Steve Fernlund originally wrote this article in 1999 for a regional business magazine. The issues still impact life on the North Shore – 25 years later.
The challenges of economic development and business operations in rural Minnesota, particularly in Cook County, stand out compared to the larger metro areas of the Twin Ports or the Twin Cities.
After almost 20 years running a freight management/forwarding business in Minneapolis, I achieved a long-held goal of ‘retiring’ at 40. We sold the suburban Twin Cities house and moved to the north shore of Lake Superior with vague plans for the future.
The lake attracted us. There are more moose than people, and the county has only one stoplight. Yet, less than a year into ‘retirement’, and facing an imminent visit from the “Capital Gains Tax Collector,” we bought a thriving, albeit relatively small by our standards, publishing and printing business in Grand Marais.
Thus, I embarked on a learning curve, adapting to a different way of doing business.
Some differences were just a matter of degree. Staff in my previous life freed me from the drudgery of government forms and reports, not to mention the daily grind of bookkeeping chores and day-to-day business tasks. I could focus on strategic issues, employee development, and customer contact.
The small business owner doesn’t have that luxury. Not only do they face the daunting task of identifying and articulating a strategic vision, but they must also deal with the unending pile of government forms and reports while seeing that the statements get in the mail, the bills get paid, and the floors get swept. While doing all this, they maintain regular contact with customers to understand their changing needs and expectations.
Other differences were more philosophical. My mantra in the corporate world was, “Bill it when you do it and collect it right ASAP.” Cash flow is the mother’s milk of business. So, I immediately changed our billing system, sending weekly invoices to dozens of people who were used to receiving and paying monthly statements. That caused an uproar from customers. I’m a quick learner; we immediately returned to the traditional monthly statement system.
The general public’s attitudes and perceptions directly impact business development and operations. Ask the average person in Cook County about economic development, and you’ll most likely hear the potential evils of building another tourism-related business. While people cry for ‘real, year-round jobs,’ any attempt to discuss economic development here is perceived as “just another way to help the resort business owners.”
Public perceptions of economic development will only change through intensive, long-term efforts by community members committed to sustainable development—those who recognize that growth is not inherently evil and that the status quo is not an option.
In our neck of the woods, a high percentage of middle-income residents work in some way for the government, federal, state, county, and school. Many of these people are transplants to the area. The economy’s private sector, for the most part, is based on the tourism industry.
With few good, year-round private-sector jobs, most young people leave the area after completing an education. Unemployment is unheard of. Anyone can work if they want to, although not always in the most rewarding jobs.
This presents a two-fold problem for business. Existing employers, unable to offer large salaries or significant benefits, need help finding dedicated employees who can be retained long-term to grow with the company. Potential new businesses recognize that the small labor pool restricts future growth, and they end up elsewhere.
Only after adopting and implementing a comprehensive plan for sustainable economic development can the entire community address the challenges of attracting and retaining a competent labor pool.
Cook County’s physical location presents many challenges for non-tourism businesses and those wishing to locate here. It is over 100 miles from Duluth and 250 miles from the Twin Cities; companies that rely on technical expertise or transportation are disadvantaged.
Technical and management resources at universities and technical schools, taken for granted by metro businesses, are almost inaccessible to those in rural areas. With one major highway under yearly reconstruction in the warm months and snow and ice in the winter months, the cost of transportation for people and finished goods is exceptionally high.
Telecommunications and other technological advances will nicely address the location challenge, but only after a sustainable economic development plan is created and adopted.
Taxes challenge economic growth and diversity throughout the civilized world. The arguments over Minnesota’s tax structure are well known. In Cook County, there is the double jeopardy of ever-higher property taxes caused by a long-term boom in real estate activity and an extra one percent sales tax to finance a new hospital and care center.
Unlike many rural communities, where property values have stagnated or declined, Cook County’s have been increasing at double-digit rates for several years.
Compounding those higher taxes is an ever-increasing appetite by local groups seeking periodic and not unsubstantial donations to their cause. One long-time local business owner has resorted to posting a written policy on assistance in the front lobby to cut back on the seemingly unending, last-minute requests for donations. From Little League baseball and hockey to art projects and civic groups, the cost of donations becomes a real burden to small businesses when added to the taxes they already pay.
None of the challenges to economic development is insurmountable, not even taxes. In this remote corner of the Arrowhead, with a solid plan for sustainable economic growth, the commitment of public officials and existing local business leaders, and the appropriate use of technologies, a diverse and prosperous economy that benefits everyone can be created.
As for me, give me the small business challenges of rural Minnesota over the corporate world any day.
