Agenda - Economic Development Authority - 07/12/2012

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ECONOMIC GARDENING I Edward Lowe Foundation development organizations that serve startups and small businesses by providing assistance with operations and management issues such as business -plan review, cash -flow analysis and succession planning. In contrast, economic gardening deals with growth - oriented companies and strategic issues like penetrating new markets, refining business models, developing teams and embracing new leadership roles. Economic gardening provides information and decision -making assistance to companies that are transitioning from small to large, with services customized to meet the just -in -time needs of this audience. Communities currently nurture their economies through recruitment, workforce development and small- business development. "But there is a fourth dimension we need to add," Lange says. "Growth -company development is the missing piece, which is why the Edward Lowe Foundation is an advocate for economic gardening." Second -stage benefits Some of the greatest returns of economic gardening come from working with second -stage entrepreneurs — companies that have advanced beyond the startup stage with the intent and potential for additional growth. (Second -stagers typically have 10 to 99 employees and generate about $1 million to $50 million in annual revenue, depending on their industry) Many people associate second stage with gazelles (companies with extremely high growth). Although gazelles pass through second stage, which makes it a good place to find them, they're only part of the story Second stage also includes: 1) companies with potential for high growth and 2) companies generating steady growth that may be less dramatic than gazelles but remains impressive. This growth orientation is a critical Small Business Development Business Attraction & Recruitment • • distinction that separates growth companies from other types of small businesses. For example, some individuals may be self-employed because they like being their own boss, but job creation isn't part of their game plan. Then there are small businesses that provide jobs in a community, but their growth is somewhat restricted by the local trading area they serve. In contrast, second -stage entrepreneurs are significant job creators because of their focus on growth. And because they often have national or global markets, they bring outside dollars into the community. "It's time we treat growth -oriented entrepreneurs differently than small businesses — giving them their own place in the overall scheme of economic development," says Lange. "The foundation can play an important role by helping community organizations collaborate more effectively to serve this audience." According to Doug Tatum, author of "No Man's Land," entrepreneurs face four key challenges as their companies transition from small to big: • Market adjustments. • Outgrowing early management teams and their role as founders. • Workforce eVelopment I Gro►4yt D e ve o p'a nY nt • Scaling business models to handle growth. • Understanding capital requirements. "It's hard for entrepreneurs to resolve these issues on their own — or even identify them accurately," says Dino Signore, manager of program development at the Edward Lowe Foundation. "For one thing, moving from Stage 1 to Stage 2 brings on an entirely new set of challenges. Entrepreneurs face more responsibilities, and everything becomes magnified. Their core competencies become stronger, but so do their weaknesses." Making things even more difficult, changes in markets, management, business model and money are interrelated, Signore continues. "Being out of sync in one area can cause you to be out of sync in others." These conditions manifest themselves in a variety of ways. Some common symptoms: not being able to fulfill commitments to customers; quality problems become more