Mining Hardship for Prosperity

The Appalachian Regional Commission, Southern Research and a team of college interns assist small businesses in four counties hit by a coal mining slump.

Sister and brother Julie Smith Madison and David Smith show off their pepper products. Photo by Barry Fikes

Brother and sister Julie Smith Madison and David Smith were a preschool teacher and machine worker before they decided to go into business together in 2016.

“It was a totally different turn in life,” says Madison. “We both had moved away for various reasons but found ourselves back in Fayette County, so we decided to do it.”

What the siblings decided to do was to buy Alabama Sunshine, a pepper farm and store owned by family friend Fred Smith. His products included jellies, jams, sauces and other pepper-related products.

“The really neat part of our company is that we grow all the peppers that go into our products here in Fayette County,” Madison says. “We’re farming on fourth-generation farm land, so if the product has a pepper in it, we grew it.”

Madison knows peppers, but she didn’t know the ins and outs of owning her own business. One of the places she turned to was the Prosperity Fund, an initiative of Southern Research and the Appalachian Regional Commission.

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The $2.4 million program, launched in June 2017, aims to help small businesses in Walker, Tuscaloosa, Jefferson and Fayette counties, all areas that have been hit hard by the steep downturn in the coal industry. The goal? To help add jobs to these counties with a grass-roots approach.

“Traditional economic development is about building spec buildings and bringing in the Hondas of the world,” says Steven Puckett, managing director of the Prosperity Fund. “Two-thirds of all employees, though, work for small businesses, and this initiative is focused on small business. Bringing in Honda and Mercedes is extremely important and good, but there are lots of people working on that. There’s no one else working with small businesses at their businesses.

“It’s amazing to see the difference that just going out in the field and meeting on their own terms and own time schedule makes,” he adds. “That whole grass-roots focus of doing things makes a big difference.”

Puckett and his team of 11 college interns travel the four-county area, searching for small businesses and entrepreneurs that they can help. They consult with them, offering their expertise and networking to help with most anything that might help a small business grow and add jobs.

“What we’re not doing is providing dollars for startups or for them to grow their business,” says Bill Grieco, Southern Research vice president of Energy & Environment and one of the founders of the Prosperity Fund. “We’re providing help. We’re doing things like providing business plans or technical assistance or helping the mom-and-pop shops market themselves. We help them develop websites. We determine what they need, and then we find people to help them accomplish it.”

After 12 months of the initial 30-month program, the Prosperity Fund has worked with about 55 small businesses in the four-county area, creating about 48 jobs. “We’re committed to the Appalachian Regional Commission over that 30-month period to create 80 jobs, so we will exceed that,” Grieco says.

Services offered to businesses are free, thanks to $1.2 million in funding from ARC and another $1.2 million in matching funds being raised by Southern Research. “For every dollar someone gives us, we can bring a federal dollar to bear and double it,” Grieco says.

Some of the fund’s clients have included:

• A&A Machine in Jasper. The Prosperity Fund helped develop a new processing capability for stainless steel, which resulted in cost-savings for the company.

• Chonex in Jefferson County. The Prosperity Fund has helped validate proprietary technology for the startup that produces livestock feed from the larvae of black soldier flies that feed on chicken manure from poultry producers.

• Fannie’s Bistro in Fayette. The Prosperity Fund worked with the café to come up with menu ideas, a logo and website.

In the case of Alabama Sunshine, Puckett met Madison and Smith through Danny White, head of the Fayette Area Chamber of Commerce. Puckett and his team determined that they could buy their glassware from China, reducing their number one expense by up to 50 percent.

“They have been really helpful when it comes to the import process,” Madison says. “It has been really nice because number one, I wouldn’t know the steps to do it, and two, I’m so limited in my time that I already feel pulled in a hundred directions.”

The Prosperity Fund also has helped Alabama Sunshine with marketing.

“They’ve suggested T-shirts and other items, and they never seem to run out of ideas,” Madison says. “We’re just really grateful for the interest in small business that they seem to have.”

Resource Fiber is located in Alabama’s Black Belt, which doesn’t include the Prosperity Fund’s four-county area, but the fund has helped identify product development opportunities in the counties the fund serves, says Ann Knight, who founded Resource Fiber in 2011 with her husband, David, and former Alabama First Lady Marsha Folsom.

“Through the cultivation of bamboo, Resource Fiber has the goal of serving as a catalyst to attract other industries who utilize bamboo fiber to locate in Alabama, and collaboration with Southern Research serves as a key component to making that happen,” Knight says. “The Prosperity Fund will enable Resource Fiber to advance product development and the expansion of economic development around the mass cultivation of bamboo and the manufacturing of bamboo industrial products in Alabama.”

The Prosperity Fund is looking into creating an angel network of some kind, which would allow for some money to be invested in small businesses. They’re also looking into expanding the Prosperity Fund model into other areas of Alabama and perhaps other states. That might lead to another funding model when the initial Appalachian Regional Commission agreement is over, Grieco says.

“Ultimately, maybe town X in state Y has the same problem and believes our model might work,” he says. “They would pay us, we would hire a small team, and that team would be the boots on the ground there.”

Being part of those boots on the ground is especially gratifying work, because small business owners often have a lot at stake, Puckett says.

“I met recently with a big ol’ tough-looking guy, and he had tears in his eyes,” he recalls. “He said, ‘My daddy built this business 40 years ago. Don’t let me be the one that destroys it.’ We’re going to work not to let that happen.”

Alec Harvey and Barry Fikes are freelance contributors to Business Alabama. Harvey is based in Auburn and Fikes in Tuscaloosa.

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