Say you live in a neighborhood with a mix of both residential and commercial uses. It has places to dine and drink; however, not every day-to-day need can be met within the neighborhood. For example, maybe residents must leave the neighborhood to find a hardware store, see a dentist, or get a haircut.
Now, imagine your neighbor, working as a barber in the town over, purchases a used barber’s chair and begins offering haircuts in her home. That’s an example of import replacement: creating local services that residents would otherwise have to leave town to obtain.
It cuts neighbors' transportation costs, of course. But more so, it ensures that the community’s capital—their money—stays in the community, creating more local jobs as the trend progresses.
Therein lies the question: if your neighborhood needs a local service, how do you motivate entrepreneurs to create it?
In this article, we’ll share ideas for starting an import-replacement trend in your neighborhood, including:
Knowing what import replacement is (and what it can and can't do)
Engaging local entrepreneurs
Convincing city leaders
What Import Replacement Can and Can't Do
The idea of "import replacement" was coined by Jane Jacobs, the famous urban activist and economist. It is an alternative to a model of economic development that focuses on export industries: selling goods and/or services produced in your community to people who live elsewhere.
With import replacement, the goal is that the people who do live in your community will start purchasing something locally that they would otherwise leave town to obtain. The second half of that sentence—that they would otherwise leave town to obtain—is important.
Let’s use restaurants as an example: your neighborhood may already have a chain French restaurant, however, you’d prefer a locally-owned version. Would the new restaurant mean residents go out for French onion soup any more than they usually do?
No, because the second restaurant doesn’t increase the size of the pie—get more people to spend more money in their neighborhood. Instead, it creates more competition. A new favorite restaurant probably doesn't make you go out to eat more often; it makes you go less often to some other restaurant you used to patronize.
Capital that once left the community isn’t retained in this case; it’s redistributed between the two establishments. Strong Towns member Arian Horbovetz describes this concept well in his article When Local “Growth” is Just Redistribution.
Competition has its benefits and can lead to more and better choices for local consumers. But it shouldn't be mistaken for import replacement. Not all local business creation actually increases the amount of local wealth that stays and recirculates in the community.
Therefore, as you consider starting an import-replacement trend, remember: the proposed service—locally-owned or chain—must not already exist in the neighborhood.
Engaging Local Entrepreneurs
Once you’ve identified missing services in your neighborhood, you must find entrepreneurs to provide those services.
This is easier in some cities more than others. For example, as Strong Towns president Chuck Marohn illustrates in his piece on import replacement, in a small town, local leaders may need to get creative. The example he provides: they could hire a barber from a neighboring town to cut hair in City Hall once a week.
You likely have neighbors with skills that they could put to use opening a new business in the neighborhood. Does that mean they’ll sign a lease tomorrow? Unlikely. Instead, the neighborhood can present opportunities for entrepreneurs to test their services: a low-cost strategy to see if the service is viable.
An excellent example of this are the pop-up chalets in Muskegon, Michigan, that create more long-term opportunities for local businesses. Or if your neighborhood has vacant storefronts, you could work with the city and owner(s) to use the space for pop-up shops.
Talk to your neighbors and find out what they think is missing from the neighborhood or the town. What kind of business would they love to patronize if it existed? Social media makes it easier than ever to have these ongoing conversations in a public forum, where would-be entrepreneurs might be listening and getting ideas.
Key to creating an environment in which entrepreneurs are incentivized to take the leap and start a business is to think small. Make sure there are opportunities for them to do low-cost, low-risk experiments, like a pop-up shop or a food truck.
Talk to existing entrepreneurs in your neighborhood and find out about their experiences. What obstacles did they have to overcome? Were any of them things within the city's control—like an unnecessary regulation that was expensive or difficult to comply with? If so, it might be time to reach out to your local elected officials.
Convincing City Leaders
Import replacement, from the city's perspective, is a means towards increasing tax revenue for the local government—and making that revenue more stable and predictable, less dependent on the whims of outside employers who could pack up and leave. As you propose things like pop-up shops to city leaders, it’s essential you present the idea in terms of economic development.
Chuck Marohn’s piece on import replacement illustrates this point well, as he describes the ripple effect of investing in a entrepreneur who works with furniture:
If [the entrepreneur working with furniture] can become successful at a local scale, then export to a larger region. Now, what supporting industries are needed? A lumber mill? Loggers? Custom metalwork? These start small and scale as well, creating the need for other supporting industries—human resources, banking or even haircuts, for example. The key is that the city grows and prospers by replacing those things that it currently imports with things that it can produce locally, keeping capital within the community where it can be put to more productive use.
You’re pitching import replacement so your neighbors don’t have to commute as far for goods and services, sure. But more so, you’re pitching a vision of a stronger local economy, where the city can capitalize on its existing resources and create new opportunities for economic growth.
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