Building at a Loss

Note: This is one part of a freeform blog post series. It’s goal is to get a big idea out there. To workshop it. It may not be complete. It may end abruptly. You have been warned. 🙂

Here in southern Orange County, NC, aka Chapel Hill and Carrboro, land is very expensive. Thus housing is expensive. Fact is profiting from land sales is a very old occupation. Every since land stolen from Native Americans was deeded by King Charles II to wealthy Englishmen this property has been a key wealth source.

Before the University of North Carolina was constructed land around it has been held in high value. Now in the 21st Century it’s very hard for working people to buy a home.

I think there is a answer to this problem. It involves building workforce housing, homes for people who work and have good jobs, and not making a big profit doing it. Maybe even taking a loss.

During my research to make Carrboro Coworking thrive I did the math to construct a office building. Plus I’ve talked to others who have done similar math. The bottom line is building anything here in Carrboro is expensive. To do it and keep it alive, in the traditional way, you have to make a profit. Not just a modest profit but a big one.

One of my bigest personal lessons running a business was big profit must be your goal. Not necessarily because you love money and want a lot of it. But because without serious cash on hand you can not meet the challenges of being in business. Such as unforeseen costs or borrowing more money than you have to take your business in a new direction. At the end of the day my business ended because I ran out of cash. I did not run it to make a big profit. That was because coworking is not a big profit business model.

So it runs counter to established business ideas to start a venture that could not make a big profit. First you may think, “Why not start a non-profit?” Nope. The term Non-profit is a misnomer. Even tax exempt organizations that are formed to help others must have a positive ballence sheet. They usually do this by having more money on hand than their expenses are. That is just breaking even. To succeed at their missions non-profits must “profit”. Even in their own way via grants.

My idea is to create a new hybrid socially responsible organization that builds without a big profit on each project. All with the blessing and approval of equity investors.

But how?