Small business needs state leadership too

SC Statehouse Report
August 29, 2008

By Frank Knapp Jr.

On Aug. 18, an opinion editorial I wrote ran in The State. The title was “The fourth pillar of success” because it addressed the economic development proposal offered by the leadership in the South Carolina Senate and House as well as from other economic development leaders. Notably absent from the latter were representatives of the Governor’s Office and the SC Department of Commerce.

In fact, these offices seemed to be quite upset with the proposal’s underlying premise that our Department of Commerce, a cabinet-level agency under the direct supervision of the Governor, has not been very effective. The press release issued from the Office of the Speaker of the House states that “despite having more tools available to improve economic soil conditions, we have fallen to one of the worst unemployment rates in the nation and lag behind our neighboring states when it comes to average income levels.”

The essence of the new economic development proposal is to remove the primary responsibility for developing our state’s “knowledge-based” economy from the Department of Commerce and give it to the South Carolina Research Authority (SCRA)—a private, tax-exempt applied research and commercialization services company. The SCRA would grow our “knowledge-based” economy by focusing and coordinating efforts to turn the new knowledge and technologies acquired at our research university into new South Carolina small businesses.

As someone who championed the cause of South Carolina giving more attention and resources to growing our state’s small businesses, I applauded this mew economic development proposal in my opinion editorial. I concluded by saying that I believed that all the other “non-knowledge-based” small businesses were just as worthy of an organization other than the Department of Commerce to provide leadership to facilitate their success.

It didn’t take long for the supporters of Gov. Mark Sanford to pounce in defense of the status quo. A former high-level employee of the governor attacked The SC Small Business Chamber of Commerce on his blog making some typical over-the-top, unsubstantiated and unflattering comments that characterize most of his entries.

But this quasi-anonymous blogger did raise a standard objection meant to appeal to the independent streak of the entrepreneur. He vehemently disagreed that, in his words, “a shiny new government agency” is what we need to fix our economic problems. Instead, he asserts that government help for small businesses should be in the form of “less government, lower taxes and fewer regulations.” This sentiment was echoed in a guest editorial this week by the National federation of Independent Businesses (NFIB). A traditional strong supporter of Gov. Sanford.

This is great political rhetoric and may help a candidate win an elected office. But if that’s all that my blogger friend and the NFIB propose, it shows a complete lack of development expertise. And if this is the small business economic development strategy proposed by a politician, it also represents a complete abdication of leadership.

Making a state small-business and entrepreneur-friendly takes work. Businesses of all sizes are not going to grow where there is not the needed infrastructure, resources and community support. Every state in the country has some agency responsible for meeting these needs at the state and local level. They all do it for big business recruitment and development. And most, except for South Carolina, also do it for small business growth.

The Small Business Chamber’s position is very simple. If we need state agency to coordinate big business recruitment and growth, then we need an entity to dedicate similar resources, time and effort to grow small businesses. Commerce Secretary Joe Taylor is quoted as saying, “I am the chief salesman for the state of South Carolina.” We also need a chief small business promoter for South Carolina.

If our Department of Commerce is not up to the job of developing a plan and working to grow small businesses, then, as the proponents of our “knowledge-based economy” have concluded, small business in general need to find that leadership from another entity- public or private.

Mr. Knapp is the President and CEO of the South Carolina Small Business Chamber of Commerce.

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