Growing a State’s Economy, One Business at a Time
Just as growing a garden requires tending, so, too, does growing the businesses that fuel a state’s economy. That was the message of experts at the CSG West Economic Development and Trade Committee session Saturday.
While many states attempt to lure big companies, in most cases, this comes with a high price tag for state governments in the form of expensive incentives.
That’s why Oklahoma started a program to support small startup companies.
“It’s tough, it’s messy and the success rate isn’t always high,” said Scott Meacham, CEO of i2E, a nonprofit agency that operates the state program to assist new businesses. Data show new businesses yield big impacts for state economies, he said.
While more than half of all startup companies fail within the first four years, statistics show that nearly all new jobs in the economy during the past year came from those new businesses that survive five years or longer.
Most new companies fail as a result of lack of capital and proper planning, said Meacham. Thanks to funding provided by the state, new businesses can get assistance through i2E, which provides both seed funding and guidance to help new companies grow.
Leveraging state funds with private investment, i2E has invested $26 million in new Oklahoma businesses and has brought in an additional $510 million in private capital for companies. The success rate of new startups assisted by the agency is 41 percent higher than startups that do not receive such assistance.
Startups aren’t the only companies that need assistance growing, said Penny Lewandowski, vice president for entrepreneurship and strategic direction with the Edward Lowe Foundation.
Second stage companies—midsize businesses that employ between 10 and 99 employees—can create jobs, increase income to a region, and attract both companies and talent to a state, but often require assistance to continue growing and creating jobs.
“The creation of nurturing environments is critical for growth and success of companies that started and decided to stay and grow in your communities,” said Lewandowski.
That’s why new state economic gardening programs, like GrowFL in Florida, are offering investments and education to help second stage companies make decisions about strategic issues. Florida has seen a job created for every $2,660 in state funds invested in GrowFL.
State efforts to increase the talent pool are also a critical element, said Scott Jenkins of the National Governors Association. Internationally, American students are performing at about the average level when compared to students in other countries. “The problem is that the United States can’t sustain its economic success by being average,” said Jenkins.
Jenkins pointed to efforts by Kentucky’s career and technical schools to align curriculum with available jobs in high-skilled occupations as critical to building the workforce needed for a strong economy.
“In creating a healthy economy,” said Meacham, “the price of doing nothing is heavy.”