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Economic gardening, the underlying economic model that stresses business

creation and expansion, has gained a foothold in Florida thanks in large part to a coordinated effort from Central Florida economic devel-opment leaders who view local entrepreneurs as the key to economic growth and prosperity.

When the town of Littleton, Colorado,faced a potential economic disaster in1987 due to layoffs of thousands of peo-ple by the community’s major employer,the crisis strained the resources of localresidents and businesses and threatenedto undermine the community’s overall taxbase. Staring into a dark abyss, commu-nity leaders disregarded conventionaleconomic development wisdom andchose a divergent strategic path.

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HARVESTTIMETHE PRACTICE OF NURTURING HOMEGROWNCOMPANIES AS AN ECONOMIC DEVELOPMENTSTRATEGY REQUIRES FORESIGHT ANDPATIENCE.

By Jack Roth

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The EDC is part of a particularlystrong infrastructure in Central Floridathat supports entrepreneurship, busi-ness growth, new-industry develop-ment and recruitment in the region, but

the recent buzz associated with eco-nomic gardening lies in how its basicphilosophy syncs with the current eco-nomic climate. “A focus on existingcompanies is more practical right now,especially when cities and states havelimited economic funds,” explains JohnFremstad, vice president of BE&K Inc.and former vice president of the EDC.“You can spend limited funds on yourown entrepreneurs, and the benefitswill trickle down to other areas withinthe community.”

In fact, a tough economy isn’t theonly reason to consider an inside-outeconomic growth strategy. Globaliza-tion, the impact of the Internet, rapidlychanging technologies, and the emer-gence of new, fast-growth overseaseconomies are forcing wholesale eco-nomic change across the United States,making business expansion programsmore important than ever. Despite this,many cities and states still focus onrecruitment, not expansion. So why isCentral Florida, and now the entirestate, so ahead of the curve?

The answer: an infrastructure gearedtoward an entrepreneurial growth con-tinuum and the presence of forward-thinking individuals.

A PERFECT FITNo region can be truly successful at economic development without local universities and colleges that offer the curriculums, mentoring and internshipprograms that help create and retainhome-grown talent. This is true in Central Florida, where the University ofCentral Florida (UCF), Rollins College,Stetson University, three top-rated community colleges and other institu-tions offer the tools necessary for eageryoung talent to blossom.

Take the UCF Business Incubation Pro-gram, for example. Opened in 1999, ithas served more than 90 emerging com-panies that have generated more than900 new jobs and more than $200 millionin annual revenues. This community part-

nership provides early-stage companieswith the tools, training and infrastructureneeded to create financially stable, high-growth enterprises.

“Growing is our main role, whichhopefully leads to maintaining,” says TomO’Neal, associate vice president forResearch and Commercialization at UCFand founder of the incubator program.“These young companies are run by indi-viduals who have the intent and where-withal to grow, so we help reduce the risksby being coaches and mentors.”

The university has a built-in network ofadvisors, in the form of professors, whoare familiar with the particular issues asso-ciated with various industries. It also nur-tures the region’s future workforce. “Wehelp these companies write grants so theycan get money, and we connect them withgraduate students who work with the pro-fessors to write the proposals,” O’Nealexplains. “So when they graduate, theyget jobs with these companies. It’s a goodexpansion model. We have many highlyskilled graduates currently working onprojects with incubator companies, sowe’re parlaying this local talent into theregion’s economic growth.”

At the Rollins College Center forEntrepreneurship at the Crummer Grad-

Instead of seeking a quick fix toreplace lost jobs by offering relocationincentives and tax breaks to firms out-side the region — an approach knownas “economic hunting” — theyembraced an alternate, long-termentrepreneurial strategy designed togenerate new jobs from the commu-nity’s existing base of businesses. Thisapproach, which became known as“economic gardening,” yielded remark-able results. During the 15-year periodfrom 1990-2005, Littleton saw a 136percent increase in the number of netnew jobs, outperforming Denver Metro,the state of Colorado and the entirenation by a significant margin. Economicgardening proved to be a successfulparadigm shift, as well as a burgeoningalternate strategy in the arsenals of economic development commissionsacross the nation.

When Florida Governor Charlie Cristwent against conventional economic wis-dom and — during an emergency bud-get-slashing session this past January —pushed through an economic develop-ment pilot program that called for moneyto be spent on preferred small-businessloans and entrepreneurial support ser-vices, it marked a bold and significantleap toward adopting economic garden-ing as a model for the state.

The impetus for the state legislativeaction, however, started in Central Floridayears ago with the efforts of a handful ofpro-entrepreneur advocates who haveunderstood the importance of “fertiliz-ing” homegrown businesses and reapingthe benefits of a strong harvest.

THE NEW BUZZ PHRASERay Gilley, president and CEO of the

Metro Orlando Economic DevelopmentCommission (EDC), stresses that theEDC has always incorporated economicgardening as part of both an inside-outand outside-in economic developmentstrategy. “We’ve always tried to createa balance between recruitment andretention and growth,” he explains.“Both the attraction of out-of-marketcompanies into Metro Orlando and theretention and growth of companiesalready within this market are vital tothe regional growth process.”

“We’ve always tried to create a balance betweenrecruitment and retention and growth.” — Ray Gilley,

president and CEO, Metro Orlando EDC

Ray Gilley

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uate School of Business, the goal is toprovide the best possible training for itsMBA students. The Center provides semi-nars, workshops, mentoring programs,internships and speakers, many of whichare open to the public and all of whichpromote the retention of MBA talent.

“Economic gardening is the founda-tion of what we are working to accomplishthrough the Center,” says Cari Coats,interim executive director. “We help our

students successfully start and grow theirown businesses. We also network withentrepreneurs in the region who are look-ing to grow their businesses and offerthem access to resources and programsthat will foster successful growth.”

As a partner with UCF and five otherFlorida institutions, the Center for Entre-preneurship hosts the annual New Ven-tures Business Plan Competition, whichhas resulted in the creation of viable busi-nesses that contribute to the economicvitality of Central Florida. The Center alsopartners with the Athena Powerlink Pro-gram, a national organization that pro-vides panels of volunteer business expertswho advise female business owners onimportant issues that can help themachieve growth and further success. TheCenter’s inclusion as part of a partnershipthat includes Orlando Regional Chamberof Commerce, Center for Entrepreneur-ship and Innovation at UCF, and the Dis-

ney Entrepreneur Center secures its roleas one of the many entrepreneurship-focused organizations working in concertto create one of the best regional entre-preneurship systems in the United States.

The Florida High Tech Corridor Coun-cil (FHTCC), under the guidance of presi-dent Randy Berridge, partners with variousCentral Florida institutions to attract, retainand grow high tech industry and to helpdevelop the workforce to support thoseindustries in the 23-county service areas ofUCF, the University of South Florida (USF),and University of Florida (UF).

“The Corridor Council plays an integralpart in providing services to high-techcompanies, many of which wind upbecoming second-stage growth companies with often limitless capacityto provide jobs and wealth for theregion,” says Ed Schons, director of Economic Development at UCF.

Additional support for regional entre-preneurs comes courtesy of the DisneyEntrepreneur Center, which has become

nationally recognized for small businessdevelopment and provides a variety ofservices such as free business coaching,networking functions, a resource library,access to video conferencing and more.“Whether an entrepreneur is just consid-ering starting a business, or a seasonedbusiness is seeking tools for growth, the10 separate business organizationslocated at the Center can accelerate theprocess,” says Jerry Ross, executive direc-tor. “Our region is very entrepreneurialand we are very good at assisting thestart-up/first-stage ‘main street’ busi-nesses. By supporting and acceleratingthese start-ups into second-stage busi-nesses, we are supporting the economicgardening concept of growing compa-nies and, in turn, growing jobs.”

There is no doubting that a stronginfrastructure exists in Central Florida toeducate, create and retain start-up busi-nesses, but it is during the crucial next

step in a company’s growth cycle whensupport gaps often exist and manyregions fail to fill them. Ross emphasizessecond-stage growth companies asessential to economic development, and,in fact, they are the critical focus of eco-nomic gardening. It became clear to Rossthat economic gardening could be an ini-tiative worth considering for CentralFlorida when he read the 2006 Report tothe President on The Small Business Econ-omy, written by Orlando-based economicdevelopment researcher Steve Quello.

“Steve has brought his knowledgeand research on economic gardening toCentral Florida because of the fertileground of high-tech, biotech, and entre-preneurial capital present here,” addsRoss. “It only makes sense that a regionthat is so engaged and supportive of eco-nomic development would be at the fore-front of this type of initiative.”

SECOND-STAGEGROWTHTo Quello, who has been studying entre-preneurship and economic growth formore than a decade, economic garden-ing is more than a metaphor. It is a crit-ical part of a broader economic devel-opment story associated with the con-tinuum of entrepreneurship. There is aleverage point, he suggests, where com-munities can do better faster if theyinvest the right way. “With limited

resources, communities have to allocateresources strategically, and in times likethis, industrial recruitment is not as effec-tive as supporting expansion programstargeting resident businesses. Most jobsare created and sustained over time bythe creation and expansion of local com-

“These young companies are run by individualswho have the intent and wherewithal to grow, sowe help reduce the risks by being coaches andmentors.”— Tom O’Neal, associate vice president for Research and

Commercialization, UCF

Tom O’Neal

Randy Berridge

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panies. The message of economic gar-dening is to allocate resources moreeffectively, by focusing on the stage-specific needs of high growth/highpotential second-stage companies.”

The bracket typically used todescribe second-stage growth compa-nies is 10 to 99 employees and $1 mil-lion to $50 million in revenues. In thisspace, says Quello, if a community cancultivate the right environment and offerstage-specific support, they will gener-ate the best return. Historically, he adds,the majority of public sector resourceshave flowed to supporting first- andfourth-stage companies, but entrepre-neurs are not equally productive. Only asmall subset of first- and second-stagecompanies have the desire and capac-ity to become truly high-growth enter-prises. The goal of economic gardeningis to recognize and support stage-spe-cific needs of these high achievers inorder to generate a greater return, nomatter the industry sector.

The Edward Lowe Foundation,based in southwest Michigan, was cre-ated to enhance entrepreneurship andeconomic growth across the country.Mark Lange, the executive director, hasknown Quello for 10 years, andtogether they have worked to betterunderstand how to recognize and sup-port second-stage growth companies.“Steve is our man on the ground in Cen-tral Florida,” he says. “He introducedme to Tom O’Neal four years ago, andI quickly realized what a great infra-structure Central Florida already had inplace. We simply began to provide thedata and new ways of thinking to keysupport people, and Steve became anadvocate for these ideas in the region.”

Acknowledging that UCF was wayahead of the curve with its incubatorprogram, Lange and the Foundationlicensed its PeerSpectives Program toUCF. O’Neal was quick to embrace it asa “graduate program” for his incubatorcompanies. PeerSpectives is a peer-to-peer, learning and problem-solvingprogram based on the best practices ofCEO peer-learning programs across thecountry. Quello worked in concert withthe Edward Lowe Foundation to study,design and implement the programnationally.

In essence, second-stage CEOsmeet in a roundtable setting once amonth to discuss issues relevant to theirbusinesses. The entrepreneurs decidewhat topic to discuss at the meeting. Inlaunching this program, Quello alsoserved as a facilitator, and has devel-oped a mentoring program that goeshand-in-hand with PeerSpectives, inwhich third-stage CEOs give advice tosecond-stage CEOs.

This supportive and proactive infra-structure has allowed Central Florida toovercome the most common hurdlesassociated with recognizing second-stage growth companies.

“Most communities have a hardtime finding them because they justdon’t know who they are, but CentralFlorida can target them easily becausethey’ve already been part of the con-tinuum process from the first-stagegrowth programs already in place,”explains Lange. “I’m really looking for-ward to seeing how this works out long-term for Florida now that initial fundingfrom the state is in place. I can seeusing Florida, and Central Floridaspecifically, as a blueprint when takingeconomic gardening to other regionsof the country.”

At the core of all this, stresses Quello,is the entrepreneur. “They create thejobs and wealth that drive the economy.That’s the message here — being entre-preneur-centric allows Central Florida tobe more productive and competitive inan increasingly “flat” world. Striking theappropriate balance of investment inentrepreneurship and innovation offersthe only truly sustainable economicdevelopment strategy.” x

Steve Quello

Signs of Second-StageGrowth A major principle of economic gardening

states that high growth/high potential com-

panies are critical to inside-out economic

development. They can be of any size but are

ideally bracketed between having 10 to 99

employees and $1 to $50 million in revenue;

established companies operating at a stage

beyond start up or early development. Most

importantly, second-stage companies are

particularly strategic.

The Edward Lowe Foundation describes

the second stage of business development

as a point in the business life cycle when the

casual ad hoc methods of entrepreneurial

ventures begin to fail. It is a stage when the

complexity of employing an increasing num-

ber of workers and the related regulatory

compliance issues begin to exceed the span

of control of one owner or CEO.

At this stage of business

development, more formal

systems and processes may

be required to effec-

tively manage the

business if it is to

sustain or accel-

erate its

current

rate of

growth to the

next stage of busi-

ness. These compa-

nies have moved

from where

the founder is

owner, operator, manager,

innovator — all in one — to

an operation organized

around specialization and more formal

organizational structure. This is an inher-

ently fluid stage of business development

that requires support to be available

in “just-in-time” fashion.

“They require high-maintenance and are

often difficult to get a handle on,” says Mark

Lange, executive director of the Founda-

tion. “We often liken second-stage growth

companies to a child’s terrible

twos. It's a tough growth

period that requires specific

support and under-

standing.”

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