Greensboro, go small on incentives

My company, Double Hung is teetering on the edge of another expansion.  We’re at a point where we either need to grow pretty quickly or start turning down some business.

In weighing the positives and negatives the decision on which way to go I thought to myself, “Self, wouldn’t it be great if I could get a leg up from the City of Greensboro like HondaJet just did?”

Although today’s N&R column started out as a tongue-in-cheek essay, as I was writing it I got a little more serious about it.  I took the tack that if we are dead set on doling out incentives for businesses to expand or relocate in the Gate City, why not earmark a large percentage of our efforts to the small business sector?

3/14/07 

By David HoggardN&R mast_1_27.jpg

Our city fathers and mothers are in the process of determining guidelines on how to divvy-up and dole-out the $10M in bond money voters recently approved for Greensboro’s future economic development.  Here’s my advice: think small.

I used to call on a particularly successful business owner in the hills of east Tennessee. While his competitors were knocking themselves out selling big-ticket items at low profit, this guy made real money stocking and selling all of the high profit accessories people needed to keep their big-ticket item working. 

He summed up his formula for success for me one day: “While everyone else is running around looking for a dollar�, the crusty fellow explained, “I’m looking for 21 nickels.�  He’s still in business 20 years later; the other guys are long gone.

For every Dell Computers and HondaJet out there, there are a few hundred small business owners struggling to take their business to the next level.  ‘Nickel’ names like Joe’s Plumbing Supply might not carry the pizazz of a FedEx, but collectively they have the same ability as the ‘dollar’ names to create jobs.

To prove my heart is in the right place, I’ll be the guinea pig.

My company restores historic windows.  We’re not yet a large concern, mind you, with only six people on the payroll.  But I have a plan to expand my payroll by 50% over the next three years.  To make a go of it, I’ll request a reasonable and practical package of economic incentives.  I figure that since incentives are good for homegrown RF Micro, then why not me?

(I’m submitting my plans and incentive package request to High Point officials as well.  I don’t intend to relocate there because Greensboro is where my roots are, but I’ve heard that mentioning other locales might cause some elected folks to drop their money drawers much more readily.)

It struck me that in every old building the doors are usually in as sad a shape as the windows.  It is a solid outgrowth opportunity that is compatible with my current business.  If Honda can receive an incentive to leap from car assembly to building jet airplanes, then my leap from windows to doors is an incentive no-brainer.

I’ll make a capital investment, with my own money, of $8,500.00 in equipment to facilitate the successful expansion of my business.  I know that doesn’t sound like much, but as a percentage of my net sales, $8,500 is huge.  Purchases will include a new table saw, three orbital sanders with ample sandpaper, a few extension cords, a coffee pot for my shop and a nice used pickup truck to carry the doors around.

I will increase my number of employees by 50%, which is three people.  I know that sounds like a drop in the local employment bucket, but again, to a small business like mine, adding three employees is huge.

My incentive package request will entail a series of practical city tax and fee reductions over the next three years.

· Reduce by half the property taxes due on my office real estate.  Please know that my office is located in my home. Incentive: $2,100.00.
· Provide my company with its annually renewable, city issued, business license at no charge.  Incentive: $500.00.
· Provide three parking spaces in a nearby city-owned lot. My workshop is located in Greensboro’s central business district so parking is sparse and comes at a premium.   Incentive: $1,200.
· Furnish free garbage collection, water and sewer for three years to my workshop and to my home office.  Incentive: $1,800.00.

So, for only $5,600 spread over three years, I can do for Greensboro what Dell is doing for the Winston-Salem area, only on a much smaller scale.

Economic incentives have become a ‘necessary evil’ as Greensboro competes with other cities for new jobs.  But instead of fighting for the big guys, perhaps we should take a different tack and become a small business haven.

We can think small and still grow big.

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11 Comments

  1. Posted March 14, 2007 at 9:03 am | Permalink

    What a great idea. Although I can see this being totally abused by the whole good ole’ boy networks. It definitely helps small businesses grow though, and ones like yours where it’s a niche market to begin with, to succeed.

    Maybe there could be a grant status based on growth patterns or something so you don’t have startups that have no record or base trying to get seed funding.

  2. David Wharton
    Posted March 14, 2007 at 11:08 am | Permalink

    David, you’re too low in the amount you’re requesting. HondaJet got $1.2 million in city and county incentives for 283 employees, which divides out to about $4,240 per employee.

    Therefore you should ask for $12,720, since you’ll be hiring 3 new employees!

    This was one of your best columns.

  3. Brenda Bowers
    Posted March 14, 2007 at 11:47 am | Permalink

    David, Great article. Even greater idea! Do it! I believe it was last year that Steve Arnold tried to get the county commissioners interested in a blanket incentive program for ALL businesses that started in Guilford County or wanted to expand. He claimed it was unfair to just help the big guys. Actually, to my mind it is the pits! Give multi-billion dollar companies money they don’t need just want because cities, counties and states are dumb enough to give it to them; and nothing to Joe’s Lawn Service who could hire another worker if he could afford a couple more lawn mowers and a larger, “nice used truck�. Mr. Arnold’s idea didn’t go anywhere probably due to the politics of the commissions, but maybe you as a small business man can get something started in the city. Brenda

    PS: Demand they name it the Hoggard Small Business Incentive!

  4. Posted March 14, 2007 at 2:34 pm | Permalink

    Excellent idea and article.

  5. Posted March 14, 2007 at 4:45 pm | Permalink

    I actually thought about pursuing this angle in late 2006 when we purchased and renovated a plant. We will double our production personnel from four to eight this year, and I have added a significant salary in the office already.

    Please write about retroactive incentives next time.

  6. Tracy Lamothe
    Posted March 14, 2007 at 8:32 pm | Permalink

    Great article David. You know “shoestring” isn’t just a cute name for small business budgets – it’s a reality and while small business owners might be able the think bigger, the budget just will not allow. Incentives or grants would allow us home-grown entrepreneurs to think much much bigger.

  7. Posted March 14, 2007 at 8:40 pm | Permalink

    I love it. Sign me up. As a small business owner, I would love to expand my business. Cost is always a drawback for me. To much risk in taking that step and what if it doesn’t work out? Loved the article. This should be a movement.

  8. Posted March 15, 2007 at 10:48 am | Permalink

    David, I’m in DC and yes, having at least one meeting on K Street. I’ve got a growing business I’ve been trying to find office space (and parking) for a biz that could hire 2-4 FT designers in 6-12 months. Add me to the group that I believe our Chamber should be helping with (or GMA; I don’t think we’re going to renew them this year).

    If you want to create a smbiz coalition that actually does something for small biz, count me in. I’d be happy to host the first group meeting.

  9. Posted March 15, 2007 at 11:41 am | Permalink

    Great Column David. Its also interesting to note that many many small business owners are women (myself included). Therefore if the city was to offer incentives to local small businesses, they would also be able to tout that they are helping improve the situation of women in NOrth Carolina. A nice counter to yesterdays letter to the editor that rightly decried the practice of playing down crimes against women. (I hate that “domestic” label. It makes a horrible act seem so much more tame.) Anyway, loved the article, and am brewing my own letter in praise and response to it. Thanks for writing it!

  10. Posted March 15, 2007 at 11:50 am | Permalink

    Unless you create an incentives pool that will be doled out to every business in Greensboro, you are going to create a patently unfair system where one guy’s restoration business gets a taxpayer subsidized advantage over another or one guy’s painting company gets a competitive advantage thanks to the largess of city government. Smoothing the way for businesses of all types is a proper role for local government, giving one business an advantage over another through preferential treatment is not. Sure, it sounds good if one is thinking she might be the beneficiary, but imagine the not-to-hard-to-envision scenario where it is one’s competitor who gets the hand out, and suddenly the problems are drawn into focus.

    If the city wants to reward job creation, it must be done equitably. Perhaps something like $500 in City Credits for every full time job created that pays a living wage that can be applied to any charge from the city: taxes, parking, water bill, garbage disposal, bus passes, etc.. Get the county involved and the cost is lessened while the benefits of credits are expanded: county taxes, tuition at GTCC for employee training, etc.

  11. Posted March 15, 2007 at 6:02 pm | Permalink

    Let’s start a petition drive!