Innovative financing solutions in rural areas

The purpose of the project was to facilitate sustainable business establishment in rural areas by finding innovative financing solutions and strengthening collaborations between companies in Östra Göinge.

The availability of financing solutions is crucial for small and medium-sized enterprises to be able to start, grow and develop. The need for the project stems from the fact that there are currently limitations in terms of financing opportunities. Since other financing alternatives are often lacking, small businesses are also more dependent on bank loans, and with that the accompanying higher personal risk, than large companies.

In Östra Göinge there is a strong tradition of small businesses and industrial production, which are however exposed to strong competitive and transformation pressure. The municipality has a small private service sector and many entry-level jobs in industry have also disappeared through structural transformation and the growth of new jobs to compensate for the loss has not occurred. This poses a challenge to facilitate the effects of the transformation by promoting the development of companies in our region. Östra Göinge's unemployment has remained at high levels since the financial crisis in 2008 and is one of the municipalities with the highest unemployment in Skåne (14.9 % Arbetsförmedlingen December 2016). In parallel, a large influx of foreign-born people has contributed to new opportunities but also challenges in terms of more job opportunities. The challenges are not unique to Östra Göinge, but there is potential for spread regionally and nationally.

The project takes a holistic approach to business development in Östra Göinge, with a focus on sustainability and long-term sustainability for businesses in rural areas. The project will focus on finding and investigating new financing solutions that have not previously been used in Östra Göinge: adapting crowd-funding and circular economy to our rural areas, trying to create an association/network of the target group with a link to banks and other business promotion actors, new ways to get businesses/entrepreneurs to invest in other businesses/entrepreneurs/idea carriers and supporting idea carriers through, for example, mentoring.

CASE

• Find and facilitate innovative financing solutions for companies/entrepreneurs/idea carriers.
• Investigate the interest in and need for mentoring.
• Investigate the possibility of creating a network where those who have an idea can be connected with those who want to help finance/invest (Dragon's Nest).

Implementation

• Stage 1: Inventory and identify companies, entrepreneurs, idea carriers and financiers through outreach activities.
• Stage 2: Model development and inventory of the different models that exist for innovative financing.
• Stage 3: Start-up of the activities that have proven to work best in stage 2.

The project has been carried out in three stages: Inventory and identification, model development, and start-up and testing of models. Below is a description of how we have worked in the different stages. A project manager and a project employee have coordinated meetings and had contact with participating companies. Project funds have financed these services.

In light of the goals set, we can conclude that we have been right about the long-term goals, with regard to creating the right type of network for entrepreneurs and idea carriers in the countryside, which in turn has an effect on sustainable resource solutions. Financing has not proven to be the big problem, but rather resources in the form of human capital, networks and knowledge. A context where entrepreneurs have an exchange and exchange with each other. At the time of writing, it has been three years since the application was written and submitted. The project has been allowed to grow and be reshaped along the way in dialogue with Skånes Ess. The ambitions that existed at the time have changed and the focus has instead been placed on the long-term goals. We see the project goals that have been formulated today as effects of our ensuring the long-term nature of the idea on which the application is based. This applies in particular to project goals 4 and 5, which have proven to be optimistically founded. The model that has been developed is about enabling a progressive corporate culture. Ensuring that new jobs and companies are created is actually outside the municipality's powers. Ultimately, it is the idea bearers and entrepreneurs who must be responsible for those choices.

Of the project goals that have been set, four idea carriers have participated in the project and a mentor and a business designer from Krinova are linked to them. With this quartet of tripartite constellations, we have tested the bearing in the type of dynamics that the model is based on. For them, it has resulted in different outcomes. However, the benefit of the project has been the expanded network, contact with the municipality and with Krinova. Based on project goal 2, which relates to the entrepreneurs/idea carriers having developed their business, the goal achievement is 100 %. The same applies to goal 3, which concerns increased collaboration with several other companies in the area. This was something that was expressed at the final meeting in December at Kaffeterian in Broby (see financial background). One of the companies has switched gears and provided itself with a renewed paid board with cutting-edge expertise based on the company's needs. One of the board recruitments was made through a tip from one of the mentors. One of the companies has gained in-depth knowledge in administration and leadership and employed one person during the project period. A third company has gained in-depth knowledge in its specific field and an expanded network with companies in the same industry. The fourth and final idea carrier has worked with product development and target group segmentation to test sell its product before commercializing it.

The quantitative project goals have proven to be set far too high. No new companies have been created within the framework of the project, but Östra Göinge as a whole has had a net growth of 2.1%, which means 28 companies in 2019. We also see an increase in turnover among companies in the municipality. According to the latest figures, 13 companies have exceeded SEK 400,000, which we see as an indication of increased opportunities for employment. We also see an increased industry mix and an interest in shared resources where companies help each other.

It is difficult to say what impact the project has had on that increase, but the project has fulfilled an important function for the project management that took over when it opened up business knowledge in Östra Göinge and for the implementation of the model we want to continue working with.

The project has a strong ambition to create new jobs in Östra Göinge through new innovative forms of financing. They are trying to find new methods for financing good business ideas as it is currently difficult to borrow for entrepreneurship in the traditional way. A really good project where many new business ideas can find a place and develop. Based on the application, the project will have a high ceiling and an understanding of different needs that arise along the way. The application fits well into the strategy and contributes to the goals in the focus area of competitiveness. LAG sees it as important that results and opportunities are spread in the Skåne Ess area.