Attract, Retain And Grow
“Put the entrepreneur at the center of economic development,” so says Dr. Tom O’Neal from the University of Central Florida Office of Research and Commercialization. This shouldn’t be such a hard concept to understand, but it can be. Part of the conundrum stems from how “entrepreneur” is defined – meaning seems to change depending upon whom you’re speaking to: politicians, economic development executives, civic leaders, business leaders, academic leaders and even entrepreneurs all seem to have a variation of the meaning.
When discussing economic development, there is one definition that creates clarity for everyone —entrepreneur is defined as someone who has created or leads a sustainable, scalable and growth oriented business. You may also hear entrepreneurial companies defined as Stage 2 companies. In general terms, Stage 2 companies generate $2 to $50 million in revenue and employ between 10-100 employees. But, they also can include incubator or startup companies running toward their first $1 million in revenue – and in today’s market, that can be as short as 30 days after startup.
So why is it so important to recognize sustainable, scalable and growth companies as the center of economic development?
The Three Legs Of Development
Economic development is a three-legged stool consisting of Attraction, Retention and Growth. Due to the public-private funding of most economic development organizations (EDOs), they are keenly focused on attraction. The recruitment of a company to an area gets all kinds of media coverage, thus, between recognition and public pressure for immediate results, EDO’s are forced to concentrate on the art of attraction. Retention is a continuing process of working with existing companies in a region and should never be ignored. Doing so could prove very costly in replacing the loss. Growth is the leg of the stool that is most difficult to manage and understand but I’ll try to simplify: it’s like planting a garden. You have to prepare the soil, plant the seed, pull the weeds, fertilize, add water, pray for sunshine and hopefully harvest something that’s beautiful —it’s HARD WORK, over TIME and takes a PLAN.
There is a great saying about success: “Success is the intersection in the road between opportunity and preparation, so often missed because it comes disguised as hard work.”
Entrepreneurial Economic Gardening of sustainable, scalable, it’s growth companies is a process that takes time; not an event with a short timetable. It’s like watching a cornfield grow, and because of that, it will never get the media attention it deserves. The media needs an event…bells and whistles…a beginning and an end. Covering process is not in their scope. Yet, the process of entrepreneurial economic gardening develops the most jobs, a diversified economy and also provides prosperity for the citizens of the community.
Here Are The Facts
In Florida, Stage 2 companies currently make up only five percent of all the businesses, but account for over 30 percent of all the jobs. They lead in new job growth every year. Financial support of this sector has proven an 8:1 return on investment. This sector receives the least financial support, yet it provides the greatest potential for return.
As an example, $360 million was allocated to the Sanford- Bernham Medical Institute in Lake Nona that brought a promise of 300 jobs. This equated to more than $1 million invested, per job. By contrast, Grow FL, the leading organization that supports Stage 2 companies (sustainable, scalable, growth companies) across the state, has helped to stimulate or create over 6,000 jobs with less than $2 million in public funds, which equates to $333 per job.
Using this formula, if just 10 percent (or $30 million) of the money allocated to the Institute was applied to economic gardening through Grow FL, it could have created 90,000 more jobs in our state.
Things get real exciting when the entrepreneur is at the center of economic development. An examination of communities such as Austin, TX; Littleton, CO; Cleveland, OH; Nashville, TN, and Albany, NY makes the point quite clearly. These cities successfully have been attracting, retaining and growing companies, and these strategies are making a huge impact on their economies. Instead of just five percent of companies in these regions being identified as sustainable, scalable and growth oriented, the total is approaching 30 to 40 percent.
While these companies continue to move the needle for economic prosperity, they create better wage structure and build an economy that is diversified against recessionary times. These are clear cut and concrete reasons for all of us to buy-in and consider supporting the organizations providing guidance, funding and strategies to entrepreneurial, Stage 2 companies.