Recession Recovery and Beyond
Study Committee Meeting Duval County January 19, 2011
Clanzenetta “Mickee” Brown JCCI Study Planner mickee@jcci.org
In attendance: Meeting Attendees: Elaine Brown (Chair), Guy Anderson, Sarah Boren, Sandra Brooks, Cathy Chambers, Jeanne Chappell, Jim Crooks, Logan Cross, Mick Cuthbertson, Marilyn Feldstein, Bill Gassett, Ken Hamilton, Robert Hawkins, David Johnson, Dave Kaufman, Kellie Jo Kilberg, Bill Larson, Conrad Markle, Alex McCoy, Colleen McFarlane, Julie McNeil, Granville Reed, Darryl Register, Clive Ricketts, Kathy Sandusky, Beth Slater, Deborah Thompson, Joe Whitaker, and Julia Henry-Wilson, [If your name does not appear, but you were in attendance, please let us know.] Staff Members: Mickee Brown, Skip Cramer, Steve Rankin and Demetrius Jenkins Meeting Time: Noon – 1:30 PM Chair, Elaine Brown welcomed the study committee and asked everyone to assist with making the meetings as productive as possible by staying on task (ask pointed question and reserve comments for the group discussion) in light of the scores and comments from the previous week’s group process check results. The committee approved the January 5th meeting summary and the January 12th meeting summary was distributed for approval on January 26th. After the self-introductions were completed, the chair introduced the day’s speakers Cathy Hagan, Area Director at the Small Business Development Center at the University of North Florida and Jerry Mallot, President of Cornerstone and Executive Vice President of the Jacksonville Regional Chamber of Commerce. The day’s topic was Job creation opportunities: Strategies for Northeast Florida. Cathy Hagan presentation Speaker Questions
1. How have Northeast Florida’s small businesses been affected by the Great Recession? 2. What are the roles of both small business development and small business growth in creating jobs? How effective are small business development and retention efforts in the region? What is missing? 3. What is the role of entrepreneurship in terms of being a job creation and workforce development strategy? 4. Where do current economic development strategies such as attracting targeted industries and high skill/high wage jobs overlap with small business development and growth? 5. If 80 percent of a community’s new jobs are created by existing businesses, many of which are small businesses, then what should be Northeast Florida’s response to supporting small, local companies?
[Staff note: Hagan provided answers to the questions above in writing. The answers are posted at http://jccirecoverystudy.blogspot.com/p/meeting-handouts.html.]
In Northeast Florida, small businesses make up the bulk of all businesses – 95 percent have less than 50 employees and 59 percent have less than 5 employees. There are 95,000 self-employed people in the region. Small businesses also account for 50 percent of all net new jobs.
The success of small businesses depends on the consumer’s willingness to spend money. The consumer index is tied to our spending habits and consumer confidence. Business-to-business
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transactions operate similarly. When there is uncertainty (i.e. tax laws, healthcare legislation rollout, access to capital) in the market place, businesses are reluctant to spend. Access to capital for large and small businesses is particularly difficult. Capital for start-ups is almost non-existent.
The recession has created the impetus for more people to start businesses because finding a job is very difficult. Because of the community’s number of small businesses and the growth of start-ups, nurturing small businesses is very important.
The economic gardening concept is one method for helping small businesses to thrive. Key concepts include information to access capital and business research. Helping these small businesses grow by considering new sources of revenue like exporting or selling to the government is critical as well.
The community offers abundant resources for small businesses (www.jaxsmallbusinesshelp.org). New programs are not needed. It is important for the community to leverage state and federal funding to support the region’s small businesses.
Education for entrepreneurs has also grown. UNF for example offers a minor in entrepreneurship. Many young people between the ages of 18 and 29 years old also consider self-employment to be a viable workforce option.
Streamlining business rules and regulations and investing in entrepreneurs are the best ways for the community to support small businesses.
Jerry Mallot presentation Speaker Questions
1. What are the steps necessary, from a regulatory standpoint, for a business to open/relocate in Northeast Florida? (i.e. fees, forms, timeframes, etc.) 2. What are the programs or processes in place to retain and grow existing businesses in the region? Have you shifted strategies or priorities in the current environment? 3. What is working in Northeast Florida to create/retain jobs and make the region more economically competitive? What more needs to be done and by whom at the local, state, and regional levels? 4. Is there a long-range, 10-20 year strategic plan for regional economic development? How do we integrate K-20+ education in long-range planning?
[Staff note: Mallot provided answers to the questions above in writing. The answers are posted at http://jccirecoverystudy.blogspot.com/p/meeting-handouts.html.] The day’s presentation provided insight on how the Cornerstone Regional Partnership carries out its work. The goals for the region are to increase income and wealth, prepare for the new economy, enhance the region’s workforce with training and education, expand the dwindling tax base, encourage business development, and promote growth without sacrificing quality of life. Regional economic development creates an environment where the counties are partners rather than competitors. Regional economic development is also more efficient and prospects demand a regional perspective. The Cornerstone partners meet bi-monthly to discuss prospects and strategic issues. Economic development forums, which include local politicians, are also held to discuss relevant economic development topics. Cornerstone hosts prospect site visits where each of the partner county’s are represented. In some regional economic development organizations, the individual EDO’s are responsible for identifying their own prospects. 2434 Atlantic Boulevard
Jacksonville, Florida 32207 904-396-3052 Fax: 904-398-1469
www.jcci.org
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The key elements of the partnership include research, marketing, recruiting, communication, and closing the deal. Research is critical to economic development and Cornerstone offers a full slate of information including demographic data, a properties database, and labor force analysis studies. It takes three to six site visits for a prospect to make a decision on a community. Marketing the region focuses on the following – research based information, market differentiation, direct contact with the prospects, and developing relationships. We never assume that people “know” Jacksonville. Cornerstone has a variety of tools selling the region – website, newsletters, direct marketing, business missions, conferences, and tradeshows. Most new business comes through the following: marketing efforts, site consultants, Enterprise Florida, and local referrals. Northeast Florida’s success factors include: workforce, building sites, quality of life, pro-business environment, variety of regional options, and incentives.
Questions and Answers with Resource Speakers Q. What are the impacts of government spending and increases in regulation on small business? Hagan: Government programs like ARRA and the Small Business Jobs Bill are examples of spending programs intended to stimulate business activity. The Small Business Administration is a governmental agency, but it does not engage in direct lending. The banks make those loans. Government backing helps to alleviate the uncertainty associated with issues like tax policy and health care reform. Starting a business in Jacksonville is less difficult than it used to be due to changes in regulations, business taxes, and permitting. Q. How well does Cornerstone perform when compared to similar organizations? Mallot: We compare ourselves to those in competing markets. We cannot be concerned with what everyone is doing. In a recent self-assessment we compared favorably to our competitors, though Nashville was ahead of us in some areas. We set targets and develop a 5 year-plan so that our goals are not out of date with current economic trends. Q. Who funds Cornerstone? Do those funders have any control over which deals are pursued? Mallot: Private companies support Cornerstone. Sometimes we also receive government support but it is limited. This year the City of Jacksonville provided $200,000. The companies that support Cornerstone have never steered us away from a deal. These businesses that support Cornerstone do so because they want to have a hand in making this a better community; more jobs makes the region stronger. We can also provide assistance when the company seeks to expand. Q. What have you learned during this recession when it comes to recruiting and retaining business? Hagan: The small businesses that come to the SBDC are looking for help. We arm them with information and advise them to take advantage of opportunities to grow their businesses. Mallot: Companies are more cautious today. No one wants to take chances and any decisions that are made must be correct and cost effective. Q. The commute time study that was referenced – Does that include public transportation? Mallot: The study does not include public transportation. Outside of the Duval County there is not very much public transportation. The companies that are looking at the region know that this is a car driving culture. Q. Do your organizations promote use of local vendors and small businesses? Hagan: There has been a push for this type of program locally. At the SBDC we refer vendors to the 2434 Atlantic Boulevard
Jacksonville, Florida 32207 904-396-3052 Fax: 904-398-1469
www.jcci.org
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Jacksonville Small and Emerging Business program. Mallot: Buying local will be a topic for an upcoming board retreat. However, most companies are looking for the best possible price anywhere in the country: This can cut-out local businesses. The JEDC is in support of this idea. Q. Why are we not competitive from a tax perspective? Mallot: This depends on the industry. In some industries we are more competitive than others. Manufacturing is one of those areas where we do not do as well. The new governor ran on the idea of repealing the corporate income tax; however site consultants tell us that reduced capital investment costs are more important as are place-specific incentives Q. Is this region prepared for the new Governor’s pro-business platform? We heard last week that we could get left behind, if we do not have an action plan. Mallot: Help will come to those who help themselves. We need to examine our local processes for those wanting to start or expand a business. Some of these processes are too lengthy. It is important to do whatever is necessary to become a more pro-business community. Florida lost a lot of ground over the past four years. The former governor was adverse to taking risks. Q. How many people does the SBDC serve? Hagan: The SBDC covers an 18 county region. We meet with clients at UNF and Beaver Street Enterprises. There is also a full time small business center in St. Johns County. Our analysts work with 100-200 clients per year. Q. What is the local impact of the federal government as a prime contractor? Mallot: The region has 46,000 military jobs. One-half of those include personnel in uniform. During the last BRAC the region gained 2,500 jobs. Most of the jobs associated with federal contracts involve energy and defense - Saft represents one such contractor. Strong prospects for military contracts also exist in the aviation and aerospace sectors. We have four strong prospects right now. Q. What is being done to create an environmentally sustainable “green” supply chain? Mallot: We were focused on green issues before the recession. CSX had already begun to advertise the sustainability advantages of rail as a means of transporting goods. There is also a push for clean energy. Q. How available is venture capital in the region? Mallot: This is a weak area in our marketplace. Venture capital firms do exist. Most focus on the next big thing in technology, so the success rates have not been that high. Hagan: The availability of venture capital is much more prevalent in Orlando and Miami, where the number of such firms is greater. Q. Should efforts be directed at attracting big businesses or encouraging the growth of small businesses? Mallot: The answer is both. We have to go after large and small business. We do not ignore the small business sector but Cornerstone is more focused on the larger businesses while the SBDC serves the smaller ones. Hagan: It is not possible for us to attend to the needs of all small businesses. Big businesses also create a demand for the products/services offered by smaller businesses. Q. Is the education community responding to the needs of local industry? Mallot: This can be frustrating, because we do not have the answers for how to make improvements to education. We focus on sharing what businesses are looking for in an employee. Duval County Superintendent Pratt-Dannals also sits on the Chamber’s board. School budgets are an important 2434 Atlantic Boulevard
Jacksonville, Florida 32207 904-396-3052 Fax: 904-398-1469
www.jcci.org
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consideration as well. The district has less money to work with, but they are expected to continuously produce a high quality student. Q. Where is Cornerstone focusing internationally? Mallot: We are focused on Western Europe, particularly Germany, France, the United Kingdom, and Italy. Korea and Japan are also important countries for new business development. Hagan: On the trade side the SBDC is encouraging small businesses become exporters. To that end, we provide training and technical support. Comments As we think about how we might attract and retain jobs, it is important to consider both the haves and have-nots. It is not clear what the Small Business Development Center’s focus will be for the next 5 – 10 years. We did not hear whether or not we have the infrastructure to support business development. The speakers impressed with their depth of knowledge, but we have not heard anything new or cutting edge. The possibility of a buying local program is intriguing and it has the added benefit of creating a stronger local economy and making residents take ownership, which could allay negative perceptions about the community. More local businesses need to expand their reach outside the region, which contributes to economic growth. Elaine reminded the committee to attend next week’s meeting and asked them to complete their group process check forms. The meeting was adjourned at 1:36 PM.
2434 Atlantic Boulevard
Jacksonville, Florida 32207 904-396-3052 Fax: 904-398-1469
www.jcci.org