S.C. Statehouse Report
Sunday, Dec. 4, 2005
VIEW: http://www.statehousereport.com/columns/05.1204.smallbiz.htm

COMMENTARY
State needs a strategy for small businesses
By Andy Brack
SC Statehouse Report

DEC. 4, 2005 - - With all the time and money spent to bring big businesses to South Carolina, you'd think the state could do something big to help small businesses.

But other than passing an initiative here or a small tax credit there, it's pretty safe to say the state has a long way to go to do anything substantial for small businesses.

"If passing legislation to give tax credits and incentives was a strategy for economic development, then we should shut down the state Department of Commerce," said Frank Knapp, president and CEO of the S.C. Small Business Chamber. "Yes, the legislature passed a couple of things that will be beneficial, but that's not a strategy."

The irony, of course, is that at election time, politicians strut and crow about how small businesses are the backbone of South Carolina's economy. More than 85 percent of the tens of thousands of businesses in the state have fewer than 20 employees, Knapp said.

So why doesn't South Carolina do more for small businesses than throw legislative crumbs and have a neat Web site for people who want to start a business?

Because it's easier for the state's economic development machine to focus on landing a big Kahuna - - a blue-chip business like BMW or Michelin or, as in the recent headlines, DaimlerChrysler. Never mind the competition is fierce. And never mind it's expensive.

It's still amazing to consider how the state spent $400 million in incentives to land an airplane plant being built in Charleston. While it's great the plant will be in South Carolina, it will translate into about 400 jobs over the long haul. In other words, the state offered essentially $1 million per job to lure a plant here.

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When viewed that way - - and when you consider how important everybody says small businesses are - - something just doesn't seem right. Wouldn't it make much more sense to create a pool of money to seed small business projects? It would be a very good bet that 400 smart small businesses that borrowed $1 million each would be able to do a heck of a lot more than create 1 job each over several years.

If South Carolina wants to get serious about a strategy to grow small businesses, it can take a lesson from its neighbor Georgia, which started a program last year to do more to make communities "entrepreneur friendly."

The most interesting thing: the program, which costs about $1 million annually to run, didn't cost any "new" money. Instead of looking for new revenue to start the Entrepreneur and Small Business Development Initiative, Georgia took nine state economic development employees and rewrote their job descriptions. Instead of focusing only on the time-worn, old strategy of working with communities to land big industrial prospects, these employees, who are spread out across the state, now work with communities to energize small business growth.

"It's working," said Mary Ellen McClanahan, who runs the program in Georgia. "But we're not telling folks to ignore traditional [recruiting methods] either. We're training leadership - - and this is that old-fashioned leadership who are used to focusing on the big box. It's just a fabulous educational experience."

The program connects small business economic development professionals with community leaders to assess challenges and help them find local solutions and new resources that will work for area small businesses. Most importantly, the state's economic development experts listen to a community's small business people to find out what they need. Then they work with them to develop an array of tools - - mentoring programs, training opportunities, informational materials and more.

In other words, they're working together to develop long-term strategies to help local small businesses, not just quick fixes.

By all accounts, Georgia's strategy is paying off. So far, 13 of the state's 159 counties are designated as "entrepreneur friendly" areas for business. An example: a coordinated entrepreneurial leadership approach in rural Coffee County over the last year has created about 800 new jobs and helped put small businesses in 345,000 square feet of previously vacant space, according to McClanahan.

Georgia's program got its start through an executive order by GOP Gov. Sonny Perdue. It's time for South Carolina's elected leaders get away from election-year rhetoric and do something similar and real that will help small businesses, not just pander to them.

RECENT COMMENTARY

McLEMORE'S WORLD
12/4: One-armed shoppers

Another great cartoon from Bill McLemore:



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FEEDBACK
11/30: Column was full of good ideas

To the editor:

Blessings to you, Andy Brack. [Commentary, 11/27] You are a great voice for unsung South Carolinians.

-- Bud Ferillo, Columbia, SC

11/26: Lawmakers need to do better

To the editor:

Your comments are welcome and your poll hits the spot. [Commentary, 11/27]

Educate the children with $10 Million? We should build JAILS for the parents that refuse to encourage their children to learn how to LEARN not get the ''education" offered. The idea that education stops at the High School Diploma hand-out ceremony is just much of the cause. A High School diploma is the foundation of education that will continue until we're dead.

To not see the problem is leadership by Criminals [just because they're not charged doesn't make them any less of a criminal than a robber that gets away, is the real problem and it seems to reach into a very vast number of people from and in South Carolina. You got thieves in the woodpile is all I can say.

-- Gary Rice, Columbia, SC

Recent feedback:


 KEEPING TRACK
Ahead on cigarette tax, oil drilling

This section tracks past forecasts by Statehouse Report with other media reports:

In Statehouse Report:

9/5/04, Cigarette tax hike is market-based approach: "The question of whether South Carolina's lawmakers have the gumption and foresight to raise the state's abysmally low 7-cent-per-pack cigarette tax begs the question: Is our state really serious about cutting the smoking rate, which would improve people's health, extend lives and reduce overall health costs at hospitals and other medical facilities?"

In The (Rock Hill) Herald:

11/29, Raise cigarette tax: "Thanks to North Carolina, South Carolina now has the lowest cigarette tax in the nation. North Carolina had held that distinction, but in September raised its 5-cents-a-pack tax to 30 cents. The tax will increase to 35 cents in July 2006."

In Statehouse Report:

10/23, Nip refinery, drilling in bud: "One of the beauties of South Carolina's coast is that it doesn't have industries stacked on top of each other. While any drilling or building of a refinery would be far off, let's hope lawmakers can keep the future in mind, and not mortgage it with something that could make us just like everybody else."

In The (Hilton Head) Island Packet

11/29, Oil refinery, drilling must be fought: "The call to action comes in response to a state representative from Anderson County saying he plans to introduce legislation during the upcoming session to explore construction of an oil refinery along South Carolina's coast, possibly in Jasper County. Federal officials are moving toward allowing offshore drilling for oil."

SOUTH CAROLINA SCORECARD

Here's a "thumbs up" and "thumbs down" related to various political news items from the past week:

Thumbs up

DaimlerChrysler. It's great news a new van assembly plant will be in North Charleston, but we hope state lawmakers will start paying more attention to small businesses.

McMaster. Hats off to Attorney General Henry McMaster, who is earning a lot of praise for his work from a variety of groups, according to a cover story by the Columbia Free-Times. Suggestion: Back off a little on the public prayer stuff.

Clyburn. Kudos to U.S. Rep. Jim Clyburn for a private endowment for SC State University that could be worth $1 million.

In the middle

Floyd. State Superintendent of Education candidate Karen Floyd ended up with egg on her face for overstating violence stats in schools, but she admitted the error and removed the info from her Web site. The error didn't, however, curb her appetite for more school discipline.

Thumbs down

Sanford. The governor continues to get well-deserved grief for not lowering the state's flags in honor of Rosa Parks. He says he's right and constitutional law professors are wrong. Imagine that -- Mark Sanford thinking he's right all of the time.

Folks. Former Sanford spokesman Will Folks serves as a continuing apologist for his former boss in an op-ed that appeared throughout the state this week. Who's to blame for everything under the sun? The Legislature. We said a couple of years ago the governor was using the Legislature as a re-election tool. This is just more evidence of that.

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