To boost job growth, more states are wooing entrepreneurs.
If something didn't change, Whit Everett wasn't sure what he'd do. For more than two decades, his box-printing business, Everett Graphics, had thrived in Oakland, Calif. But insurance and energy costs in the state were soaring, cutting into Everett's margins and making it tough to compete with printers in lower-cost regions. The 75-person company was growing fast and needed a bigger building. "We couldn't handle it," he says.
Everett was determined to find a new facility in a cheaper locale. He pulled out a map and ran his finger east along Interstate 80 until he found himself in Evanston, Wyo. "Why not?" he thought. Four months later, he was drinking beer with the state's governor, Dave Freudenthal, at a hotel in Cheyenne. The next morning, the state gave him $3 million to construct a 75,000-square-foot building in Evanston. Everett's lease payments are credited toward the purchase of the building, which he can buy in six years -- provided he creates 20 jobs with minimum after-tax salaries of $27,000.
Something new is happening in the world of economic development. For years, states put nearly all their resources into attracting and recruiting corporations with thousands of employees. But not anymore. "States are beginning to realize that most new jobs aren't created by huge public corporations," says Rob DeRocker, executive vice president of Development Counsellors International, a New York City company that helps communities attract businesses and visitors. "The notion of smokestack chasing is outmoded."
More than a dozen states, including North Carolina, Wisconsin, and Colorado, are shifting their focus to entrepreneurs. They now offer myriad services -- from free advice to real estate assistance to cash grants -- and are recruiting businesses from other states and, in some cases, foreign countries. Many are also ramping up marketing efforts, creating umbrella organizations that make it easier for businesses to find help from a variety of public and private sources.
Everett's move to Wyoming was surprisingly smooth. In January, he called a number on Evanston's website. A week later, he met with Rick Lundsford, the city's economic development director, who helped him file a grant application. Lundsford then pitched Everett Graphics to the Wyoming Business Council and the Business Ready Communities board, which approved the $3 million grant in April. The process took four months. "It was low key," Everett says. Business Ready has doled out $30 million in grants since its creation last year. The Wyoming Business Council says it helped create 350 jobs in 2004.
You're likely to receive more assistance if you're in an industry that can help diversify a state's economy. Wyoming, for instance, is eager to reduce its dependency on energy and agriculture by recruiting information-based companies such as Internet service providers. Louisiana is focusing on 15 industries, from shipbuilding to aerospace engineering.
In many cases, you don't even have to move to get attention. Three years ago, Idaho inventor Al Youngwerth turned to TechHelp -- a state-backed partnership of three Idaho universities -- when he needed help designing a prototype of an automatic dirt-bike clutch. The group connected him with an engineering student who designed the clutch for $1,600, a fraction of what he would have paid otherwise. Youngwerth is established now -- his company, Rekluse, has 15 employees and $900,000 in annual sales -- but TechHelp still provides him with access to testing labs and discounted labor.
Everett expects to have his Evanston operation up and running in October. He likens the experience to finding something amazing in a store and realizing it costs only $50. "We're getting a new building and chopping down overhead," he says, adding that he expects more companies to follow suit. "We're just lucky to be ahead of the curve."