Wednesday, April 16, 2008

Measuring where we are and where we need to go?

Or. a “Swank” look at rural entrepreneurship!

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Always good to see the Buckeye logo on a well-done report – this one is from the Swank Center at Ohio State, assessing the state of rural entrepreneurship and its role in rural economic health. Ohio is more rural than many would guess (just as Idaho is more urban than many realize) and the parallels are remarkable, so we can definitely learn from this. The data is rock-solid, as is the analysis.

Self-employment is absolutely critical for rural economies! However, it has to be truly entrepreneurial self-employment, not just out of necessity.

Self-employment can sometimes be a last-resort way of having a job. But it doesn't have to be. That is, what helps rural communities are entrepreneurial businesses that have a future. And we know how to help that process.

Here are the Swank Center's main conclusions for public policy that apply anywhere:

#1 You want a strong rural economy? You need a strong economy state-wide.

It's very hard to have a strong urban economy without a strong rural economy and rural economies need strong urban economies.

#2 You want more jobs? Make it easier on new and small businesses.

Lower tax burdens (on business income, business property and personal income)

[note: lowering tax burdens seems to be a lot better than adding new tax credits]

Lower regulatory burdens... a lot.

#3 Need to step back and really assess rigorously what we're already doing (& not doing)

What are we doing that actually helps start businesses? To keep them? To grow them?

Are we following known best practices?

What is working for us these days?

#4 Tax incentives need to target smaller and newer businesses

It's very hard to avoid these incentives being captured by larger firms, but the impact is proportionately much higher for smaller/newer business. (Odd as it may sound, incentivizing nonprofits is good policy too.)

Use this issue as a political excuse to look at all the state's incentives, credits, etc. (You think we have an impenetrable maze of these in Idaho? Ohio's worse.)

#5 (but should be #1 & #2): Health care/insurance still the #1 headache for entrepreneurs

If a state can figure out this one, they will draw entrepreneurs & businesses like crazy. (Ohio may be looking at NFIB's plan, but how hard would it be to create a pool for all smaller firms in the state?) As my insurance guy will attest, this is not something I remotely understand.

#6 Broadband access – the government stats can be very misleading.

The stats show how many zipcodes have at least one (1) customer getting broadband – and “broadband” is often defined as low as 256K. Ohio has as many T1 lines as we have potatoes & they still have issues... We need to be vigilant here.

One innovation we might adopt is having a college 'adopt' local communities who lack broadband & wire 'em up. Great learning experience & a really cost-effective way to bring rural communities into the New Economy!

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#7 You want higher workforce productivity? Ramp up workforce training.

Invest in community colleges & technical colleges.

Let them drive the economic development boat.

#8 Everybody's got ideas. Everybody's got good ideas. Not everybody gets them to market!

Heresy, I know, especially from a PhD.. but the dirty little secret is that all the inventiveness in the world doesn't help any local economy, any rural economy... unless they get good at transforming intellectual property into things that customers value.

Ohio got pretty good at this through the famed Thomas Alva Edison Partnership that helped rural entrepreneurs turn ideas into businesses; the newer Third Frontier program has raised the ante even higher. But they still need to do more to teach its citizens how to be innovators. We need to do the same. (We even know how to do it!)

#9 You want to grow rural jobs? Knowledge workers are key.

The “creative class” is more of a metaphor – in fact, it's the more entrepreneurial rural economies that attract the creative class, not vice-versa. Getting and keeping employees who are more tech-savvy is critical to growing and keeping jobs in any area. Ohio is trying to do more with their community colleges and with programming in their high schools, including more distance learning. (Did you know that Idaho has the Idaho Digital Learning Academy? Local communities could be doing a lot more with programs like that.)

But knowledge workers like quality of life – Idaho's rural communities have that in abundance. We've simply not as good a job as we could in showing people that entrepreneurship can flourish anywhere in Idaho. We've begun to address that (a distance-delivery youth entrepreneurship course is under development) but there's more that we could do (like the “Entrepreneurial Heroes” model).

I come away from this thinking that Idaho's potential for rural entrepreneurship is pretty amazing, but there's so much more that we could do. Fortunately, much of that are things we already know how to do and are, um, “cost-effective”! Not easy, but need not involve a lot of cash.


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