Transcript Community Approaches to Supporting Entrepreneurs

Community Approaches to
Supporting Entrepreneurs
TPOCD ALUMNI
COURSE
MARCH 2013
Co-Facilitators
Today’s Co-Facilitators:
Scott Loveridge
Director, North Central Regional Center for Rural
Development
[email protected]
Mark Brodziski, Director
Specialty Programs Division
[email protected]
John H. Broussard, Director,
Business and Industry Division
[email protected]
Special Shout-Out
 Dave Sears, USDA Rural Development
 Chelsea Takahashi, USDA Rural Development
Truman Fellow
Chat Box
 Please tell us where your office is
located!
 State
 City
What Got YOU Interested in this Class?
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

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Example: largest employer in my township is Delta Dental, a nonprofit insurer. Their square footage & employment doubled in the
past ten years.
A division manager in a large for-profit
How does this lack of common definition
affect community development?
 Same, word, but different definitions  lack of
agreement on how to help them
Goldilocks Dilemma in Entrepreneurship
 Three Camps on Business Size
 Small business
 “Stage 2” firms
 Large business
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—
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
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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
“Stage 2” Advocate Arguments
 Stage 2 firm=already some employees but eager to
grow; probably more than 3 years old
 Arguments:

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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
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
Which Arguments Make the Most Sense in Your Area?
 Small
 Medium
 Large
Loveridge Research on Role of Firm Size in
Economic Development
 It DEPENDS
“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?
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
“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?
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
Classic 2nd Stage Approaches
New 2nd Stage Approaches
 Peer-to-Peer networking
 Highly publicized “Awards”
 50 Companies to watch -versus “Entrepreneur of the Year”
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
“Classic” Large Firm Approaches
 Lone Ranger retention and expansion program
 Industrial parks (speculative)
 Industrial investment incentives
 Tailored infrastructure
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
Which USDA Programs Might Fit Large Firm
Approaches?
 Rural Economic Development Loan program
 Business & Industry Guaranteed Loans
 Advanced BioFuels Guaranteed loan program
Size-neutral Approach
 Michigan State University Extension “Creating
Entrepreneurial Communities” program
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?
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?