Cost Effective Approaches for Rural Business Incubation:

An Iowa Case Study

Mark A. Edelman, Ph.D. Community Vitality

Center National Business Incubation Association 19th International Conference, Baltimore, Maryland,

May 16, 2005

Community Vitality Center A Catalyst for innovative projects &

initiatives to improve vitality of non metro communities

University Extension Center with Governing Board of 30 leaders from non metro counties & diverse interests

Initiatives: Community Entrepreneurship Community Philanthropy Rural-Urban Policy Studies

Entrepreneurship Basics 10.5 % of U.S. adults are engaged in

entrepreneurial activities - (Global Entrepreneurship Monitor)

36% of U.S. Entrepreneurs are age 45-64

Growth in female entrepreneurship:

1 female for every 1.5 male entrepreneurs

Gender parity in 45-65 age bracket

Entrepreneurial Participation Highest U.S. Entrepreneurial participation

are those with high school diploma - (GEM)

Those with college degrees tend to have alternative employment opportunities

Entrepreneurs without a high school diploma tend to focus more on self-employment

Micro Entrepreneurs - <5 workers Low-Income Micro-Entrepreneurs

reduced reliance on govt. assistance by 61% or $1,679/year – (ISED & Aspen Institute)

53 % moved out of poverty & 72% had gains in household income over 5 years. Average gain was $8,485

With Extra TA - 49% survived 5 years – comparable to national average – (CFED)

CVC Project: Entrepreneurship Forums in 10 Communities - 2003 GOAL: Find Out What People Think Will

Work

Metro county to Smallest County (4,600)

1/2 of Participants were Entrepreneurs 32% in a startup business 19% thinking of starting business

Generated 20 Ideas for Community E-Ship Support & Checklist (www.cvcia.org)

Used Kettering Foundation NIF Public Deliberation Format Approach 1: Self-Help

Entrepreneurship

Approach 2: Community Initiatives to Support Entrepreneurs

Approach 3: Connect Local Entrepreneurs and Support with Links to Regional Resources, Expertise, & Networks

CVC - 10 Community Forums 88% favored local community initiatives

to support entrepreneur development, business startups, & seed capital networks

67% favored initiatives linking local entrepreneurs to regional resources, expertise, & networks

11% favored self-help entrepreneurship solely as a private sector initiative without public sector involvement

CVC-Communities of Distinction Project

Selected 8 non metro communities Population: 1,000 to 12,000

Paired Comparisons: 1 Fast Growing Community in Each Quadrant 1 Similar sized Community that Lost

Population

75 leaders from local government, economic development, healthcare, & education

CVC-Communities of Distinction Project EACH identified at least one

homegrown business started in an earlier decade that is now a major local employer

NONE could identify any local entrepreneur support programs except revolving loans

ALL were interested in doing more, if can be done on a “cost-effective basis”

CVC-Communities of Distinction Project Local Development Groups

Considering Whether to Re-Balance Local Economic Development Strategies to include Entrepreneurship & Business Incubation

Mapping Rural E-ship Report - (WKKF–CFED)

Networks & Capacity for Incubation primarily exist in Metro & University Communities

Business Development Networks & Incubation Capacity are a Missing Link in Non Metro Communities

CVC’s Challenge:To Assist Leaders in identifying cost-

effective strategies for building local incubation capacity linked to regional resources, expertise, & networks

To Create Learning Networks that provide Local Leaders with Opportunity to learn from other Communities

To Develop Best Practices for specific strategies based on local community experiences

CVC Statewide E-ship Portfolio Goal: Collaboration & Credibility

Monthly E-mail Newsletter - 30 leaders/county

Statewide Community E-ship Academy Statewide Community E-ship Awards Co-Sponsor state, regional & local Events Incentives for Collaboration

SBDCs & ISED Pappajohn Centers (University Based) Iowa RDC, State & Federal Agency Reps Extension & Professional Developers Universities, Community and Private Colleges

CVC Entrepreneurship Portfolio - Local Community Programs Community E-ship Challenge Grants – (5-6/yr)

MyEntreNet Training Grants – SBDCs (4) Micro Entrepreneur Training – ISED (4) Community Entrepreneurial Centers (5) Community Business Plan Competitions (4) E-ship Coaching & Mentoring Networks (6) High School Business Plan Competition (40) Middle School Marketplace Program (10)

Community E-ship Challenge Grants – (5-6/yr) $10,000 grant with required local

match

Innovative entrepreneur development demonstration projects

Merit review and scoring

Reports required for impacts, lessons learned, and best practices

MyEntreNet Training Grants – SBDCs (4) Iowa SBDC Network Program CVC $2500 covers 1/3 of first year

cost.

Training Includes: Community Empowerment Organizing FastTrac and Internet Training Quarterly Meetings for Entrepreneurs

& Mentoring Group Connects with External Advisors

Micro Entrepreneur Training – ISED (4)

ISED Micro Entrepreneur Training Prog. for Low Income Entrepreneurs

CVC $2500 covers 1/3 of first year cost

Targeting Low Income Rural Counties

Partnering with 22 County Regional Coalition with Business Accelerator

Community Entrepreneurial Centers (5) Emerged from $10,000 Challenge Grants

Local collaboration & sponsor to provides site (development corporation, chamber, extension office, or college)

Includes library, contacts for access to local expertise networks, periodic training, Internet Access, secretarial services, and some space

One Community College/Extension partnership will assess feasibility of a Kitchen Incubator

Community Business Plan Competitions (4)

CVC $7000, ($1000 to SBDC, $1000 to Extension, $5000 to local sponsor)

Local Sponsors provide $10,000 minimum

Local Team manages program Process: Promotion, Application,

Review and Training Referrals, Business Plan Submission, Judging, Selection, Awards Announcement, Monitoring & Mentoring

Entrepreneurial Coaching & Mentoring Networks (6)

Pre-Existing Groups Fairfield Entrepreneurs Association

(Community Based - 400 members) Ag Ventures Alliance (Regional Ag-Value Added -1000 members)

CVC Projects Carroll County Coaching/Mentoring Project

(Organize ad hoc mentors into county group) SBDC MyEntrenet Regional Coaching Network (Annual Training Program for Coaches in

Region)

High School Business Plan Competition (40)

Univ. of Iowa Pappajohn Center Partner 240 H S Teachers Trained to Integrate

E-ship into a variety of Subjects CVC $250 to 40 nonmetro teachers

who implement Business Plan Competition

Gather Local Sponsors for Awards May evolve to statewide HS

competition & conference

Middle School Marketplace Program (10) ISU Pappajohn Center Partner CVC $1000 to 10 Local Sponsors Requires Middle Schools Cooperation 25 Hour Curriculum Local Entrepreneur

Speakers & Student Teams Loan Committee Reviews Business

Plan Marketplace; Students sell products to

classmates, parents, & community Calculate Profit or Loss

Communities Getting Started: #1. Organize Community Entrepreneur

Development Organization/Support Team

#2. Inventory Local Entrepreneurship Support Assets & Gaps

#3 Develop A Plan that the Community Can Support

#4. Link to Learning Networks & External Resources

Who Might Be on the Team? Successful

entrepreneurs Community “spark

plug” Leaders Angel Investors Attorneys Accountants Bankers Business Start-up

Services Insurance Brokers Existing companies

interested in growth Local

Telecommunications Innovators

Development Corps/Chambers

Local Colleges Local Extension Regional SBDCs K-12 School Tech &

Entrepreneur Teachers Healthcare Entrepreneurs Local Government Leaders Utility Representatives Potential Business Mentors Ag Entrepreneurs Faith-based groups

State and Regional Approaches to Rural Business Incubation Incentives for Local Innovation &

Community Capacity Building Learning Networks For Communities to

Learn from Others Incentives for Collaboration locally,

regionally, & statewide Build on capacity of state & regional

resources & expertise Catalyst: Cost-Effective Strategies,

Best Practices, Lessons Learned, & Outcomes

Community Vitality Center

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