Entrepreneurs With Vermont Connections Should Be Prime Targets of Vermont's Recruitment Efforts

 
In September 2007 the State of Vermont held a party in Boston to woo current residents of the Boston area who have Vermont connections, such as alumni of Vermont colleges and universities, back to Vermont. The party was hosted by the Vermont Department of Economic Development (DED) as part of its “PursueVT” initiative to attract a skilled workforce, www.pursuevt.org. DED posted its impressions of the event on its website, www.thinkvermont.com/newsletter/index.cfm#1. Attendees included representatives of Vermont businesses looking for qualified job applicants.

Vermont’s Strategic Plan for Economic Development identifies three areas of focus: Retention and Expansion, Entrepreneurship, and Recruitment. The plan can be found at DED’s website, www.thinkvermont.com. The “PursueVT” campaign is listed as a program for Retention and Expansion, along with programs for employee training and manufacturing extension.  The Recruitment portion of the plan also targets business owners with Vermont connections.  But the Entrepreneurship portion of the plan does not list programs geared toward identifying entrepreneurs living elsewhere who have Vermont connections.

It may be an uphill battle to try to attract young workers already earning Boston salaries back to Vermont. The so-called “golden handcuffs” can attach very early in a career - in many industries starting salaries in Boston, New York or other major cities are a multiple of starting salaries for the same position in Vermont.  The legal field is an excellent example. Taking a huge pay cut, perhaps by a third or a half, to return to Vermont is not always realistic. It makes more sense to start out in Vermont and grow your lifestyle as your earnings grow over time. Young professionals who start out somewhere else and then move back to Vermont generally are established enough to have savings to bridge the gap (or a trust fund) or are facing an urgent desire to relocate, perhaps because they are raising young children and want a better environment for the family. Otherwise, lifestyle alone is generally not compelling enough to justify leaving a high paying job and taking a huge pay cut to live in Vermont.  The tension between a desire to return to Vermont and the economic realities of taking a large pay cut were featured in a public radio story aired on WBUR about DED's recruiting party in Boston. See http://www.wbur.org/news/2008/74865_20080212.asp.    Targeting young professionals with Vermont connections is a great idea in concept but the return on the State’s investment may be disappointing because of the “golden handcuffs” problem. 

In contrast, owners of established companies that could locate anywhere can relocate their business to Vermont without taking a huge pay cut. If the business is mobile, clients and contracts can remain intact after the move. By “mobile” I mean a company that utilizes technology to serve customers in distant locations, does not have a competitive advantage based on its location, and could serve its customers and prospects from Boston, Vermont, California or any other location. Again, the legal field is a good example; some types of practice such as immigration can locate anywhere and serve clients anywhere in the nation or the world. Moving expenses can be a barrier, and moving a business will disrupt the current employees, but a mobile company should be able to charge the same prices for the same products or services even if it relocates to Vermont. In fact, a mobile company could increase its margins and even achieve a competitive advantage by reducing its prices after locating in Vermont where certain overhead expenses (rent, salaries) are lower than in major cities (again, the legal field is an excellent example).

Entrepreneurs with promising business concepts can grow their businesses in Vermont as well as anywhere else, particularly in industries in which Vermont is developing into a knowledge center (green products/services, specialty foods).  In fact, for reasons discussed in prior entries in this blog, Vermont may be particularly appealing for people with entrepreneurial drive.  DED's strategic plan identifies three programs to support entrepreneurship:  state support for technology transfer from higher education to industry, incubators for business start-ups, and early stage capital investment (venture capital or "angel" funding).   This section of the plan is short on details and I believe that is mostly a good thing. 

Entrepreneurship is an area in which the State's best strategy may be to simply stay out of the way.  DED describes its role as to "provide infrastructure for businesses to thrive" (stated in DED's strategic plan).  State support for incubators and private investment is very helpful because incubators and private investment overcome barriers to entry and growth.  The most important thing for an entrepreneur is to be free of barriers to entry and growth.  Internet service, cell phone coverage, transportation and other basic infrastructure can be barriers to entry if they are lacking.  Vermont already is working to improve internet and cell phone service options available here.  But our transportation infrastructure in Vermont has been neglected for years and should be identified as an immediate priority in DED's strategic plan. Perhaps if both DED and the Agency of Transportation focus their resources on solving our transportation challenges,  we might see some improvement in the near term.  For those who may not know, my husband is a public policy professional in the transportation sector so I have a front row view into the critical role transportation plays in our economy.

I hope DED's outreach efforts aimed at people with Vermont connections living elsewhere will include the message that Vermont is an excellent place to be an entrepreneur and create a new business.  Focusing on potential entrepreneurs with Vermont connections could be just as fruitful, or even more so, than focusing on business and career relocation.