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States increasingly using ‘economic gardening’ as tool to nurture home-grown businesses

by Laura Tomaka ~ 2014 MLC Annual Meeting Edition ~ Stateline Midwest »
Over the past few years, the Midwestern Legislative Conference Economic Development Committee has focused on strategies for the region to work collaboratively on growth strategies and to help states rely less on tax incentives for attracting business.
These themes were examined again by the committee during its meeting in Nebraska in July, with a particular focus on how states can provide greater support to two key drivers of economic growth: innovative companies and entrepreneurs.
One strategy attracting more interest across the region is the idea of “economic gardening”: nurturing home-grown companies. Using this approach, states offer technical assistance to second-stage firms looking to develop new markets or refine business models.
These younger businesses are important drivers of economic growth, but their needs often don’t fit traditional state economic development programs. Startups, for example, often get a hand from small-business organizations or public initiatives that provide financing assistance. More-established companies benefit most from tax breaks and workforce-development programs.
But what is available for second-stage companies, those firms that have moved beyond the startup phase but have not yet reached maturity? Not enough, many state leaders are saying. But that is beginning to change thanks to programs in place in states such as Michigan and Nebraska.
Susan Holben, administrator for Michigan’s economic gardening program, told the MLC committee that participating companies receive assistance on everything from social-media marketing and market research, to search-engine optimization and data analysis of geographic information systems.
The program targets companies with between six and 99 employees and annual revenue of between $750,000 and $50 million. It has served 200 firms, Holben said, 97 percent of which have achieved some level of growth.
Nebraska began a similar pilot initiative in 2011 as part of its Small Business Innovation Act. The 33 companies served by the initial program have had average increases of 9 percent in sales revenue and 31.5 percent in employment growth, said Joe Fox of the Nebraska Department of Economic Development.

 

Article written by Laura Tomaka, CSG Midwest staff liaison for the Midwestern Legislative Conference Economic Development Committee.