A Model for Growth

by Michael McGinnis

It is no secret that there is a shortage of employment in Mayo and surrounding area. Since the closure of Elsa mine , little new business has appeared to enhance the economic well-being of the area. And, not withstanding the good intentions of the previous Yukon government, the decentralization program could only supplement new private enterprises, not substitute for them.

How does growth come about, and how can we encourage growth, in the form of new business? One traditional model is the local "mega project", where a relatively large project provides a significant amount of employment but usually at a large cost. A good example of that is the Canvas Shop in Fort MacPherson. About 20 people are employed making wall tents and other high quality canvas products, which they sell to customers who live mostly in the south. After several years of operation, the Canvas Shop is making enough in sales to pay its employees wages, but is not yet able to keep up with the high operating costs of their custom-built factory and sales building.

The mega-project approach, a favourite of governments that want to be seen to solve problems quickly (during the current term of office), is glamorous and exciting if it works. We don't need to look further than the Watson Lake sawmill to find a made-in-Yukon failed mega-project. Big projects sometimes work, if the preparation is carefully done and all the myriad parts and assumptions test out ok . There is always the element of risk, however, and the bigger the project the greater the risk. And growth in nature does not usually work this way.

An alternative model for growth is the kind seen in the formation of crystals . When crystals start to grow out of a solution, thousands of little crystals will start, but most of these will not grow enough and will dissolve back into the liquid. Only the most fortunate crystals will grow, but these will end up billions of times larger than the seeds they started out as. Carrying this model into the economic field, another way to stimulate economic growth (besides the mega-project) is to encourage the startup of small businesses.

When businesses start up the chance of failure is high, but the investment being risked is relatively small. The cost of developing a job in small business can be spread over a period of time, as an enterprise proves its viability. An entrepreneur can start with a home-based business, establish a successful track record, and then expand out of the home or hire other people.

In the mega-project model, the government can provide virtually all the resources needed for the operation of the business. This removes the feeling of risk from the individual worker, who is more likely to feel that what he does will not have a major effect on the success of the business. A more appropriate role for government is to provide infrastructure support, and this now means much more than it did in the nineteenth century. The physical framework of roads, water supply and power are necessary, but we now also see the government as important in providing information infrastructure that business, especially small business, cannot do by itself. Marketing information and expertise and access to expert technical advice in both product, financial and planning areas can make the difference between success and failure for a business.

In the next few months, a workshop on home based businesses will be held in Mayo. This is being facilitated through the Advanced Training representative in Mayo, Lori Lacey and by Francis Cheng, the Economic Development officer. The Silver Trail Tourism Association in its capacity as local chamber of commerce, and the Village of Mayo are in enthusiastic support of increased home-based business in the area. I would encourage you to investigate the opportunities that home based business may offer you, in bringing to fruition a good idea of yours that may someday translate into a job opportunity for one or more people, and greater economic well-being for the community.

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