1. HARVEST
TIME
By Jack Roth
THE PRACTICE OF NURTURING HOMEGROWN
COMPANIES AS AN ECONOMIC DEVELOPMENT
STRATEGY REQUIRES FORESIGHT AND
PATIENCE.
COPYRIGHT 2009 EDWARD LOWE FOUNDATION - ART BY STEPHEN RAVENSCRAFT
>> Economic gardening, the underlying When the town of Littleton, Colorado,
faced a potential economic disaster in
economic model that stresses business 1987 due to layoffs of thousands of peo-
creation and expansion, has gained a foothold ple by the community’s major employer,
in Florida thanks in large part to a coordinated the crisis strained the resources of local
residents and businesses and threatened
effort from Central Florida economic devel- to undermine the community’s overall tax
opment leaders who view local entrepreneurs base. Staring into a dark abyss, commu-
as the key to economic growth and prosperity. nity leaders disregarded conventional
economic development wisdom and
chose a divergent strategic path.
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2. Instead of seeking a quick fix to A PERFECT FIT
replace lost jobs by offering relocation No region can be truly successful at
incentives and tax breaks to firms out- economic development without local
side the region — an approach known universities and colleges that offer the
as “economic hunting” — they curriculums, mentoring and internship
embraced an alternate, long-term programs that help create and retain
entrepreneurial strategy designed to home-grown talent. This is true in
generate new jobs from the commu- Central Florida, where the University of
nity’s existing base of businesses. This Central Florida (UCF), Rollins College,
PHOTO BY JACQUE BRUND
approach, which became known as Stetson University, three top-rated
“economic gardening,” yielded remark- community colleges and other institu-
able results. During the 15-year period tions offer the tools necessary for eager
from 1990-2005, Littleton saw a 136 Ray Gilley young talent to blossom.
percent increase in the number of net Take the UCF Business Incubation Pro-
new jobs, outperforming Denver Metro, The EDC is part of a particularly gram, for example. Opened in 1999, it
the state of Colorado and the entire strong infrastructure in Central Florida has served more than 90 emerging com-
nation by a significant margin. Economic that supports entrepreneurship, busi- panies that have generated more than
gardening proved to be a successful ness growth, new-industry develop- 900 new jobs and more than $200 million
paradigm shift, as well as a burgeoning ment and recruitment in the region, but in annual revenues. This community part-
alternate strategy in the arsenals of
economic development commissions “We’ve always tried to create a balance between
across the nation.
When Florida Governor Charlie Crist recruitment and retention and growth.” — Ray Gilley,
went against conventional economic wis- president and CEO, Metro Orlando EDC
dom and — during an emergency bud-
get-slashing session this past January — the recent buzz associated with eco- nership provides early-stage companies
pushed through an economic develop- nomic gardening lies in how its basic with the tools, training and infrastructure
ment pilot program that called for money philosophy syncs with the current eco- needed to create financially stable, high-
to be spent on preferred small-business nomic climate. “A focus on existing growth enterprises.
loans and entrepreneurial support ser- companies is more practical right now, “Growing is our main role, which
vices, it marked a bold and significant especially when cities and states have hopefully leads to maintaining,” says Tom
leap toward adopting economic garden- limited economic funds,” explains John O’Neal, associate vice president for
ing as a model for the state. Fremstad, vice president of BE&K Inc. Research and Commercialization at UCF
The impetus for the state legislative and former vice president of the EDC. and founder of the incubator program.
action, however, started in Central Florida “You can spend limited funds on your “These young companies are run by indi-
years ago with the efforts of a handful of own entrepreneurs, and the benefits viduals who have the intent and where-
pro-entrepreneur advocates who have will trickle down to other areas within withal to grow, so we help reduce the risks
understood the importance of “fertiliz- the community.” by being coaches and mentors.”
ing” homegrown businesses and reaping In fact, a tough economy isn’t the The university has a built-in network of
the benefits of a strong harvest. only reason to consider an inside-out advisors, in the form of professors, who
economic growth strategy. Globaliza- are familiar with the particular issues asso-
THE NEW BUZZ PHRASE tion, the impact of the Internet, rapidly ciated with various industries. It also nur-
Ray Gilley, president and CEO of the changing technologies, and the emer- tures the region’s future workforce. “We
Metro Orlando Economic Development gence of new, fast-growth overseas help these companies write grants so they
Commission (EDC), stresses that the economies are forcing wholesale eco- can get money, and we connect them with
EDC has always incorporated economic nomic change across the United States, graduate students who work with the pro-
gardening as part of both an inside-out making business expansion programs fessors to write the proposals,” O’Neal
and outside-in economic development more important than ever. Despite this, explains. “So when they graduate, they
strategy. “We’ve always tried to create many cities and states still focus on get jobs with these companies. It’s a good
a balance between recruitment and recruitment, not expansion. So why is expansion model. We have many highly
retention and growth,” he explains. Central Florida, and now the entire skilled graduates currently working on
“Both the attraction of out-of-market state, so ahead of the curve? projects with incubator companies, so
companies into Metro Orlando and the The answer: an infrastructure geared we’re parlaying this local talent into the
retention and growth of companies toward an entrepreneurial growth con- region’s economic growth.”
already within this market are vital to tinuum and the presence of forward- At the Rollins College Center for
the regional growth process.” thinking individuals. Entrepreneurship at the Crummer Grad-
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3. ney Entrepreneur Center secures its role step in a company’s growth cycle when
as one of the many entrepreneurship- support gaps often exist and many
focused organizations working in concert regions fail to fill them. Ross emphasizes
to create one of the best regional entre- second-stage growth companies as
preneurship systems in the United States. essential to economic development, and,
The Florida High Tech Corridor Coun- in fact, they are the critical focus of eco-
cil (FHTCC), under the guidance of presi- nomic gardening. It became clear to Ross
dent Randy Berridge, partners with various that economic gardening could be an ini-
Central Florida institutions to attract, retain tiative worth considering for Central
and grow high tech industry and to help Florida when he read the 2006 Report to
develop the workforce to support those the President on The Small Business Econ-
industries in the 23-county service areas of omy, written by Orlando-based economic
UCF, the University of South Florida (USF), development researcher Steve Quello.
Tom O’Neal
and University of Florida (UF). “Steve has brought his knowledge
uate School of Business, the goal is to “The Corridor Council plays an integral and research on economic gardening to
provide the best possible training for its part in providing services to high-tech Central Florida because of the fertile
MBA students. The Center provides semi- companies, many of which wind up ground of high-tech, biotech, and entre-
nars, workshops, mentoring programs, becoming second-stage growth preneurial capital present here,” adds
internships and speakers, many of which companies with often limitless capacity Ross. “It only makes sense that a region
are open to the public and all of which to provide jobs and wealth for the that is so engaged and supportive of eco-
promote the retention of MBA talent. region,” says Ed Schons, director of nomic development would be at the fore-
“Economic gardening is the founda- Economic Development at UCF. front of this type of initiative.”
tion of what we are working to accomplish Additional support for regional entre-
through the Center,” says Cari Coats, preneurs comes courtesy of the Disney SECOND-STAGE
interim executive director. “We help our Entrepreneur Center, which has become GROWTH
To Quello, who has been studying entre-
“These young companies are run by individuals preneurship and economic growth for
more than a decade, economic garden-
who have the intent and wherewithal to grow, so
ing is more than a metaphor. It is a crit-
we help reduce the risks by being coaches and ical part of a broader economic devel-
mentors.”— Tom O’Neal, associate vice president for Research and opment story associated with the con-
Commercialization, UCF tinuum of entrepreneurship. There is a
leverage point, he suggests, where com-
students successfully start and grow their nationally recognized for small business munities can do better faster if they
own businesses. We also network with development and provides a variety of invest the right way. “With limited
entrepreneurs in the region who are look- services such as free business coaching,
ing to grow their businesses and offer networking functions, a resource library,
them access to resources and programs access to video conferencing and more.
that will foster successful growth.” “Whether an entrepreneur is just consid-
As a partner with UCF and five other ering starting a business, or a seasoned
Florida institutions, the Center for Entre- business is seeking tools for growth, the
preneurship hosts the annual New Ven- 10 separate business organizations
tures Business Plan Competition, which located at the Center can accelerate the
has resulted in the creation of viable busi- process,” says Jerry Ross, executive direc-
nesses that contribute to the economic tor. “Our region is very entrepreneurial
vitality of Central Florida. The Center also and we are very good at assisting the
partners with the Athena Powerlink Pro- start-up/first-stage ‘main street’ busi- Randy
gram, a national organization that pro- nesses. By supporting and accelerating Berridge
vides panels of volunteer business experts these start-ups into second-stage busi-
who advise female business owners on nesses, we are supporting the economic resources, communities have to allocate
important issues that can help them gardening concept of growing compa- resources strategically, and in times like
achieve growth and further success. The nies and, in turn, growing jobs.” this, industrial recruitment is not as effec-
Center’s inclusion as part of a partnership There is no doubting that a strong tive as supporting expansion programs
that includes Orlando Regional Chamber infrastructure exists in Central Florida to targeting resident businesses. Most jobs
of Commerce, Center for Entrepreneur- educate, create and retain start-up busi- are created and sustained over time by
ship and Innovation at UCF, and the Dis- nesses, but it is during the crucial next the creation and expansion of local com-
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4. Acknowledging that UCF was way Signs of Second-Stage
ahead of the curve with its incubator Growth
program, Lange and the Foundation A major principle of economic gardening
licensed its PeerSpectives Program to states that high growth/high potential com-
UCF. O’Neal was quick to embrace it as panies are critical to inside-out economic
a “graduate program” for his incubator development. They can be of any size but are
companies. PeerSpectives is a peer-to- ideally bracketed between having 10 to 99
peer, learning and problem-solving employees and $1 to $50 million in revenue;
program based on the best practices of established companies operating at a stage
CEO peer-learning programs across the beyond start up or early development. Most
Steve country. Quello worked in concert with importantly, second-stage companies are
Quello the Edward Lowe Foundation to study, particularly strategic.
design and implement the program The Edward Lowe Foundation describes
panies. The message of economic gar- nationally. the second stage of business development
dening is to allocate resources more In essence, second-stage CEOs as a point in the business life cycle when the
effectively, by focusing on the stage- meet in a roundtable setting once a casual ad hoc methods of entrepreneurial
specific needs of high growth/high month to discuss issues relevant to their ventures begin to fail. It is a stage when the
potential second-stage companies.” businesses. The entrepreneurs decide
complexity of employing an increasing num-
The bracket typically used to what topic to discuss at the meeting. In
ber of workers and the related regulatory
describe second-stage growth compa- launching this program, Quello also
compliance issues begin to exceed the span
nies is 10 to 99 employees and $1 mil- served as a facilitator, and has devel-
of control of one owner or CEO.
lion to $50 million in revenues. In this oped a mentoring program that goes
At this stage of business
space, says Quello, if a community can hand-in-hand with PeerSpectives, in
development, more formal
cultivate the right environment and offer which third-stage CEOs give advice to
systems and processes may
stage-specific support, they will gener- second-stage CEOs.
be required to effec-
ate the best return. Historically, he adds, This supportive and proactive infra-
the majority of public sector resources structure has allowed Central Florida to tively manage the
have flowed to supporting first- and overcome the most common hurdles business if it is to
fourth-stage companies, but entrepre- associated with recognizing second- sustain or accel-
neurs are not equally productive. Only a stage growth companies. erate its
small subset of first- and second-stage “Most communities have a hard current
companies have the desire and capac- time finding them because they just rate of
ity to become truly high-growth enter- don’t know who they are, but Central growth to the
prises. The goal of economic gardening Florida can target them easily because next stage of busi-
is to recognize and support stage-spe- they’ve already been part of the con- ness. These compa-
cific needs of these high achievers in tinuum process from the first-stage nies have moved
order to generate a greater return, no growth programs already in place,” from where
matter the industry sector. explains Lange. “I’m really looking for- the founder is
The Edward Lowe Foundation, ward to seeing how this works out long- owner, operator, manager,
based in southwest Michigan, was cre- term for Florida now that initial funding innovator — all in one — to
ated to enhance entrepreneurship and from the state is in place. I can see an operation organized
economic growth across the country. using Florida, and Central Florida around specialization and more formal
Mark Lange, the executive director, has specifically, as a blueprint when taking organizational structure. This is an inher-
known Quello for 10 years, and economic gardening to other regions
ently fluid stage of business development
together they have worked to better of the country.”
that requires support to be available
understand how to recognize and sup- At the core of all this, stresses Quello,
in “just-in-time” fashion.
port second-stage growth companies. is the entrepreneur. “They create the
“They require high-maintenance and are
“Steve is our man on the ground in Cen- jobs and wealth that drive the economy.
often difficult to get a handle on,” says Mark
tral Florida,” he says. “He introduced That’s the message here — being entre-
Lange, executive director of the Founda-
me to Tom O’Neal four years ago, and preneur-centric allows Central Florida to
tion. “We often liken second-stage growth
I quickly realized what a great infra- be more productive and competitive in
structure Central Florida already had in an increasingly “flat” world. Striking the companies to a child’s terrible
place. We simply began to provide the appropriate balance of investment in twos. It's a tough growth
data and new ways of thinking to key entrepreneurship and innovation offers period that requires specific
support people, and Steve became an the only truly sustainable economic support and under-
advocate for these ideas in the region.” development strategy.” x standing.”
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