Saturday, September 01, 2007
Real startups vs branch outlets.
The glitz factor.
A little piece of economic data from the US Census Dept. did not make the Madison, WI papers. It's probably because the business press in my town is smugly admiring the press releases from our biotech, nanotech and high tech start ups and wondering why the rest of the state can't get it.
Well, a very good biz reporter for the Milwaukee Journal Sentinel caught that Census economic data as it went by, and got it on page one above the fold in the business section of their paper on Friday, Aug. 17.
Rick Romell did the analysis and found that our Wisconsin entrepreneurial climate may look good on paper, but it's wallpaper for what's happening with real economic development at the entrepreneur level.
The meta numbers say we're gaining jobs and big establishments are locating here in numbers above the national average. Big establishments meaning branch stores of firms headquartered elsewhere.
For the local entrepreneur, the situation is much different as Rick Romell parses out the numbers. In fact, we're tied for the eighth worst spot in the US for new entrepreneurship with the likes of Alabama, Mississippi and Nebraska.
Worse, Wisconsin ranked fourth worst in the US for birth rates of new businesses.
There seems to be an inverse relationship as Rick Romell has identified it. We're low on the start up numbers, but better on our ability to keep them alive. Playing it safe seems to be the model.
One gentleman who is well respected in this field, David Ward of Northstar Economics, is quoted as saying the lagging pace of business creation in WIsconsin is "a persistent, nagging problem" that has been discussed in several economic summits. "But it's hard to move that number," he said.
The reality on the ground at the individual startup level, where I work, is that there is a huge increase in the number of people turning toward entrepreneurship to support themselves and their goals in Wisconsin (this is the same with residents of most states in the US, and it seems most every other country in the world).
Yet the entrepreneurship support systems and the people behind them just aren't getting it. They love to tout entrepreneurship but are content to encourage jobs at branch outlets of big box stores. Sure those jobs count, but that's not entrepreneurship. Perhaps that's just the nature of the bureaucracy beast.
There was a very significant economic development report released recently called the M7 Report. It looked at the 7 counties around Milwaukee and South East WI and came to the conclusion that this area needed to change from being "the machine shop to the world" to the "design shop to the world". Hell yes.
If ever there was a clarion call for entrepreneurship, it's this kind of report. Get the tools into the hands of smart, hard working people with new approaches and new ideas. It's the same with all the other areas of the state and the country for that matter.
Unfortunately, the follow up and execution from these reports doesn't look to the street level. Official solutions providers tend to work at the meta level. Entry level startups with the potential for modest gains get trampled for glitzier headline-ready projects.
Starting up small, micro-funded startups is a messy, unglamorous process. The official support systems barely even notice these kinds of enterprises. It's much easier to count other, related numbers and declare success.
Mr. Ward from Northstar notes, "It's hard to move that (startup) number".
Yes, it is when our support systems are tripping over themselves to attract branch office stores and glossy high tech startups, while leaving the rest of us as something discussed as problems at economic summits.
This isn't a Wisconsin thing. It's typical across the US. As I talk to my startup friends and clients across the country, getting anyone's attention for smaller scale, micro financed, individual or family based startups is like selling foot odor.
The response is, "Somebody should do something about that, but it's not my job."
Isn't it about time we stopped fretting about this at economic summits and made it someone's job?
You can read Rick Romell's article here. The Milwaukee Journal Sentinel article original can be purchased for $2.95 here. Search for Romell and take Rick's story dated August 17, 2007