Enterprising States 2013Getting Down to Small Business

Mid-America Association of Chamber ExecutivesMay 8, 2013

Economic research, strategy & development company

that works with leaders, innovators & entrepreneursto create more competitive communities &

companies

Delore Zimmerman

ENTERPRISING STATES PROJECT

1. Which state policies have the biggest impact on creating jobs?

2. Are there best practices that states are putting into action to create new economic opportunities and prosperity?

www.freeenterprise.com/enterprisingstates

Small Business Startups Stalled

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

0%

5%

10%

15%

20%

25%

U.S. Employment in Firms Five Years Old and Younger

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Census Bureau, Business Dynamics Statistics

Small Business Outlook Low

2003

2004

2005

2005

2006

2007

2008

2008

2009

2010

2011

2011

2012

-40-20

020406080

100120140

113

-28

12

-3

23

-11

9

Wells Fargo/Gallup Small Business IndexOwners' Ratings of Current Situation and Future Expectations

Wells Fargo/Gallup Quarterly Small Business Index

U.S. Chamber Business Outlook Survey

16% of small businesses added employees in the past year

82% feel the U.S. economy is headed in the wrong direction

January 2013: 54% expect outlook to get worse over then next year, up from 24% the previous October

Employment by Business Size, U.S. Economy

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

Self-Employed (1)

Stage 1 (2-9)

Stage 2 (10-99 employees)

Stage 3 (100-499)

Stage 4 (500+)

Num

ber

of Jo

bs

Source: National Establishment Time Series

Small Business Growth & Vigor

Minority-owned businesses Immigrant-owned businesses Women-owned businesses Baby boomers Self-employed & solo entrepreneurs

Energy & All Other Sectors

Energy Jobs All other Sectors

10.1%

2.3%

2010-2012

States and Small BusinessAll states have policies and programs to encourage entrepreneurs and support small business

30% increase in program funding 2012-13

Most states have loosely integrated programs but some have comprehensive, policies and programs intended to create “ecosystems”

Many states are focusing on high-growth potential firms with job generating capacity

Policies That Produc

e

Entrepreneurship &

Innovation

Talent Pipeline

Exports & International

Trade Business Climate

Infrastructure

States Impact Economic Growth & Job Creation in 5 Key Policy

Areas

Moratoria on new rules and regulations

Fast-track permitting Eliminate rules, regulations

and statutes that are job-killing

Impact statements for newly proposed rules and regulations

“One-stop” offices for state government

Business Climate: DURT Busting

Many states are bringing business leaders to the table to help with regulatory and policy

reforms

Tax credits for:o Investors in startup and expanding

businesseso Hiring employeeso Businesses in targeted industries,

e.g. data centers Regulations tailored for targeted

industries, e.g. financial, energy, and vehicles

Business Climate Highlights

Top Business Climate States14 4

037

20

1

Focus on emerging growth companies, a.k.a. high-growth firms

Economic gardening initiatives for expansion stage companies

Technology-based economic development programs; “ecosystem” initiatives

Investment funding for startups and expansions

University-business-government partnerships

Business plan competitions

Entrepreneurship & Innovation

Big shift towards entrepreneurship and growing existing businesses.

Top Entrepreneurship & Innovation States15 2

744

38

42

Expand access to broadband Target and incentivize specialized

infrastructure and equipment Upgrade ports & airports Establish state infrastructure banks

and funds Encourage Public Private Partnerships

(PPP)

Infrastructure

Southeastern states upgrading ports to trade with Central and South America

Top Infrastructure States22 6

42

19

41

Programs at colleges and universities tailored to industry sectors and/or specific companies

STEM initiatives – secondary and postsecondary

Middle-skill jobs that require less than a four-year degree

Internships

Talent Pipeline

Economic development and workforce development systems are becoming more

integrated.

Top Talent Pipeline States13 6

11

22

10

Training and support for companies to develop their export skills and connect to foreign markets.

Governors as international business diplomats –> door openers and deal closers to attract foreign companies

Exports & International Trade

Small businesses are a major target for state export programs

Top Exports States21 2

512

23

36

Energy industries Reasonable regulations and taxes A pro-growth culture and attitude Strong talent pool and training systems Sound fiscal policy that invests in the

basics - Governors providing high-level

leadership to build local networks and international connections

Top Performing States

Top Performing States

1 1510

13

12

Conclusions After 4 YearsEach state has its own unique

economic DNAA state can neither cut nor tax itself

into competitiveness & prosperityTo simply proclaim an enterprise-

friendly environment is no longer adequate. A story must be backedup by actions.

Using Enterprising StatesGovernor’s roundtable with business

leadersCustomized state reportPresentation at statewide chamber

events or other business conferences

ACKNOWLEDGEMENTS

Delore Zimmerman, Ph.D.Mark SchillMatthew LeiphonRyan AasheimZina Klapper

Joel Kotkin Presidential Fellow, Chapman University