Economic development is part of every tribe’s vocabulary. Most tribes have established an economic development position to attract or start businesses on reservation. The reason is simple: businesses from separate sectors and in multiples are better for a tribe’s community than less, because more enterprises result in financial resilience; resilient economies are better able to absorb stress and survive in difficult times and create wealth over time.
The benefits to resilient economies are that they do not fall as fast or far in a downturn - generally recover faster. Take for example a community with a hotel and gaming operation then nothing else. The economic health of the community will generally follow the ups and downs of the gaming property. Comparatively, a community with the same gaming property, plus c-stores, fisheries, and timber is more diversified. Declines in gaming are not directly related to grab-and-go sales at a c-store, consumption of salmon, or the use of lumber in paper, light poles or building supplies. Each sector (gaming & hospitality, gas and grocery, food, and wood products) will follow its own cycle. When one sector is down others may be rising or stable.
From a family’s perspective economic diversification works better; take a dual-income household where one family member is employed by a casino and another by a convenience store. In an economic downturn the probability of dual job loss and financial hardship is less if each spouse works at a separate business than if they work at the same place. Additionally, if one looses a job and a local business is hiring, the likelihood of being re-employed is greater.
Some tribes are natural resource rich located in rural communities others are urban or in-between, suburban. For a rural tribe it might make sense to allocate resources toward businesses that integrate a vertical supply chain around a natural resource. Timber for example has a lot of uses between the harvest of trees and the end user. Every business transporting, trading, refining, or selling wood products has a place along the vertical supply chain. An urban tribe may have access to a large population base of consumers. Owning retail businesses where the tribe has a competitive advantage, like tax exemption, may make sense.
It is smart to build upon strengths. A tribe should start by examining the businesses they are in today and recognize their competitive advantages. It should be asked: Does an opportunity exist to expand upon what we already have? –or- What are our clusters of expertise?
There are three things a tribe can do to increase the probability of success in adding businesses to their portfolio:
1) Invest in Human Capital – Apply resources toward existing and new businesses, make education and the achievement of goals a priority, spend time and energy focusing on what is possible rather than toiling over that which does not work.
2) Develop Infrastructure – This can be physical like roads and water treatment plants but also organizational –like trade and educational associations. It is the services and/or facilities that embody incremental improvement to promote the achievement of goals. A Chamber of Commerce group that holds regular meetings uncovers a lot of opportunity.
3) Leadership – make a plan, have the community understand it, and follow through. Leadership is also the ability to adapt to changes while maintaining the integrity of the group. Businesses start out with the best of intentions and regardless of planning, unforeseen things happen -requiring change. Experienced leadership understands how to move forward in a changing environment. They move the group forward with confidence or hold a position while under pressure from others to change.