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Thursday, 21 June 2012 12:46

State ramps up aid to second-stage companies

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WEST MICHIGAN — Michigan needs to do a better job of tending its garden of existing businesses rather than focus on hunting for outside companies.

That is the driver behind the expansion of the Pure Michigan Business Connect program, which started as a pilot in Nov. 2011 to help grow the state's second-stage companies.

To date, the program paired the CEOs at 50 second-stage companies with consultants from the Cassopolis, Mich.-based Edward Lowe Foundation for help with four key business areas: strategy and management, market research, Internet and social media strategy and geographical information systems to help identify potential customers in other states.

Going forward, the National Center for Economic Gardening that's hosted by the Lowe Foundation will lead the next phase of Pure Michigan Business Connect. The Michigan Economic Development Corp. selected the foundation to run the program after it responded to an RFP issued in March, said Nicole Whitehead, the MEDC's project manager.

The 50 companies that completed the pilot all supplied feedback on the program, which will be used to tweak the delivery of the services, she said. Specifically, in the pilot project, the CEOs and the consultants met virtually, but the executives said they wanted more face-to-face interaction, Whitehead said.

"They wanted somebody to be there to facilitate what happens before and after (the consultation)," she said. "Before the two phone calls take place, they want to know what will happen and the expectations of what they will receive. They want someone to be there (afterwards) in case business issues come out."

The next phase of the program plans to use certified economic gardening consultants from around the country. Because the program is new to Michigan, the state will have to work with specialists on the national team, Whitehead said. The Center for Economic Gardening certifies the specialists after a nine-month virtual training program, she said.

"We're hoping that when we launch that there will be a good pool of members in Michigan, but right now, the specialists are not in Michigan," Whitehead said, noting that she knows of a few in-state people who have gone through the training.

Companies interested in the free program should reach out to their local economic development agencies, Whitehead said. The MEDC plans to tap those local partners for help in developing a statewide pool of companies to go through the Pure Michigan Business Connect programming.

"The big thing we learned in (the pilot) is that we needed to educate the community first. We needed to educate all our partners and stakeholders about what economic gardening is ... so that we were not mixing our terms. A lot of economic developers though they were already doing economic gardening," Whitehead said.

Second-stage companies can also access free support from other programs, including the Michigan Small Business and Technology Development Center, which is housed at Grand Valley State University and has distributed representatives throughout the state.

"The SBTDC has highly complementary services: that of assisting companies in using information, in accessing the capital needed to grow, and in building and deploying growth strategies," Carol Lopucki, the SBTDC executive director, told MiBiz in a statement. "Additionally, as growth companies encounter new challenges and opportunities they will continue receiving SBTDC services to strengthen their business."

The SBTDC was among the organizations that responded to the RFP.

The state wants to see 50 second-stage companies per quarter going through the program. The next program will start in July. However, the organizers want the 23 companies that applied for the pilot run of the program but didn't make the cut to have first crack at joining the new cohort, Whitehead said.

"It took us about a quarter to get through the 50 (in the pilot project). We think that's doable, since the national group is beefing up its staff," Whitehead said. "There are 49,000 second-stage companies in Michigan, so at 200 companies a year, we might just scratch the surface."

The MEDC will report the results from the program via a scorecard on the agency's website. Companies will continue to provide feedback in an exit survey, and Whitehead said the MEDC plans to regularly monitor the companies and measure their progress in growing their customer base, revenues and jobs.

Since the formation of the MEDC in 1999, the agency's approach to economic development hinged on a strategy of luring companies to the state with a package of incentives, but it did little directly to assist its existing companies to grow and prosper. That changed under Gov. Rick Snyder, who insists that incentives are the "heroin drip" of government.

Speaking to an audience at the National Economic Gardening Conference held at the Amway Grand Plaza Hotel in Grand Rapids June 13, Snyder called the past approach "a really bad idea" from "well-intentioned" people during some tough times for business in the state.

"You don't spend your time going after new customers. It's about making sure your current customers are happy. You create the very best environment for them. That's one of the fundamental starting points that wasn't recognized at all by the traditional political world," Synder said. "That's the very essence of economic gardening. The comeback in Michigan was not going to be based on who we go give big (incentive) packages to. The comeback for Michigan is based on the people already in Michigan."

When the businesses in the state are successful, they will serve as real-life marketing campaigns by sharing their story with other companies and luring them here organically with examples of success, Snyder said. "This is basic common sense," he said.

With the launch of Pure Michigan Business Connect and a stream of new business programs, Snyder told MiBiz that the state still has some work to do, particularly around talent.

"I'm not satisfied with where we're at. I'm not complacent," he said. "This is round one. I think we can continue to evolve and improve. And I think you will see some real innovation."

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