Supporting small businesses in creative ways

Listening to yesterday's “State of the State 2007” address you couldn't help but agree that when Governor Granholm speaks, she spreads a lot of enthusiasm, cheer and positive energy. Rumor has it she was once an aspiring actress. Her talents at the podium are obvious.

In her address, Governor Granholm highlights several initiatives that could help small business in Michigan. Unfortunately, nothing in her speech came close to what I will term as the “Orabone model”.

Some time back, my friend and maverick entrepreneur Bill Orabone proposed an interesting idea worthy of pursuit. Bill suggested that the state adopt a simple policy of putting its money where the mouth is, i.e. setting aside no more than 2% of its buying budget to purchase products and services from Michigan-based small businesses.

Granted, Bill has a selfish interest in pushing his own products to the state, but if his company’s products can save Michigan tangible resources (say, by extending the life of the state’s roads), why not give it a close look? I know that Bill struggled mightily to get the attention of the right audience at MDOT in Lansing.

Sircon, a venture backed small company based in Okemos, Michigan offers software products for effective management of the insurance industry. States like South Dakota, Indiana, Nevada, Wisconsin and Wyoming have all bought their products. I did not see Michigan on their list. If insurance regulators from 15 other states can see the value of Sircon’s products, why not Michigan?

Or take the example of Xoran Technologies, a University of Michigan spin-off focused on selling mini CAT scan machines. The company can sell their products everywhere, but not in Michigan.

According to an obscure rule, the state’s 'Certificate of Need' requirement stipulates that users of CT scanners must demonstrate they will use the equipment for at least 7,500 scans a year. Per Xoran, most doctors don’t use the device for more than 300 scans a year. Good luck, Xoran!

The Ann Arbor Business Review carried a detailed article on the subject & funnily enough, six months prior to this story, the Governor announced the expansion of Xoran in Michigan via tax cuts. I am not sure the tax cuts would help Xoran as much as common sense (in other words, a Certificate of Need).

There are plenty of small businesses that would thrive in Michigan if only the state would set an example by creating a “buying program”. Venture Capital and financial programs are good but customer relationships are even better. Giving small businesses a meaningful opportunity to make their case --as opposed to tax breaks-- would stimulate the economy.

It would also send a powerful message to companies considering a move to Michigan.The state might even attract these companies without giving away tax breaks. Or maybe, I'm just naïve…

As a naive immigrant, Mahendra cannot vote for either Red or Blue but strongly believes that government can play a positive role in stimulating the economy. If you have ideas that can top the “Orabone model”, please email them to Mahendra at mgr@plymouthvc.com