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REVIEW SUMMARY
What. Economic gardening program.
Issue. State program offers expert advice and loans to second-stage companies.
Impact. Companies adding jobs, but criteria tough to meet.
At a glance. See Gulf Coast companies gardening for growth.
David Peterson is not unlike a lot of CEO's of small, established companies who want to grow their business but may not have all the expertise or capital to make it happen.
Indeed, when your office is at the end of the hallway, finding people to turn to for advice could be a difficult task, considering the variety of issues business owners deal with. The list includes website development, search engine optimization, new markets research, strategy development or, in a rare case, how to go about firing your best friend.
Peterson, however, is finally not so lonely anymore.
Enter GrowFL, the state-funded 'economic gardening' program run by the Florida Economic Gardening Institute at the University of Central Florida in Orlando. The second-year program assists entrepreneurs like Peterson, president of V Tech (as in virtualization), a Naples-based business technology services firm founded in 1993.
“I can't say that there's anything that I needed from them that I haven't been able to get,” says Peterson, 56.
V Tech also got a $75,000 low-interest loan through a sister program created in the same 2009 legislation but managed by the Black Business Investment Fund, also in Orlando.
A dba name for Computers at Work, Inc., V Tech qualifies for GrowFL assistance as a so-called 'second-stage' company. To qualify for GrowFL, a company must have 10-50 employees, generate $1 million to $25 million in annual revenue and be a for-profit, privately held, investment grade business.
Businesses must also meet Florida's qualified target industry (QTI) tax refund program and have increased sales and employment three out of the past five years. Considering the recession, those final two factors make the program a reach for some companies. (See sidebar for list of criteria.)
Peterson says V Tech put the loan to good use, hiring an employee to go after a new market. “To bring in an additional employee and go into debt, you have to have high expectations,” says Peterson. “So far, my expectations have been exceeded. The employee I hired has been hitting it out of the park.”
So much so that Peterson plans to bring on another employee to help handle the new workload on the “tech side,” as he puts it. “I'm not sure we're going to need more money for it; I think were going to cash flow it,” says Peterson. “No more money down the well.”
And the technical assistance he received from GrowFL, he says, helps him evaluate new hires, a task that challenges just about any executive. “One of the resources they offered me was a course on personality types — Myers-Briggs assessments — how to put the right people in the right chairs on the bus,” Peterson recalls. “It's not something I'm unfamiliar with, but I did get some additional insights. I considered it to be valuable.”
It was also free.
Thank Kitty Litter
The state Legislature seeded the economic gardening program in 2009 with $10 million. The loan program takes $8.5 million. The rest supports one-on-one technical assistance and CEO roundtables.
The gardening concept of nurturing existing companies grew out of Littleton, Colo. in 1989. The city suffered when its largest employer left town. Still, the effort led to job growth that outpaced the Denver area, the state and the nation, according to Tim Cartwright, the Economic Development Corporation of Collier County's volunteer vice president for economic gardening.
Though the concept has spread to a handful of states, Florida's is the only statewide program. Kansas may soon be the second, according to Tom O'Neal, FEGI's executive director, who has meetings scheduled with Kansas officials.
“We're glad to share all the mistakes we made,” he says only half-jokingly, referring to communications and eligibility issues he'd like addressed. “We're staying busy, but we can do more.”
Sen. Mike Fasano, R-New Port Richey, says it was a challenge to convince House members early on to support the bill, which he sponsored in the Senate. In the end, the only House votes against it came from seven Democrats. Now, he says, “The amount of jobs that have been created far exceeded anyone's expectations.”
Now FEGI partners with Enterprise Florida, Workforce Florida, the Florida High Tech Corridor Council, the Florida Economic Development Council and the Michigan-based Edward Lowe Foundation to identify and qualify second-stage growth companies, provide technical assistance, and deliver services — including CEO Forums and CEO Peer-to-Peer Roundtables — to as many as 1,000 companies statewide.
Roughly 130 companies, including V Tech, are involved in intensive technical assistance.
GrowFL assists the CEOs by bringing them together with other CEOs from non-competing companies in a peer-to-peer roundtable network. It's based on the PeerSpectives Roundtable system developed by the Edward Lowe Foundation, a nationally recognized entrepreneurship development organization.
The CEOs can thank Kitty Litter for that — Edward Lowe invented the cat-box filler. Lowe died in Sarasota in 1995. He left a large estate, including 3,000 acres in southwestern Michigan where the foundation thrives.
Meanwhile, a thriving element of the GrowFL program is the job creation side. In fact, a summer survey of companies touched by the program had 70 respondents claiming 320 jobs created since last November, according to O'Neal.
The intent is to grow jobs at many established companies rather than the traditional, yet riskier and pricier approach, of trying to steal big corporations with hundreds of employees from other states or counties. The idea, according to Fran Korosec, FEGI's client services director, is to get 500 companies to each add five jobs rather than going after five companies with 100 jobs each.
Based on the program's early success, an additional $2 million in funding was provided by the Legislature this year to boost technical assistance. Much of that money goes to scholarships for the company CEOs to attend CEO roundtable meetings and one-on-one time, and some goes to the experts brought in.
“We got access to talented people that helped us define aspects of our market, important data around our target market,” says Daniel West, CEO of St. Petersburg-based UNITY Mobile, a software platform provider that allows companies to extend websites optimized for mobile phones. “They helped me put together a very large searchable index of companies we sell to or potentially could sell to.”
Designer Golf Company CEO Donald Morrison is another Gulf Coast executive who benefited from the technical assistance experience. The Odessa-based company manufactures ball washers, tee markers and signs, nearly everything a golf course needs besides grass, sand and water hazards.
“We had selected different market segments we wanted to get into,” Morrison recalls. “They validated what some of our selections were. They told us how to go about it.”
Morrison adds that the experts reviewed his websites and provided input that led to improvements that were made. Morrison didn't seek a loan from the program.
'The critical thing'
Advice is nice, of course, but so too are low-cost loans. That side of the program, managed by the Black Business Investment Fund, offers loans from $50,000 to $250,000. (See www.bbif.com.)
To date, $5.735 million has been loaned out, including $2.175 million to Gulf Coast companies. The regional firms include Web Direct Brands and Micron Pharma Works, both based in Odessa; Gulf Coast Signs of Sarasota; and Naples-based 4What Interactive.
The loans have four-year terms at 2% annual interest and are interest-only for the first 12 months.
“For me, the loan was the critical thing,” says Peterson about his $75,000 loan, a necessity given the financing struggles entrepreneurs face. “There is no capital; it's slim and none and slim left town.”
Collier EDC board member Cartwright feels Peterson's urgency. Cartwright doubles as managing director with Fifth Avenue Advisors in Naples, managers of the Gulf Coast Venture Forum and the Tamiami Angel Fund. “If a company is growing, and they have a huge opportunity, it outstrips their cash flow,” notes Cartwright. “A debt offering is cheaper than an equity offering. There's a higher risk premium for an investor.”
The Collier EDC, which serves Lee and Charlotte counties too for the program, raised GrowFL's profile with Cartwright's appointment. The EDC also obtained a sponsorship from Bank of America to support more CEO roundtable meetings, which are by invitation only.
Positive feedback from executives like Peterson and West could be key as EDCs around the state look for ways to continue the programs should state support slip in the next budget shortfall. Fasano hopes to find the money, but he knows it's going to be tough.
“It's important to that we continue to show success at the state level,” says Collier's EDC president and CEO Tammie Nemecek. “I think you're going to see a nice growth rate in these second-stage companies because of what Florida has done.”
To be considered for selection as a participant in the Florida Economic Gardening Technical Assistance Program, an enterprise must meet the following criteria at the time of selection:
• Be a for-profit, privately held, investment-grade business;
• Employ at least 10 but not more than 50 people;
• Maintained its principal place of business in Florida for at least the previous two years;
• Generate at least $1 million but not more than $25 million in annual revenue;
• Qualify for the tax refund program for qualified target industry businesses;
• Show an increase in full-time equivalent employees in Florida and gross revenues during three of the previous five years.
Some GrowFL resources may be available to companies not meeting the criteria.
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