As more First Nations enter private business to generate much needed cash and economic opportunities for their members certain “best practices” have emerged. Following these best practices will give Chief and Council the best shot at improving conditions in their communities. When we follow best practices we learn from the mistakes of others. When we don’t we often repeat those failures and fall short of our goals, wasting time and money.
Here are 5 of thee best practices for First Nation’s business and economic development.
1. Separate Business from Politics – The success of First Nation owned businesses has been directly linked to separating business decision making from political decision making. Put bluntly, Chief and Council should not be running businesses. The role of Chief and Council is to set up the business structure, set out broad investment policies, appoint people to invest in and operate the businesses and then back away. A good business development structure can accomplish this.
2. Appoint Competent People – Because the entire community will be relying on the investments and businesses to provide funding for community activities and economic development, it is vital that the people investing in and operating businesses have proven experience. If people with a proven track record are not available from within the community, look outside. However, have people from the community sit as observers to provide a community perspective and to gain experiences and knowledge.
3. Separate Investment from Economic Development – Economic development tries to overcome historical barriers to business success by supporting worthwhile business ideas of community members. This could be through grants or interest free loans. By investing money in community members’ businesses Chief and Council help individual members prosper and create jobs for other community members. If a community member succeeds in business the financial benefits will be for the member who owns the business. By their very nature such business ventures are risky and most new businesses don’t succeed. The return to the community is minimal. On the other hand, in a sound business investment Chief and Council will invest money to create a steady stream of profits which can be used to support programs (including economic development) for many years to come. Because the decision to support a community business is different than the decision to invest to earn income, it is best to have two separate groups of people making those decisions.
4. Economic Development should be administered by professionals and funding should be a last resort– Deciding which community business have a good chance at succeeding takes a lot of business experience. Much depends on the member’s abilities and training and the ability to manage the business and access funding. There may be other funding programs available. These should be used before dipping into community funds. Other organizations may already have people with the skills in deciding which community businesses to fund. Rather than reinvent the wheel, Chief and Council can set aside funding for economic development and ask external agencies to help with the selection process. This will make the limited funds available go as far as possible and give economic development the best chance of success. As the community gains experience, it can take back control of the funding process.
5. Involve the Entire Community – At the end of the day, Chief and Council are investing community funds and must be accountable to the community for the investments made. Community members may have other plans for scarce community funds – other projects or a pro-rata distribution to each community member. Educating the community on the value of investing community funds to ensure long term economic growth is critical. Most community members will see the benefit of long term investment as this is in line with the idea of looking out for the next 7 generations. A well planned community engagement and education strategy will also help when the businesses start making money and community members are demanding dividends. By explaining to the community up front that not all profits will be used immediately and the need for reinvestment for the long term, conflicts over use of hard earned dollars can be minimized if not avoided.
Follow these best practices and you’ll be off to a good start. There are plenty of resources out there to assist.
What other best practices have you found in your First Nation’s business and economic development efforts?