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Turning Yourself Upside Down

T.J. Becker

Serving second-stage entrepreneurs successfully means listening intently, staying flexible and letting your audience drive program content.

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Just as biodiversity contributes to successful ecosystems in the natural world, a productive entrepreneurial ecosystem requires many elements, including educational institutions, diverse sources of capital, talented workers and savvy service providers. Yet perhaps most important is a nurturing culture — which is why entrepreneur support organizations (ESOs) are so critical.

A multifaceted role

ESOs can include chambers of commerce and other membership organizations, universities, small business development centers, technology councils and economic-development agencies. The common denominator: they are groups or individuals working to accelerate entrepreneurs’ success.

“People typically think of ESOs as providers of technical assistance, but that’s only a small part of the picture,” says Penny Lewandowski, director of entrepreneurship development at the Edward Lowe Foundation, a nonprofit organization that supports entrepreneurship through research, recognition and educational programs. “ESOs shape the very infrastructure in which entrepreneurs operate, from driving policy to providing critical connections. They set the tone for culture and affect how easy it is for entrepreneurs to operate and access good resources.”

Based in southwest Michigan, the Edward Lowe Foundation has worked with ESOs for more than a decade to create and distribute programs for second-stage entrepreneurs. Second-stage entrepreneurs are companies beyond the startup phase that have the intent and capacity for additional growth.

“People frequently use the term ‘entrepreneur’ to refer to small businesses,” says Mark Lange, the foundation’s executive director. “But entrepreneurship encompasses a broad spectrum, and there’s a big difference between small-business entrepreneurs and growth-oriented entrepreneurs.” 

Growth entrepreneurs have a significant appetite — and aptitude — for expansion. The foundation defines second-stage growth entrepreneurs as having 10 to 99 employees and annual revenue from $1 million to $50 million, but these are soft boundaries that fluctuate depending on industry. The important distinction is their focus on growth.

In addition to programs for second-stage entrepreneurs, the Edward Lowe Foundation works closely with ESOs to help them understand this important cluster of growth companies and better serve their needs. In 2010, ACCE and the Foundation worked together to host a retreat to help chambers become more effective ESOs; a second event is planned for this May.

“Second-stagers are powerhouses when it comes to job creation,” Lewandowski says. “What’s more, second-stagers often have national or global markets that bring outside dollars into their communities.  They attract new investors to a region. And they recruit talented employees, which boosts a community’s human capital.” 

“This is all music to ESOs’ ears,” she continues, “and why we see chambers of commerce putting more emphasis on second-stage entrepreneurs.”

Embracing a second-stage initiative doesn’t mean that organizations have to reinvent themselves, but it typically requires revising existing programs or starting new ones. For one thing, second-stage companies have drastically different needs than startups or mature companies. 

There’s another factor, too. As more groups strive to help second-stagers, ESOs need to differentiate themselves. “It’s important that your programs don’t duplicate ones offered by other groups,” Lewandowski says. “Look for niches you can fill — ones that play to your strengths.”

Entrepreneurs’ Entrepreneur

An ESO’s culture must also mirror the entrepreneurs it serves. “That means listening to your clients’ ideas, and then acting quickly,” explains Lewandowski. “Chambers hoping to be significant ESOs can’t hear an idea on Tuesday and then wait for six months to bring it to fruition.”

Granted, chamber leaders already have plenty on their plates as they strive to meet budgets, deliver value to members and please boards. Yet serving second-stagers brings tremendous payoffs, Lewandowski stresses: “Entrepreneurs have the power to change the economy, but ESOs have the power to help them be more successful. They are the entrepreneurs’ entrepreneur.”

As they strive to help build more vibrant, prosperous communities, many ESOs are putting more muscle into resources for second-stage companies.

Grabbing their attention

Connecting with second-stagers and developing relevant resources are two key challenges for ESOs.

“Second-stage entrepreneurs are extraordinarily busy and discriminating,” says Joan Siefert Rose, president of the Council for Entrepreneurial Development (CED) in Research Triangle Park, N.C. “They have a million things they could be doing, so you have to find something that meets their needs on their terms.”

Second-stagers aren’t attracted to traditional networking or educational events. They prefer to learn from people who have walked in their shoes, which is why peer-learning programs are so successful. For example, the Economic Development Council of Collier County (FL) hosts quarterly forums for second-stagers where founders of larger companies discuss how they’ve grown their businesses and share best practices. “The audience is riveted, and the speakers enjoy it as well, since they don’t often get to tell their stories,” observes Tammie Nemecek, the EDC’s CEO.

These forums have multiple benefits. “For starters, the program provides a sense of community for entrepreneurs and allows them to interact with each other,” Nemecek says. “It also helps us build relationships with second-stagers and serves as an entry point to other programs and services.”

Many organizations, including Nemecek’s, have added Peer-Spectives roundtables to their offerings. A CEO roundtable program developed especially for second-stagers, PeerSpectives brings entrepreneurs from non-competing industries together in a structured format to discuss problems. 

“Our table has been really well received,” says Chris Parson, director of small business development at the Kalispell (MT) Area Chamber. “There was some initial hesitation about the cross-pollination of industries, but after just two sessions we had comments about how much everyone was learning. People really like the structure of the roundtables, the idea that they’re going to get something accomplished … that it’s not just another networking group.”

How ESOs market peer-learning events is important, says Raman Chadha, executive director of DePaul University’s Coleman Entrepreneurship Center in Chicago. 

Case in point: the Coleman Center hosts a variety of workshops for second-stage business owners — taught by other second-stagers. One session, dubbed “My company’s experience with digital and social marketing,” is led by four business owners — two who had success with digital marketing and two who didn’t. “The entrepreneurs we’re targeting don’t care about learning how to do digital marketing,” Chadha explains. “What they wrestle with is ‘Why should I do it?’”

Responding to new needs

There’s no cookie-cutter recipe for aiding second-stagers. A lot depends on the mix of companies in a region — and truly understanding the factors that impact their business.

For example, the Entrepreneurs EDGE in northeast Ohio conducts annual interviews with employees of its member companies. This service was initially introduced to provide CEOs with feedback they might not otherwise hear, but the outreach has also sparked new programs.

“In the interviews, we learned that many employees were being asked to make or understand management decisions, although they had little management background,” says Kirk Neiswander, founder of EDGE. “In response, we created MBA Ultralite, a 10-week course on leadership and business fundamentals, which has been a big hit.”

During the startup phase, entrepreneurs strive to develop products and find initial customers. Yet second-stagers struggle with new issues such as strategic planning, market diversification and operational efficiencies.

“We find they need a lot of business process improvement,” says Nancy Boese, who heads a special team at the Michigan Small Business Technology Development Center (MI-SBTDC) known as the Growth Group (G2). “Second-stagers need to build systems so they have repeatable processes and don’t have to reinvent something every time they do it.”

Formed in 2009, G2 is manned by experts in strategic planning, process improvement, market research, product development and marketing — and draws additional support from the MI-SBTDC’s manufacturing and technology commercialization teams. G2 also has a virtual incubator where certified business coaches help clients bolster leadership and communication skills.

Before second-stagers are accepted into the G2 program, the MI-SBTDC first conducts a vetting process, followed by a strategic needs assessment. “Holding CEOs accountable for their decisions and implementation plans is also an important component of the program,” Boese says. “They’re used to putting out fires, but need to shift from a reacting mode to a planning mode.”

Second-stagers also need fast answers to overcome sudden obstacles, which is where economic-gardening programs come into play.

“Economic gardening puts a laser-like focus on challenges that growth companies are facing and gives CEOs tools and information they can implement immediately,” says Stephanie Steffens, director of the Colorado Workforce Development Council. “It helps CEOs look beyond surface issues and dig down to see what core issues are blocking growth — or what could catapult them to the next level.”

Don’t be afraid to nag

Although startup entrepreneurs are typically hungry for networking and educational opportunities, persuading secondstagers to participate in programs isn’t easy. Which is why being proactive — and having a thick skin — comes in handy.

“As an ESO, it’s our job to be their champion, to be on the lookout for things they need,” says Jaye Baillie, CEO of the Ocala/Marion (FL) Chamber of Commerce. “You’ve got to tap them on the shoulder and say ‘you should take advantage of this.’ And if they don’t respond, you’ve got to tap them again.”

Success stories can help win a response. After Baille’s chamber held a workshop on social media marketing, one second-stager reported doubling his sales in a week. “Once you have those kind of successes, then they pay more attention,” Baillie says, noting that second-stagers want to know that if they’re going to spend time doing something, it’s going to affect their bottom line.

Other tips from ESO leaders:

Go offline To recruit roundtable members, Parson got contact information from his partners’ databases. But filling the chairs required old-fashioned techniques. Phone calling was effective, he says. “And sometimes you need to actually go knock on their door.”

Leverage referrals According to Rose, “It helps if secondstagers can be invited to an event by someone they know and trust. Someone who can say, ‘Hey, this was worthwhile to me, and I think it would be to you.’”

Be persistent Don’t be surprised if they don’t respond at first. “They’re incredibly busy people,” says Chadha. “Bug them until they tell you to leave them alone.”

 Linked in

Another essential role ESOs play is convening. 

ESOs must establish “transactional relationships” with business, civic and government leaders, stresses  Adrian Taylor, manager  of the Minority Business Partnership  at the Dayton (OH) Chamber of Commerce. “This enables you to give second-stagers access to decision-makers — people who can commit on behalf of their organizations — that they normally wouldn’t have access to.”

For example, when Taylor’s group launched in 2007, his executive director not only met with leaders of other ESOs, but also educational institutions, professional and community organizations and entrepreneurial networks to secure buy-in before reaching out to clients. “It’s all about relationships — and making sure relationships lead to business development opportunities,” says Taylor.

ESOs also need to stay on top of what other ESOs are doing. “ESOs act as connectors in their communities,” says Maria Meyers, director of University of Missouri-Kansas City’s Innovation Center. “It’s their job to know what resources are available to entrepreneurs — from other organizations as well as their own.”

Meyers launched KCSourceLink in 2003 to create a network of small-business resources in the 18-county Kansas City region, followed by a national arm, U.S.SourceLink, that helps other regions with resource mapping.

ESOs are typically so busy running their own programs that they don’t know what other groups are doing, which can result in unhealthy competition. Resource mapping reduces friction by documenting who’s offering what to whom. “As we work with groups, and they find out they’re not really competing, you hear this huge sigh of relief,” Meyers says.

What’s more, participating in a resource-mapping program helps ESOs eliminate duplication in services and identify gaps, Meyers adds. “You can really raise your economic impact on the community.”

Adopting a New Mindset

Serving second-stagers has led to some significant shifts for many ESOs.

"We're in a transformational mode regarding how we think about economic development," says Tammi Nemecek, CEO of the Economic Deveopment Council of Collier County (FL), which began a second-stage initiative in 2009.

Instead of thining about jobs first, Nemecek says that her group is focused on targeting and supporting companies that know how to create intellectual property and generate wealth.  "It's not about the jobs first; it's about the environment,"Nemecek says.  "We want to be known as the place where growth entrepreneurs want to be.  The jobs will grow from there -- and in a more sustanable way." 

Jaye Baillie, CEO of the Ocala/Marion (FL) Chamber of Commerce, has had to let go of some "sacred cows" to focus on second-stagers, such as sponsoring Ocala's annual fish fry. "We used to try to be all things to all people, but now if something doesn't support our mission 100 percent, we've either dropped it or are outsourcing it," she explains.

Baillie is also striving to make sure her entire community, as well as the chamber, is entrepreneur-friendly.   "If we don't know the answer, we need to be one degree of separation to finding it out.  If an entrepreneur is frustrated by something happening at the governemnet level that's keeping them from succeeding, it's our job to help break through those barriers," she says. "We have to stand on our heads for them."

Let’s get together

Resource mapping also helps ESOs strike successful partnerships, which have become especially important in recent years as organizations are pressured to do more with less funding.  Collaboration is easy to talk about, but takes a lot of work.  “You’ve got to agree on the cause — that it’s bigger than any one partner,” says Steffens. “At the same time, you have to acknowledge that each of the partners is at the table for a reason.”

Effective collaborations:

Are discriminating; organizations don’t say “yes” unless it makes sense.

Make it clear who is the lead dog and who will play a supporting role.

Leverage the resources of each partner and avoid overlaps. 

“Each partner should be made stronger by the collaboration,” says Steffens. “That’s the challenge — getting the  right partners to the table, helping them understand the value they bring and increasing the value of their individual organization by being part of the collaboration. It’s not easy to do, but when you do, you can accomplish great things.”

Established in 1985, the Edward Lowe Foundation is a nonprofit organization that supports entrepreneurship through research, recognition and educational programs, which are delivered through entrepreneur support organizations (ESOs). The foundation focuses on second-stage companies — those that have moved beyond the startup phase and seek significant, steady growth. The foundation also encourages economic gardening, an entrepreneur-centered strategy providing balance to the traditional approach of business recruitment. For more information, visit www.edwardlowe.org.

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