Best Practices

Economic Gardening... What is it?

Published May 31, 2013 by

by: Jeremy Hegle
  

economic-gardening

Next week economic and small business development practitioners from across the country will gather in Kansas City, Mo for the 11th Annual National Economic Gardening Conference.  Economic Gardening has become quite a buzz phrase in recent years and the concept is not always fully understood.  For those that may not be very familiar with Economic Gardening (EG) here is how it is described by the  Kauffman Foundation.

     Economic gardening is an economic development model that embraces the fundamental idea that entrepreneurs drive economies. The model seeks to create jobs by supporting existing companies in a community….It initially was based on research by MIT’s David Birch, who suggested that most new jobs in any local economy were produced by the community’s small, local businesses. In Littleton, city leaders observed that only 3 to 5 percent of all companies were "high growth" but determined that those "gazelles" were creating the great majority of new jobs.

     Economic gardening connects entrepreneurs to resources, encouraging the development of essential infrastructure and providing entrepreneurs with needed information.

So, in other words, instead of using incentives to keep or lure large companies in a community (“Retention and Attraction”) the program “grows” the community’s smaller firms by providing them with the strategic and technical expertise they would otherwise not be able to access.

Here are a few fundamental attributes of Economic Gardening that I learned at last year’s conference in Grand Rapids, Mich: 

What Companies Does Economic Gardening Target?

o   A Second Stage Company:  Typically these are companies with between 10 and 100 employees.  According to the practitioners I met at the conference, the employee count is really used more as a rule of thumb for client prospecting.  It works well though, as larger companies typically have access to the type of knowledge gained through the program, while smaller companies are rarely ready for it.

o   A coachable business owner who wants to grow the business.  This is key as not every business owner wants to take the company “to the next level”.  The purpose of the program is to help significantly grow companies and create jobs.  It is therefore imperative to have an owner whose goals are aligned with the program.

What Economic Gardening Does

o   The Economic Gardening team consists of five experts who spend roughly 32 hours working hand-in-hand with the business owner/company leadership to identify strategic opportunities.

o   The EG team provides training and assistance in four key areas:

  • Market research and competitive intelligence
  • Internet and social media strategy/search engine optimization
  • Geographical information systems (GIS)
  • Core strategy review

o   The program often syncs with CEO peer mentoring groups:  Leaders of second stage businesses often face new challenges along with rapid growth.  Struggles with personnel decisions and shaping company culture are two common examples.  Peer mentoring provides the owners an opportunity to share experiences and learn from peers faced with similar challenges.

What Economic Gardening Isn’t

o   Economic Gardening is not a consulting gig.  The EG teams work hand-in-hand to not just identify issues facing the client company, but to also implement and work through a solution.  In contrast to a “data dump” consultants might provide, the EG teams spend a great amount of time explaining the purpose and application of the information provided.

o   It is not a program focused on operational issues.  The program targets core strategy, marketing and finance.

It takes a village to reap a bountiful harvest.  Here are key attributes of successful programs:

o   A champion in the community, with the desire, budget and staff to implement is vital.

o   The program works best when viewed as the third leg of an economic development approach.  It is not likely to replace traditional business retention or attraction programs anytime soon, but it does pair very well with them.  This is especially true when one looks at the relatively minuscule per-client cost associated with an EG program, typically less than $800 in public investment per job created.

o   A well developed, collaborative network of entrepreneurial support organizations (ESOs).  The network is needed for two purposes: 

  • To help identify great client companies.  At last year’s conference some EG organizations discussed their challenges in identifying client companies for their programs.  In contrast, Corey Mohn of NetWork Kansas said having a network of more than 400 economic development and entrepreneurship organizations across the state helps them successfully identify target companies. 
  • To provide the needed auxiliary services identified in the program.  In one example given at the conference, an EG team and business owner discovered ripe business opportunities for the company in South American markets.  Since neither the business owner nor the EG team specialized in exporting, they connected with other organizations that did; the U.S. Export Assistance Centers and the World Trade Centers.

o   It really, really works.  It’s amazing what can happen when businesses are provided the right resources at the right time.  GrowFL first implemented the program November of 2009.  In less than two years the program:

  • Helped create 3,285 jobs
  • Increased state and local sales taxes by $18.7 million
  • Increased state GDP by $267.4 million
  • Saw participant client companies grow 11% faster than similar non-GrowFL companies

o   Numbers shmumbers, hearing from actual participants paints a great picture.  Hear what Grow FL company clients have to say:  http://www.growfl.com/about/videos

Content contributed by Jeremy W Hegle, U.S.SourceLink, America’s largest resource network for entrepreneurs.