Community Approaches to Supporting Entrepreneurs

1. Community Approaches to Supporting Entrepreneurs TPOCD Alumni Course March 2013

2. Co-Facilitators • Today’s Co-Facilitators: • Scott Loveridge • Director, North Central Regional Center for Rural Development • loverid2@msu.edu • Mark Brodziski, Director • Specialty Programs Division • Mark.Brodziski@wdc.usda.gov • John H. Broussard, Director, • Business and Industry Division • John.Broussard@wdc.usda.gov

3. Special Shout-Out Dave Sears, USDA Rural Development Chelsea Takahashi, USDA Rural Development Truman Fellow

4. Chat Box • Please tell us where your office is located! • State • City

5. What Got YOU Interested in this Class?

6. What is an Entrepreneur? • Depending on who is talking, it might be: • Small business owner • An exporter • The owner of a multi-national corporation • Someone starting a non-profit • A non-profit administrator • Example: largest employer in my township is Delta Dental, a non-profit insurer. Their square footage & employment doubled in the past ten years. • A division manager in a large for-profit

7. How does this lack of common definition affect community development? Same, word, but different definitions  lack of agreement on how to help them

8. Goldilocks Dilemma in Entrepreneurship • Three Camps on Business Size • Small business • “Stage 2” firms • Large business

9. Small Business Advocate Arguments • Most job growth comes from small business • Small businesses are more likely to be loyal to the community • Large businesses are hard to recruit— • Must give financial incentives • Firms moving to rural areas are looking to cut wage costs—low skill, low wage jobs • “Use up” incentives and move on

10. “Stage 2” Advocate Arguments • Stage 2 firm=already some employees but eager to grow; probably more than 3 years old • Arguments: • Most small businesses aren’t entrepreneurial—just looking to make a living for the owner (e.g. convenience store; card shop) • Most small businesses die within first three years • Stage 2 firms have lived through the valley of death and want to increase in size, so most growth potential

11. Large Firm Advocate Arguments Small firms pay poorly and don’t generate much in the way of economic multiplier effects Smaller firms may generate jobs in the long run, but we’re hungry now Large firms “demonstrate” that our community is viable—if we give the next one a subsidy, others will follow

12. Which Arguments Make the Most Sense in Your Area? Small Medium Large

13. Loveridge Research on Role of Firm Size in Economic Development It DEPENDS

14. “Classic” Small Firm Approaches Revolving loan fund Business start-up seminars Counseling Incubators Q: Have these been tried in your area? If yes, what happened?

15. USDA programs that fit “classic” small firm approaches Rural Business Enterprise Grants (RBEG), Intermediary Relending Program (IRP), and Rural Economic Development Loan and Grant (REDLG) program: RLF or other local project by a city or county Project-specific facility or request Value Added Producer Grant to single agricultural producer

16. “New” Small Firm Approaches • Sector-specific counseling • Case Study: MSU Product Center • ANGEL Investors • Fast-pitch sessions • Economic Gardening • “Slave”—(Sirolli approach) • Amenity-led development • Has anyone tried anything like any of these?

17. Which USDA Programs Might Fit “New” small firm approaches Intermediary Relending Program (IRP) and Rural Business Enterprise Grants (RBEG) Industry-specific or sector focused initiatives Microloans Value Added Producer Grant—mid-tier Rural Energy for America Program—energy audits and development assistance

18. Classic 2nd Stage Approaches

19. New 2nd Stage Approaches • Peer-to-Peer networking • Highly publicized “Awards” • 50 Companies to watch -versus- • “Entrepreneur of the Year”

20. Which USDA Programs Might Fit Second Stage Approaches? Intermediary Relending Program – larger loans Rural Economic Development Loan and Grant program Business & Industry Guaranteed Loans Rural Energy for America Program

21. “Classic” Large Firm Approaches Lone Ranger retention and expansion program Industrial parks (speculative) Industrial investment incentives Tailored infrastructure

22. New Large Firm Approaches Cluster gap analysis/regional coordination Workforce training in lieu of infrastructure or tax breaks Supplier/customer (value chain) recruitment in lieu of “y’all come” recruitment

23. Which USDA Programs Might Fit Large Firm Approaches? Rural Economic Development Loan program Business & Industry Guaranteed Loans Advanced BioFuels Guaranteed loan program

24. Size-neutral Approach Michigan State University Extension “Creating Entrepreneurial Communities” program

25. What’s Missing? Are there enough programs for all the approaches? What are barriers to implementation? What might be some other means of bringing capital to rural communities? How can community organization for business development be strengthened?

26. Final Question Based on what we discussed today, what are the major local business development opportunities for you in your work with USDA Rural Development?