Gov. Mike Pence has launched a new $3 million office to help small businesses and streamline cutting through red tape.
Some state business experts and Columbus officials generally welcomed the idea — though at least one said that he would like to see more details about what the office is going to do.
The new agency, the Office of Small Business and Entrepreneurship, will be overseen by Lt. Gov. Sue Ellspermann and is housed on the sixth floor of 1 North Capital Building, across the street from the Indiana Statehouse.
The OSBE, which will house the Small Business Development Center and the Procurement Technical Assistance Center, will provide help for businesses with fewer than 500 employees. The office will be overseen by an ombudsman, who as of Monday had not been appointed. The ombudsman also will “help to streamline state programs, licensing and permitting processes.”
The $3 million annual budget is funded through $1 million from the state and $2 million from the federal government, according to information provided by Lexie Hosier, press secretary for
Small and medium-sized businesses — not big businesses — have been the drivers in job creation over the past few years, said Michael Hicks, director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University.
Hicks provided data that indicate that Indiana businesses with more than 500 employees account for about 40 percent of jobs growth. Businesses with fewer than 50 employees create just as many jobs as businesses with more than 500 employees.
Kevin Brinegar, president and chief executive officer of the Indiana Chamber of Commerce, said that while Indiana already has a good business climate, this office will place a greater emphasis on helping smaller businesses.
“We think it’s a very positive development,” Brinegar said. “It’s putting the focus where it should be.”
Eighty percent of the Chamber’s business members have fewer than 100 employees, Brinegar said.
David B. Audretsch, a distinguished professor and Ameritech Chair of Economic Development at Indiana University, said that while he would like to see more details of how the new office will operate, he believes that having an office dedicated to small businesses is a great idea.
Large businesses tend to create more jobs overseas than in the U.S., he said. The primary drivers of growth in jobs and GDP domestically have been small businesses.
Beyond helping entrepreneurs, Audretsch said, the new office could have a spillover effect and help create a culture of entrepreneurship.
Audretsch spoke by phone from Berlin, where he said similar programs to the one being enacted in Indiana have proved quite successful in German states of Berlin, Bavaria and Baden-Wuerttemberg.
Entrepreneurs usually start businesses because they have ideas that they cannot pursue in their current jobs. The founders of German software giant SAP, for example, worked for IBM and wanted to branch into business software. They were shot down by IBM’s leaders, Audretsch said, so they left and formed SAP, today a software giant with about 65,000 employees.
Columbus Mayor Kristen Brown said that within reason, streamlining regulations to help small business makes sense.
She said the state’s ombudsman is similar to the position she wanted to create several months ago, which was rejected by the Columbus City Council. Brown said she has changed the job description for an open position in the city planning department to better help shepherd small businesses through local and state regulatory processes and to provide information about state, local and federal incentives to help local businesses succeed.
Brown said she hopes to fill that position by the end of the month.
Brown also said that while the availability of skilled employees remains the biggest obstacle to job and business creation, issues such as quality of life and the removal of regulatory hurdles also play a role.
“We are business friendly,” Brown said. “I think we can be more business friendly.”
A dedicated person to address small business issues will help the city, she said, especially with the newly created state counterpart.
Columbus entrepreneur Rick Johnson said via email that the governor’s efforts “will also serve as a signal that Indiana cares about the growth of small businesses and welcomes entrepreneurs and the capital that they deploy.”
Johnson is the president and chief executive officer of Johnson Ventures, which buys and runs a portfolio of small to midsized businesses. In May, Pence named him to the Indiana Economic Development Corp., which focuses on attracting, growing and retaining businesses in Indiana.
“Ultimately,” Johnson said, “this package should enhance the competitiveness of Indiana and create economic growth which means more and better paying jobs for residents of our state.”
Hicks said that the new office’s success will depend in large part on “helping identify ways to reduce unneeded regulation.”
Although, Hicks said, “It is hard to tell exactly how much harder or easier it is in Indiana to start a business and follow all the regulations associated with it.”
Ryan Hou, a Columbus entrepreneur who 12 years ago launched LHP Software, said that he did not consider any other place but Columbus as a base for his business.
LHP has seen significant growth in the past few years and is building a $5 million headquarters in Columbus. Leaders expect to employ more than 400 in 2014, up from about 250 today.
Hou said that streamlining licensing and permitting processes do not play an important role in LHP’s business decisions; although, he said he is in favor of anything that gives small businesses and startups a better chance to succeed.