A financial lesson from a 19-year-old
Thursday, July 16, 2020
Over the past 12 years, I've had two jobs. My daughter, Carson, has four this summer.
That's right, four jobs. Quatro trabajos. She works full-time at a resort, holds a pair of online gigs for her university and a local ag company, and once a week cares for a high-octane 4-year-old.
In business terms, we would say that Carson has multiple revenue streams. She's diversified. Should the college deal dry up or the toddler toddle off with another nanny, she'll still be able to pay the note on her new set of wheels.
The Iowa Lakes Corridor Development Corporation is trying to follow Carson's lead.
Last week's newsletter laid out the five principles framing our budget decisions in FY 2021. The fifth and final is that the Corridor "will continuously seek new partners and revenue sources with a goal that 33 percent or more of annual revenue will derive from fees for service, real estate, lending, grants, and other sources by FY 2025."
Historically, economic development organizations have relied on membership dues to fund operations. They ask and public- and private-sector partners deliver.
But some organizations change things up. Across the state and country, you will find economic development groups that own property, lend money, charge consulting fees, or sell advertising and job listings.
We've considered these options and more at the Corridor, but so far we've deferred. The reasons are multiple. First, we respect private business. With excellent landlords in the region, should we really build a warehouse and go in search of tenants? Is there a need for another lender, given that some of the state's best banks are headquartered here?
As for consulting fees, we believe every business person with a vision, from a kid opening to a body shop to a site selector searching out a 100,000 SF factory, should have ready access to information. That's a big part of what our investors are paying us to provide.
So, our services have remained free.
The unnerving aspect of our model is that we begin each new planning cycle at zero. That makes the new initiative or the strategic hire - particularly the strategic hire - risky. It also amplifies our vulnerability to economic downturns and political whims.
Our board has indicated that diversification is needed. It's now up to staff members to find new revenue. Over the next few years, we will search out areas where the Corridor's value proposition is suitably unique to warrant reasonable fees or commissions and assess other ways that we can prime the cash flow pump. In so doing, we will show respect and appreciation for our investing members who have been so consistently generous.
Category: Blog, Letter from the CEO