purchases but also want trust products are safe.
Being the various out breaks of Salmonilla from the coperate giants, local makes even more sense.
This econmic atmosphere will shake out the weak, disorganized, and ill prepared. The strong-willed belivers who are dedicated with well developed business plans (meaning, doing the do diligence from knowing your customers, costs,ect. to getting a return on investment) will not only get going, but more importantly survive.
Example: in 2000 their were about 18 wineries in the state. Gov. Granhlom’s Agri-Tourism development program aided in the developement of Wine Trail Association with matching grant money. Inovative processing was also eligble for grant money. The net effect in 2008 was an increase in wineries to 45 +/- and many more vineyard arces developed. Michigan is growing some world class wines now. Older previously exhisting wineries are enjoying a more stable business and expanding. This is a good example of State Government helping the start ups with a collective marketing effort. Not all wineries get their grapes from Michigan growers but more and more are.
I knew long ago that the only job security I had, was me. Not all can live that way. But those who try and succeed enjoy a wonderful adventure.
Being associated with Mike Score and MSU has been a privlege and very helpful to me. A reular diet of articles supporting agribusiness and educational opprotunities for everyone is neccesary to stay abreast of the challenges. Mike & MSU help greatly in those areas.
This reminds me of the saying, “Everything old is new again.” If we think back in our state’s history, a number of today’s major corporations came into existence or were built up during the Great Depression, when Michigan entrepreneurs like Henry Ford, Will Keith Kellogg and Herbert Dow were experimenting in their garages and kitchens.
These folks didn’t start out as huge conglomerates–they were people who thought they could build or make items that people would want to buy, even as the economy crumbled around them. They, like the folks mentioned in this article, persevered, believed in themselves and built businesses that are still around today.
Though the world has changed in immeasurable ways since the 30s, that spirit of entrepreneurialism is still in the folks mentioned above and will be with them as they help build a new economy for the future.
i have nothing to say on the topic, but i do appreciate you guys inputs I am a young future entrepreneur and i’m taking in as much knowledge as possible and i learned something new just from reading you guys comments.