Buy Local, Buy Forward

4thOct. × ’14

My business partner and I recently observed the third anniversary of having founded MobileIgniter. Looking back, one of the most difficult obstacles we’ve had to overcome in building our business is our ability to sell to local enterprises. Large, established organizations prefer to buy from other large, established organizations — at least that’s one of the reasons we hear for why they don’t buy from startups. Changing this behavior is crucial to the success of Wisconsin entrepreneurs. Changing corporate culture can be a huge challenge, but there are tried and true methods that have proven to influence buying decisions.

I propose that Wisconsin create a sibling to the existing Angel Investor Tax Credit. The new program will give large corporations a tax credit for buying from startups in Wisconsin that qualify as a WEDC QNBV. Riffing on the Buy Local movement, I call the concept Buy Forward.

As a Lean Startup devotee, I have come to accept that ideas are nothing without data. Here’s my data.  All of MobileIgniter’s Wisconsin-based investors will benefit from the Angel Investor Tax Credit. One of those investors will also benefit from having stipulated a discount on our services as a condition of their investment. At the time, it seemed an off-hand request but the result has had a huge, positive impact on the fate of our business. And this benefit has been mutual — the client has saved money and received a more innovative product compared with that derived from their traditional means of procurement.

After three years as an entrepreneur, the data tell me that early customers are at least as valuable as early investors.

Wisconsin enterprises spend billions annually on goods and services. If they buy locally, the resulting tax revenue stays here either as piece of corporate or personal income. As a result, the cost of such a tax credit related to those expenditures would appear to be negligible.

Once local enterprise has been incentivized to Buy Forward, the benefits realized will have them looking for opportunities to partner with innovative entrepreneurs.

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  • Quietyme

    Well thought out and well written.

  • http://timothynott.com Timothy Nott

    Why thank you sir! Would your operation benefit as much or more from a buyer tax credit as it has from the investor tax credit?

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