The Sirolli Model: Is it the missing link for economic development?

By Michael Leon Guerrero

This article is based on a visit to New Westminster, British Columbia taken in April of 2004. Michael Leon Guerrero is Co-Director of the Albuquerque based SouthWest Organizing Project

“Out of 105 businesses that we started, not one tax break was given out”. That is liable to raise eyebrows in many communities. This was only one of the impressive statistics that Suzette McFaul shared about the Sirolli Project in New Westminster, British Columbia.

Nestled along the banks of the Fraser River, among the epic scenery of the Greater Vancouver area, New Westminster, home to roughly 55,000 people, shares a common history with many communities. New Westminster was the first city established in western Canada. The economy was driven for decades by the fishing industry. “We have a lot of fishermen,” says McFaul, “unemployed fishermen. We have an upper class, and a working class, not much in between.”

When the fishing industry went “belly-up”, the economy and the social life of New Westminster declined. The crime rate skyrocketed as the city descended in to drug trading and prostitution, facilitated by the Sky train metro system, which gives easy access to patrons from throughout the Vancouver area. At one point, New Westminster gained notoriety for having the highest crime rate not just in the Vancouver area, but for all of the Northwest Americas.

Civic leaders tried familiar approaches to stimulate the economy, offering subsidies to lure new industries to the area: call centers, fiber optics, “big box” stores. The city also established Business Improvement Associations. But to no avail – New Westminster’s economy continued to languish.

In the late 1990’s Bob Williams, CEO of the largest credit union in Canada, came across the book Ripples from the Zambezi by Ernesto Sirolli, which has become an inspiration to communities throughout the world. Sirolli developed a model of economic development that boasts many successes in four countries. The book is a very entertaining account of Sirolli’s experience working for the Italian government’s equivalent of the Peace Corps, imposing economic development ideas and projects upon communities in Africa, often with disastrous results. One of the fundamental philosophies that guides Sirolli is a quote from E.F. Shumacher which states that “If people don’t ask for help, then don’t give it.”

According to Sirolli, “I have … developed what I believe to he a healthy skepticism toward top-down initiatives that tend to disregard the abundant wisdom lying at the grassroots level of any community.”

Ripples goes on to describe Sirolli’s experience in helping people in western Australia initiate and build local, community-based businesses. Most economic development models emphasize recruitment and importing industry or people. Local and state governments are giving enormous tax breaks and other subsidies to recruit industry. Richard Florida, famous for his philosophy of the “Creative Class”, calls for communities to create the environment to attract “creative” people to the community. Where Sirolli is different, is his belief that creative people already live in the community. He prioritizes work with often the most marginalized people – those who are viewed as outcasts. According to Sirolli, everyone is passionate about something. This is the greatest resource and the foundation for good economic development. Sirolli’s approach connects potential entrepeneurs to resources and other people through a process called “Enterprise Facilitation”.

New Westminster is the latest emerging success story in the Sirolli history. The young track record is impressive: 105 businesses started since 1999 - 104 of the businesses are still operating, over $6.9 million given by banks to new businesses – not one default. Over 400 new jobs created. The main street has been revived. Over $35 million in gross revenue brought to the community as of April 2003.

The range of New Westminster businesses is eye-opening as well. Through enterprise facilitation a homeless man started a sign making business. Formerly he would create chalk drawings on the sidewalks. A local art store provided a space for him to work out of – the art store was also started through Enterprise Facilitation. High school students started a store called Hypnotik, selling old record albums. Bankers originally balked at the idea, not realizing that there is a big market for records among young DJs and rappers. Hypnotik is still open for business on the main street of New Westminster. Suzette McFaul has also helped a company that sells building materials and exports to other countries.

McFaul’s history reflects a victory for the underdog as well. A single mother who has created her own small businesses and also has worked with the government to support economic development, she has seen many facets of small business creation. She responded to a small, classified listing and was among 100 applicants for the job of Enterprise Facilitator. Suzette did not even make the first cut of 10 interviewees, but the founding Board was not impressed with the initial round of interviews. Suzette was selected after interviewing in a second round.

Enterprise Facilitation has definitely been a unique experience but she has embraced the role. The most important value in enterprise facilitation is “passion”, and McFaul certainly has it. “The budget is a salary, a computer, and a cell phone,” she says, “There is no office or desk. We find a place in the community where people can find us, and wait for our first client. It’s all done by word of mouth.”

The role of Sirolli’s enterprise facilitators is to connect people to others who have the range of skills needed to sustain a business. Sirolli defines the “Holy Trinity” of successful businesses: good product, financial management, and marketing. All three of these areas are necessary, yet no one person is capable of doing all three. The enterprise facilitator helps identify family, friends, or others in the community who have the necessary skills and connects them with each other. In essence, the enterprise facilitator functions almost as a community organizer for micro and small businesses. A common phrase among enterprise facilitators is “We’ll find someone for you.”

The Board of Directors is the heart of a Sirolli project. “It should be diverse,” says McFaul, “It should include resourceful people – everything from the single mother working out of her home, to bankers. It needs to be made up of people who can provide support and networking for the new businesses.” Each of the 22 Board members was asked to identify ten people in the community to talk to Suzette. This pool led to her first projects. “After that, it is doing literally anything you can to get the business going,” she says, “That is your sole mission, to get that first success. It builds from there.”

Networking is a unique strength of the Sirolli model. Rather than competition between businesses, the emphasis is on cooperation and support. I visited an unusual business called “The Bug Lab Inverterbrate Zoo”. Founded by Jennifer Heron, the business boasts a storefront on the main street with wide variety of bug paraphernalia, everything from pens and stickers to bug traps and candles shaped like butterflies. In the back of the building is a fairly large bug zoo, with exotic and somewhat scary looking animals in glass cases. While I was there, roughly 65 toddlers were enthusiastically wandering around the zoo, parents in tow, some sporting tiny lab coats.

“I sent out a general e-mail requesting lab coats for kids,” Suzette says, “I immediately found 22 coats.”

Heron has a unique history as well. She in fact has two jobs. On the side she works for the province of British Columbia, advising farmers on how to practice sustainable agriculture by replacing pesticides with bugs. Jennifer described a fashion show that was held in her shop the week before. My interest piqued, I went around the corner to visit clothes designer James Rogers, who also benefited form McFaul’s support.

Rogers makes custom lines of clothing for women, including a new line based on Heron’s bugs. “I met Jennifer as she was getting started, and I was very intrigued by the bug zoo,” Rogers recalls, “So I started incorporating the patterns of the insects into my clothes.” The designs are quite creative and well done. Tags attached to the clothes display the insect that the design is based on. Apparently others believe there is a market for them as well. An upscale fashion store in Edmonton has agreed to carry Rogers’ line for their fall collection.

“Enterprise facilitation really helped me in terms of connections and focus,” says Rogers. “I’m from New Westminster. What’s great is that now, I feel a part of the community. I never really had that feeling before I had my own business here.”

The Big Box Question

“Are you ready to fall off your chair?” asks McFaul, looking intently for signs of uneasiness, “Walmart’s coming.” Now I was uneasy. Surprisingly, Suzette sees the big box empire’s interest in New Westminster as an opportunity, rather than a threat. “People are traveling ten miles to Walmart as it is,” she states, “The businesses we have started here are pretty specialized and have a regular clientele, I’ve asked them to consider how they can benefit from the new customers that a Walmart will bring to town.”

Not all Sirolli participants share McFaul’s view of Walmart, however, one Sirolli-initiated Board in the province of Ontario was emphatic about it: “They told me that if I wanted to bring Walmart into the community, they didn’t want to have anything to do with it,” she recalls. Ultimately, Suzette says that it is a Board decision.

With a stronger, locally based economy and a network of community-based businesses, overall, New Westminster is in a much stronger position to confront the Walmart question. Other communities do not have such a foundation and opt for the low-wage employer because they feel they have no choice. It will be interesting to see where the New Westminster discussions go from here.

Is it sustainable?

When asked if enterprise facilitation would compete with existing community development efforts like incubators and loan funds, Suzette replied enthusiastically, “I would have loved to have incubators and loan funds. We started with practically nothing. But people stepped in and helped each other out. Our biggest challenge now is funding enterprise facilitation. We’re not a non-profit, and we aren’t a business that charges for our services.”

Currently the city of New Westminster contributes $50,000 each year out of the $80,000 budget for the service. The rest is donated by former clients and other supporters.“ Overall, the city’s leadership views it as a worthwhile investment.

“Enterprise facilitation is a cost-effective, grassroots program designed to tap into the business ideas of the people already living in your community,” explains Mary Pynenburg, Director of Planning for the City of New Westminster. “It helps you create new businesses from within as opposed to traditional economic development that spends a lot of money on infrastructure and marketing and hope the new business will come.”

Following the progress of the enterprise facilitation project in New Westminster could be valuable for many communities. There are some questions that still deserve deeper research. The relationship to labor unions is unclear. There also seems to be potential to form cooperatives, yet there was no mention as to whether this option had been considered. These are issues that I did not have time to explore further. On the whole it appears that enterprise facilitation offers a missing link to an overall balanced approach to economic development. While many communities may have incubators, loan funds, a manufacturing base, government services and other assets. An enterprise facilitator can serve as an organizer who works in the community to connect these resources.