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Supporting existing businesses a successful strategy for job creation

Business development expert says supporting innovative local entrepreneurs 
is the best way to boost a community’s economic fortunes

Helping existing businesses grow, rather than chasing big companies or fostering startups, is the best way to boost a community’s economic fortunes and create jobs.

That’s the core of an economic-development approach dubbed “economic gardening,” business-development expert Robin Phelps told participants at the recent Capturing Opportunities conference.

“You need the startups, but what about these existing businesses?” asked Robin Phelps, founder and director of Denver-based Innovation Economy Partners.

“(Economic gardening) is about reaching out to those who have gotten through the startup phase, who have proof of product or service, or proof of market, to help them think strategically about how they can grow their business.”

The term was coined in Littleton, located just south of Denver, in the early 1990s when a major defence contractor — the main employer in the city of 40,000 — laid off thousands of workers. The city’s economic development officer was initially mandated to recruit another big outside company, but he thought it made more sense to foster local businesses, said Phelps. The focus was on “here-to-stay” companies, whose owners and employees were longtime residents, she said.

“He took it as a personal challenge, saying there’s lots of existing businesses here that are loyal to the community, let’s see if there’s a way to help those businesses grow,” said Phelps.

Business owners were encouraged to identify an aspect of their operation with potential to expand beyond the local market, and asked how the city could help.

“It was not forcing anything on the business owner,” said Phelps. “It was encouraging the business owner to see if there was enough of an opportunity to grow their business while continuing to service the local market.”

It worked. Between 1990 and 2009, employment in the city doubled and sales tax revenue tripled.

The approach has since gained momentum across the U.S. and a National Centre for Economic Gardening has been established.

Among the success stories are a pump manufacturer that expanded sales by tapping into nationwide demand for water service infrastructure and animal feed suppliers that developed new product lines for the organic lawn fertilizer market. Phelps also described a small-town antique dealer who built a national market for her decorative flags.

“Economic gardening is about reaching out to existing business owners and those who already have a developed product or service, and giving them access to infrastructure and information that can help them think about strategies and opportunities for growth,” she said.

The approach also strengthens relationship between chambers of commerce and local economic development agencies, Phelps added.

“They become a partner with the local economic development folk and it’s also a program that they can administer and fund,” she said.

More information about Innovation Economy Partners is found on their website at www.ieconomypartners.com.

The theme of this year’s Capturing Opportunities conference is Local Living Economy and it focused on creating job growth by helping entrepreneurs innovate and realize their full potential.

About 97 per cent of Manitoba businesses fall into the small-business category, noted Minister of Entrepreneurship, Training and Trade Peter Bjornson.

It’s estimated one-third of all new jobs are generated by firms of this size, he said.

“Rather than using all your resources to encourage large businesses to come to your community you’re better off fostering growth in existing local businesses,” he said.

About the author

Reporter

Lorraine Stevenson

Lorraine Stevenson is a reporter and photographer for the Manitoba Co-operator with 25 years experience writing news and features. She was previously a reporter with the Farmers Independent Weekly and has also written for community newspapers in Winnipeg and Manitoba's Interlake.

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