Biz Features

Small is Beautiful: Are Community-owned Businesses Viable?

by . March 2nd, 2015

The often-repeated tale of big businesses moving into a small town and displacing the lives of those who live there is one that everyone’s heard.

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What’s less common though is hearing of these communities fighting back, not by asking the courts to stop these big businesses — but by competing directly against them.

When residents of Saranac Lake, NY found out that Wal-Mart was moving into town, many were actually quite relieved. A few years earlier, in 2002 the local Ames department store went out of business thanks to its holding company’s bankruptcy. This meant that most of Saranac Lake’s 5,000 residents had to drive 50 miles away to Plattsburgh to buy basic necessities.

But not everyone was enthusiastic about the idea of Wal-Mart building a 120,000-sq foot (11,148 sqm) supercenter in the middle of their close-knit community. Everyone knew everyone else, and a supercenter would likely be the end for many local businesses as had been the case in thousands of other communities throughout the United States.

Instead, a small group of locals decided to raise the money to open their own department store. To raise the capital, shares were sold to Saranac Lake residents at $100 each, to allow them to “take control of our future and help our community,” said Melinda Little, a Saranac Lake local who helped spearhead the idea. “The idea was, this is an investment in the community as well as the store.”

Berkeley_Square_Historic_District,_Saranac_Lake,_NY

Despite the mid-2000’s recession and the comparatively small population base to draw shareholders, the organizers reached their $500,000 goal after five years. Around 600 locals pitched in an average of $800. The 4,000 sq ft (471.6 sqm) department store finally opened on Oct. 29, 2011 at 97 Main St, Saranac Lake.

Aptly named “The Community Store“, the community-owned enterprise stocks items based on what community members feel they need, and aims to provide reasonably-priced alternatives to what would normally be found at supercenters. Wal-Mart ended up not building their supercenter, though no reason has been given to date.


Community-owned businesses in other contexts


However, The Community Store isn’t the only store of its kind. Saranac Lake residents were inspired by a similar store in Powell, Wyoming that was created out of a similar dilemma. This business model is quite familiar to Western Europeans for a variety of enterprises, from stores to utilities.

Lambeau_Field_-_November_14,_2011

Perhaps the most popularly cited example of a community-owned enterprise is the Green Bay Packers– the only community-owned professional sports team in the United States. If you’ve ever been to Green Bay, Wisconsin, you’ll know that there’s nothing much going on there as far as industries go except cheese and Packer-mania. The commerce Green Bay’s football team rakes in for the community is nothing short of astounding,

As a publicly held nonprofit, the Packers are also the only American major-league sports franchise to release its financial balance sheet every year. Now compare how many improvements they’ve made for their home town compared to other bigger pro sports franchises that whine and blackmail for new stadiums subsidized by their home cities while keeping their books close, and you can draw your own conclusions.

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Community-ownership business models ranging from coops to community-owned corporations have been used successfully in a wide range of enterprises, from bakeries like Clare City’s Cop’s and Donuts, to solar power providers like Solar Shares in Sacramento.

Community-owned banks are an increasingly common feature throughout the world (not in the U.S., though, as private equity crowdfunding is not yet legal). Funding sites like Kickstarter and Indiegogo also have a huge community aspect to them, especially with regards to more esoteric and localized concepts.


Merging profits and sustainability


Entrepreneurship doesn’t necessarily have to be about just one business’s interests. Time and again, community-owned businesses have shown that it’s possible for smaller groups to compete against big business, and still retain the characteristics that define the people who started them.


Possible downsides


  • Limited/highly localized reach for some business models.
  • Resources tend to be limited to what the specific community could put up.
  • Depending on the context, may be more prone to politics or “too many cooks” syndrome. However, this holds true for most large organizations, the degree depending on how they’re run. Compared to a single proprietorship however, they will tend to be bulkier and slower to act.

In a nutshell, yes, Community-owned businesses are viable in plenty of contexts, and they have been for years. Why we don’t see enough of them perhaps reflect on our motivations as business owners and founders.

As the world becomes smaller, perhaps it’s in our new-found connections with each other that communities will be better able to take action not just to defend themselves — but to truly compete on a global scale.

 

Image credits: All photos under Creative Commons licenses via Wikimedia Commons


Love idea of starting a community-owned enterprise in your area? Hate it? What do you think? Comment below!


 

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