Going out on a limb. Taking the path less traveled. Making a leap of faith.
These are all positive ways of saying, “Go ahead, take a risk.”
It’s commonly known in Northeast Wisconsin that our culture is risk averse. You could say that’s partly why our economy does not experience the wild swings that other parts of the country do, as in the recent recession. But it’s also true that the cautious gene we share holds us back in many ways.
This risk aversion has been documented, going back to the 2004 study conducted by David Ward and NorthStar Economics that led to the launch of New North, Inc., which identified “lack of access to risk capital” as one of the greatest challenges for Northeast Wisconsin. Some steps have been taken to overcome this challenge, including the formation of new angel networks. Another is the creation of Fast Forward 1.0. The brainchild of the New North’s Small Business & Entrepreneurial Committee, Fast Forward is now in its second class (2.0) of grooming potential “gazelles” primed to quickly grow revenue and hire highly-paid skilled workers.
But what is it that keeps us from taking risks in the first place? I’ve witnessed a couple instances in recent weeks that have led me to ponder this question.
In one, a commercial developer, excited about the prospects of reviving a once-failed project, laid out all the facts about why the investors are in a great position to turn a large building from a former white elephant into a high-profile, sought-after location. It would revitalize a neighborhood while offering affordable rent in attractive surroundings for small businesses. The low price makes it a no-brainer.
However, naysayers in the community would not let the bankers forget the failed history of the project – never mind that what happened in the past has absolutely no impact on the building’s future potential. Without getting into specifics, I can say that two bankers turned it down without looking at the new business plan. The good news? A third banker is taking a harder look and may well come through. According to the developer, the deal is so sweet that it would be a greater risk to walk away from it. Kudos to the bankers who put more credence in numbers than naysayers.
Another scenario brought to my attention recently involves a commercial development that has been scaled back considerably from its first draft. From my observations, it’s a desirable project that will turn an eyesore into a beautiful residential development. Unfortunately, just as the developers were ready to break ground, one neighbor asked that yet another traffic study be done — very likely delaying construction for at least two months. In the construction world of our northern climate, that could easily translate into another six months’ delay.
Why didn’t the municipal leaders make a leap of faith in the developer? I’m told not one person stood up to defend the project and congratulate the developer for drawing up such a beautiful plan — and having the patience to scale it back as the neighbors desired. There may be more to the story, but if municipal leaders are skittish about taking a chance on a good idea, what does that say about the pace of progress in our region?
There may be many reasons we shy away from risks: contentment with what we know (read: never leaving home), fear of losing what we have (someone else might stand to gain), or sheer lack of vision (seeing the world through blinders).
This issue of Insight offers plenty of success stories from risk takers in our midst, starting with our cover story on Waupaca Foundry and its leaders who are taking advantage of the company’s new, hands-off owners. You’ll find this theme throughout this issue, but especially in “Rebirth: Developers breathe new life into downtown commercial projects”.
And when you encounter risk takers in the course of doing business – including those who launched a worthy project but did not, in fact, succeed — I encourage you to go out on a limb … and encourage them.