Small businesses face constant challenges. The economy's outlook is dampened by inflation, with the Consumer Price Index at 3.2% annually for October – far above the FED's target of 2%. Inflation expectations are putting pressure on businesses to better compensate their workers, which in turn raises supply costs and harms production. High interest rates also make it difficult for small businesses to finance their operations and potentially expand. According to data from the National Federation of Independent Business, small business optimism has hit a five-month low, with owners feeling pessimistic about the current economy.
In times of economic uncertainty, small businesses rely heavily on the support of their local communities. Vincent Aguirre, a newly elected member of the Greencastle City Council, takes office on Jan. 1, 2024. He says the city has “lots of opportunities, but we can do more as a community to help make it easier” for these enterprises to succeed. The city has an approximate population of 10,000 and a median household income of $47,000 per the 2020 Census.
There are opportunities for small businesses in Greencastle to receive financial support. The Greencastle/Putnam County Development Center maintains a revolving loan fund where businesses can apply for a $20,000 revolving loan at a low interest rate. Repayments get recycled back into the pool, which grows the fund for future use.
Aguirre, who served on the Board of Directors, says these funds provide small businesses more flexibility and outreach in the early days of operation. His own business, Distinct, has taken advantage of these funds. Distinct provides website design and support to small businesses and nonprofits. Aguirre says the fund “Allows small businesses to jumpstart their activities in the community. As [businesses] pay that back, more small businesses can loan from that fund… I think 15-20 businesses have taken advantage of that now.”
In addition to the local fund, Greencastle small businesses can receive funding from the Indiana Small Business Development Center.
Greencastle may also benefit by being the home of DePauw University. Prime Real Estate owner Eric Wolfe says, “There is an absolute correlation between quality establishments and DePauw University… If we didn’t have DePauw, we certainly wouldn’t have as good of a small business community as we do.”
Businesses near campus enjoy the customer base it provides. Restaurants, bars, and retailers take advantage of the money spent by students and staff. However, Greencastle Mayor Bill Dory says that small businesses in Greencastle must be careful and creative to appeal to the DePauw community. “It requires some unique marketing techniques, especially because we have around 1,800 students here on campus that turn over every four years. It’s like having 1,800 new residents they have to reach out to meet and provide for,” Dory said.
Small businesses can also recruit students to be part-time employees. Elliot Dunbar, an owner of Lost Hollow Beer Company, says they utilize students for quality help. Dunbar says “We’ve had students asking us how they can be involved… We are working with a student who will be helping us on the brewing side and will give us data on the commissions side of things. It's incredible to be in a college town.”
Furthermore, Greencastle can be a quality spot for remote workers to live. The city offers Fibre to the Home and Fibre to the Business internet, which provides high-speed and reliable internet connectivity. Located between Terre Haute and Indianapolis, Greencastle can offer remote workers access to these larger hubs as a smaller community. These opportunities may make it easier for local business owners to settle down long-term in the city.
Community members also discussed the challenges small businesses could face in the city. Zoning laws, for example, can also discourage economic growth. Greencastle typically follows traditional zoning practices. Instead, Aguirre is a proponent of mixed-use zoning: A planning strategy common in urban areas that promotes the coexistence of residential and commercial properties in close proximity. Mixed-use zoning exists mainly in the downtown area of the city. Aguirre says more of this in Greencastle will lead to growth opportunities and a more connected and vibrant community. “If we allow more mixed-use zoning, we can encourage growth in neighborhoods that don’t currently have it… Old Main Street used to be a thriving downtown for Greencastle. If we work on allowing more mixed-use growth with some more affordable housing there, we can really build up a community that can be a complement to the [downtown Greencastle] square,” Aguirre said.
Dory shared some potential drawbacks of more mixed-use zoning in the city. “Sometimes, if you have a commercial business in a residential neighborhood, there could be a conflict between the hours of operation as opposed to what the residents want in terms of traffic, noise, and things like that,” Dory said.
Moreover, high commercial rental rates can be another concern. Prospective business owners may be priced out of purchasing property in the area. Aguirre hit on how current rates are less encouraging than when he started his business. “When I started my business, we rented a location on the square, a whole house of about 4,000 square feet, for about $400 a month… Right now, it’s really hard to find affordable rent. If you look on the square, the space is going for like $1,500 a month for about 1,000 square feet.” He added that “we [Greencastle] can do better to encourage more growth because there are a lot of startup costs here in Greencastle and that wasn’t the case five, ten years ago,” Aguirre added.
On the residential side, rental rates may also be a concern. A lack of affordable rentals could dissuade potential buyers. Wolfe touched on the state of the residential rental market in Greencastle and how it is connected to DePauw. “Our rental prices, much to renter’s chagrin, are very high and it's very difficult to find a rental here. That is in part due to faculty and staff coming in and renting… DePauw, and universities in general, are hiring more term faculty, who tend to rent rather than purchase. That means that our rental market is very strong,” Wolfe said.
Wolfe added that Greencastle needs more new homes to be built. “We need new homes desperately. We need builders, and that kind of investment. We also need our local governments to sort of catch up and figure out how to work with builders and developers to make those homes happen. Greencastle is no different,” Wolfe said.
Wolfe also highlighted the benefits new housing has on the local community. “Every time we have a new subdivision, it creates some energy, it brings new people in, it increases your tax base so you have more money for schools, libraries, parks, all of those amenities. These things can really increase the quality of life [in Greencastle],” he said.
DePauw and Greencastle have applied for funding through the Lilly Endowment’s College and Community Collaboration Initiative, which “seeks to help interested higher education institutions collaborate with a diverse range of stakeholders to enhance their communities for the benefit of residents and local businesses as well as for the institutions’ faculty, staff and students” per the Lilly Endowment website. Greencastle and DePauw are using a $250,000 grant to develop a plan to submit to Lilly that could earn the community up to $25 million of further funding to support the development of small businesses, among other possibilities. New housing is a top priority, according to Dory. He says expanded housing will help industries recruit talent and support downtown businesses. “Funding will help a number of our industries recruit talent. It also provides folks who live close to downtown with the opportunity to make use of our restaurants, shops, and services,” He said.
Small businesses in Greencastle encounter similar obstacles as other cities. Nevertheless, the local community plays an important role in attracting and supporting these enterprises. Greencastle already houses multiple small businesses and has the potential to thrive as a hub for economic development. At the same time, there are challenges to overcome to make this a reality.