Last week, Hillary Clinton participated in a widely-covered photo op with Iowa small business owners. She, and her fellow Presidential hopefuls, would have benefited from a read of a new report from the University of Northern Iowa’s Center on Business Growth and Innovation. The 2015 Iowa Small Business Report reports on a statewide survey of entrepreneurs who were asked to share trends on how their firms were faring and to report on key issues they face in today’s marketplace. In general, business is pretty good in Iowa. Thirty-seven percent of surveyed firms grew last year, while only 15% downsized. The remainder of firms held steady. Most of the firms remain quite small—almost half had revenues of under $100,000. One potential reason for this small size is that the firms aren’t hitting new markets—54% of surveyed firms don’t do business outside of Iowa.
When asked to identify pressing business problems, surveyed entrepreneurs highlighted the following as top concerns:
- Cost of Health Insurance and Other Benefits
- Finding Qualified Employees
- Growing Sales
- Market Competition
Despite ranking costs and taxes as pressing issues, respondents also tended to see Iowa as a good place to do business. While this report is focused on Iowa, this useful report is a great guide on issues facing small entrepreneurs. The survey and report also serve a great model that could be emulated in other states
Last week, we saw a flurry of news stories marking the first anniversary of New York’s Start-Up New York incentive program. The program has received loads of local, regional and national publicity—including an aggressive TV ad campaign running in many regions across the country. Overall, costs for the program’s marketing have exceeded $46 million. But, the advertising buzz isn’t the only reason for the public attention. Start-Up New York is also one of the more extensive and aggressive incentive programs now available in the US—it offers up to ten years of tax abatements to companies that opt to start up or expand operations near New York’s many colleges and universities.
The latest news flurry was sparked by a release of the program’s first annual report. And, as the headlines note, the news isn’t really that good. In Year One, Start-Up New York helped 54 businesses. Of this group, 30 actually started operations, collectively creating 76 jobs and generating $1.7 million in investment. For a program often touted as a potential supporter of thousands of jobs each year, this performance has to be sobering and powerful fodder for critics of NY Governor Andrew Cuomo.
While I have long held reservations about the generosity of this program, I would also caution that it’s too soon to pass final judgment on Start-Up New York, even with this first report. Most start-ups and expansions take several years to gain traction, so counting jobs in Year One is always a risky proposition. This experience suggests that smart program managers need to do a good job from the start in terms of highlighting other program impacts beyond job creation—this is the only way to paint a full picture of the program’s impact and potential to create new prosperity over the long term. One program benefit clearly jumps out: the initiative has sparked conversations about NY State as place for start-ups. This is an important (albeit costly) benefit considering that New York is traditionally ranked among the least friendly states for business. Finding ways to change that narrative has to be a top priority for any governor of New York.
Nonetheless, I’ll continue to reserve judgment on whether this expensive program generates a good return on investment. As much research shows, entrepreneurs are not traditionally driven to make location decisions based on tax incentives. Access to talent, customers, peers, and suppliers clearly matter more. Thus, even very generous tax incentives may do little to motivate firms to locate or expand in New York. The interesting Start-Up New York experiment has had a challenging first year. Its future performance may improve, but it’s likely to face further challenges ahead.
As someone who has spent many years in Washington, I can get as cynical as anyone about the dysfunctions of our current political system. But, sometimes, a guy has to have some hope. And, some recent announcements from Senator Mark Warner’s (D-VA) camp give me some cause for optimism that we may start to see some robust public discussion about one of my favorite topics: the 1099 Economy (or Gig Economy). Recent news stories have been filled with discussions about unstable work schedules, millennial dissatisfaction in the workplace, and the like. Underlying all of these issues is a basic structural disconnect: our work and career patterns have become much more flexible, complex, and unstable. At the same time, our political/legal structures and business practices have not evolved to keep pace. Flexibility can be a good thing if it helps people pursue entrepreneurial dreams and achieve greater work-life balance. But, for many, these labor market shifts create great uncertainty and insecurity.
Sen. Warner has stated that he will soon release a series of proposals on how to create stronger safety net for what he calls the “gig economy.” Among the issues he’ll consider is some form of safety net support for independent workers that operates akin to the private health exchanges under the Affordable Care Act. Groups like the Freelancer’s Union are already testing small scale models of this approach. The devil will be in the details, but Warner’s interest in this topic—and his history of bipartisanship—suggest that we may finally start to see some interesting public discussions about how to create a more flexible entrepreneurial economy that can work for everyone. Watch this space for future discussions.
I’ve written several recent blog posts on our ongoing work on the Appalachian Regional Commission’s new strategic plan. ARC is working on multiple ways to gain input from local residents and stakeholders, including a new on-line survey which was released yesterday. If you live or work in Appalachia, please take a few minutes to complete the survey. You can access the survey here and it will be open until June 19. It is short and can be completed in 5-10 minutes. Your feedback is needed.
I spent a good share of last week in Pikeville, Kentucky at the first meeting of the Coal-Reliant Communities Innovation Challenge, sponsored by the National Association of Counties and the National Association of Development Organizations. During our session, seven community teams, hailing from Colorado, Kentucky, Virginia, and West Virginia, developed new regional strategies to help diversify their local economies away from their current heavy dependence on coal. This is the first of three planning sessions, with later meetings planned for the fall in Colorado and West Virginia. The project has also unveiled an excellent new web resource: http://diversifyeconomies.org/. This site contains a host of excellent resources for communities seeking to support local economic diversification. It was designed to help project teams dealing with coal transitions, but the resources are relevant to any community seeking to become more resilient and to develop new local engines for economic prosperity. Watch this space for more details on the Innovation Challenge project and new resources for economic transitions.
This spring, I’m working with a team of colleagues to assist the Appalachian Regional Commission in the development of is five-year strategic plan. This is a massive undertaking and we deep in the midst of obtaining feedback and community input via surveys, focus groups, expert panels and the like. ARC is aggressively reaching to get input and feedback on how it can best invest its resources to help bring prosperity and economic opportunity to Appalachia. As part of this effort, ARC is also sponsoring a series of listening sessions to get input and suggestions from a wider array of interested parties and regular citizens. Five sessions are planned for the next two months, and will occur in a variety of sites across the region:
Listening Session Dates and Locations
Forest City, North Carolina: Friday, May 15; Carolina Event and Conference Center
Starkville, Mississippi: Thursday, May 21; MSU Hunter Henry Center
Morehead, Kentucky: Thursday, June 4; Morehead Conference Center
Altoona, Pennsylvania: Thursday, June 11; Blair County Convention Center
Morgantown, West Virginia: Tuesday, June 16; Morgantown Event Center
I encourage you to consider participating if one of these sessions is convenient to you. You can learn more and register here. We hope to see you at a session this spring.
I am a big fan of business plan and innovation prize competitions. They help generate great new ideas and also help build a culture of innovation and creativity by shining a spotlight on new ideas and new companies. I’m not alone as the market place for innovation prizes is pretty crowded nowadays. But, every once in awhile, a cool and distinctive competition pops up and I think Fish 2.0 fits the bill. Fish 2.0 seeks to spur innovation and sustainability in global seafood supply chain. Fish 2.0 is a global competition so companies and individuals from all over the world are invited to participate; the completion also includes a unique track for Pacific Island businesses. The competition is seeking early stage and established businesses, as well as investors and mentors/coaches. The competition is now open for applications until April 27, 2015 and winners will be selected later this year.
This is the second iteration of this prize competition, and the previous winners were an exciting bunch. They included ten firms all pursuing new approaches to sustainable seafood development. The top winner, Blue Sea Labs, is developing e-commerce tools to better link small fisherman with chefs and other potential markets. Another top performer, Crycocyte, has developed new technologies to allow improved storage and transportation of fish eggs. The final top performer, Ho’oulu Pacific, uses aquaponics to grow fish and vegetables in Waimanloa, Hawaii. We are going to need these kinds of innovations if we hope to maintain a sustainable seafood industry into the future.
Last week, the Knight Foundation announced the winners of its Knight Cities Challenge, a very exciting and innovative competition to fund cool ideas for making cities more livable, prosperous, and successful. The 32 winners include a list of some very exciting and fun ideas. Here’s just a few of the more quirky and interesting:
- Operation Export Macon (GA): A project to send a one-man trailer and show to neighboring cities to showcase what’s great about Macon.
- Detroit Homecoming: A new digital community designed to engage former residents of Detroit in supporting the region’s revitalization.
- The Science Barge: A floating sustainable farm and education center designed to highlight the impact of climate change in Miami, FL.
- The Pop-Up Pool Project: An effort to create urban swimming pools in locations across the City of Philadelphia.
There are lots of great ideas in this crop—they tell us that good ideas can come from anywhere and that many good ideas can be done without major funding. The largest project on this list—a culinary incubator in Gary, IN—received $650,000. But, many of the projects received investments of less than $100,000. So, great ideas can come in small packages. The next competition starts in October, so, if you’re up for it, get ready to innovate!
The latest edition of EntreWorks Insights, our quarterly newsletter is now available. This issue examines potential causes for America’s recent start-up slump. You can learn more and subscribe here.
Like folks in most industries or business segments, economic developers go through fad cycles, where certain topics or initiatives get a lot of public attention and interest. Manufacturing supply chains are currently “hot” in our business. Via some recent national projects and some regional work across the US, I’ve spent a lot of recent time working on this issue. There’s a good reason why people are interested—major corporate decisions—and a large share of investments and innovation—happen in global supply (or value) chains. In the past, most activities occurred within the walls of a single firm, often a far-flung conglomerate like GM or US Steel. Today, those decisions occur within massive supply chains that connect hundreds (if not thousands) of firms all working to crank out world-class products, services, and technologies. (Here’s an excellent OECD introduction to mapping global value chains.)
Global supply chains are very complex, and thus very tough to understand. It’s even tougher at the local level, when you need to understand global value chains and your community’s place in them. That’s why this week’s new White House Report on Supply Chain Innovation is so timely. If you’re looking to understand the fuss over supply chain innovation, this report is a good place to start. It’s an excellent introduction to the issues and to some of the current initiatives designed to promote supply chain innovation. In many ways, supply chain innovation is the next generation of “just in time” or “lean.” If small manufacturers want to do global business in global supply chains, they will need to commit to becoming more competitive and more innovative. This will require investment along with support to make the case for why and how supply chain innovation matters. As the White House report notes, this is an issue being addressed in a host of developed economies—we can expect supply chain innovation to remain a hot topic here at home too.