Attract. Retain. Grow. These are the three pillars or “legs” supporting our1.1 Trillion economic stool we currently have in Florida. But as with any stool, if one leg is weak or broken, the entire seat topples over.
Prior to COVID-19, Florida’s economy was strong, but inherently flawed because we lacked diversified strategic investment in small-business growth (98.5% of all business in Florida) and a long-view of what our economy could become in the next decade if we prioritize small-business portfolio diversification.
The first of our first economic recommendations entitled “Recovering from an Unprecedented Health and Economic Crisis” focused on a near-term economic response to stabilize Brevard County in the aftermath of COVID-19. Our FL NEXT policy paper expands upon that approach but takes a long view with a focus on economic diversification and targeted investment in key technology sectors to create a more sustainable, resilient, and recession-proof economy able to withstand future downturns.
Recession Proofing Florida: A Primer
The typical approach to economic development which favors attracting and retaining businesses has its benefits, but is inherently flawed because it lacks a focus on targeted investment to achieve economic growth (e.g. more state revenue).
In times when the economy begins to contract and political winds begin to blow, or worse, when a true crisis hits like we’re experiencing now, the big businesses (500+ persons) inevitably look to reduce costs and their eyes turn cutting their existing workforce in large numbers.
Reducing costs = Reducing staff = Major impact to our regional economy
A good rule of thumb is the “rule of three” which says that for every high-paying job or high-tech job created in a local or regional economy, another THREE are created to support those jobs and families. So, as we attract new industry or aid in business growth here in Florida, it has an exponential impact on the economy.
The inverse if also true. When we base our economic growth on ONLY the attract and retain portions of our economy, and a downturn occurs – either a purely economic cycle or a natural disaster (e.g. hurricane or pandemic), these large employers shrink at the same 1:3 ratio from which they grew.
Therefore, we owe it to our people to create and encourage a more diversified economic base here on the Space Coast.
“Innovation is definitely the cart, and entrepreneurship, the business model and commercializing ideas are definitely the horse. You need them both, but if you keep loading the cart, we’re just going to keep staying right where we are…”
– Jim Clifton, Gallup Chairman & CEO
Our FL NEXT economic agenda will expand our state growth model through enhanced investment in small business with a focus on expansion in key technology sectors such as green energy, infrastructure, and advanced technologies. Our approach will balance Florida’s wobbly stool and leapfrog our economy into the top three economies nationally in real GDP (past New York) in less than 10 years.
The strength of our Florida economy lies in supercharging our small-business engine and middle-class drivers. However, evolutionary growth takes time. Yet, as with any good business venture, the reward far outweighs the risks for taxpayers in the Sunshine State.
Case in point, most economists agree that a return on investment for small business growth almost universally occurs at a 1:8 ratio – that is, for every dollar invested in growing so-called second stage companies (<99 employees) that have grown past the “start-up” phase, it returns a minimum of $8 in new tax revenue into the economy. Think about that for a second and compare that to our current model promotes corporate tax cuts for big businesses, whereby reducing our state revenue by $500M+ annually. Imagine if we kept that money to re-invest in small business growth!
We can use this as a model for how to invest in our FL growth strategy focused on business incubation and targeted investment in diversified markets areas in our County.
Case Study: The University of Central Florida’s Business Incubation Program (UCFBIP), reported growth at an even more aggressive rate of return in its 2016-2018 Regional Economic Impact Study, saying “for the study period, it should be noted that every $1 of public investment resulted in an estimated $12.03 returned in taxes to state and local governments.”
Despite overwhelming evidence on the necessity for growth funding, Florida historically ignores strategies focused on new venture and growth strategies for our small businesses (<49 persons) to stage-2 businesses (<99 persons).
My plan is to support new legislation to increase growth locally, regionally, nationally, and beyond. Our FL NEXT priorities will focus on new business generation (green energy, resilient infrastructure, and key technology), small-business growth in low and middle income areas, and this by extension, generation of new jobs in Florida by a factor of three and a growth rate by a factor of 8-12 dollars for every dollar invested by the state.
BUILDING A 21ST CENTURY ECONOMY WITH OUR FL NEXT APPROACH
To build a truly 21st Century Florida economy, our FL NEXT initiatives will encourage inclusive and sustained economic growth with a focus on venture capitalism in key technology sectors, small-business investment, and middle-class growth opportunities through an increase in higher-paying jobs.
FL NEXT can serve multiple purposes for innovation and growth to include:
Establish a wide range of collaborative partnerships with regional economic authorities, local governments, private organizations, incubators, venture capital resources.
Improved resource allocation for incubation hubs at Florida’s higher education systems and provide a platform for a transfer of new ideas to private industry to enhance product creation or creation of new start-ups in new markets.
Leverage Florida’s national and international market-share in human and investment capital to re-brand us as a destination for innovation.
- STABLE GROWTH
Provide conduit assistance for the interaction of current assets with venture-start-up companies to aid on transitional growth and stability.
With every invested dollar returning eight or more dollars from our home-grown companies, Florida can have a more diversified economy that creates exponentially more tax revenue. In turn, this will allow Florida to promote progressive measures such as living wages without tax increases our critical small business growth engine.
Further, FL NEXT will allow us to expand entrepreneurship and community investment through incentivized support to low- and moderate-income neighborhoods right here in Brevard County. Finally, with increased tax revenue generation, we can accelerate public and private sector investment with a focus on resilient infrastructure and green initiatives to enhance quality of life and reduce the overall impacts of climate change on the Florida economy.
FL NEXT is a new model for Florida that grows our economy, grows our ability to protect against our changing climate, grows new opportunities for people of every color, and grows our brand image as a forward thinking state with a focus on innovation.
Let’s get it done!