Most time and money in economic development today is invested in strategies to “attract and retain” large, global companies. A growing body of evidence suggests, however, that these “deals” offer few if any benefits that might justify the high public costs. At Cutting Edge Capital, we believe a better approach is to grow a competitive, diversified economy grounded in great local entrepreneurs. Communities prosper when they:

• Maximize the percentage of jobs in small, locally owned businesses, because compared to outside-owned companies, local businesses spend more money locally, and create more income, wealth, and jobs.
• Maximize the diversity of local businesses that can competitively meet an expanding number of local needs with local goods and services, with an expectation that many of them will naturally expand into national and global markets—and do not need subsidies to get there.
• Nurture and replicate “triple bottom line” businesses that are profitable for shareholders, employees, and the environment.

Our Practices

Our approach at CEC is to help a community nurture local businesses through the six P’s below:

Planning – By measuring where it is losing wealth to unnecessary imports, a community can develop a plan for mobilizing local talent and assets to plug those leaks with new local business.

People – By identifying and nurturing entrepreneurs locally–in the schools, in home-based businesses, among retirees–a community can generate the leadership for more and better local businesses.

Purse – By connecting entrepreneurs to local capital, whether loans from credit unions or investments from local stock markets, a community can help finance the expansion of the local business sector.

Purchasing – A community can help its local businesses flourish with concerted buy-local efforts led by consumers, businesses, and government agencies.

Partners – By helping local businesses treat one another, not just as competitors, but as partners—through a local-business alliance or as part a sector-specific network in food, energy, or finance—a community can boost the competitiveness of the entire sector.

Public Policy – By rolling back the laws, regulations, and rules at all levels of government that create competitive disadvantages for local business, a community can create an environment where local businesses thrive.

Consulting Client Examples

Davidson County (NC) – Working with a nonprofit economic-development organization, Davidson Vision, CEC helped this once prosperous textile and furniture economy reimagine its economic future. We prepared a leakage analysis for the county, proposed several promising meta-businesses, and are now choosing one for blueprinting and capital-raising.

Cabarrus County (NC) – We are working with the county council and its new sustainable-development advisory council to engage in a public process to gather data on the economy, identify assets and leaks, and present a long-term plan for reviving the local business sector.

Metro Cleveland (OH) – Winning a competitive bid over a grant from the Cleveland Foundation, we prepared an extensive analysis of the opportunities and challenges for the region as it moves toward food localization. Our ultimate study, called “The 25% Shift,” proposed, among other things, a Local Food Authority that would issue tax-exempt municipal bonds to finance local-food businesses.

Community Food Enterprises – Partnering with the Wallace Center for Sustainable Agriculture, we undertook for the Gates and Kellogg Foundations a $400,000 study of 24 exemplary local food businesses around the world. The study is now frequently cited to show the ways in which the economies of scale in food businesses are shrinking.

Rural Capital Barriers – We are currently completing another $400,000 study for the Kellogg Foundation on the three largest economic-development programs in 15 rural states. Our findings are that 90% of the programs spend most of their money on out-of-state business—and in most cases more than 90% of the funds.

Other Leakage Studies – We have steadily been developing and fine-tuning our methodology for measuring a community!s balance of trade. We have now performed studies for Carbondale (CO), Central Appalachia, the Hudson Valley (NY), the Katahdin Region (ME), Martha!s Vineyard (MA), Spokane (WA), and St. Lawrence County (NY).

Other Food Studies – Working with the Bioneers, we prepared an economic analysis of the job opportunities that would come from increased food localization in New Mexico. We performed similar calculations for the Fair Food Foundation in Detroit.

Classes – We have taught a 2-3 day workshops for grassroots-led economic development in the Hudson Valley (NY), Yellow Springs (OH), College Park (MD), and Whidbey Island (WA).