National experts help state biz grow; MEDC-backed program to expand
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Online Tech Inc. CEO Yan Ness got important data for his business through the Pure Michigan Business Connect economic gardening program.
Photo: LEISA THOMPSON
As part of the strategy to grow Michigan businesses, the Michigan Economic Development Corp. has launched a program to help startups get business consulting services.
The MEDC has dedicated $3.5 million to the program in which Michigan-based companies can apply for $50,000 of consulting services. The Detroit office of Ernst & Young LLP has a team of consultants working directly on the program.
Mike Finney, MEDC president and CEO, said companies can apply for up to $50,000 through local economic development offices, and will be required to pay a portion of the consulting fees.
The program is part of the Pure Michigan Business Connect program. It reflects the overall shift in economic development to focus on growing local businesses rather than trying to attract large businesses to Michigan.
Economic development can't be based only on tax incentives, Finney said, and needs to include business support, infrastructure and financial assistance.
When Online Tech Inc. CEO Yan Ness took part in a state pilot program for growing small and midsize businesses, he was looking for business intelligence that would help his 10-year-old company pinpoint the best locations to place its next data centers.
His experience with the Pure Michigan Business Connect economic gardening program didn't disappoint.
Ness learned where the Midwest's areas of high demand are -- such as the density of businesses within a certain number of miles of where a data center might go -- and also what areas have low competition. He has that and other layers of information in an interactive online proprietary database that can be updated -- information he will use as his Ann Arbor-based company looks at expanding beyond its three data centers, two south of Ann Arbor and one outside of Flint.
"It's going to help us pick where to put our next data centers. I knew I needed better data on making that selection," Ness said.
Online Tech was one of 54 Michigan companies to get one-on-one development support from national experts in four central areas: strategy and management; market research and competitive intelligence; Internet and social media strategy; and geographical information systems (GIS) data.
The companies received 35 hours of assistance from team members in the program, which was administered by the Cassopolis-based Edward Lowe Foundation and underwritten with $205,000 from the Michigan Economic Development Corp.
With the pilot program now complete, the state is preparing for the next iteration: an expanded program available to all Michigan second-stage companies. While only a few companies were selected from particular regions of the state in the pilot, in the new program "the door will be open to the entire state, as long as they meet the criteria of a second-stage growth company," said Nicole Whitehead, project manager at the MEDC.
As in the pilot program, companies must:
• Be for-profit and privately held.
• Have between $750,000 and $50 million in annual revenue, or working capital in place from investors or grants.
• Employ six to 99 full-time-equivalent employees, including the owner.
• Have maintained its principal place of business in Michigan for at least two years.
• Have potential revenue growth in the next three years exceeding $1 million.
• Demonstrate growth in employment or revenue in two of the past five years.
• Provide products or services beyond their current service area, to regional or international markets.
The state in March issued a request for proposals for a vendor to provide services to second-stage companies and last week said it had awarded the contract to the National Center for Economic Gardening in conjunction with the Lowe Foundation, which houses the center.
Whitehead said the new program could launch in July. She said the MEDC will fund it, but cost figures were not available by Crain's deadline. Whitehead said the services provided in the new program will be in the same four areas as in the pilot.
Whitehead said the MEDC received "overwhelming positive responses" from companies' exit surveys in the pilot.
The program put Ness in touch with experts such as Wayne Kocina, founder, owner and CEO of GeoWize LLC in Boulder, Colo. The firm provides GIS economic gardening services that range from site and customer prospecting and market intelligence to consumer spending data and customer profiling.
For example, using information extracted from a list of about 15 million businesses that it has licensed from a national provider, GeoWize can analyze penetration of competitors and compare the daytime and residential populations in a target area. It can also identify a company's potential customers and provide contact names, phone numbers, credit ratings and other information "so they can go in and contact prospects," Kocina said.
Businesses selling to consumers can get profiles for a geographical area that drill down to information such as average household income and net worth, family size and ages, homeownership and even behavioral characteristics like whether people in that area like to hunt and fish and what TV programs they watch.
Kocina said GIS "has been the secret weapon of big business for years and years and years" but "a lot of entrepreneurs and small-business people don't have access and don't understand the capabilities."
Ness said the GIS information will help.
"Our plan is to open more data centers in the Michigan and Midwest area, and it's expensive and takes a long time to do that. You want to pick those locations carefully. Put them in the wrong place and they can be really disadvantageous," he said.
For some businesses in the pilot, such as Alfie Logo Gear Inc. in Traverse City, Web assistance was an area particularly valuable.
"I knew that my website could be improved. I knew there were things that could make it better and more efficient, but I didn't know what those things were," said Bonnie Alfonso, president and CEO of the 22-year-old provider of logo apparel, staff uniforms and promotional products. "I am not a technical person."
She said website analysis looked at what aspects were effective and what needed to be upgraded, like scripts that needed to be changed, as well as other improvements like making the site more content-driven so that it appears more prominently in searches, and making it more user-friendly for new and returning visitors.
She received a seven-page document that went through every page of her website and gave her feedback on what she could do to improve it. Alfonso in turn took the document to the website design firm she uses. She expects that changes will start appearing this summer.
She said that in addition to learning how her Web presence could be more effective, she was able to communicate better with her Web design firm.
Alfonso said that while the website changes are near-term, market research assistance has provided a framework for identifying and connecting with new customers over the next few years.
For example, Alfonso is interested in expanding her clientele in health care, so she got information on Midwest trade shows where she could meet with staff from community-based hospitals who could be leads for new orders of logo or branded uniforms and other items.
David Brim, founder and CEO of Brand Advance LLC, an Orlando, Fla.-based Internet marketing and design agency and member of the national team that assisted Michigan companies, said he sees a variety of needs as he works with companies.
Brim said he helped some Michigan companies construct "thought leadership strategies" -- sharing educational content on their websites that helps them stand out as an industry leader. That might entail how-to guides, an educational video, a blog addressing a particular topic, a PowerPoint presentation, informational graphics or webinars, he said.
"The goal is to have your website become a trusted resource," Brim said.
Brim said he also did competitor website reviews and analyses and helped companies identify where their target customers interact online and the best strategy to connect. For example, executives might think they need to be on Twitter or on Facebook, Brim said, but "you really don't. You have to be where your customers are."
Brim, Kocina and others who helped Michigan companies are part of a team of specialists trained and certified through the National Center for Economic Gardening. The center was founded by Chris Gibbons, director of business and industry affairs for Littleton, Colo., who in the late 1980s pioneered economic gardening, an entrepreneur-centered strategy that focuses on helping existing companies to grow.
Mark Lange, executive director at the Lowe Foundation, said economic gardening services offered through the Michigan pilot program provided an uncommon kind of "just-in-time, high-end" expertise.
"Economic gardening specialists function much like an outsourced team of experts," Lange said. "Their goal is not to dictate or implement solutions but to help CEOs identify issues that might be hindering growth -- and point them to new tools, business concepts and information to make better decisions."
For example, economic gardening specialists can help entrepreneurs determine whether they have the right business model, see new opportunities in their industry and understand how to better interact with customers and suppliers, Lange said.
"Economic gardening specialists are able to get to the root of growing pains quickly and give entrepreneurs actionable information so they can move forward," he said.
For Ventower Industries LLC in Monroe, which began manufacturing wind turbine towers in 2011, the pilot program provided market research that would have stretched Ventower's time and staff to pursue.
The company targeted areas that could potentially diversify its business, said Scott Viciana, Ventower vice president. That included looking at what else the company might fabricate, such as the potential for components needed for natural gas hydraulic fracturing; the possibility for the company's background in construction, metals and other areas to be of service when wind turbines are decommissioned and taken down; and the opportunity and ability to provide capital or management expertise for small wind-energy developments and projects.
Viciana said Ventower gained information on companies involved in such areas, including company names, length of time in business, their target areas and current projects. "It gave us really just a view of the landscape and how realistic something was and (whether it) might not be worth the time, or worth the time," he said.
In Michigan, interest in diversifying was a common theme among many manufacturing companies in the pilot program, said the MEDC's Whitehead.
Terri Schroeder, a market research specialist on the national team and project manager at Shepherd Advisors, an Ann Arbor-based business strategy and market research consulting firm, said that if a company is looking to enter a new industry, market research can provide reports on a potential industry's size, nature, trends, key players and supply chain, which can "help ease the transition of them breaking into that new industry."
And market research can help companies prioritize and make decisions, she said.
Robin Phelps, one of four leaders of the national economic gardening team and owner and managing director of Denver consulting business Innovation Economy Partners, said another area that's important is assessing the "fitness landscape" of the business: Determining whether and when to put resources -- such as sales, marketing, products and services -- toward exploiting markets that have proven successful or that have a lot of potential for growth, or to focus on exploring new or related markets.
"So much of traditional business strategy ... doesn't have you think about the balance between the two, ... when you shift from one to the other and why," Phelps said. For example, "if your market is going through a lot of change, then you have to be exploring, just like your customers are."