Jane S. Shaw is Senior Associate of the Political Economy Research Center and was previously Associate Economics Editor at Business Week.
The Terrapin Station is a new restaurant in the basement of an old hotel in Bozeman, Montana. At the end of a dingy hallway you suddenly come upon a place that’s spiffy and charming, where the tables glitter, as the wine glasses—gaily filled with colorful napkins—reflect the light of kerosene lamps.
What makes this place exciting and heart-rending at the same time is that the proprietors are doing something outlandishly extravagant and probably foolhardy. They are providing a gourmet seafood restaurant for the middle of southern Montana.
You may not know much about Montana, but it’s nearly a thousand miles from an ocean and hundreds of miles from almost anything else. Bozeman is a town of 25,000 people. Most of them don’t have a craving for seafood, since Montanans grow up on hamburger or beefsteak. And the proprietors aren’t selling mere seafood—they are selling exotic preparations such as blackened red snapper and blue-fin tuna!
But that’s the way it is with entrepreneurs. They take unpromising locales and rough raw materials and try to fashion them in accord with an idea glowing in their minds—a new offering that will appeal to the customers that they believe (against all odds) are there. That’s why author George Gilder calls entrepreneurs “givers,” people who give first and receive rewards later—and they are rewarded only if people voluntarily pay for what they’ve been offered. Frequently, few people choose to pay and the business doesn’t last very long.
Sometimes, of course, enterprises succeed. Times change, new people move into town, tastes develop. Maybe this time it will work.
Thanks to an ever-renewing crop of such entrepreneurs, little Bozeman has riches beyond anything one could rationally expect—a store devoted exclusively to doll furniture, a nursery that supplies African violets only, two upscale kitchen boutiques, three high-toned wine shops, and a book store that carries the New York Times Book Review and books by Anne Tyler and Barbara Pym.
The trouble is, a lot of shops don’t last very long. At any one time, the Bozeman you see is a snapshot that will never be the same again. In the past two years, I’ve seen restaurants, exercise clubs, food stores, clothing shops, and furniture outlets come and go.
Shops rarely go bankrupt. According to Dun and Bradstreet, all of Montana had fewer than 200 bankruptcies in 1985. But businesses change hands frequently and for little cash. A flower shop, I hear, sold for $3700 several years ago—about what it had cost a few years before.
Statistics show that at any one time, about one in seven of all the businesses in our county is less than a year old or has changed hands within the year. New optimists take the place of old ones, renting out empty storefronts as others close their doors. I used to worry when I saw a “going out of business” sign, anticipating a great loss, but now I know that some other expansive soul will replace the one who lost his shin.
An economist recently observed that we get more goods and services in Bozeman than wedeserve. What he meant is that—as a result of all these eager entrepreneurs—we don’t pay the full cost of the goods and services we buy. Instead, the providers pay in the form of lost profits and lost fortunes. We, the consumers, are the beneficiaries.
I haven’t been able to determine whether the turnover in Bozeman is greater than in other places or just more visible. While Montana’s bankruptcy rate is lower than that of the majority of states, bankruptcies are a relatively rare phenomenon everywhere, and bankruptcy figures don’t begin to reflect the change of ownership that is so noticeable here.
If the turnover is greater here, it is because people like it here. The romance of the West and the freedom of the outdoors attract people. There isn’t much in the way of employment, so people bring their own—using up their grubstake from back East to start shops, restaurants, and businesses. They run them until their patience or their money runs out.
A business can’t operate over the long run unless it makes a profit. But Bozeman’s experience suggests that an endless succession of businesses can operate without profits—as long as there are romantic optimists to take up where the disillusioned leave off.
Glider says that entrepreneurs “orient their lives to the service of others.” They may not mean to do it at such great expense to themselves, but as I sip chardonnay at Terrapin Station and contemplate the blackened red snapper, I am grateful.