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New Zealand's longest-running online daily news and commentary publication, now in its 25th year. The opinion pieces presented here are not purported to be fact but reasonable effort is made to ensure accuracy.

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A resource for entrepreneurs?

12 October 2021

Last week a new resource for entrepreneurs was opened right here in Tokoroa.

The Tokoroa Impact Hub is billed as "a modern co-working environment" and "a place to develop your dreams".

Last week I dropped in and had a chat with the woman running the venture and got a handle on what they're planning to do.

Whilst I applaud the goals of the hub, I'm afraid I have significant reservations about its viability in an area such as the South Waikato and I was also shocked to find that our local council has thrown over quarter of a million dollars of ratepayers' money into this venture.

So let's have a look at why I have reservations about this "investment" by a council that has repeatedly shown itself "sorely lacking ability" when it comes to sensible use of public funds.

The woman running the whole shebang, Ms Nanice Ginnen can not be faulted for her enthusiasm and aspirations with respect to the hub. She's keen as beans and seems happy to put in as much effort as she can.

The real problem, from where I'm standing, is that it's just not going to be even remotely financial viable in a town like Tokoroa.

Retail space in Tokoroa, despite the depressed nature of its CBD, is still pretty expensive so that single overhead alone will be a major drain on any revenues.

And speaking of revenues... it seems that income is created by "memberships" which vary, based on your requirements. Sadly, the website for the Tokoroa hub is pretty bad, with no indication of costs or benefits with everything being hidden behind a need to "sign in" as a member to gain access. You should *never* hide your marketing info behind a paywall because then it is totally ineffective.

Also of interest is the fact that the hub's web presence doesn't operate under its own domain name but instead is under the domain name nexudus.com an cloud-based service provider. This is a small detail but all entrepreneurs understand the importance of establishing and maintaining a strong branding presence so the dilution of the "Impact Hub" brand in this way is not so smart.

Anyway, about those prices...

I did find some prices for the Waikato Impact Hub which (strangely enough does operate under its own domain name). Did I mention the importance of consistency when establishing a brand?

As you can see, the services on offer are, at least in my opinion, not cheap.

At $172.50 ($150+GST) a month for "up to" 2 days a week access to a shared desk in an open-plan area between the hours of 9am and 5pm is not a bargain, at least in this entrepreneur's opinion. The reality is that most small, sole-trader entrepreneurs value their limited capital for the scarce resource that it is and having a desk in an open-plan work-area is really little different to having a desk in your bedroom or living room at home so why pay $150 for the privilege... especially when it's only going to be available for such a limited time each week?

Of course if you want to blow more money you can purchase "permanent desk resident" status that gives you 24/7 access to your own dedicated desk, albeit still in an open-plan area, for closer to $400 a month.

While these prices are certainly less than the cost of a serviced office, they're still a hell of a lot of money to any struggling entrepreneur for what amounts to little more than access to a desk.

The bigger problem however, is that I really don't think there are enough entrepreneurs in Tokoroa or even the wider South Waikato to make this venture an economically viable proposition. I know that most of my entrepreneurial attempts since I moved to the district have been scuttled by the local council whose words still ring loud in my ears when the (now) deputy Mayor told me "Bruce, you have some great ideas but, because it's you..."

Just to check on progress, I have walked passed their flash space in the CBD several times this last week and yesterday. The place has remained totally devoid of people -- I did not see a single "entrepreneur" or anyone using the desks or the plush new sofa in the front window. I should add that the past week has been their "grand opening" and they've been offering use of the desks and "co-working" area for free to anyone that wanted to avail themselves. That it remained empty, even when free, does not bode well for the future when such use will command a monthly stipend.

As they announce in this press release the South Waikato District Council are proud of their $270K investment in this facility but I have some questions for them:

Firstly, who in their right mind would invest in a co-working environment in the middle of a pandemic? Yes, Covid 19 has been a thing for 18 months now so it was certainly a thing when the investment decision was made. At L3 and higher lockdowns, co-working simply is not a thing but the monthly burn of rent, salaries, power, internet, etc will continue to drain that "investment" without pause.

Secondly, why was the money "given" to the Impact Hub rather than loaned to it? Indeed, why should local councils be funding *any* private business in the district and thereby effectively raising a barrier to other players in the same marketspace from also investing? After all, how can any other similar business hope to compete with Impact Hub when that new entrant would not have the benefit of $270K given to them by ratepayers? This is *NOT* how you encourage business investment in your town or district, in fact quite the opposite!

Thirdly, whenever I've approached council about investing MY OWN MONEY in a venture here, they have demanded a business plan, even though not a cent was sought from their own coffers. I would love to see how the Impact Hub business plan provided evidence to support its projected revenues from such a low decile community. Or, am once again right in my assertion that this council wouldn't recognise a decent business plan if it bit them on the arse?

The sad reality is that councils (and I refer to both the governance and the executive) tend to know bugger all about what it takes to be an entrepreneur. Entrepreneurs do not work in the public service, they get out and create their own opportunities rather than sit behind a desk and collect a monthly salary. It is ridiculous therefore, for a bunch of non-entrepreneurs to have judged the merits of a proposal that was based on serving the needs of entrepreneurs -- and hence we have $270K of public money being flushed down the toilet yet again.

Sadly, I predict that the Tokoroa Impact Hub, despite all its worthy goals and plans and despite the best efforts of Ms Ginnen, will not survive. It will become yet another of the growing number of "great ideas" that the council has funded in its ignorance of "the real world" and which have simply shut up shop after a short period because they were never actually viable in the first place.

This is an utter tragedy for the low-income earners in this district whose pockets are regularly raided by council to pay the rates bill. Instead of investing in the really worthy projects that could actually improve the fortunes of our local businesses and residents, this council continues to demonstrate its ignorance and arrogance by throwing money at follies such as this.

Bookmark this column and come back in 18 months.

Of course even if the Impact Hub has crashed and burned (along with the $270K thrown at it) by then, nothing will have been learned and the reckless waste of public funds will continue because that is the nature of the beast we're dealing with. Those in the community who repeatedly and freely offer the benefit of their own skills, knowledge, understanding and experience are rejected out of hand and instead, ignorance and arrogance sees public money squandered again and again.

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