Entrepreneur
Readiness Assessment
Tattnall
County, Georgia
July 2, 2002
Don Betts Patrick Wilbanks
ATDC- Entrepreneur Network Entrepreneur Services Coordinator
Douglas Regional Office Georgia Rural Economic Development Center
don.betts@edi.gatech.edu patrick.wilbanks@edi.gatech.edu
Economic
Development Institute
Georgia
Institute of Technology
©
Copyright 2002
Georgia Tech Research Corporation
Atlanta,
Georgia 30332-0415
All
Rights Reserved
Communities tend to pay attention to large companies, and their economic development programs focus on recruiting big corporations with numerous employees. However, the facts tell us that more emphasis should be directed toward entrepreneurs to stimulate local economic development. While Fortune 500 employment has declined over the last decade, the United States has enjoyed job growth, which has been fueled by small businesses. This is especially true in Tattnall County where local entrepreneurs created 99 percent of the current manufacturing jobs. Risk-taking entrepreneurs generate jobs and wealth, and they are the backbone of our national and local economies.
The Entrepreneur Readiness Assessment provides a community with objective feedback on how well it promotes and assists local entrepreneurial activity. Our assessment identifies obstacles and opportunities, and recommends strategies for improving local entrepreneur development. Georgia Tech and other regional service providers are available to assist with implementing entrepreneur development strategies.
Information for the assessment is gathered by reviewing several statistical data sources to examine pertinent demographic trends and diverse indicators of small business activity. No one source can accurately reflect the amount of entrepreneur activity, so we examine several different factors.
We also interview community leaders, service providers, and existing entrepreneurs. In Tattnall County, we received input from 32 interviews conducted in February 2002 as part of a broader strategic assessment. Also, we interviewed another seven community leaders and five entrepreneurs specifically about local entrepreneur activity.
Following the Executive Summary, we report our findings and recommendations by the key areas we examined:
1. Existing Entrepreneur Environment
2. Entrepreneur Assistance
3. Financial Resources
4. Potential Entrepreneur Development Opportunities.
The economic history of
Tattnall County shows that entrepreneur development has been the area’s single
most successful strategy for creating new jobs and investment. We expect that entrepreneurs will continue
to be the highest contributor to economic development in Tattnall. However, entrepreneurs are not getting the
attention, support, and assistance from community leaders necessary to maximize
continued entrepreneur development and growth.
Entrepreneurs face many challenges in starting and growing a business. The community’s lack of an entrepreneur support infrastructure further reduces their chance for success. Several community-based challenges in Tattnall County will hinder entrepreneur development if not addressed. Many of these same challenges have rendered economic development efforts fragmented and ineffective. Challenges include the Glennville-Reidsville adversarial relationship, lack of community vision and planning, low skilled workforce, and insufficient infrastructure.
To be highly effective, entrepreneur development needs to be a community-wide economic development effort. A dedicated community leader, with the assistance of a countywide support team, must build an entrepreneur support infrastructure to ensure Tattnall County is “entrepreneur support ready.”
Tattnall County needs entrepreneur development as an effective supplemental strategy for job creation. The following priorities summarize our recommendations and provide a road map for local leadership to implement a successful entrepreneur development program.
1. Educate community leaders and citizens about the local contributions of entrepreneurs and their need for support. Recognize entrepreneur achievement.
2. Ensure that entrepreneur development is a high priority in the overall economic development strategic plan for Tattnall County.
3. Establish working relationships with entrepreneurs, industry (Rotary, Corrections, Fort Stewart), and service providers to gain an understanding of entrepreneur and regional industry needs concerning capabilities, markets, financing, outsourcing, etc.
4. Form a local entrepreneur support network to link entrepreneurs, banks, industry, service providers, schools and colleges, and community leaders.
5. Conduct a Business Retention and Expansion Process survey to identify outsourcing opportunities with regional industry.
6. Improve the start-up financing environment for entrepreneurs with banks, investors, and SBA.
1. Existing Entrepreneur Environment
Successful entrepreneur development programs require local
leaders who are committed to helping entrepreneurs. When asked, Tattnall community leaders acknowledged the
importance of entrepreneurs but this awareness has not translated into
community action. We found no evidence
of an entrepreneur development strategy in any of the community plans or
programs. As
with many communities, the main focus of Tattnall’s economic development
leadership appears to be industrial recruitment. This emphasis has not produced any recent success.
Recommendations:
ü Ensure that entrepreneur development is part of the community’s overall economic development strategic plan.
ü Assign a leader to be responsible for entrepreneur development.
ü Form a local task force to drive the local entrepreneur development effort.
Creating a community culture that promotes entrepreneurship requires community awareness, active support, and recognition. In Tattnall County, local entrepreneurs started 12 of the 14 local industries. These 12 local entrepreneur start-ups employ 99 percent of the industrial jobs (771 of the 780) in Tattnall County.[1] Although community leaders are aware of the contributions of local entrepreneurs, they have not made supporting and assisting entrepreneurs a priority in their economic development plans. Presently, no programs exist to recognize local entrepreneur achievement.
Everyone in Tattnall County
knows of the contributions of agriculture, yet many don’t think of farmers as
entrepreneurs but, in fact, they are.
Tattnall County’s reputation in the agricultural community as one of the
top agricultural counties in the state is largely due to the efforts of
entrepreneurs. Agriculture is a source
of pride for Tattnall County citizens.
Exposing a community’s (our) youth to the concept of entrepreneurism is important to growing future local jobs. Unless youngsters grow up with a family member who is an entrepreneur, it is unlikely they will be exposed to the concept. Tattnall County High School offers an elective entrepreneurial class. Also, the high school has several other programs that help students learn about the business world although they don’t necessarily teach entrepreneurship. College-bound students also need exposure to entrepreneur concepts.
Recommendations:
ü Invite entrepreneurs and entrepreneur development service providers to speak to local civic groups and government officials about building awareness for entrepreneur development.
ü Recognize local entrepreneur achievement (example: “Entrepreneur of the Year”)
ü Expose students to entrepreneurship to help them see how they can fit into the local economy as a business owners after graduation
ü Spotlight local entrepreneur start-ups and their successes in the local media to inform the community of their contributions
The quality of the local technology infrastructure is important to entrepreneurs.
Access to broadband, qualified Information Technology service personnel, and an IT- trained workforce can help support entrepreneur activity. Entrepreneurs start small, and many rely on the latest technology to compete with larger companies. Tattnall County currently has no access to broadband, which severely limits entrepreneurs. The Georgia Tech Economic Development Institute recently performed a technology assessment that should be consulted for more information and recommendations.
Recommendations:
ü Work with telecommunication providers to obtain the infrastructure needed to promote business growth.
ü Encourage the use of technology and computers in business.
Examining existing entrepreneurial activity can be a key to better understanding the current support climate and determining future potential. Entrepreneur activity in Tattnall County is experiencing modest growth based on several small business indicators. As mentioned earlier, entrepreneur activity throughout the years has supplied almost all of the current manufacturing jobs. Some of this employment is in large corporations that started small.
Small business is big
business in Tattnall County, which has over 600 small businesses employing nine
or fewer workers. These small
businesses employ 1,678 people or 26 percent of the local workforce and have
annual sales of $115,700,000.
Agriculture production accounts for the single largest number of these
small businesses, with 72 enterprises, 143 employees, and sales of $17,100,000.
[2]
Many entrepreneurs start businesses in their home. With help, many of these can grow out of their home and employ even more people. There are currently 155 home-based businesses in Tattnall County, which is considerably more than small surrounding counties but also even more than larger Toombs County. Not surprisingly, over 50 percent of the home-based businesses are agricultural-related. Home-based business categories include the following in descending order:[3]
1. Agriculture, forestry, & related services
2. Construction
3. Services
4. Retail
5. Manufacturing
6. Wholesale
7. Finance, Insurance, real estate
8. Transport, communications, and utilities
The number of patents issued can measure entrepreneurial
activity. In the last five years, two
patents have been issued to Tattnall residents. In contrast, neighboring Toombs County has had 16 patents issued.[4]
Possibly, the most
significant determinant of entrepreneur activity is the number of young
start-up businesses. Tattnall County
has 76 businesses that are five years old or less. This compares well to some neighboring communities, but even
taking population size into account it’s a smaller number than Toombs County,
which has 169 young businesses. Also,
new business incorporations in Tattnall have averaged 46 per year for a total
of 230 incorporations over the last five years. This indicates that new businesses are being formed or growing to
incorporation status. [5]
If more community support
for entrepreneurs existed, entrepreneur activity probably would increase.
Recommendations:
ü Identify and interact with local entrepreneurs.
ü Track and measure entrepreneur activity monthly.
2.
Entrepreneur Assistance
A. Local Resources
Many entrepreneurs don’t have access to outside assistance and resources, so local help may determine whether their businesses get started. Unfortunately, no local resources are available to specifically help entrepreneurs in Tattnall County. As a result, only one of five entrepreneurs interviewed had asked community leaders for assistance in their start-up efforts. Most community leaders and entrepreneurs view the development authority as a source of assistance for entrepreneurs, although very limited assistance actually is available. The development authority does not have a structured program with dedicated resources to help entrepreneurs.
The only known effort by the community occurred several years ago when the development authority held a “How to Sell to Prisons” workshop for local businesses interested in marketing goods or services to the Georgia Department of Corrections. However, the event appeared to focus more on helping existing vendors obtain corrections business and less on fostering new entrepreneurial opportunities.
Interviewees felt that the community needs to do more to help entrepreneurs. When asked who should run a new entrepreneur development program, respondents most often mentioned the Tattnall County Development Authority, the Greater Tattnall Chamber of Commerce, and Southeastern Technical College. Although the community perceives that many such local groups and organizations could assist entrepreneurs, none of these groups has the resources to do so.
The fragmentation and lack of unity of various local organizations hinder the community’s ability to assist entrepreneurs. The community needs to ensure that entrepreneur services are available throughout the county.
Recommendations:
ü Develop a local entrepreneur start-up kit containing resources on how to start a business in Tattnall County and make it available at various community locations.
ü Develop a support network of experienced entrepreneurs, service providers, and community leaders willing to serve as mentors and coaches to entrepreneurs and small existing businesses.
ü Get local service providers involved in entrepreneur development.
ü Ensure that any support to entrepreneurs is provided on a countywide basis.
ü Develop a user-friendly, one-stop shop for government permitting.
B. Educational
Resources
A community’s education and training resources are vital for encouraging and preparing potential entrepreneurs. Local educational service providers need to give more emphasis and support to entrepreneurs. Educational resources in Tattnall County include Tattnall County High School, Southeastern Technical College, Brewton Parker College, and the Cooperative Extension Service.
Tattnall County High School has several programs directed toward entrepreneur awareness, including its school-to-work program, an elective entrepreneur class, and apprenticeship program.
Southeastern Technical College has a dynamic and growing
satellite campus with 200 to 300 students in Tattnall County, and many
community leaders perceived it as a source of help for entrepreneurs. There are no real entrepreneur services
available at the local Glennville campus, but several short courses for
entrepreneurs are offered periodically at the Vidalia campus. The most popular programs include medical
assistants and computer and business technology. A few graduates from these programs have become
entrepreneurs. To better support such
entrepreneur efforts by students, Southeastern Tech needs to dedicate resources
for entrepreneurs at the Glennville campus.
A 1998 Georgia Department
of Technical and Adult Education study examined technical college students 10
years after graduation. The research
found that:[6]
Brewton Parker College has a satellite campus with 200 students and offers core college classes for freshmen and sophomores, but offers nothing specifically for business start-ups and growing small companies.
The Cooperative Extension Service offers training and resources on topics related to agriculture and natural resources.
Recommendations:
ü Utilize the education resources available
ü Ensure that education providers are giving the training needed by entrepreneurs.
ü Southeastern Technical College should offer specific entrepreneur courses at the Glennville campus.
ü Southeastern Technical College should have entrepreneur start-up kits available at the Glennville campus.
ü Educational providers should help students to see how they can fit into the local economy as a business owner after graduation.
C. Business and Technical Assistance
Numerous agencies offer assistance to business start-ups and small-established businesses. County leaders need to ensure that available assistance is publicized and that entrepreneurs are taking advantage of these services.
An Entrepreneur Services Coordinator provided by Georgia Tech’s Economic Development Institute (EDI) and East Georgia College’s Georgia Rural Economic Development Center (GREDC) serves Tattnall County. This individual provides business and technical assistance to entrepreneurs as well as entrepreneur development strategies to rural communities. Also, Georgia Tech’s Advanced Technology Development Center Entrepreneur Network (ENet) group assists communities in developing and implementing entrepreneur support programs. ENet combines the strength of the EDI’s regional offices with experience in entrepreneur development and business incubation.
The Small Business Development Center (SBDC) serves Tattnall County through its regional office in Statesboro. SBDC consults with prospective and existing businesses in accounting, economics, finance, management, and marketing, especially those firms associated with retail and service. As reported by the Brunswick Regional Office, recent SBDC activity in Tattnall includes:
Year Number of Clients
1999 14
2000 16
2001 4 (SBDC staff limited in the Tattnall region in 2001)
2002 3 (1/1/02-4/1/02)
Also, the Tattnall County Cooperative Extension Service provides assistance to entrepreneurs and small businesses concerning agriculture and natural resources.
There was no evidence of any other agency activity in Tattnall County focused on helping entrepreneurs.
Recommendations:
ü Entrepreneurs, community leaders, and service providers should be aware of available entrepreneur development assistance.
ü Highlight all available business and technical assistance in the previously mentioned start-up kit.
ü Ensure that community leaders network with these entrepreneur development service providers.
A risk-tolerant banking
environment is needed to encourage and support entrepreneur development. Resources for
financing entrepreneurial business start-ups in Tattnall County are limited to
one of the five locally owned banks. No
large regional banks exist in Tattnall County.
Most start-up financing consists of conventional in-house business
loans.
Many Tattnall County
leaders assume that local banks are risk-tolerant in supporting the needs of
entrepreneurs. However, entrepreneurs
consider the Tattnall County banking environment conservative. Both entrepreneurs and community leaders
blame the conservative lending policies on the risks and losses associated with
the large amount of farm loans. As a
result, three of the five local entrepreneurs interviewed traveled out of
Tattnall County to obtain lower rates at more risk-tolerant banks to finance
their business start-ups. Several
interviewees mentioned that a sixth bank is being formed locally and thought
this added competition could make the banking environment more
risk-tolerant.
Recommendations:
ü Ensure local banks are aware of the lending opportunities to and contributions of local entrepreneurs and are encouraged to be more risk tolerant to keep entrepreneur start-up financing local.
ü Encourage entrepreneurs to become well prepared before approaching lenders by taking advantage of local service providers’ assistance in preparing written business plans and detailed financial projections.
B. Alternative Sources of Financing
Due to the risk associated with starting a business, banks are sometimes reluctant to finance entrepreneurs. Many times, entrepreneurs must find ways to reduce the risk to a bank or locate alternatives sources of financing, such as an investor. Outside of the Small Business Administration (SBA), no alternative financing sources such as, local loan funds, angel investors, or venture capitalists, exist in Tattnall to help fund a start-up.
One method to finance start-ups, that lenders consider
high-risk, is through an SBA loan in which SBA guarantees up to 85 percent of
the loan. Although all five banks in
Tattnall County are SBA lenders, SBA loans are not popular, not utilized, and
considered too complex by community leaders and entrepreneurs. As reported by the SBA Georgia District
office, during the last five years, seven SBA loans were approved in the county
totaling $2,985,000. Two local banks
issued four of the seven loans. One of
the seven loans resulted in liquidation.
Recommendations:
ü Identify local investors and encourage them to consider forming a local loan fund or becoming angel investors. Bring entrepreneurs and local investors together.
ü Encourage entrepreneurs and local banks to consider SBA loans to minimize the risks to banks in financing start-ups. Hold an SBA loan workshop to make entrepreneurs and banks aware of SBA requirements and offerings.
Entrepreneur candidates exist in Tattnall County based on indicators such as home-based businesses, business openings and incorporations, and interest in business ownership. In recent years, entrepreneurial activity has been associated with agricultural cooperatives, forestry and wood products, retail, service, and some manufacturing. Entrepreneurial activity in these fields is expected to continue.
The interest of citizens in being their own boss is evident based on the existence of 155 home-based businesses in the county involved in diverse fields, over 50 percent of which were agriculture-related. Tattnall County has 76 businesses that are five years old or less. [7]
The median age of the local workforce is 34.[8] At this age, people have been in the workforce for approximately 11 to 16 years and have gained skills and work experience that increase their chances for success as entrepreneurs. Also at this age, many people have decided they want to be their own boss, have saved money, and feel confident they can succeed as a business owner.
The area has various pools of potential entrepreneurs, and one is corrections workers. The perception exists that corrections employees lack job pride that they can’t go home at day’s end and say that they have contributed to the economy or had a part in producing a product. Aside from the job security, they long for a job that gives them pride in their work.
Then there are farmers who are inherently entrepreneurial and self-sufficient. In an effort to diversify, they will continue to search for new markets through added-value agricultural products and cooperatives. Also, due to the declining profitability of agriculture, they will investigate new business opportunities outside of agriculture; however, they will need assistance to succeed due to their lack of knowledge and skills in these new markets.
The high school, Southeastern Technical College, and Brewton Parker College are also good sources for potential entrepreneurs in the community. As noted earlier, 25 percent of Southeastern Technical College graduates will start their own business.
The fast-growing Hispanic community offers another opportunity for entrepreneur growth; however, obstacles such as the language barrier exist.
Other obstacles in Tattnall County that reduce the pool of entrepreneur candidates include low unemployment, a large high school dropout rate, and lack of confidence in the chance for entrepreneurial success. A relatively low unemployment rate of 3.7 percent (November, 2001) [9] reduces the number of skilled workers who may be willing to risk business on their own rather than risk job security with another employer. Most of the textile job losses of past years have now been absorbed into other fields. In 1990, 42.6 percent of workforce age 25 and older in Tattnall County lacked a high school education. [10] This significantly lowers the number of candidates capable of starting a business. Also, community leaders and entrepreneurs rate Tattnall as only fair to good as a location to start a new business. This shows a lack of community confidence in the chance for entrepreneur success.
Overall, interest in entrepreneurship resides in Tattnall; however, due to lack of education, experience, resources, and confidence, entrepreneurial candidates will need strong support and assistance to become successful entrepreneurs. If a community entrepreneur development program existed to encourage, prepare, and support these candidates, the chances for entrepreneurial activity and success would increase.
B. Market Identifiers
Tools exist to help communities identify markets for entrepreneurs and small businesses; however, little community effort has occurred to identify such opportunities for entrepreneurs in Tattnall County.
In 1991, the state Department of Community Affairs performed a Business Retention and Expansion Process (BREP) survey. No current community leaders interviewed were aware of the results. The Development Authority attempted to perform another survey several years ago, but not enough volunteers could be recruited to assist with the survey. A BREP needs to be performed approximately every five years to identify local industry needs that could generate opportunities for local entrepreneurs as suppliers. In 1996, a “How to Sell to Prisons” workshop for local businesses was coordinated through the Development Authority. Approximately twenty-five citizens attended, but no business relationships resulted from the effort.
The high school and technical college survey local business to assess their needs and have industry advisors for their programs. Also, the Cooperative Extension Service has an advisory committee to address local needs relating to agriculture and natural resources. The development authority needs to have a working relationship with these groups to assist with potential entrepreneur opportunities identified.
C. Potential Markets
The opportunity for small businesses to supply products and services to local and regional industries appears to be the greatest market potential for entrepreneurs in Tattnall County. Potential markets include Rotary Corp., Georgia Department of Corrections, and Fort Stewart.
As new markets and
businesses are considered, especially retail and service, it is important to
identify sufficient market demand.
Conclusions that markets to sustain business exist in Tattnall can’t be
made based on existing business activity and success. Typically, rural community markets are small, and require outside
markets to be profitable. For example,
of the entrepreneurs interviewed, only 5 percent of their sales were generated
in the county.
The U.S. Army’s Fort Stewart continues to have a positive economic impact on Tattnall County, and it presents potential opportunities for entrepreneurs. According to the Directorate of Contracting for Fort Stewart, 90 contracts were issued to seven Tattnall County suppliers totaling $9,127,208 in 2001. Most of these purchases were service- and retail-oriented and associated with hardware sales, maintenance, and lawn care. In addition, Fort Stewart purchased $468,002 by credit card for mostly service- and retail-related items. This grand total of $9,595,210 is only for base procurement and does not include purchases by other Fort Stewart divisions such as Corp of Engineers, Defense Logistics Agency, General Supply Agency, and prime contractors. Presently, Georgia Tech and the GREDC are researching available opportunities for local businesses to supply Fort Stewart. Tattnall County will receive the results of this study when completed.
Opportunities for supplying the Georgia Department of Corrections need to be investigated again. Presently, the agency is obtaining many of its retail and service purchases in adjacent counties. Due to increasing restrictions, correction officials are experiencing a greater need to outsource work previously performed by inmates. New staff housing regulations may also create opportunities in the Tattnall County real estate and construction markets.
Rotary Corporation
continues to expand, generating a need for new suppliers. Other local and regional industries present
similar opportunities for entrepreneurs.
Agriculture and forestry also offer opportunities in Tattnall County. New value-added products need to be identified for agribusiness entrepreneurs to become profitable. These products must be less affected than traditional agriculture products by commodity prices and weather. Cooperatives are viable avenues to support entrepreneurs interested in these markets. Initiatives such as the Farm Fresh Produce should be supported as a special market for area farmers.
The Wiregrass Trail study
should be reviewed for potential retail, and tourism-related entrepreneur
opportunities.
Entrepreneurial businesses
that import wealth into the community deserve greater emphasis. For example, a business that acquires most
of its sales from outside the community will grow more wealth than a business
that primarily takes in the money of local citizens.
Recommendations:
ü Establish working relationships with the procurement authorities of Fort Stewart, Corrections, and Rotary Corporation as well as other local and regional businesses to identify outsourcing opportunities.
ü Conduct a BREP survey to identify expansion and outsourcing opportunities with local business.
ü Obtain the study on Fort Stewart procurements from the GREDC when it’s completed.
ü Help identify new, added-value products and services with viable markets for entrepreneurs.
ü Establish a working relationship with the Hispanic community and offer entrepreneur development assistance there.
[1] Georgia Chamber of Commerce. 2001 Edition Georgia Manufacturing Directory. 2001
[2] Dun and Bradstreet Inc., Dun’s Market Identifiers. Dialog File 516, 4/3/02 and 4/29/02
[3] Dun and Bradstreet Inc., Dun’s Market Identifiers. Dialog File 516, 4/3/02 and 4/29/02
[4] United States Patent and Trademark Office. www.uspto.gov. 2002
[5] Dun and Bradstreet Inc., Dun’s Market Identifiers. Dialog File 516, 4/3/02 and 4/29/02
[6] Georgia Department of Technical and Adult Education, Carl Vinson Institute of Government at the University of Georgia. A Ten-Year Student Follow-Up Study, 10 Years Later. Fall 1998.
[7] Dun and Bradstreet Inc., Dun’s Market Identifiers. Dialog File 516, 4/3/02 and 4/29/02
[8] Woods & Poole Economics, Inc., Washington, DC. 2002 State Profile: Georgia. 2002.
[9] Woods & Poole Economics, Inc., Washington, DC. 2002 State Profile: Georgia. 2002.
[10] Woods & Poole Economics, Inc., Washington, DC. 2002 State Profile: Georgia. 2002.