By JACOB KANCLERZ
Capital News Service
LANSING – Starting next month, 54 Michigan businesses will be selected for a program that grows proven businesses to create jobs.
Some experts say that’s the best way to do it.
For the $250,000 pilot program, the Michigan Economic Development Corp. has contracted with the Edward Lowe Foundation, a Michigan-based non-profit that supports entrepreneurship, to work with the state’s businesses. The Michigan Economic Development Corp. and local economic development agencies like the Mackinac County Economic Development Corp. and the Marquette County Economic Development Corp. will pick these companies. The businesses will be notified by Oct. 19, and the programs will start shortly after and extend into early 2012.
Companies can’t sign up for this pilot program, said Tom Rico, a sales support manager for business and community development at the Michigan Economic Development Corp. He suggested businesses contact their local economic development organization to be considered.
Eight companies have been nominated from the Upper Peninsula, said Joel Schultz, a board member on the Upper Peninsula Economic Development Alliance. Among them are Superior Extrusion Inc. and Argonics, both based in Gwinn, which is south of Marquette. He said there’s still time for nominations to be made in other regions, which are limited to eight per region, Amy Clickner said, the CEO of the Lake Superior Community Partnership.
Rob Fowler, president of the Small Business Association of Michigan, said that economic growth has often been focused on recruiting businesses from elsewhere. The Lowe Foundation calls that economic hunting. The organization calls growing existing businesses economic gardening. Its roots are in a program started by Chris Gibbons in Littleton, Colo.
Gibbons started the concept in 1989 after the largest employer in that town re-located, according to the Lowe Foundation. The approach was to focus on assisting and guiding companies already in place to continue their growth. The success there led the Lowe Foundation to develop its nationwide program in 2009, said Mark Lange, the organization’s executive director.
The selected companies have to be what the Lowe Foundation terms as second-stage companies, Rico said. Such a business has to employ six to 99 workers, demonstrate growth in two of the past five years and be projected to grow revenue by $1 million in the next three years, among other criteria.
Lange said the focus is on second-stage companies because research shows the most job growth comes from existing companies that survived the startup stage.
“Everybody gets excited about entrepreneurship,” he said. “They tend to focus on startup companies and think that almost all of our new jobs come from startups when in fact existing companies create more jobs than startups do. Those jobs are generally more sustainable, they’re longer lasting, and those companies stay around longer.”
In August, the Lowe Foundation released a study that found existing companies created 71 percent more jobs than startups did from 1990 to 2008 in the U.S. With that in mind, the program focuses on what these second-stage companies need to grow, which are significantly different from startup companies’ needs, Lange said.
Companies from various regions and industries in Michigan will be selected to work with a five-person team of certified experts employed and trained by the Lowe Foundation. The team members are experts in customized market research, social media and search engine optimization, business strategy and management or geographic information systems. The fifth person is the team leader who has had experience running a business. The team leader meets with the CEO of the company to determine their needs.
Wanda McDavid is a certified expert who will be conducting customized market research for companies in Michigan. As the president of the research firm Access Information, she said the research her company compiles is beneficial to second-stage businesses because they often don’t have the ability to tap those resources.
“The companies are running their business, and they know they have business issues they have to address,” McDavid said. “We spend time working on those business issues, doing the research. Many times the specific information they need is very hard to find.” McDavid’s company typically assists businesses with information on their competitors and how to conduct best practices financially.
Lange said the Lowe Foundation has hosted pilot programs in states like Kansas, Georgia and Florida, but he warned that job-creation doesn’t always kick in right away. The program has only been around since 2009. However, Lange said Florida’s economic gardening program has produced some initial positive results. In a study released by GrowFL, the state’s official economic gardening assistance program, companies participating in the program combined to create 3,285 jobs from 2009 to 2011.
Judy Goater, the director of information services at Access Information, said she’s heard good feedback from the companies she and McDavid have worked with.
“One of my companies I remember being very excited about because they said, ‘Yes, the research itself helped us to get a new project, and we just hired eight more people to come on board to help with this particular project we got.”
Because it is a pilot program, each Michigan business will receive just 35 hours of assistance and planning with the team. If the program goes well, Lange said an organization like the Michigan Economic Development Corp. could set up its own economic gardening system with its own teams of consultants to assist businesses on a permanent basis.
Clickner said she was excited the agency is testing out economic gardening in Michigan.
“I do like the way that the MEDC has pushed and put as priority retaining and growing our businesses,” she said. “Attraction is part of it, business startups are part of it, but you need to retain and grow your businesses as your bread and butter.”
By JACOB KANCLERZ