June 14, 2010

Need small business help? Try an economic gardener

Say you run a small business and you're looking to add a branch office or break into social media. How do you decide where to locate? How do you use Facebook to get your message out to the right people?

If you're like a lot of entrepreneurs, you go with your gut, according to Tom Dorr, director of Western Washington University's Center for Economic Vitality in Bellingham.

“The challenge there is that they do that with inadequate information,” he said. Owners want to make good decisions, but don't know how.

That's where the concept of economic gardening comes in. It was first developed in the late 1980s as a way to help small businesses stay on their feet and grow.

Christian Gibbons, director of the Littleton, Colo., economic development department since 1987, was looking at the time for ways to preserve jobs during a deep recession there. Rather than compete for big employers from out of state, he focused on cultivating local businesses and entrepreneurial talent.

Gibbons wasn't available for an interview, but he writes on his city's website that his idea arose from research that showed the majority of new jobs in local economies were produced by small businesses. By allowing those businesses to avail themselves to market research and technical expertise they couldn't easily get on their own, cities and states can provide tools to help them succeed.

The experiment that Gibbons helped start in Littleton proved influential, and economic gardening services have sprouted across the country. An online economic gardening discussion group that Littleton maintains has over 700 members from 21 countries.

Western's Center for Economic Vitality has been around since the mid-1980s, though for much of that time it was affiliated with the statewide Small Business Development Center network. It left the network and changed names in 2009 to reflect its broader role in providing research and special-project services.

The center will help hold the eighth annual International Economic Gardening Conference from June 16 to 18 at the Bellingham Cruise Terminal. Gibbons and Dorr will be among more than a dozen speakers there from around the U.S. and Japan.

Dorr said the decision to hold the conference in Bellingham is a reflection of the center's longevity and record of success. In the last 10 years, he said, the center has served more than 4,000 businesses, helped save 3,000 jobs and attract $150 million in new investment. Most of the businesses it serves are from the center's home base in Whatcom County, but its reach is statewide.

The center receives its funding from the state and its services are free for businesses with 500 or fewer employees. Though it is affiliated with Western's College of Business and Economics, the staff do not teach or research for the university. Dorr described his program as an outreach center whose purpose is to give back to the business community.

Effective programs, he said, have a central hub for collecting research and data services, but send staff out to the communities they serve, where they can provide counseling and technical expertise. A misconception about economic gardening is that it can refer to any program that's focused on retaining existing businesses.

“You must combine research with advising to make it work,” he said.

That's because research alone usually isn't enough to do much good. A company seeking to expand or relocate could request a location analysis, for example, but the results could give rise to new questions about, say, costs or the availability of skilled employees.

Services are generally aimed at “stage two” companies — past start-up, but not yet mature — with 10 to 99 employees. Most such businesses are at least three years old and have more than $1 million in sales.

“That's where most of the job growth has occurred in communities,” Dorr said, “but there are not a lot of resources dedicated to stage two companies. We can help them to overcome their problems and be more successful.”

Economic gardening programs also tend to focus on smaller communities, which face larger economic development challenges. Statewide growth initiatives tend to focus on large industries that drive growth in major cities.

“If I'm Wenatchee, we're never going to have biotech,” Dorr said. “Those strategies and initiatives don't mean anything to the rest of Washington state.”

It's better to reach out, then, to the companies that are already there.

“Those people are already committed to the community and have more propensity to stay in the community,” he said.

Rob Pochert, economic development manager for Beaverton, Ore., said his city got its economic gardening program up and running in 2007 after a year of planning and testing.

Many of the businesses the program serves are seeking sales leads, but market and location analyses are also frequently requested.

The city didn't have an in-house economic development program until 2006 — it had been contracting out that service to nearby Portland — so one of the first tasks for the city was to build credibility with the business community.

Pochert, who will also speak at the Bellingham conference, described economic gardening as the keystone of the city's economic development efforts. It's part of a “three-legged stool” that also includes an entrepreneurial incubator and outside business recruitment.

Faced with a recession, the program has been helping businesses stay afloat rather than expand, but Pochert said 25 percent of its clients increased their business in 2009, and 5 percent made capital expenditures.

“One number we didn't see was job creation,” he lamented. Still, he had some anecdotal evidence that small businesses that didn't seek help from the program fared even worse.

The biggest challenge for the program is getting the word out about its services.

“Economic development organizations in general do a horrible job explaining what they do to people who don't know what they do,” Pochert said.

The city has been targeting businesses, working with the local Chamber of Commerce, and “making presentations to any organization that lets us through the door.”

The efforts are paying off, he said.

“The feedback we're hearing from business surveys and consultants that talk to business owners is that we're making a significant contribution to the overall economy here in Beaverton.”