Wanted: more florists, fewer bowling lane refinishers
If you want to go into business in Flint, Mich., don't start a carwash. What the city really needs are ice-cream parlors and tree service companies.
In Denver, they're short on motorcycle shops and brick dealers, but long on beauty shops. Hartford, Conn., has too many diaper services, though there's room for more wholesale florists and hobby shops. And if you're a taxidermist or an aircraft upholsterer, try looking for work in Boston.
These are the kinds of things Dr. Judith Appelt, a geographer working with the Council for Northeast Economic Action, can tell you.
The council, a nonprofit development and research corporation, has just designed a first-of-its-kind system in conjunction with the First National Bank of Boston for identifying oversupplied and undersupplied industries in urban areas.
The initial report focuses on the Greater Boston area. That is how Dr. Appelt knows that fire damage contractors, picture-framing shops, manufacturers of loose-leaf binders, and 46 other industries have significant development potential in the Hub.
That's also how she knows that 140 industries -- including bowling lane refinishers, pickle wholesalers, and makers of cloth bags -- face keen competition here.
For years, says First National Bank senior vice-president and chief economist James M. Howell, industries were distributed at random. ''You just knew deep down inside,'' he says, ''that the market mechanism was not what it was cracked up to be in Economics 101'' -- that it could not guarantee a balance of industries in every city.
The study supports his conclusion. Seventy to 80 percent of the industries surveyed, it finds, are ''roughly'' in equilibrium. Customers wanting the services of the other 20 to 30 percent, however, find either a dearth or a glut of individual firms.
The bank looks on the study as useful both to its own lending officers (who hope to help finance new neighborhood businesses) and to the nation's Community Development Corporations (CDCs).
Dr. Howell says that CDCs -- neighborhood-based organizations seeking to upgrade inner-city areas through real estate development and business financing - are shifting away from an adversarial relationship with the private sector. Now, he says, they want ''a piece of the action.''
But the questions they are asking, he says, are ''what is the piece, and what is the action?''
The piece, in some cases, consists of becoming a financial partner in local businesses. And because the report helps determine what kind of action is likely to succeed, local community groups so far are supportive. ''I think the study is a real help,'' says president Syvalia Hyman III of the United South End/Lower Roxbury Development Corporation. He feels the bank (which is battling its reputation of indifference to neighborhood needs) deserves credit for devoting resources to the report.
The report begins by selecting 551 kinds of businesses from the 3,500 represented in Boston. These 551 are selected because they are especially appropriate to inner-city settings: relatively simple to manage, requiring only limited space, and needing only $50,000 to $100,000 in capital.
The methodology, which compares the numbers of operating business establishments in these 551 categories with corresponding counts from six other similar-size cities, is not new. It rests on the assumption that demand for business services is reasonably uniform from city to city.
Alexander Ganz, research director of the city's redevelopment authority, notes that ''the technique has most usually been used by developing countries'' to discover what new industries might be most successful. He praises it as ''a very useful exercise,'' although he calls it ''offbeat'' and ''counterintuitive.'' It shows, he says, that Boston may be focusing too narrowly on its proven strength in high technology and ''neglecting opportunities.''
Council executive director Linda Frankel, who hopes to market the system to about 50 other cities, is currently talking with ''two or three'' banks in Cleveland, with the Chamber of Commerce in Charlotte, N.C., and with other municipalities. She puts the cost of each report, which will remain current for 18 to 24 months after completion, at between $35,000 and $50,000.