SBAM says homegrown companies are states economic solution

July 2, 2010
| By Pete Daly |
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The Small Business Association of Michigan has launched an economic initiative focused on “homegrown” companies, which it believes provide the chance for an economic turnaround that will get Michigan back on the track to job creation, economic growth and stability.

SBAM is urging state policymakers — and even the candidates for governor — to embrace “economic gardening,” an economic development strategy that has emerged as a prototype for what it calls “significant job creation.”

“Our initiative will aggressively hold the new governor and legislators accountable for supporting homegrown business job providers,” said Rob Fowler, SBAM president and CEO.

“We need to refocus our direction from primarily ‘hunting’ outside the state for job providers, to instead ‘cultivating’ homegrown companies, especially second-stage companies, that have been the primary job creators,” added Fowler.

SBAM cited research by the Edward Lowe Foundation, which shows that almost all of Michigan’s new jobs from 1993 to 2007 came from businesses with less than 100 workers, while companies of 500 or more employees lost significant numbers of jobs in that period.

The launch of SBAM’s new initiative — “Propelling a New Economic Direction for Michigan” — attracted hundreds of small business owners from across the state to the Kellogg Center in East Lansing in late June.

Figures compiled by the Edward Lowe Foundation show that small second-stage companies produced more jobs in the 15-year period between 1993 and 2007 than any other business segment in the state. Second-stage companies are those that employ between 10 and 100 workers, have annual sales of at least $1 million and want to grow, according to the Foundation. Such businesses created 137,249 jobs in Michigan between 1993 and 2007; companies employing 500 or more workers shed 257,585 jobs in the same time period.

SBAM says homegrown companies will grow with the right support that allows them to overcome hurdles to growth.

Despite the fact that we are now in a global economy, “place has become more important than ever,” states a Lowe Foundation dissertation on “Economic Gardening.” It is a philosophy that forms the basis for the entrepreneurship programs at the foundation.

“Economic gardening is an innovative, entrepreneur-centered economic growth strategy that offers balance to the traditional economic practice of business recruitment, often referred to as ‘economic hunting,’” according to the foundation.

The “economic gardening” philosophy was pioneered in Littleton, Colo., in 1989 after the town’s major employer, Martin Marietta, cut thousands of jobs. Since then, Littleton’s employment has risen 71 percent and its tax base has tripled.

Today, the philosophy has emerged as a prototype for a rapidly expanding movement of like-minded economic developers looking for additional methods to generate truly sustainable economic growth.

The three basic elements of economic gardening are:

  • Providing critical information needed by businesses to survive and thrive.

  • Developing and cultivating an infrastructure that goes beyond basic physical infrastructure and includes quality of life, a culture that embraces growth and change, and access to intellectual resources, including qualified and talented employees.

  • Developing connections between businesses and the people and organizations that can help take them to the next level: business associations, universities, roundtable groups, service providers and more.

SBAM has quietly been working on pilot programs, testing growth ideas with 24 companies in the Upper Peninsula’s Keweenaw region and Tuscola County in the Thumb.

The Edward Lowe Foundation, headquartered in Cassopolis, created Companies To Watch in 2005, an awards program to honor second-stage companies that demonstrate high performance in the marketplace, exhibit innovative products or processes, or otherwise are "worth watching," according to the foundation website.

Recognizing that many second-stage companies fly under the radar of typical awards programs, CTW is designed to seek out businesses from a wide range of industries, representing all areas of a state — not just major metropolitan areas. In addition to being evaluated on past growth and projected success, applicants are judged according to special strengths. These special strengths revolve around a company's innovative products and business practices, special use of technology, work within their community and so forth.

Because Companies To Watch is focused on an entire state and not specific industries, it provides an opportunity “to paint a realistic picture of a true regional economy,” according to the foundation. Since applicants are evaluated on more than growth, it widens the playing field for companies not often recognized for the critical differences they make.

Edward Lowe was the entrepreneur who invented Kitty Litter in Cassopolis back in 1947. After service in the U.S. Navy during World War II, he returned to Cassopolis where his father had a company that sold industrial absorbents, including a type of clay used to absorb oil and chemical spills on a factory floor. Lowe discovered it was perfect for cat box litter and formed a successful company that made life much more pleasant for indoor cats everywhere.

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