Backed by a key small business advocate in Lansing, a bipartisan group of lawmakers have proposed a legislative package to boost state support for companies operating in the space between small startups and larger corporations.
The four bills introduced a month ago by three House Republicans — including state Rep. Tommy Brann, R-Grand Rapids — and a Democrat, seeks to “make it somebody’s job in state government to provide services to small businesses,” said Brian Calley, president of the Small Business Association of Michigan.
SBAM, which is marshaling support for the legislation, argues the state can and should do more to support second-stage businesses that employ 10 to 100 people, a segment of the economy that research shows accounts for more than four out of every 10 jobs in Michigan as of 2018. By comparison, large companies employ less than 13 percent of all jobs in the state, according to a 2018 report by Lansing-based Public Sector Consultants Inc.
The legislation aims to “make it easier to do business with state government” and to broaden the role of the Michigan Strategic Fund to focus more on “these companies in the middle,” Calley said.
“This is a natural progression we’re talking about,” he said. “We want small companies to operate on the same footing and the same basis as large companies operate on.”
The legislation aims to do that by:
• Creating a “small business growth acceleration board” within the Michigan Strategic Fund. Chaired by a small business administrator, the board would advise the governor, state Legislature and Michigan Strategic Fund on “the creation and management of programs and the appropriate scale of those programs that promote small business growth within the state,” according to one of the bills.
• Directing the Michigan Strategic Fund to evaluate the feasibility of creating a “virtual business road map” to help small businesses navigate the “maze of bureaucracy” in state government, Calley said. The platform would ask users a series of questions designed to assist them on regulatory compliance issues, licensing and permitting, while linking to small business resources.
• Creating a small business liaison within each state agency to assist with issues or concerns.
• Creating a small business director position within the Michigan Department of Labor and Economic Opportunity to “facilitate the creation and retention of small business jobs in this state,” plus launch a “one-stop shopping” website for small business dealings with the state, according to the bill’s language.
The legislative package has been in the works for two years and SBAM continues to work with legislators on refining the language, Calley said.
The state has “a pretty big focus” on startup companies, as well as offers incentives and assistance to corporations “at the other end of the spectrum” to attract business investments and create jobs, he said.
“Both of those are very important aspects of what happens out there in the world of economic development, but there’s a lot of action out there — and we would say the most action — that happens between those two bookends,” Calley said.
SBAM hopes to gain approval of legislation that gives the Michigan Strategic Fund “a more explicit mission to serve these second-stage growing companies with acceleration services,” as well as “improve the ease at which interaction and transaction happens with state government,” he said.
In preparing for the legislative push, SBAM retained Public Sector Consultants to examine best practices for spurring investment in second-stage businesses. The consulting firm’s May 2018 report stated that broadening state economic development strategies to focus more on growing second-stage businesses with annual revenue of $1 million to $99 million “can be particularly effective.”
“Given the importance of small businesses to economic growth, Michigan needs economic development strategies that maximize this important sector’s potential,” authors from Public Sector Consultants wrote in a summary of the report.
The bills do have their opponents in Lansing.
Charles Owens, state director for the Michigan office of the National Federation of Independent Businesses, offered strong opposition to the legislation in a Sept. 16 op-ed in The Detroit News. His main objection to the bills was that they added to the state bureaucracy.
Owens noted in his opinion piece that an NFIB national index shows “job creation among small business has reached the highest recorded levels in its 45 years of record keeping, and small business optimism has been off the charts. In fact, the biggest problem for small business is finding anyone to fill jobs.”
“This surge in small business growth and success is not because of any government agency or program, it is because of the positive economic environment created at both the state and federal level through sound tax, fiscal, regulatory and labor policy — and that is where our lawmakers should be focusing their attention,” Owens wrote.
Likewise, the Grand Rapids Area Chamber of Commerce opposes “certain elements” of the legislation as it is presently written, said Andy Johnston, the group’s vice president of government and corporate affairs.
Given the tight state budget and the need to fund roads, job training and other areas, the Grand Rapids Chamber has concerns about the expense of adding small business liaisons across state departments, Johnston said. The state also already has a small business ombudsman.
“If there are deficiencies in that, let’s focus on that instead of paying for the liaisons and establishing a director position,” he said. “There are other priorities out there.”
The Chamber remains open to the idea of a virtual road map for small businesses created by the Michigan Strategic Fund, Johnston said.
As well, the Grand Rapids Chamber is involved in “ongoing conversations” on the bills “as we work to see how government can be most responsive to the needs of small, medium and large-sized businesses,” Johnston said.
Taking it slow
SBAM is well aware of the concerns with the state budget and wants “to be extra sensitive to those types of costs,” Calley said.
“That’s why we’re taking it a little bit slower when it comes to doing the front-end work to make sure everybody’s comfortable with what we’re doing and how we’re moving forward,” he said.
The legislative package does not make appropriations toward any positions and only “would require the government and the bureaucracy to organize differently.”
“Roles and jobs in government would change somewhat,” Calley said, adding that if new positions are subsequently required, the cost would likely prove negligible.
“Once we see implementation, you could see the possibility of the need to hire a few more people,” he said. “In the grand scheme of things, it would be less than a rounding error in state government numbers.”
The bills now sit in the House Commerce and Tourism Committee. Calley hopes backers can secure enough support and finalize drafts to get the legislation to a committee hearing this fall.