A year ago, Elsie Russell watched as her home décor shop, 2 Chicks Home and Market, was heavily damaged by a fire that ripped through the 300 block of historic downtown Denison, Texas.
“I just stood across the street with a crowd of people, watching it burn,” she says. “I was thinking ‘I’ve lost everything. Maybe I just need to shut the business down.’”
Naturally, she wasn’t sure if she wanted to attend a boot camp for small business owners that was already scheduled for later that month. Still, friends convinced Russell to attend, and there, among other things, she learned the importance of ecommerce and online business.
She set up new services like curbside pickup and free local delivery through her website. And now, thanks in part to a $6,000 e-commerce acceleration grant from the city, 2 Chicks is booming as never before.
“Since we’ve added ecommerce, our sales have been doubling every month versus last year,” says Russell. “Thanks to our website, a lot of people have found us and followed us and are staying with us.”
Stories like Russell’s are playing out throughout Denison, a city of 25,000 located about 75 miles north of Dallas.
Businesses that had sold mostly to the locals are now selling electronically throughout the U.S. and beyond. They’re also seeing a huge increase in foot traffic as visitors from Dallas and other nearby communities, desperate to escape for a day of shopping, are starting to discover the idyllic downtown.
“People learn about one of our businesses online and more are deciding to schedule a trip to Denison to visit the store,” says William Myers, VP of business development at the Denison Development Alliance.
“I guess you could call it ecommerce tourism.”
The result: Even as much of the country struggles, sales tax revenue in Denison rose 8% in the fiscal year ended Sept. 30.
Denison’s success holds important lessons for other small city mayors and policymakers.
Businesses with websites — whether it’s a small business advertising its wares or someone’s online side hustle — reduce unemployment and make communities more resilient during economic downturns.
Local governments can help the entrepreneurs behind these efforts with training, networking opportunities and financial support. And unlike traditional forms of economic development, such as tax breaks, success has more to do with attention to detail than with large outlays of public funds.
“We hear so many people talking about surviving, but we’re thriving,” says Janet Gott, who has been mayor of Denison since 2018. “And we wouldn’t be where we are today if we hadn’t moved so quickly. Will our businesses still have a presence on Main Street? Absolutely. But the bulk of their business is going to come from e-commerce.”
The city looks for ways to help businesses
Denison’s ecommerce push is just the latest chapter in a decades-long collaboration between city government and the local business community.
Since 1988, the City’s Main Street Program has offered grants, skills training and promotional help to downtown businesses. In 2015, the city began a multiphase, $45 million beautification of the historic, 31-block shopping district.
The city’s 2019 financial annual report includes no mention of the words “ecommerce,” “online” or even “digital.” But when Texas Governor Greg Abbott issued a statewide shutdown on March 31, Myers immediately started looking for data on how increasing online business activity could help the city cope.
He eventually found Venture Forward, GoDaddy’s research initiative on the economic impact of online entrepreneurs who run the 20 million microbusinesses in the U.S.
The data shows that a higher concentration of these “ventures” in a city or county leads to lower unemployment rates and helps with faster recovery from economic downturns.
The stat that grabbed Myers’ attention the most: adding even one highly active venture per 100 people can increase a community’s median household income by $408.
“This was exactly the type of information I needed,” says Myers. “Even if it turns out to be half of that, it’s an extraordinary number.”
A former real estate broker who joined the DDA in 2013, Myers spent the next three weeks calling more than a dozen online business experts just to learn the basics, like what’s a “conversion” and what’s a “bounce rate.”
He and his team spent hours studying how different companies set up shopping carts, communicated with customers and provided support via their websites, “just so we could call up businesses and have some idea of what we were talking about.”
Related: How micro-businesses have blunted the economic impact of COVID-19
Designing a program to boost online selling
Myers’ first idea was to set up a marketing cooperative, where the city would promote online sales for local businesses. But talking with local business owners quickly convinced his team to take a different path.
A huge percentage of Denison’s brick-and-mortar businesses were at digital square one. Maybe they put some posts on Facebook or Instagram, but hardly any could take a digital payment. Even fewer had a proper ecommerce platform.
Since an online marketing program wouldn’t be of much help to companies that couldn’t take online orders, Myers’ team quickly landed on other ways to help. The city updated policies to allow additional restaurant seating on the sidewalks. It also created sandwich boards reserving several curbside pickup parking spaces on each block for businesses that were still open for business even if the doors were shut.
Then Myers’ team settled on the idea of the e-commerce accelerator incentive: grants for brick-and-mortar businesses that may not survive if they couldn’t quickly ramp up sales to sustain cash flow.
The city didn’t want to take a cookie-cutter approach. “Every business is different. Every single one of them,” says Myers. “So we didn’t want to tell them what to do. We wanted to help them find what was best for them.”
In May, just two months after Denison’s stores were closed due to COVID-19, Mayor Gott approved a program to provide $6,000 grants to help local entrepreneurs succeed online.
The terms required recipients to invest 75% of the funds to create an ecommerce capability, such as buying technology to build a store and preparing a marketing campaign. The other 25% needed to be spent on advertising and other expenses to promote that work.
Also, the grants would be available only on projects with a total cost of $8,000 or more — meaning the business owners would have to fund some of the projects themselves. While many municipal grants offer to pay 50% of the cost of projects, Denison bumped the cap up to 75% to encourage business owners to hire local digital marketing consultants, photographers and other experts, and to invest in online tools.
“These business owners are experts in what they do, not in websites or doing social media,” says Myers. “Some of our restaurants just had bad pictures of food.”
Spreading the wealth beyond the grant recipient results not only in better websites with better photos and features, but in a richer local digital economy. Using the Venture Forward dataset, researchers at UCLA recently established that every online entrepreneur in a community creates more than two jobs (whether or not they are actual employees).
Related: How one town used federal CARES Act money to support its small business community
A grant in action
Myers expected to get 10 applicants at most, but the city handed out 16 grants in the fiscal year. One of those was Russell, who stayed up until 3 a.m. working on her application on the night the program was announced.
Russell also had to rethink her design and DIY workshops. She quickly created kits of materials that people could buy to do a particular project, such as making a painted mini Christmas tree, from the safety of their own homes. And by offering classes online, she’s able to teach far more people than could have fit in the workshop area of the store.
“She’s been able to expand her business far beyond what she could have done if it was all brick-and-mortar,” says Mayor Gott.
Russell used her grant money to purchase a webcam for the virtual classes and upgraded her point-of-sale system so it integrates with her inventory system. She’s also working with Melanie Medina, owner of Local Socialight and a digital marketing expert, to create YouTube and Pinterest channels where she can sell products and recordings of her classes.
“We’re trying to hit all of the mediums out there,” says Russell. “I wouldn’t have been able to do all this so soon without that grant.”
Not only is Russell more successful, but she’s also happier now that she’s brought on partners to handle the social networking, bookkeeping and other tasks.
“I started this business because I have a passion for sharing inspired things and helping people make their homes beautiful. I had gotten so far away from that with the daily tasks of running a shop as a sole proprietor.”
Denison’s city government is thrilled with the return on its $100,000 grant program investment. The businesses have invested an additional $40,000 and they are now much more vibrant enterprises. “We wouldn’t be where we are without it, that’s for sure,” says Mayor Gott.
Related: Download the Fall 2020 Venture Forward report
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