A number of small and medium-sized communities are growing in population and attracting businesses because they started to invest in their people and their place differently a while ago. Thrillist even started writing about the best small towns with awesome downtowns to move to.1 This new reality requires a combination of placemaking investments, place-based economic development, and inclusive ecosystem building. In nontechnical terms, it means investing in places, people, and how they connect. That is how we change our economic development model to create strong, inclusive, local economies for the long-haul.
Three fundamental tenets of this new economic development model are core to this work:
1. Investing in the place is key to economic strength.
2. A unique identity of the place is essential to long-term value.
3. Social connections are essential to economic resilience and the place’s “stickiness.”
And small-scale manufacturing businesses help us achieve that model.
Investing Is Key to Economic Strength
Small-scale manufacturing businesses are wonderful in storefronts. They draw people to an area to see cool stuff made, they help attract investment to neighboring properties (especially when they are filling a vacant space), and they are uniquely of that place. No one else has that business owner, with that brand and that product, anywhere else. These businesses make people proud of their community, their main street, and their downtown. They often buy supplies locally, hire locally, and have deep roots in the community.
Every place (a neighborhood or downtown or main street) is stronger when it is loved by the people who live there. You know that a place is loved when you see it. Storefronts are cared for, and people gather and spend time there. It isn’t about property value. Rather, it’s about pride in the place in small and important ways.
For instance, does the neighborhood have its own festivals and gatherings? Do people say that they come from that neighborhood or that city with pride? Do residents feel that the place is invested in by the district authority, local government, or local businesses? There are a million ways—many of which are very low budget—to invest in a place, but it takes the community coming together to make it happen. Do we want gardens in vacant lots? Stoops or sidewalks swept clean by business owners? Public places where people can gather? What does it look like to walk down the street? Are storefronts filled with activity and open for consistent hours?
These acts signal to the property owners and to local business owners that this place is worthy of investment. Each act is a small way to invest in that place. These acts signal to local residents that it is a place to spend time and money.
Local leadership investing in the place is essential to economic success. And that includes public, private, and political investment in that place. For instance, many communities work to implement the elements of complete streets—wider sidewalks, traffic calming, and landscaping—and places for the community to gather in plazas downtown. These investments signal to property and business owners that a place is worthy of their time and money. For example, Lancaster, California, saw an increase in investment in downtown worth ten times the investment that the city put into these kinds of elements. For the $10.6 million the city invested in wider sidewalks, landscaping, a plaza for people to stroll, and steps to slow traffic, the private sector invested $126 million in the area. The city had a 26-percent increase in sales tax revenue from this area, and the community added 80 jobs.2
We also need to acknowledge that some places might be loved by their residents but neglected by the local jurisdiction. The local budget might be shrinking, and it costs money to take care of a downtown or a neighborhood main street. The properties on main street might be owned by distant investors who neglect maintenance. Some main streets may not be maintained because the jurisdiction doesn’t see them as an essential investment. We know that there is a historic, as well as present-day, difference in how much a city invests in different neighborhoods because of race. It is visible in many communities. Are there certain neighborhoods where the garbage piles up in front of businesses? Are there vacant lots? Is there litter? Are there festivals, but only ones directed at bringing in people from outside the community or for tourists? In a smaller city or town, does community investment go only to new commercial development at the edge of the jurisdiction? In a town with one main street, do the storefronts only include white-owned businesses and not businesses from the racial and ethnic diversity of its population? These issues all illustrate different kinds of neglect, different ways of saying that certain people and certain places are more important than others.
Unique Identity Is Essential to Long-Term Value
Places that are unique make us feel like we are somewhere special. That difference, that special sauce, that thing that makes it stand out—whatever it is that makes it the place it is—draws us in and makes us want to spend time there.
Think about a place you’ve been that feels different and special. It might be a small rural town or a neighborhood in a big city. The uniqueness of the place makes you curious about what you might see that you won’t see somewhere else. That the place is special makes us feel special and gives us a boost of energy. It doesn’t matter if it is our own hometown main street or one we choose to visit. Some real estate developers pay big dollars to create an “authentic” experience, recognizing that it will draw future development and investments. They know that it will draw tenants for apartments and customers for shops. Large developers create a destination, events, and a brand for a place before even launching sales of property or development.
Your history, your people, and your local business owners are what makes your downtown or main street special. It might be naturally occurring in your community, but you didn’t really notice it as an asset before. Each place needs purposeful work to create this in a way that is inclusive so that we are building up the local economy, not displacing it. And small businesses (especially small-scale manufacturing businesses) can be a way to ensure that everyone in your community feels that this opportunity to build the local economy and build community wealth is available to them.
Highlighting the identity of your community and being inclusive require asking some questions. Who are the people in your storefronts? Who do they represent? Who owns the businesses? How are they designed on the front and inside to reflect the personality of the owner and of the community? How is this business specific to your place and region? How is it specific to the neighborhood and the people who live there? Most important, when you look around, do you know if you are in a specific place?
Answering these questions should reveal a place that will reflect the community and retain value over time. This main street with unique businesses cannot be replaced with a new mall with national chains down the road because is no other place like it in the world.
Social Connections Are Essential to Economic Resilience and Stickiness
The connections between business owners and people in the community are essential to economic resilience. Many types of connections matter, but personal, social connections draw people to a place and make them want to stay (its stickiness). These connections can also be important when a community needs to adapt and recover in the face of disaster.
Researchers have found that personal connections between business owners are important to the business’s survival in the face of national disasters. Local business owners with strong connections to other owners were more likely to survive crises and reopen after a disaster, whereas those with fewer connections were more likely to go out of business.3 The people with connections bartered services or deferred payments because of their social capital with the other business owners. Their social connections made them 24 percent more likely to be resilient than owners with weak connections.4 Those connections become even more important when the economy is unpredictable or weak, as seen during the COVID-19 pandemic.
These connections can be important to a business’s success even in stable times because these business owners can learn from and lean on one another, as often seen with startup programs working with cohorts of business owners. Successful programs also provide strong connections to expert mentors. A study of New York City tech startups found that businesses with strong personal connections to successful founders and with strong mentors were more than twice as likely to succeed as those without strong connections.5 Places that invest purposefully in these cohorts and connections reap the benefit of stronger small businesses and, with direct action, could result in a more inclusive and diverse community of business owners. Cohorts for Black-owned businesses, for example, can offer support and help owners overcome barriers to launch and create strong local businesses.
Attachment to a place (its stickiness) is also essential to its economic survival. Why do people stay in the town or city if they could have the opportunity to go somewhere else? In a study called “Soul of the Community,” the Knight Foundation and Gallup found that there are three major reasons people stay in a community:
1. People feel included.
2. There are places to gather.
3. The place has a beauty in its buildings or natural environment.6
This connection is not about economic opportunity. It’s not about salaries. It’s about connections—emotional and physical—and inclusion. In the end, however, the result for the city is about money. That same study found that places with a higher stickiness factor also had higher rates of growth in gross domestic product (GDP), with the rate of growth exceeding the population rate of growth by two and a half to three times.7
We see this distinction echoed in real estate studies: people are attracted to locations that have places to walk to and gather and to places that have that special something. The National Association of Realtors surveys people every two years about community preferences to help its members understand trends in what attracts households. This survey is a window into changing preferences. In the 2017 survey, the most recent, some of the top priorities for people deciding where to live included homes that are an easy walk to places like shops and parks and
communities that have safe sidewalks.8 These preferences were echoed in an Urban Land Institute housing study of millennials, which showed that community character and proximity to shopping rank among the top priorities when these younger adults decide where to live.9
We need all three of those fundamental parts listed above—inclusion, gathering spaces, and beauty—to build a strong local economy. We also need to invest in the place; we need to show who we are and the inclusive, unique sauce of our community; and we need to help business owners continue to build stronger connections. That’s the way to create a place that people want to stay and invest in, as well as a place that will attract other investments and entrepreneurs.
We will only achieve these outcomes with purposeful actions that will benefit residents from the entire community, attract businesses and people, and strengthen the local economy. That feeling of being included, of feeling valued, of feeling connected to others in our community, does not happen automatically. And for our business owners, it doesn’t happen across racial and ethnic lines without concrete, intentional actions from city leadership.
Invest in Target Locations: Downtown, Main Streets, and Neighborhood Centers
Placemaking means to make a place that is distinct and to invest in a place where people can come together. The subject gets a lot of coverage in the media and in real estate, economic, and planning trade materials, and many communities are working on placemaking in their downtowns. They know that a strong downtown is essential to a strong local economy.
Targeting one location does not mean that others will be neglected; rather, it means that we work on implementing changes and taking action in that one place with a burst of energy to be a catalyst and show people what is possible. When we focus on a target location, residents can quickly see the impact and get excited about getting involved in what comes next. It also allows us to try a new idea in one place to see if it works before we roll it out to the rest of the jurisdiction. When we target locations for investment, we can be more effective, lower the risk of investments, and create success faster for our local small businesses than when we spread our energy out over multiple locations.
In a small town, making these investments on main street may be enough. In larger cities, though, it may be necessary to also invest in neighborhood main streets. These local main streets were often the commercial center of the neighborhood. In many communities, these places were neglected as cities emptied out in the 1970s and 1980s, especially in predominately Black neighborhoods. Today, these same places are an amazing opportunity for locally owned businesses to move into storefronts and build wealth for a local household. We need to make it a priority to target neighborhood centers and work with the residents to bring these places back to life. We need to do it with purpose and intent to break from the old model and the systemic racism that neglected these places and do things differently. If we do not think purposefully about who benefits from investment, we leave people and places behind.
Unfortunately, it is still common to see investment directed at wealthier White communities. A study looking at St. Louis, Missouri, found that government tools such as Tax Increment Finance incentives were pulling investment away from predominantly Black neighborhoods in the city.10 Another study found that cities that are more segregated spend less on public services throughout the entire city compared to cities that are less segregated that spend more on public services on average.11
Cities often continue to invest more in the neighborhood centers that are already thriving. These places bring in tax revenue, and the city wants that to continue. Yet these places are thriving because of historic investments in that place. A struggling neighborhood center has likely been neglected for generations. Areas that were redlined in the 1930s are generally still more economically distressed, with lower household incomes, lower housing values, and lower rents,12 than areas that were not redlined. If local leaders want to invest in places that are already doing well—so that they do even better—the neglected neighborhood main streets are unlikely to ever catch up. It is important to think about what purpose we are trying to achieve with these investments. And we need to do so with fresh eyes at historic injustices and the systemic racism baked into our economic development and planning decision-making.
The Exciting Potential of Small-Scale Manufacturing
Small-scale manufacturing businesses can help you make these four pieces of the new economic model become a reality. These businesses can help each community create a thriving and unique place. They can help build an inclusive economy in which more people have the opportunity to build wealth. They can be brought into the work quickly to help achieve short-term and visible wins. This business type is not a solution for all our community challenges, but it can make a big difference in solving more of them, and faster.
The reality is that most communities are not using all the local assets available to them to be successful. In fact, most communities are doing this work with at least one hand tied behind their back. And in many cases, one of the local assets not engaged, a major missing piece, is small-scale manufacturing businesses. (Remember that small-scale manufacturing businesses are ones that create a tangible product that can be replicated or packaged, across any material, be it hot sauce, handbags, or hardware.)
Although the Small Business Administration defines small business as one with fewer than 500 employees, small-scale manufacturing is much smaller. In most communities, this business sector is in the “microenterprise” category, with one to 20 employees, so that it can fit into the existing buildings in and around downtown. In larger cities, where existing building spaces may be larger, small-scale manufacturing may be as large as fifty employees. Most important is that these businesses fit into spaces in our downtowns, main streets, and neighborhoods because they are modern production businesses—clean, quiet, and great neighbors.
Small-scale manufacturing businesses are an untapped asset for downtown and main street. We can achieve many more of our purposeful outcomes faster when we include this missing business sector in our work. And no, bringing small-scale manufacturing businesses into the work is not going to make all those outcomes happen tomorrow. It will take a lot more than that. But those businesses are essential to creating that future, one that is inclusive, strong, and proud.
Reprinted from Recast Your City: How to Save Your Downtown with Small-Scale Manufacturing by Ilana Preuss. Copyright © 2021 Ilana Preuss. Reproduced by permission of Island Press, Washington, D.C.
ILANA PREUSS is the founder and CEO of Recast City.
Endnotes and Resources
1 Thrillist Travel, “America’s Best Small Cities to Move to Before They Get Too Popular,” Thrillist, September 28, 2018.
2 National Complete Streets Coalition, “Complete Streets Stimulate the Local Economy,” 2020.
3 Ariana P. Torres, Maria I. Marshall, and Sandra Sydnor, “Does Social Capital Pay Off? The Case of Small Business Resilience after Hurricane Katrina,” Journal of Contingencies and Crisis Management 27(2): 168–81.
5 Endeavor Insight, “The Power of Entrepreneur Networks,” Partnership for New York City, 2014, http://www.nyctechmap.com/nycTechReport.pdf.
6 Knight Foundation, “Soul of the Community 2010: Overall Findings,” 2010.
8 National Association of Realtors, “National Smart Growth Frequencies: 2017 Topline Results,” American Strategies, 2017.
9 M. Leanne Lachman and Deborah L. Brett, Gen Y and Housing: What They Want and Where They Want It (Washington, DC: Urban Land Institute, 2015).
10 N. Cambria et al., Segregation in St. Louis: Dismantling the Divide (St. Louis, MO: Washington University, 2018).
11 Emily Badger, “More Segregated Cities Spend Less on Parks, Roads and Sewers,” Washington Post, October 28, 2015.
12 Andre M. Perry and David Harshberger, “America’s Formerly Redlined Neighborhoods Have Changed, and so Must Solutions to Rectify Them.” Brookings Institution (blog), October 14, 2019.