Waukesha models new business growth strategy on nearby counties: Economic development organizations offer variety of resources

Banking & Finance

When EmbedTek LLC wanted to make a big investment and rapidly expand its size beginning in 2010, the company’s leaders weren’t sure which organization in Waukesha County could help them make it happen.

“We were located in Hartland and we were looking to expand the business and ultimately move into a new facility,” said chief operating officer Tom Fotsch. “I wouldn’t say (we were) necessarily looking for a loan.”

EmbedTek, which designs and manufactures single-purpose computers and digital displays for original equipment manufacturers, has increased employment from eight to 75 since 2010, outgrowing its 26,000-square-foot location in Hartland and moving to a new, 100,000-square-foot facility in the City of Pewaukee last year. Its 2015 revenue was about $27 million, up from $4 million in 2009.

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EmbedTek has grown from eight to 75 employees since 2010 with the help of a private loan and state tax credits. The company had a tough time figuring out how to obtain county funding.
EmbedTek has grown from eight to 75 employees since 2010 with the help of a private loan and state tax credits. The company had a tough time figuring out how to obtain county funding.

That’s big growth. The kind of jobs- and development-creating investment with which many county economic development organizations would love to assist.

When it was planning the expansion, EmbedTek turned to the now-defunct Waukesha County Economic Development Corp., which in turn directed it to the Wisconsin Economic Development Corp. Otherwise, WCEDC didn’t provide much assistance or engagement on the project, Fotsch said.

EmbedTek was able to garner a $300,000 tax credit deal with the WEDC in return for job creation, and ended up getting a private revolving loan from Town Bank for the majority of its investment, which totaled about $4 million.

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There may have been resources available to EmbedTek through Waukesha County, but Fotsch didn’t have the time to research them since he was busy growing the business. The process would have been easier if there were one central organization—a traffic cop, if you will—that could help any business in the county with hiring, working capital, expansion and other growing pains, he said.

“The challenge that (business owners) have is that their No. 1 job is to run their business,” Fotsch said. “They don’t have the time or the resources to go and research and find out what are the resources that will help them grow.”

When he was elected in April, Waukesha County Executive Paul Farrow said his goal was to drive economic development across the county, and he has been busy putting together a new economic development organization to serve as that traffic cop for businesses planning to grow. With the input of a group of business leaders and stakeholders including Fotsch, Waukesha County plans to launch the new organization by the third quarter.

Waukesha County expected to put a request for proposals to operate the new organization on its economic development site by Feb. 17. The address is waukeshacounty.gov/businessgrowthstrategy.

The old WCEDC closed down in October 2014 due to an unsustainable financial structure, said Dale Shaver, director of the Waukesha County Department of Parks & Land Use, who is leading the rollout of the new organization.

The hope is that the new organization gets buy-in and funding from the municipalities within Waukesha County, pooling the loan funds and information to make business growth financing simple and efficient, Shaver said. A central point of contact for businesses, looped in on the project from the start, could aggregate which real estate is available countywide and keep up with where assistance is needed using an expediter mentality.

Among the pooled funding that would be available: Community Redevelopment Block Grant revolving loans; early lapsing tax incremental financing; Community Reinvestment Act funds; industrial revenue bonds; and eight existing town, city and village programs.

EmbedTek outgrew its Hartland location and moved into this new Pewaukee facility in August.
EmbedTek outgrew its Hartland location and moved into this new Pewaukee facility in August.

The City of Waukesha was already planning to form an economic development organization this year, but instead has agreed to contribute the $50,000 it had allocated and put its weight behind the group entity. Together, Waukesha County, the City of Waukesha and the University of Wisconsin – Extension Small Business Development Center have structured $350,000 in funding for the initial administration cost. The county plans to gather several million dollars for the loan fund.

The new setup is being modeled off the successful approaches by the Kenosha Area Business Alliance, Racine County Economic Development Corp. and Economic Development Washington County.

“The successful models that we’ve seen in Kenosha, Racine and Washington counties is the economic development organization also creates a collaborative fund,” Shaver said. “That loan fund has enough money in it that begins to generate interest that can be used to sustain the operational cost, or part of the operational cost, of the organization.”

RCEDC has 99 active loans in a $30 million loan portfolio. The organization’s success has partly been driven by its longevity and its employees’ outreach. It’s been around since 1983, and offers 13 loan programs.

“We’ve always tried to serve as that point of contact regardless of the project,” said Jenny Trick, executive director. “So often…these programs exist but businesses just don’t know about them or they’re not aware of them in time for us to help them.”

Trick has been with the organization for 24 years, which has also helped contribute to the staying power of RCEDC.

“You kind of become that staple in the community that people just know you,” she said. “And if you provide value, you get repeat customers.”

Among the organization’s services are advocacy on behalf of businesses when it comes to funding, zoning, building occupancy issues and other barriers to growth that could arise. It also can cobble together more than one loan program to form an overall funding package of as high as $1 million, Trick said.

Economic Development Washington County is an independent nonprofit that administers loans on behalf of the county. The model has been successful because of the speed and privacy afforded by the separate entity, said Christian Tscheschlok, executive director.

But the loan pools are still one of the best kept secrets in Washington County, he said, and part of that could stem from the perceived slowdown created by obtaining government funding.

“The minute you start talking about an incentive program that’s in some way associated with the government, then the private sector runs to some understandable conclusions, either from past experiences or word of mouth,” Tscheschlok said. “We’ve worked hard to develop tools that really break the mold from that regard. They are extremely flexible, they are very timely, and they don’t involve government red tape.”

EDWC has about $3.7 million to lend, spread among three loan programs. The turnaround on the funding can be as short as 60 days, he said. Usually, its low-interest loans are used to leverage a private loan, freeing up working capital for the growing business.

“We’re not here to compete with banks,” Tscheschlok said. “We’re here to support lender success on projects and support their customers’ success.”

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