Creating an Entrepreneurial Friendly Community Vitality Center April

Creating an Entrepreneurial Friendly Community Vitality Center April 25, 2007 A Catalyst for Creating Real Impact in Real Communities

Community Vitality Center n Mission: A catalyst for innovative projects and initiatives designed to improve the vitality of non metro communities and rural areas. n Community Entrepreneurship Community Philanthropy Rural-Urban Policy Studies on Vitality Issues n n

Community Vitality Center Board and Structure n 25 Board members representing n n n 1/3 Higher education & agency reps 2/3 Diverse interests of across Iowa ISU Extension Admin Host & Fiscal Agent n Board-ISUE Concurrence on Policy & Projects

Entrepreneurship in the U. S. n 10. 5% of U. S. adult population is engaged in entrepreneurial activities -- Global Entrepreneurship Monitor (GEM) n 36 % of U. S. Entrepreneurs are age 45 -64 n 1 female Entrepreneur for every 1. 5 male entrepreneurs, with parity in 45 -65 age bracket Source: Mapping Rural Entrepreneurship (WKKF/CFED)

Entrepreneurial Participation n Highest Entrepreneurial participation in U. S. are those with high school diploma n Entrepreneurs without a high school diploma tend to focus more on self-employment n Those with college degrees tend to have alternative employment opportunities Source: Mapping Rural Entrepreneurship (WKKF/CFED)

CVC - 10 Community Forums n 88% favored local community initiatives to support entrepreneur development, business startups, & seed capital networks n 67% favored initiatives linking local entrepreneurs to regional resources, expertise, & networks n 11% favored self-help entrepreneurship solely as a private sector initiative without public sector involvement

CVC Communities of Distinction n 4 fast growing (nonmetro) communities, 1 in each quadrant of Iowa n 4 comparable communities that lost population in 1990 s n Interviewed 75 leaders in local gov’t, econ. develop. , healthcare, & education Goals: n Show Not All Rural Communities in Decline n Determine Key Factors of Difference

Grassroots Entrepreneurship was important in past & has future potential. n All Communities identified at least one homegrown business started in an earlier decade that is now a major employer. n None identified major local entrepreneurship programs in place beyond revolving loan funds. n All were very interested in what could be done locally on a cost-effective basis, underscoring Iowa’s potential.

Local Ownership Can Make a Difference n n n Diversification Advantages in Downturns Businesses Less Likely to Move Adds independence to Local Leadership Can be more Philanthropic CVC Analysis of 100 mgy Ethanol Plant concludes nearly 70% more local economic impact

How much does the strategy cost per job? Tupelo, MS attracted Toyota Plant n n n Jobs 2000 averaging $20/hour $40, 000 annual income/worker $296 million incentive package n Cost per direct job created $148, 000 n $1. 3 billion plant investment Approximate new investment per job $650, 000 n Community Vitality Center

How much does the strategy cost per job? n n n Lincoln County MN Sirolli Facilitation Project – Too Expensive For Iowa? $80, 000/year plus annualized startup costs $20, 000/year for 10 yrs Averaged 10 startups per year creating 25 jobs Averaged 10 expansions per year creating 29 jobs Cost per firm $5, 000 Cost per direct job created $1, 852 $75, 000 new investment per startup, $100, 000 per expansion Approximate new investment per job $32, 407 $1. 62 million in new payroll annually $1. 75 million in new investment annually $1. 4 million in new bank loans annually Community Vitality Center

“Seven Statements To Stagnation”: Erwin M. Soukup 1. 2. 3. 4. 5. 6. 7. We’ve never done it that way before. We’re not ready for that. We are doing all right without trying that. We tried it once before. We don’t have money for that. That’s not our job. Something like that can’t work.

Banker Criteria in Evaluating Business Opportunities n Strategic Fit in Market Business Plan Track Records of Team Assembled Experience of Key Leadership Resources Available to Firm n Community Vitality Center n n

Creating a Culture for Community Entrepreneurship 1. Establish A Collaborative Local Alliance to Support Entrepreneurship Development n n Sirolli Model (Lincoln County, MN) Fairfield (Volunteers to Chamber) Carroll (Dev Corp & Extension) Mason City (NIACC & Local Leaders)

2. Provide Recognition to Celebrate Entrepreneurial Success n Identify and Share Entrepreneurial Success Stories (Past and Current) n Provide Awards for Entrepreneurs (Entrepreneur of the Year) (Business Plan Competition) n Media Announcements

3. Annually Support Entrepreneurial Educational & Training Activities n Conduct training workshops annually n n n Business Plan Basics Entrepreneurship Fundamentals Marketing, Customer Analysis, Internet Financial Management Track Record and Experience of Team & Leader Involve local entrepreneurs & education resources n Beyond Basics, Entrepreneurs need experienced Coaches and Mentors n Local Networks, SCORE, SBDC Navigators

4. Inventory Entrepreneurial Assets and Resources (Local & Regional) n How, When, and Where to tap Local Expertise n Create resource guide for entrepreneurs n Community Entrepreneurship Centers n Create Marketing Directory for Entrepreneurs

5. Establish & Support Entrepreneur Coaching and Mentoring Networks n Identify local entrepreneurial needs and topics of interest to local entrepreneurs n Meet a minimum of 6 times per year n Provide seminars by respected entrepreneurs and experts. n Provide time to share ideas, problems, and networking for contacts and advice

6. Create Entrepreneurial Capital Networks n Endowments, Donors & Public Funds for Program n n Debt for Entrepreneurs n n n $204 m annual Linn County Wealth Transfer in probate $262, 554 average estate probated $779 estates probated/year A Good Lender (Equity lender vs repayment capacity) Micro Loans & Revolving Loan Funds SBA & USDA Agency Programs & Guarantees Credit cards and Other Equity for Entrepreneurs n n n F, F &F Seed Capital, Grant Programs, SBIR Angel Capital Venture Networks Private and Public Offerings

Ultimate Goal: To Develop an Entrepreneurial Support System for: n Taking People with Passion & Good Ideas n Honing Management & Due Diligence Talent n Effective Use of Available Capital Resources n Reaching Markets & Knowing Customer Wants n Coaches & Mentor Networks to solve problems n Sorting plans with promise from others Creating an Effective Entrepreneur Support System Can Cut the Business Failure Rate in Half

Community Vitality Center n n Dr. Mark A. Edelman, Director Phone: 515 -294 -3000 E-mail: cvc@iastate. edu Website: www. cvcia. org