The stated goal of Kansas City’s civic leaders and business community is to make this America’s Most Entrepreneurial City.
To be sure, there are lots of reasons why we might be able to lay claim to that title—national and global companies that were founded and based here, terrific assets like the Kauffman Foundation and entrepreneurship studies programs at UMKC, Park University and other campuses in the region, even the companies you’ll find inside this issue with our 31st annual Corporate Report 100 ranking of the region’s fastest-growing headquarter companies.
And yet, something about this region’s business climate nags at me. It’s something that raises its head elsewhere in this edition, with our special feature looking at the state of small business in Missouri and Kansas. Combined, small business in the two states employ more than half the 6 million people who have jobs from the Colorado border to the Mississippi River.
It took me a bit of thinking to put a finger on it, but what troubles me was something of a disconnect: We have high-growth companies, many of them in the growth sectors of technology, biosciences and health care, that are relatively young, and in many cases, are the beneficiaries of programs designed to encourage just that kind of start-up growth.
Hurrah and huzzah to that, I say: We should be supporting early-stage entrepreneurship, which has been proven over and over to be the key to generating net new job growth—the gazelle factor, and all that.
But if we truly want to be America’s entrepreneurial capital, it has to go deeper than start-up. By virtue of conducting the research into Corporate Report 100 for nearly a third of a century, we’ve seen what happens to many high-growth superstars:
They often grow into something that will be acquired by interests outside this market, flat-line after a few years, or fail altogether. Plenty of former Top 10 companies on our list no longer exist.
The fact is, no other organization—certainly no other publication—that I know of does the kind of diligence we do here at Ingram’s to identify growth-oriented companies and share with this region’s business communities the stories of, and examples of, their success. And yet, most companies that start up today won’t be here to celebrate a fifth birthday; only 1 in 10 will make it through the first decade.
Which makes me wonder if we’re not missing a bigger opportunity as a region to laser in on a rich target for promoting business growth: Established companies whose owners have been slugging it out for years—decades even—and with a little more attention from the policy-makers and incentive masters, might be able to take their organizations to the next level and achieve that high-growth status.
Time and again, we’ve seen public dollars invested in the wrong kind of business promotion—another state-line-hopping announcement as I write this touts the 100 jobs moving into Missouri from the Kansas side. And yet, not a dime of the incentive money going to support that move will yield a single new job. It’s the same workers, relocated a few miles away.
On top of that, we see that the region’s very largest companies are often the beneficiary of incentive dollars or tax policies at the federal and state level, recipients of assistance that will not be make-or-break for them, but rather, padding on the bottom line.
It’s time for a more thoughtful series of discussions about how to take the unfulfilled potential of long-standing small business here and help those owners find the Rosetta stone of higher growth. That could be through more guaranteed-loan support, through direct incentives (still tied to growth, not relocation), tax credits for both hiring and capital improvements that could clear the way for more job creation.
The point is, there’s a lot more we can do. That we have to do. That we’re not talking about those potential job-boosters is a reflection on just how com-mitted we are to our oft-repeated slogan.
America’s Most Entrepreneurial City? I suppose KC could be. But not if we’re going to place all of our bets at the roulette wheel of start-up companies.
Business longevity is an important indicator of stability and success. Perhaps we should consider that with our incentives and support ecosystems, and start betting on a much more sure thing. Those companies that have sustained and are eager to further grow.