How Small Town USA Becomes An Entrepreneurial Magnet

The National Center for Small Communities announced earlier this month that its Grass Roots Entrepreneurship Award, and accompanying $5,000 grant, would be presented to the city of Fairfield, Iowa and its mayor, Edward Malloy.

The Microenterprise Journal
Sidney, NY

The Grass Roots Entrepreneurship Award is presented to small communities with a population of less than 10,000, that develop innovative programs and/or policies in order to effectively spur entrepreneurial growth in the community. Two other communities that were also honored for their economic development strategies were Broadway, Virginia and Turner County, South Dakota.

Mayor Edward Malloy has been the chief executive of Fairfield since his election in 2001, and he took over a community in which the elements to spur entrepreneurial activity were already in place and humming. "I just saw a need at that time to bring the extra pieces together to help startup small businesses," he said in a telephone interview.

Perhaps the greatest good fortune this community enjoys, according to Malloy, is the existence of a "unique educational institution" in the Maharishi International University of Management. This intriguing institution of higher learning combines a reputation for academic excellence with the principles and practices of Transcendental Meditation® and the TM-Sidhi program®.

According to the information posted at the school’s web site, the university’s students "enjoy heightened alertness in the classroom — and greater enjoyment of all that they learn." Be that as it may, one of the practical results for the community of Fairfield is an ongoing influx of bright, talented people from all over the world. And as sometimes happens in a university town, some of them stay.

Since about the mid-1980’s, that entrepreneurial talent pool started sprouting fish. Mayor Malloy tells me that over the last fifteen years, there have been hundreds of new business startups in the community, some of which were bought by Fortune 500 companies while others remain locally owned.

Some of the things the local government has been able to do to help include liberalized laws to ease home-based business ownership (including making local zoning laws a bit more home business friendly), sponsoring seminars and other programs for entrepreneurial education, and organizing the Fairfield Entrepreneurial Association.

This organization, which was launched in 1989, sponsors networking activities, scouts for grants and locates venture capital for fast growth startups. Of course, Mayor Malloy notes that many venture capital firms don’t look to such small communities for entrepreneurial ventures, making access to capital quite a challenge for local businesses and a focus issue for local leaders.

They have answered that challenge by locating companies such as Village Ventures, which specializes in small market venture capital. In addition, many of the startups in the area have relied on angel investors for their capital needs.

The results have been impressive. According to the statistical information available through the Commerce Department’s Bureau of Economic Analysis, the per capita personal income of the residents of Jefferson County, Iowa (where Fairfield is located) was $8,016 in 1980 and had increased more than three-fold, to $26,435, by 2000.

"We’ve created a lot of millionaires," says Mayor Malloy.

What is perhaps most intriguing about all this is the lack of input into this success story on the part of any federal programs targeting small businesses. There is no Small Business Development Center or Women’s Business Center nearby. The mayor says their entrepreneurial success has been largely "self generated."

For some, such a success story would argue for the superiority of home grown solutions to economic development over federal intervention. However that may be, this small community is certainly a model for other small cities to turn to as they consider ways and means for developing and diversifying their own economies, and supporting the microbusiness owners in their own back yards.