Policy

Policy in Action

Let’s begin with two stories to illustrate policy making to support entrepreneurship. Surry County, North Carolina, the real Mayberry RFD of Andy Griffith Show fame, had a thriving manufacturing and tobacco-based economy for many years. More recently, however, the factories closed and tobacco supports diminished, forcing community leaders to consider other economic development options. With support from the Appalachian Regional Commission and many private sector businesses, the county created a business plan competition for new entrepreneurs. The competition raised awareness about the potential role for entrepreneurs in creating new economic activity and prompted community leaders to talk about entrepreneurship strategies. The initial experiment is continuing with the support of the local economic development commission, the city and county chambers of commerce and the community college, helping to create an environment where entrepreneurship is recognized and celebrated.

In Georgia, Governor Sonny Perdue, a former entrepreneur, focused attention at the state level on ways to support entrepreneurs. In 2004, he created by Executive Order the Georgia Entrepreneur and Small Business Coordinating Network. This multi-agency group is charged with coordinating the state’s programs for entrepreneurs and small businesses. A new Office of Entrepreneur and Small Business Development within the state Department of Economic Development facilitates the work of the Network. Listening to entrepreneurs and community leaders is one of the important activities of the Network. Through his leadership, the Governor is sending a signal that the state is serious about creating an environment that is supportive of entrepreneurship.

These two stories illustrate that policy intervention can occur at different levels. Our focus in this guide is helping rural community leaders think about, plan for and implement strategies to energize entrepreneurs. Part of this process requires becoming involved with policy in two ways—by working to create the most supportive environment for entrepreneurs at the community level and demonstrating the value of supporting entrepreneurs to state policy makers through your success. This section offers some useful insights for undertaking this adventure in policy making.

Why Engage Policy Makers?

Right now, disproportionate amounts of county, state and federal economic development resources are directed toward more traditional economic development strategies. These traditional approaches focus on attracting industries through incentives, supporting farm commodity programs and providing services to existing businesses. A 2002 survey of state expenditures on economic development conducted by the National Association of State Development Agencies found that $2.7 billion was allocated to both financial and non-financial assistance programs, but less than 1% of these investments went to programs that support entrepreneurship. The number could be higher in some states, as Erik Pages and Ken Poole found in a three-state study. Using a more specific definition of entrepreneurship development programs, they found that expenditures on entrepreneurship programs were much higher in Maine (29%), Nevada (40%) and Pennsylvania (64%).

Aside from money invested, more traditional economic development activities receive much greater public attention than do entrepreneurship programs. Ribbon cuttings for recruited industry abound, while small entrepreneurs create new ventures or add new employees without any public fanfare. And, in conversations with entrepreneurs around the country, this lack of recognition hurts!

Community leaders don’t determine how state resources are allocated to economic development activities. County governments cannot influence national issues such as trade, fiscal and monetary policies. However, leaders at the community, county and even regional levels do play a fundamental role in creating a supportive and stimulating climate for entrepreneurs. The next section describes the elements of this supportive environment. By focusing on these elements and creating an environment that nurtures and grows entrepreneurs, your community efforts may become the model that influences policy makers in your statehouse.

Maximizing Impact–Community Level Policy

When we talk about community level policy, we’re thinking about Webster’s definition: a “high-level overall plan.” Policy is more than just keeping taxes low and extending water and sewer to an industrial park. The plan that community leaders design and implement to support entrepreneurs (entrepreneurship policy) plays a central role in creating a stimulating and supportive environment for entrepreneurs.

In other parts of this website, we talk about the elements of an entrepreneurial environment. Communities can create this environment by making policy choices and decisions that produce a positive climate for entrepreneurship and by investing in infrastructure that supports entrepreneurs. While this environment has many features in common with places that boast a strong business climate, there are some important distinctions that can make all the difference to your entrepreneurs.

Climate for Entrepreneurship
Creating a supportive climate for entrepreneurship begins by recognizing the importance of the entrepreneurs who live and work in your community. Community leaders need to understand why these entrepreneurs are important to the economic development future of the community and communicate that understanding widely. This is particularly important for the growth entrepreneurs. These entrepreneurs have both the motivation and capacity to grow their ventures, bringing jobs, taxes and economic growth to your community. Understanding their needs and developing a climate that is supportive of them is an important first step in this process.

Creating a culture that supports and embraces entrepreneurship entails a number of different elements. Communities with an entrepreneurial culture regularly celebrate their entrepreneurs. They also recognize that these creative folks often may appear to be out of step with what is considered the rural “norm.” Instead of isolating them because of their uniqueness, entrepreneurial communities accept entrepreneurs as a new and vital part of the community’s social order. This isn’t always an easy process. Writing for the Des Moines Register, columnist David Yepsen summed it up well. “Those of us who remain [in rural Iowa communities] often ridicule the failure of others, or are jealous of their success, which just drives away even more creative people. Nor do we welcome outsiders and those who don’t look like us.”

Community leaders must address the challenge of incorporating entrepreneurs into the social and political structure of the community. This means welcoming the “techie” who wants to develop a software business in an old tobacco barn, dealing with the suddenly successful local sporting goods retailer who has tapped the online market and continuing to support the manufacturing entrepreneur whose business has succumbed to competition.

So, what policies might community leaders consider to create this entrepreneurial support environment? Here are some ideas to get you started:

• A formal entrepreneur visitation program on the part of the chamber or economic developer sends a positive message that the community is interested in learning more about the needs of and opportunities faced by its entrepreneurs.
• Creating an entrepreneur advisory group to the chamber or town council provides a pathway for entrepreneurs to share with community leaders and gives entrepreneurs an opportunity to get involved in leadership roles.
• A powerful way of creating a cultural shift toward entrepreneurship is to engage youth in the community. Working with the local school board to institute an entrepreneurship education program in K-12 classrooms and developing a youth leadership program are two ways of tapping into the potential that youth have to create a different economic future for themselves and their communities.
• Establishing award programs to honor an entrepreneur of the year or an entrepreneur who gives back to youth or the comeback entrepreneur of the year are relatively simple but effective ways of honoring the entrepreneurs in your midst and providing role models to others in your community with entrepreneurial aspirations.
• A branding campaign for your community’s entrepreneurs can draw attention to their importance to your economy and create a sense of identity among entrepreneurs in your community. Plaques or stickers can identify a business as owned by “A Mayberry Entrepreneur.”

The entrepreneurial climate you are working to create differs from a business climate because entrepreneurship is fundamentally about developing human resources—the entrepreneurs—and not just developing businesses. Community leaders must work to create an environment where entrepreneurs want to live, play and plant their businesses. This approach requires thinking a bit differently about community infrastructure to support entrepreneurs. In effect, leaders must keep an “entrepreneurial impact statement” in their heads. When considering new ideas or initiatives, they must ask themselves “what does it mean for local entrepreneurs?” Much like an environmental impact statement, this concept ensures that leaders “do no harm” to their local entrepreneurial climate.

Community Infrastructure
Economic development infrastructure has traditionally been about physical infrastructure—industrial parks and sites, water and sewer, access to interstates, rail and air transportation. We were less concerned about support services for business since branch plants usually came equipped with management and financial support from the headquarters location. Local financial institutions were called upon to finance the mortgages of relocating workers rather than the expansion needs of branch plants.

Entrepreneurs, however, have an expanded set of infrastructure needs. In terms of physical infrastructure, community leaders need to consider how well connected their community is to regional, national and even international markets and services. A rural entrepreneur may be able to start a company digitizing medical records, but only if he has reliable access to high speed, broadband Internet service. Entrepreneurs also need access to different types of space as their business grows—something different from the industrial park. For example, in Siler City, North Carolina, an artisan can expand her business from her home to an arts incubator located in a renovated, historic Main Street building.

Entrepreneurs also need support infrastructure—the collection of service providers who can help with finance, technical assistance, mentoring and networking. Entrepreneurial communities like Littleton, Colorado, place a premium on meeting the information needs of entrepreneurs who are starting and growing their ventures. Other communities make financing more accessible to entrepreneurs through micro loan programs. Community leaders can make a commitment to invest in the types of support infrastructure needed in the community just as they have invested in roads and industrial parks in the past. Many rural communities will lack the scale to have such resources close to home. Links to regional, national, and international expertise are essential to filling the service gaps that exist close to home.

A supportive entrepreneurial environment also includes quality of life infrastructure. Remember, entrepreneurship is about the people. Entrepreneurs choose to locate their businesses in places where they wish to live. Communities that invest in quality of life infrastructure (good schools, fine recreation programs and facilities, cultural venues like museums and theatres, quality community facilities such as renovated downtown markets and a preserved natural environment) are more likely to attract entrepreneurs from outside the community and keep those who are homegrown. How can community leaders develop infrastructure policies to support entrepreneurs? Here are some ideas:

• Community policies toward home-based businesses should make it easy for start-up entrepreneurs to begin in their basements, garages or spare bedrooms.
• You can help entrepreneurs through the regulatory maze by creating a one-stop shop for new entrepreneurs at your chamber or local government office. Something as simple as a guide that details “How to start a local business” will be greatly appreciated by new business owners. Start by talking to entrepreneurs, those just getting started and those in business for some time. Find out where they got information on doing business in your community. Identify the stumbling blocks and take steps to ease the red tape for your entrepreneurs.
• Provide office space in your community for regional service providers and invite them to hold office hours once a week or twice a month. This simple move can expand access to services for your community’s entrepreneurs.
• Contact service providers in your community (lawyers, accountants, marketing professionals) and ask them to volunteer a few hours per month to work with start-up or aspiring entrepreneurs—a Community Entrepreneurial Support Team (CEST). Give these “civic entrepreneurs” recognition in the community and honor their efforts.
• Form an Entrepreneurial Capital Access committee, including local bankers, service providers and entrepreneurs, to explore gaps in financing for local entrepreneurs. Take steps to create a revolving loan fund, microenterprise fund or local angel network as needs are identified.

Creating an entrepreneurial environment is more complex than building an industrial park or a connector to the Interstate. Throughout this website, we’ve featured communities like Fairfield, Iowa, that are working hard to build an environment that is a magnet for entrepreneurs. These stories can help guide you as you develop the entrepreneurship policy that is right for your community. Once you’ve done that, what role can you play in beginning to transform economic development policy in your state?

Leveraging Community Work –State Level Policy

While we are convinced that the real work of creating entrepreneurship development policy must begin at the community level, state leaders are responsible for developing and implementing economic development policy at the state level. These policies, in turn, can be supportive of entrepreneurship development efforts at the community level. All too often, however, entrepreneurship development programs take a back seat to recruitment and retention strategies.

As community leaders, you have a role to play in state policy by demonstrating the potential of entrepreneurship development in your community. This requires careful documentation of your program and the outcomes of your investments. The information on program evaluation we present on this website is very important to this process. Armed with this information, community leaders can share their stories with state legislators, agency representatives from the state department of commerce and newspaper reporters.

You can also share the stories of your community’s entrepreneurs. Nothing is as powerful as hearing a passionate entrepreneur share her story. Invite entrepreneurs to lunch with your local legislator. Organize an entrepreneurs’ roundtable in your region and invite the press. By sharing your experience with entrepreneurship development with a wider audience, you can contribute to changing the attitude toward entrepreneurship in your state.

The first step in creating a dialogue with state policy makers is identifying the “go to” staff. You should get to know the key staff people for the state legislator from your region and for the legislators who chair key committees—economic development, small business, agriculture, education. Add these staffers to your mailing list and send them reports and special event announcements. You should also get to know key staff within your state departments of commerce or economic development, education and agriculture. Keep them informed of your progress and successes. Provide them with an opportunity to bask in the reflected glories of the accomplishments in your community!

For those of you who are state elected officials, it is useful to consider the following initial steps that state government might take to support entrepreneurship:

• Create a focus on entrepreneurship as a development strategy. States such as Georgia, West Virginia and Minnesota hold entrepreneurship summits to focus on entrepreneurs. North Carolina’s Rural Economic Development Center has created the Institute for Rural Entrepreneurship as a focal point for entrepreneurship policy and programs in the state. Wisconsin and Georgia have created entrepreneurship divisions within their state development agencies to pay particular attention to entrepreneurship policy. Other states such as Arkansas engaged in assessments of the environment for entrepreneurship as a means of stimulating discussion and action.
• Support innovative entrepreneurship projects at the community level. When it comes to entrepreneurship policy, there is no “one size fits all” strategy. Each community can and should develop a unique, locally tailored approach. A number of states have made investments in such community-based entrepreneurship projects. These projects can serve as a demonstration to the state and other communities about the outcomes of entrepreneurship programs. In a time of limited public sector resources, the state should consider ways that categorical programs can be used to support these innovative programs. For example, both Kansas and North Carolina are using Community Development Block Grants to support entrepreneurship projects in communities and regions of the state. In Nebraska, social service funds are used to support micro lending and self-employment strategies. Maine has altered its workforce programs to permit self-employment as an option for retraining.
• Encourage service provider networks. States often have many resources that provide technical and financial assistance to entrepreneurs. However, the services often fail to meet the needs of entrepreneurs because they are not integrated and do not operate as a system. Too many times entrepreneurs tell us that they “don’t know where to go for help” or “I was referred from one place to another until I just gave up.” Although many of these resources are not state supported, state policy makers have some tools at their disposal to try to encourage a more systemic approach. State government could convene the service providers so that they can begin to share information about their services and develop the comfort level with each other needed to foster cooperation. For state-supported service providers, the state could change performance standards to encourage, or even require, collaboration among service providers.

These three steps can begin the process of moving the state toward a more balanced economic development policy—one that recognizes the importance of entrepreneurs and supports strategies to energize entrepreneurs.

Just as there is no one strategy for supporting entrepreneurs, there is no single strategy for state policy makers to follow. However, two examples help to illustrate different paths to creating more supportive state policy environments for entrepreneurship.

Additional Resources

While much has been written about the policy-making process, we think the following pieces are most appropriate for those of you working at the community level. You can find all three publications under Supporting Materials in this section:

Entrepreneurship: A Candidate’s Guide by the National Commission on Entrepreneurship.

Key Issue Areas for Rural Public Policy by the Association for Enterprise Opportunity’s Rural Committee.

Strategies for Sustainable Entrepreneurship by the Central Appalachian Network.

The Center has more resources and can provide additional assistance to you as you support entrepreneurs in your community. To access Center Resources, click on our logo.