Ronald Reagan once said the most terrifying words in the English language are, “I’m from the government, and I’m here to help.”
The attitude was typical of early participants in Louisiana’s economic development department’s Economic Gardening Initiative. The program offers market research tailored to the needs of companies with the potential for high growth. The firms that participated in the program during its first three years have added the equivalent of 558 full-time jobs and increased revenue by $170 million.
Before all that success, most participants were a little skeptical, like Rick Mekdessie, president of e-Gov Systems LLC, a cloud-based tax specialist based in Baton Rouge. Mekdessie had gotten “help” before in free programs that turned out to be nothing more than avenues for consultants to generate business.
“So when they told me, ‘Yeah, we’re going to get you these great consultants. It’s a free service.’ I said, ‘OK, what’s the catch?’ ”
Economic Gardening proved to be nothing like his previous experiences, Mekdessie said. The consultants were the real deal. It took only a couple of hours for one to show Mekdessie his plan to sell ads on e-Gov’s sites, which users visit each month to file sales tax returns, was impractical. There just wasn’t enough traffic to justify all the work it would take to track the information advertisers required.
At the time, Mekdessie also was looking to expand from sales taxes to other areas, like business licenses. The Economic Gardening consultants analyzed the size of that market, helped find which states offered the best opportunity and where businesses faced the most obstacles in filing.
Today, e-Gov offers automated business licensing and business and occupancy tax filing in Washington’s four largest cities. Only a handful of states impose the business and occupancy tax. The new line of business probably makes up 30 percent to 40 percent of e-Gov’s revenue.
“A company our size with limited resources and all that, it’s very expensive to chase something,” Mekdessie said. Economic Gardening “helped us focus on exactly what the correct areas were and the important places.”
John Matthews, director of Small Business Services in Louisiana Economic Development’s Office of Community Competitiveness & Small Business Services, said the idea behind economic gardening is to accelerate companies’ growth by helping them get the proper information and resources.
The department pays the Edward Lowe Foundation about $4,000 per consult. The Economic Gardening participants don’t pay anything for services that can run upward of $10,000 in the private market. Participants can seek a second and third consult in some cases.
“Companies don’t have those resources. They’re trying to grow, trying to expand,” Matthews said. “They just don’t have dollars for that.”
But their competitors, often large out-of-state firms, do. Economic Gardening helps level the playing field.
LED vets applicants and helps them make sure they focus on two or three critical issues because the consultants’ time is limited, Matthews said. Edward Lowe Foundation specialists use expensive, corporate databases to help identify market trends and map areas for targeted marketing. The consultants also can help raise participants’ online visibility and web traffic.
Pat Witty, LED’s director of community competitiveness and small business services, said the front-end assessment is key.
Matthews and his two-person staff get companies to take a step back and look at the issues they must address to get to the next level.
“So many of these folks are so geared into their day-to-day activities,” Witty said. “On a standard day, they don’t have the time to figure out what their next steps are.”
Missy Rogers, president of Noble Plastics Inc. in Grand Coteau, said the vetting helped her firm focus so tightly that the consultants had time to provide two lines of feedback.
Noble used that information to help in its pursuit of defense industry contracts. Consultants identified competitors within those markets and ranked them.
The consultants unearthed data in a couple of weeks that would have taken her firm months to parse, Rogers said. The process was so pain-free she has recommended it ever since.
Jay Labarre, president of Labarre Associates, said he wasn’t prepared to take full advantage of the consultants’ expertise during the first go-round.
In 2011, the Denham Springs design and construction firm had just opened an office in Tallahassee, Florida. The company was trying to figure out how to reach the credit unions that are a primary source of business.
The consultants provided a list of sales leads that met all of Labarre Associates’ specifications. Labarre had been a member of the International Facilities Management Association for 20 years. But the Economic Gardening experts had data that Labarre didn’t know existed.
Labarre can’t remember if his firm picked up clients because of the consultant-generated list, but he knows the research provided something more important: the knowledge that Labarre Associates could compete with anybody, anywhere.
Labarre Associates now does business in five states and has added an office in Gulfport, Mississippi. The company uses the process it was exposed to in Economic Gardening to gather data for work in other states.
Labarre recommends talking to somebody who’s been through the program, if possible, before taking part themselves.
“Get their input because you can get more benefit than going in cold,” Labarre said.
Economic Gardening began as a result of a chilly economic climate. In 1987, Martin Marietta cut 7,500 of its 15,000-person workforce in Littleton, Colorado. Chris Gibbons, then director of business and industry affairs for the town, decided to try something different. Rather than trying to recruit firms, he began working with local companies to help them grow. In 20 years, Littleton doubled its jobs and tripled sales tax revenue.
Gibbons created the National Center for Economic Gardening to share his ideas. The center partnered with the Edward Lowe Foundation in 2011. About half the states now have economic gardening programs.
Gibbons said the program doesn’t create jobs, entrepreneurs do.
However, it’s difficult to argue with results like Florida’s, where participants generated 3,745 jobs between the 2012 and 2013 fiscal years and increased state and local tax revenue by nearly $20 million more than its cost.
LED spends about $400,000 a year on Economic Gardening. The program will work with 60 companies this year. Matthews hopes to eventually work with 100 each year.
At one point, LED hoped to bring the entire program — consultants, databases and all — in-house, but the cost for the databases alone was prohibitive. LED abandoned that idea.
Ultimately, Matthews said he would like to see LED create an in-house group that focuses on high-growth companies, especially those looking to expand beyond the state.
“If we could get these small companies to compete and do business globally and bring back value to Louisiana, then I think we would see significant improvement in our economy and the environment in general,” Matthews said.
Follow Ted Griggs on Twitter, @tedgriggsbr.