Updated 2 yearss ago
Traditionally, local economic developers have sought growth by trying to lure businesses from outside a region — so-called "economic hunting." Hunting can produce big economic gains, but it poses lots of challenges: It’s slow, uncertain and usually requires big marketing budgets and travel along with a raft of local and state incentives. It also may end up attracting highly mobile companies looking for the cheapest place to do business at the moment — and willing to leave for another town as soon as they believe the grass is greener elsewhere.
In recent years, economic developers have begun experimenting with another approach that has gained momentum as Florida’s unemployment rate has risen to over 10% and local governments and economic recruiters have seen their recruitment budgets shrink.
"Economic gardening" focuses on helping so-called second-stage companies with 10 to 50 employees and revenue of $1 million to $25 million — local businesses that have survived at least five years and are growing revenue and adding employees.
The gardening approach doesn’t view all businesses equally. Startups with fewer than 10 employees appear to produce more growth, accounting for a 40.7% increase in employment in Florida between 1993 and 2007, according to the Edward Lowe Foundation, a Michigan non-profit group that assists entrepreneurs. But the foundation points out that startups have a high failure rate, meaning many of the jobs they generate quickly disappear in the churn of business formation and failure.
Proponents of economic gardening say startups are important but believe the most effective way to build a local economy is to focus on helping the second-stage businesses, which accounted for a 36% employment increase in Florida between 1993 and 2007. The second-stage firms, they say, have demonstrated staying power and also tend to pay higher wages than startups.
Economic gardening — the term originated from the approach used to resurrect the economy of Littleton, Colo., in the late 1980s after an economic meltdown — doesn’t generate the headlines associated with big business relocations but can produce solid results within two to three years, its adherents claim. The approach is also attractive to economic developers because it doesn’t require lots of capital. More than money, second-stage businesses need the kind of sophisticated marketing information, information technology and management advice that much larger firms take for granted — and are often the key to expanding further, says CEO Nexus President Steve Quello, a Winter Park consultant who has worked with many of the economic gardening projects around Florida.
Case in point: Entrepreneur Jim Cossetta, co-founder of Naples-based 4What Interactive, a 14-year-old marketing, training and communications consulting company with $2.5 million in revenue and 19 employees, says his biggest challenge at this point is in human resources — identifying the right people to hire for middle management positions. That’s a topic he’ll likely focus on as he participates in the Collier County EDC’s new economic gardening program. The approach, he says, "makes total sense."
Last session, the Legislature passed a $10-million pilot program that provides $8.5 million for short-term, low-interest loans and $1.5 million for technical assistance.
The Jacksonville Regional Chamber of Commerce is among several local business groups in Florida that are incorporating economic gardening tactics into their development arsenals. More than a year ago, the Jacksonville group set up a second-stage volunteer advisory board and now hosts quarterly forums for 30 to 35 CEOs of second-stage companies. The forums are led by CEOs who have been through the trials and tribulations of building a sustainable, fast-growing enterprise — and are targeted specifically for second-stage firms.
"A second-stage business does not want to be in a startup class," says Sandy Bartow, vice president for small business at the Jacksonville Regional Chamber.
Separately, 10 Jacksonville CEOs participate in an ongoing peer-to-peer mentoring group called Peerspectives. "Probably the best thing is that everybody in the group kind of acts as my board of directors," says Joe Lemire, co-founder of Elyk Innovation, a Jacksonville internet strategy firm.
The state also has bought into the economic gardening approach in a fashion. Last session, the Legislature passed a $10-million pilot program that provides $8.5 million for short-term, low-interest loans and $1.5 million for technical assistance. The idea was to use the $1.5 million to pay a group of economic gardening experts to vet applications for the loan money and to offer marketing help and other kinds of assistance to fast-growing businesses from around the state that are seeking to expand.
The Black Business Investment Fund of Central Florida is handling the loan part of the program statewide, and the University of Central Florida’s Office of Research was tapped to administer the technical assistance portion. Tom O’Neal, associate vice president for research and commercialization at UCF, says the group will use the $1.5 million to launch the pilot program and to form an economic gardening institute at UCF. It will also acquire sophisticated databases and other tools as well as train and pay the people who will lead "Jumpstart" teams. Among the team leaders is Chris Gibbons, the business and industry affairs director for Littleton who pioneered the original economic gardening program.
The group plans to offer intensive and personalized assistance to about 300 companies statewide and assist about 700 more companies in a more limited way. The Jumpstart program began in October with 10 to 15 CEO participants in each of six regions around the state. Economic developers will meet with each CEO to identify his or her specific needs and then connect them with nationally known professionals in fields such as database management, search engine optimization and global information systems. Part of the program includes a rapid response solution within 24 to 48 hours to a CEO’s immediate problem.
"The Florida model," says Quello, "is very encouraging."
The Littleton Experience
In the late 1980s, Littleton, Colo., went into a tailspin after the loss of its major employer crippled its economy. Economic developers realized the town’s remaining businesses had many strengths, however, and focused on developing those strengths as a strategy to rebuild the local economy, which has emerged more diverse — and stronger.
Jacksonville Regional Chamber of Commerce. Has established a volunteer advisory board and hosts quarterly forums for 30 to 35 CEOs of second-stage companies. A CEO peer counseling program functions independently.
Collier County. Has started a gardening program. "We can spend our limited funds on our own entrepreneurs," says Tim Cartwright of the Economic Development Council of Collier County.
Florida’s Research Coast Economic Development Commission (Indian River, Martin, Okeechobee and St. Lucie counties). Will use a $200,000 grant to create a pilot program. Michael Corbit, economic gardening coordinator, is planning "boot camps" that will offer financial, legal, HR and other expertise.
The Economic Development Corporation of Sarasota County. Plans to encourage participation in the state program and also develop its own program, says Kathy Baylis, president and CEO of the EDC.
Information: 941/309-1200 ext. 100
Broward Alliance. Is starting an economic gardening program. "My gut’s telling me it’s going to work," says Bob Swindell, senior vice president of business development at the Broward Alliance. He adds, "Businesses are in survival mode out there."
Metro Orlando Economic Development Commission. "The companies themselves define what they need," says Ray Gilley, president and CEO of the Metro Orlando Economic Development Commission, which hosted a workshop on economic gardening in June.
Statewide. Fast-growing second-stage companies that want to apply for technical assistance from the state’s economic gardening initiative should contact Tom O’Neal, associate vice president for research at the University of Central Florida, who administers the state program. The Black Business Investment Fund of Central Florida is handling the loan portion of the program.
Technical assistance information: 407/882-1120 or email@example.com
Loan information: 407/649-4780 or bbif.com
The Edward Lowe Foundation offers conferences and training on economic gardening for local economic developers. A white paper with tips on implementing an economic gardening project is available at growinglocaleconomies.com.
Information: 800/232-5693 or edwardlowe.org