Nurturing
local business: Another economic development approach
by
Mike Kroll
The
Zephyr, Galesburg
Ask anyone in Galesburg what the biggest community
need is and you will be told jobs. Since the 1980s this community has seen
thousands of good middle-class jobs leave the area with the closure or
relocation of a long list of major employers and the response has been to seek
out and entice other major employers to come to Galesburg. While a small number
of new employers have moved to Galesburg none have been sizable and they have
contributed relatively little in terms of new middle-class jobs. What job
growth this area has experienced has been from expansion of existing employers
such as the BNSF (whose workforce has fluctuated considerably both up and down
over the time period) and Galesburg continues to lack significant numbers of
well-paid job comparable to those that have been lost.
Clearly the attempts at attracting mid- to large-size
employers have been a bust despite serious expenditures of local resources and
regardless of how creative the search has become. Numerous trips to China along
with reciprocal hosting of Chinese delegations have resulted in a sister city
agreement but no jobs and American manufacturing operations are too busy
outsourcing production or moving to low-cost foreign locations to even give the
Galesburg area consideration. This experience is hardly unique to Galesburg.
Across the state of Illinois and the midwest manufacturing jobs have been
flowing away in pursuit of ever cheaper labor.
During Governor Rod Blagojevich's first term he
restructured and renamed the state's economic development operation and
launched some new projects aimed at stimulating job growth in Illinois. One of
those projects was the Illinois Entrepreneurship Network (IEN) composed of 18
Entrepreneurship Centers scattered regionally across Illinois. One of those
centers is located here and called appropriately enough the Galesburg
Entrepreneurship Center, staffed by Cat Garza and retired local banker Dick
Johnson. Perhaps owing to the economic realities of west central Illinois two
other centers serve the region with offices in Quincy and Macomb.
The state-funded program typically works with local
economic development and education providers to offer an array of services to
both existing small businesses and those contemplating a small business
startup. Working Ò...with clients who have
the vision and potential to become a high-growth enterpriseÓ entrepreneurship
centers provide ÒExperts, networks, tools
and other opportunities transform your business into an appealing investment
for lendersÓ according to the state website. At the state level much of the
emphasis is placed on assisting businesses and potential startup secure
financial assistance from both public and private sources.
That is why a key goal is to facilitate each client's
development of a business plan that is critical in securing bank financing for
most small businesses but also helps focus the entrepreneur's thinking on the
challenges and realities of the business idea. A business plan forces you to
put your business idea in writing and make a convincing case for its probable
success. This can be a productive exercise even if obtaining bank financing is
not a short-term goal because the process helps to identify the strengths and
weaknesses of the business idea.
ÒWriting a business plan isn't a lot of fun and many
clients resist this step only to discover just how useful it can be. Few new
business ideas survive the preparation of a business plan without modification
and sometimes putting it all down on paper helps us face hard realities. Our
dreams aren't always realistic, but that doesn't mean they can't become so with
a little more work and planning,Ó explained Cal Garza. ÒTwo of the major
reasons many new business fail are under-capitalization and a failure to really
understand their marketplace.Ó
If small cities and towns in rural Illinois are to
survive without importing manufacturing jobs they have to learn how to generate
new jobs themselves. They need to realistically appraise the strengths and
weaknesses of their community, the available resources and the potential
marketplace. By necessity most such startups don't begin by employing hundreds
of workers but if they succeed and grow their loyalty to the community that helped
nurture them is far greater that a manufacturing operation that is lured to
that same community by incentives that can be matched or exceeded by some other
disparate community. In many cases existing small local businesses already
possess valuable skills and experience that can be leveraged into growth that
will support more local employees with a little bit of help. Officials at the
Department of Commerce and Economic Opportunity (DCEO) say they understand
these things and want to assist the creation of such jobs, that's why the IEN
was formed.
ÒRight now we're in the process of building the
conceptual infrastructure of entrepreneurship,Ó explains Garza. ÒThe biggest
challenge is finding people with the willingness and resources to take a chance
on developing a small business or expanding an existing business into new
areas. It's not my role to provide new business ideas or to tell someone
whether their business idea has merit. Instead I help lead them through the
planning process and help them obtain information and assistance that permits
them to determine the likelihood of success for themselves.Ó
Garza and Johnson are here with the mission of
facilitating local entrepreneurial growth and development but they are also
assisted by experts across the IEN. Before you can even think about obtaining
financing you have to develop a marketable product or service and assess its
probably market success. If the idea is determined to have merit then most of
us require financial assistance to enable realization of that idea. Garza says
that his office will not only help a business line up a commercial bank loan
but also help them utilize available government incentives and assistance
ranging from small grants to tax savings to training assistance.
ÒWe are a partnership working together with economic
development groups across Illinois and especially GREDA (the Galesburg Regional
Economic Development Association) to promote the creation and growth of local
small business. A successful small business doesn't stay small for long.
Assessing the performance on an ongoing business and reviewing your operations
is crucial to both growth and survival. We're not just here to help get you
started but also to help insure your continued success and growth in both jobs
and financial return. Our strength is the network of available resources we can
help make available to the business person.Ó
Starting a small business is a risky endeavor.
Statistically most new businesses do not succeed but there are things a smart
businessperson can do to maximize the probability of success. One such thing is
having the patience to properly research and plan your potential business
before you startup. Not all business ideas are practical or workable or even
realistic. And it is not uncommon for someone to desire their own business
while being clueless just what that business should be.
ÒProbably the most interesting and challenging request
made of me is when someone says that they want to start a business but don't
have any idea what it should be,Ó said Garza. ÒNot everyone is cut out to start
their own business or in a position to do so realistically and we want to help
those people make a sound assessment before they sink their life savings into a
high risk business venture. But on the other hand there are also plenty of
people who are well equipped to become small business people if only they had a
good business idea. I can help those people generate potential business ideas
and evaluate interesting opportunities or offer suggestions. Ultimately the
dream and the decision must be theirs. My role is to make sure that they have
exercised due diligence and sound judgment in evaluating the opportunity. It
may not be realistic but I want everyone I speak with to be successful business
people.Ó
Business risk is inevitable and typically, like any
investment, that risk is proportional to the return one anticipates. Timing,
experience, resources, market knowledge and luck all play important roles in
determining the success in establishing a new business or the expansion of an
existing business. Garza can help ongoing businesses continue to prosper and
grow by offering advice, training and referrals to experts within the IEN.
One of the goals Garza has for the Galesburg
Entrepreneurship Center is to reestablish the former SCORE program. When first
started by the federal Small Business Administration the acronym SCORE stood
for ÒService Corp of Retired ExecutivesÓ but times have changed and so has
SCORE. In its former incarnation in Galesburg Garza's partner Dick Johnson was
a key figure in the local score chapter that put the decades of business
experience of retired local business people before current businesses seeking
assistance. Today's economic climate in Galesburg means that there are fewer
retired business executives available but Garza wants to network both active
and retired business people to assist he and Johnson in advising local
businesses. ÒThere's a lot more available business expertise in this area than
people realize and I want to leverage it to help our clients,Ó stated Garza.
Another goal of Garza's is to begin offering a series
of local training workshops for business people covering everything from basic
accounting principals to the essential of human resources to how to identify
and purchase affordable technology for your business. ÒNone of us know
everything we need to know to remain successful. Large businesses can hire a
team of experts to assist but that is practical for the small business. A small
businesswoman needs to be a Jill-of-all-trades and we can help that happen.Ó
And finally Garza believes that it is important to
recognize that not all entrepreneurs are created equal. There are different
kinds of entrepreneurs offering different potentials to the community. The
commonly recognized entrepreneur is what Garza terms an Òoperational
entrepreneurÓ who thrives on the creation and operation of his own business.
Another type of entrepreneur is less often recognized but just as important,
the Òsocial entrepreneurÓ possesses resources such as cash or ideas but not the
desire to directly operate a business. This latter group can be paired with the
former to assist in the financing of new business ventures or the incorporation
of a new idea to expand an existing business.
Identifying potential social entrepreneurs and
convincing them to become involved in starting or expanding local businesses
seems like a key ingredient toward the economic resurgence of the Galesburg
area. Garza is convinced that most of the required resources are already available
in this region to support the creation and growth of new businesses and new
jobs. Two of the benefits of pursing economic development in this way are that
it diversifies the economy not only because it is less reliant on a small
number of large employers but also because it employs a wider variety of both
blue- and white-collar employees. Secondly, businesses started by people who
already live in the area seem far less likely to be lured away just when they
become most valuable to the community.
Growing the local economy through the creation and
expansion of a number of local small business takes a lot longer than
successfully recruiting a single large manufacturing plant to town but we
already have a track record of success on the former and many years of failure
at the latter. Perhaps the old fairy tale about the hare and the tortoise may
have just some real world applicability here.
8/16/07