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Networking Food System Businesses to Build Local Economies Megan Shoenfelt & Steve Bosserman 32nd Annual Ohio Ecological Food & Farm Association (OEFFA) Conference Inspiring Farms, Sustaining Communities 9:30 – 11:30 AM, February 19, 2011 Granville, Ohio
This Workshop: Practical Steps in How to…• Strengthen your business within a local economy• Form business networks that span the sustainable agriculture value chain, starting with the local market and working back to production• Develop business ecosystems with supportive social, economic, and environmental systems to promote sustainability• Find within your community the resources and assets needed to launch new businesses and sustain your business ecosystem, while retaining local ownership.
What We’re Doing…In projects supported by the USDA Specialty Crops Research Initiative and the Fund for Our EconomicFuture of NE Ohio, we are aiding and guiding collaboration on new business opportunities involvingspecialty crops (fruits, vegetables, tree nuts) innovations and production. LocalFoodSystems.org
Sustainable Local Economic Development: Key Questions• What is a local economy?• How does one participate in a local economy?• What is a business model?• What is a business ecosystem?• How do you plan a business in the context of a business ecosystem?• How can a local economy operate?
What Is a Local Economy?A system of choices and transactions that enable members of a community,neighborhood, or rural area to meet their needs and sustain themselves from localsources. “The following study analyzes the impact of the 16-county Northeast Ohio (NEO) region moving a quarter of the way toward fully meeting local demand for food with local production. It suggests that this 25% shift could create 27,664 new jobs, providing work for about one in eight unemployed residents…” The Play: •4,000,000 people in NEO •Each local economy serves 10,000 people •Each of the 400 local economies in NEO supports 20 new businesses •Each business creates 3.5 new full-time- equivalent jobs •Total new jobs = 28,000
How Does One Participate in a Local Economy? Investing Own & Operate Contribute Volunteer Activism Direct, e.g., CSAs Hold Office In-Store Public Service PurchasingVote & Lobby Status Farmers Market Quo 1Search & Lurk Health 2 Join & Post Lifestyle Convene & Lead 3 Aspirations Level of Advocating Participation Awareness
What Is a Business Model?In the context of a local economy, it describes how to:• Market to one’s own community• Identify, integrate, apply, and reinvest local assets and resources to leverage internal capability and capacity and reduce dependency on external sources• Generate sufficient revenue and reduce operating costs to sustain the business• Substitute locally produced goods and services at greater value than externally supplied equivalents• Conduct business in ways that improve both the social and environmental dimensions of community life in addition to the economic.• In the case of specialty crops, the business model is applicable to all food system supply and value chain businesses, not just specialty crop production.
What Is a Business Ecosystem?A business ecosystem, in the context of a local economy,encompasses clusters of interdependent, community-basedbusinesses. These business clusters include businesses that:•Share a common function, such as specialty crop production, anaerobicdigester installation, and deconstruction and material reclamation, etc.•Link along a common value chain such as food production-to-consumption,waste recovery-to-green energy generation, and repurposing-to-affordablehome construction, etc.•Blend of function and value chain such as agri-tourism-and-dairy-and-organichay operation or vineyard-and-winery-and-specialty-crop-operation-and-family-friendly-restaurant
What Is an Effective Business Ecosystem?• Consists of integrated clusters of individual businesses.• Responds to local market demand, strengthens the local economy, and engages members of community within a supportive framework to launch and sustain myriad local businesses.• Meets community members’ requirements as measured in calories, kilowatts, gallons, cubic feet, and units;• Utilizes a wide range of monetary and non-monetary mediums of exchange to maximize participation;• Minimizes economic leakage from the community, for example through reinvestment, reuse, repurposing, and recycling of local assets;• Mitigates investment risks by positioning individual businesses within a sustainable, localized system.• In the case of specialty crops, food and related businesses are but one dimension of a holistic business ecosystem.
How Do You Plan a Business in the Context of a Business Ecosystem—Part I? Business Case Template Title: In 70 words or less, what is the name of your business case? • Reference: Re-enter the name of your business case, then enter names of principal developers, describe how the idea came about, and describe the state of things as they are today. • Context: Building on the information you provided in the previous section, what opportunities and challenges do you see? What business objectives do you have? How do your objectives align with or build on other opportunities and business objectives? • Value Proposition: What will your business provide to customers and why will they pay for it. Map your route to those outcomes. State business benefits by outcomes, considering economic, social and environmental impacts of the value you plan to provide. Consider various financial scenarios and associated risks and costs of proceeding and not proceeding. • Focus: What specific problem are you solving or specific need are you addressing? Assess issues of size, scale, and complexity. What is the scope of your endeavor? What considerations have you made to help you maintain focus on the problem and manage scope? Identify and evaluate various options that enable you to stay in-bounds of your original guidelines. • Deliverables: What will you deliver as a result of your business and how will customers benefit? What critical factors influence your capacity to deliver your promised goods and or services? Who are the key stakeholders? What organizational areas, both internal and external, will be impacted during delivery? • Workload: How much work is there to be done and what is your plan for doing it? Who will do what by when? How will you organize operations to get things done? What specific activities are required? • Required Resources: Who will be on your project leadership team and/or governance team? What resources, including funding, are at their disposal? What additional resources need to be found? • Commitments: What are the expectations of your customers, colleagues, suppliers, employees, etc.? What budgetary and quality controls, internal and external communications, and schedule documentation will you need to assure those expectations are satisfied?http://localfoodsystems.org/building-business-cases-0
Potential Local Economies and Agbioscience Business Ecosystems in NEO• Points are business cases or ideas proposed during agbioscience stakeholder meetings• Symbols for points indicate potential business ecosystem clusters• Line color spectrum indicates strength of potential supply chain relationships (purple=weakest, red=strongest)
How Do You Plan a Business in theContext of a Business Ecosystem—Part II?Business Ecosystem DevelopmentConsiderations that connect your business with others in ways that build wealth in the region and enhance the sustainability of eachof the interacting businesses through waste or supply chains, shared resources or mutual development of markets, as examples.•Mapping: What information have you assembled on: – Asset inventory - geographically where do or could your supplies come from, particularly within Northeast Ohio? – Process flows – what happens at each step in producing value? – Value chains – how much value is added to your product at each step? – Supply chains – what materials, information, etc. is needed in each step of the process?•Modeling: What information do you have on testing "what if" scenarios to identify choices, select strategies, and ultimately identifyhow your business fits into a logically organized network of businesses (business ecosystems) that deliver interrelated products andservices into local markets and are mutually supportive towards sustainability of the entire network.•Information Flows: What data, communications, and other information technology resources have been identified and/or acquiredto support the functioning of the businesses that network together into a business ecosystem?•Know-How: What is the combination of information, experience, skills and abilities, and application to the business that is essentialin the business and the business ecosystem to ensure an ability to adapt continuously to changes in the business climate, and what isthe current status of this knowledge among those engaged in the business?•Community Investment: What mechanisms and resources are in place within Northeast Ohio or need to be created to provideaccess to local investment in the business so that the ownership of the business and the wealth generated have every opportunity toremain within the region.•Governance: What are the existing legal authority structures that will govern the operation of your business and relatedbusinesses, and what changes in policy or statute are needed to improve the function of the business ecosystem.
Process Flow Maps for Fresh Producehttp://localfoodsystems.org/process-flow-maps-fresh-vegetable-and-grape-production
How Do You Plan a Business in the Context of a Business Ecosystem—Part III?Business Ecosystem DevelopmentPlanning a local business ecosystem invites a similarly disciplined approach for each individual business; however, the plansdocument the interdependencies among the individual businesses that comprise clusters within the business ecosystem. Due to thesignificance of these interdependencies, planning within a business ecosystem context explores additional areas, such as:•What community assets that support business cluster development within a local business ecosystem can be mapped and areavailable, who controls them, and where are they located?•What scenarios can be modeled that assist individual businesses to take advantage of available community assets to integrate theirpractices and form highly adaptive, effective, and efficient business clusters that deliver products and services to clientele,customers, and consumers throughout the local business ecosystem?•What information flows are needed to sense, compile, present, and track the performance of clusters over time within the localbusiness ecosystem?•What know-how is required and how is it delivered in order for decisions to be made automatically or for management to be guidedin their decision-making within business clusters in response to historical trends, current conditions, expected performance criteria,and anticipated opportunities associated with the local business ecosystem?•What monetary and non-monetary transaction systems can be deployed with the local business ecosystem that facilitate theliquidity of assets for timely and effective support of individual businesses and their associated clusters?
How Can a Local Economy Operate? Community Investment Portfolio CommunityInvest Time,Usage, andMoney intoPortfolio CommunityReceiveRecognition…and Return onInvestment Personal Meet Needs Personal Satisfy Wants
Basic Business Ecosystems Flow: Community Investment Portfolio Framework Services Virtual(Green) Point of Consumption Production Processing PreparationPhysical(Orange) Products
Community Investment Portfolio (CIP) Businesses that Assure Ecosystem Sustainability Services Virtual(Green) Point of Consumption In Out In Out In Out Production Processing PreparationPhysical(Orange) Products
CIP Governance:Operational Guidelines for the Business Ecosystem Governance Services Virtual(Green) Point of Consumption In Out In Out In Out Production Processing PreparationPhysical(Orange) Products
Essential CIP Support Services: Providers Inside or Outside the Business Ecosystem Governance Services Virtual(Green) Point of Consumption In Out In Out In Out Production Processing PreparationPhysical(Orange) Products
Formation / Expansion of Core Businesses in CIP Governance Contractual Capital Teaching Criminal Compliance Exchange Access Research Outreach Legal Transactions Education Services Virtual(Green) Point of Consumption In Out In Out In Out Production Processing PreparationPhysical(Orange) Products
Aggregation, Queues, and Distribution Governance Contractual Capital Teaching Criminal Compliance Exchange Access Research Outreach Legal Transactions Education Services Virtual(Green) Point of Consumption In Out In Out In Out Production Processing Preparation In Out In Out In Out Distribution Distribution Distribution Distribution Distribution DistributionPhysical(Orange) Products
Zero Waste Return Loop Governance Contractual Capital Teaching Criminal Compliance Exchange Access Research Outreach Legal Transactions Education Services Virtual(Green) Point of Consumption In Out In Out In Out Repurpose Production Processing Preparation Reclaim Recycle Reuse In Out In Out In Out Distribution Distribution Distribution Distribution Distribution DistributionPhysical(Orange) Products
Physical Essentials for Business Ecosystems: Providers Inside the Business Ecosystem Governance Contractual Capital Teaching Criminal Compliance Exchange Access Research Outreach Legal Transactions Education Services Virtual(Green) Point of Consumption In Out In Out In Out Repurpose Production Processing Preparation Reclaim Recycle Reuse In Out In Out In Out Distribution Distribution Distribution Distribution Distribution DistributionPhysical(Orange) Products
Complete Community Investment Portfolio Governance Contractual Capital Teaching Criminal Compliance Exchange Access Research Outreach Legal Transactions Education Services Virtual(Green) Point of Consumption In Out In Out In Out Repurpose Production Processing Preparation Reclaim Recycle Reuse In Out In Out In Out Distribution Distribution Distribution Distribution Distribution DistributionPhysical(Orange) Products
Populated Community Investment Portfolio Apple Creek CIP Management Governance Contractual Capital Teaching Criminal Compliance Exchange Access Research Outreach Legal Transactions Education Apple Creek Asset Utilization Apple Creek Decision Support Services Apple Creek Asset Inventory Apple Creek CIP Website Virtual Apple Creek Information Systems(Green) Point of Consumption In Out In Out In Out Apple Creek Produce Apple Creek Creamery Apple Creek School Lunches Apple Creek Dairy Apple Creek Meat Apple Creek Agri-Tourism Repurpose Production Processing Preparation Reclaim Recycle Reuse Apple Apple Creek Bio-Energy Creek Zero In Out In Out In Out Waste Apple Creek Distribution Distribution Distribution Distribution Distribution Distribution DistributionPhysical(Orange) Apple Creek Facilities Management Products Apple Creek Equipment Systems Apple Creek Operations
Potential Approaches to CIP Governance• TimeBanks • Evergreen Cooperatives – Time Bank Mahoning Watershed – Ohio Employee Ownership Center• BetterMeans • South Central Manufacturing Network, Inc. – Open Source Venture: Picture This – Ohio Cooperative Development Center• Local Roots • Shagbark Seed & Mill – Appalachian Center for Economic Networks (A• Zingerman’s • Cooperative Local Food System – NEO Food Web
Next Steps…• Check out LocalFoodSystems.org• Form an online group• Develop a business case• Post it to your group and have others do the same with theirs• Associate the business cases by clusters• Establish a governance structure• Form a business ecosystem