Recently, as U.S. economic struggles have continued, the mainstream media has paid a lot of attention to entrepreneurs and their importance to the economy. The question commonly asked is: How important are entrepreneurs to a community? The answer in short: New entrepreneurial ventures are critical for economic development in any region.
In 2007, the U.S. economy generated 1.1 million net new jobs of which three-fourths were in small firms with fewer than 500 employees, and one-fourth in firms with fewer than 20 employees. So, it is important that we do a good job of attracting new entrepreneurial ventures to West Michigan as a key strategy toward building a prosperous economy for the future.
As a first step, we need to assess the entrepreneurial climate in West Michigan. West Michigan has a great tradition of entrepreneurship. It has produced several major companies that have entrepreneurial roots such as Amway, Autocam, Cascade Engineering, Gordon Food Service, Meijer, Padnos Iron & Metal, Steelcase, Perrigo, Universal Forest Products and many others. But, are we attracting such entrepreneurs to this region today?
To this end, a study was commissioned recently by the Seidman College of Business. The results from the study indicate that while we have many strengths in this community, we are falling behind when compared to other cities, such as Huntsville, Ala., and Salt Lake City, Utah, that have been more successful in attracting entrepreneurs and starting new ventures in their community.
Why are we lagging behind? A community needs four basic elements to build a hotspot for entrepreneurial activities. First, we need a social climate that is conducive to attracting entrepreneurs — the “creative class.” These are people who have the good ideas and are willing to do whatever is necessary to transform this idea into a successful business. Second, we need the support from incubators and professional firms to help set up the business. Third, a critical factor that is needed is adequate capital at every stage of the business — from pre-setup to growth stage. Lastly, we need the labor and managerial talent to operate and grow the business successfully.
How does West Michigan fair in each of these elements?
While we have a strong tradition of entrepreneurship in this community, we can do a better job of attracting entrepreneurial talent by building a culture that is more conducive to risk taking and celebrates successful entrepreneurs. We need our local government to embrace such entrepreneurial ventures. We have a very strong support from outreach centers that work toward regional economic development. We can enhance this through better coordination among the support centers. The main goal should be that an entrepreneur looking for help will know where and to whom to look for help.
Capital is the critical element that we seriously lack. Though many private investors are located here in the community, we need more organized (venture) capital that is targeted toward the initial stages of the entrepreneurial venture. With regard to labor, we have the manpower but they need to be retrained and better educated to suit the needs of the new ventures that require highly skilled labor.
How can we build a strong entrepreneurial community in West Michigan? We have much strength that already exists in the community. We need to marshal these resources with a clear goal to building a hotspot for entrepreneurial activity.
As a first step, we need to create an entrepreneurship forum where potential entrepreneurs can share their ideas with others involved in entrepreneurial activities. Second, we will need to attract more organized capital that will be targeted toward investing in a portfolio of start-up ventures as seed financing. Third, we need a business climate that attracts new businesses to this region. This includes local and state government policies and incentives targeted at attracting new ventures to the community and state, respectively. Lastly, we need to target our resources toward retraining and educating the labor force for the jobs of tomorrow.
The West Michigan community has done this before very successfully and can do it again today. This will put us back on the road to a sustainable and prosperous economy.
Dr. Sridhar Sundaram is an associate professor of accounting and chairman of the finance department at the Grand Valley State University Seidman College of Business.