Speaking Entrepreneur in Montana and beyond

Communities across the country are increasingly embracing entrepreneurship as part of the economic development landscape. Find out why and how to make the most of the entrepreneurial climates they are creating.

By Rachel Duran Business Xpansion Journal

As an entrepreneur, Dave Bayless is gratified when economic development organizations such as the Gallatin Development Corporation of Bozeman, Mont., use the word “entrepreneur” more than he does.

When Bayless attended a state economic development summit in Montana a few years back, he counted the use of the word “entrepreneur” only one time during the two-and-a-half day conference.

“The relationship between economic development and entrepreneurship wasn’t even on the radar screen,” he says. “There wasn’t a sense of building entrepreneurial companies with a national scope. It wasn’t part of the Montana experience.”

Bayless is the founder of Small World Networks, Inc., in Bozeman, which created Pioneer Entrepreneurs, an online forum. “We develop tools and methodologies to connect entrepreneurs to peers and other sources of expertise to discuss and resolve the problems that face young and growing businesses,” Bayless says.

Bayless notes that today the entrepreneurial climate in Bozeman has become part of the normal conversation. “This is good news for entrepreneurs because they don’t have to educate people about entrepreneurship from ground zero.”

Bayless’ experience is not unlike the ones that entrepreneurs across the country are experiencing. “My perception, and I am no expert, is that highly visible location events take years to cultivate; it is highly competitive; and is a tough game to play for a community like Bozeman,” he says. “Economic development organizations are beginning to see that job creation is going on all around us. It was just hard to see because it was so dispersed.”

While communities have long realized that existing businesses create the majority of new jobs in this country, assisting in developing entrepreneurial ventures and creating an entrepreneurial climate wasn’t necessarily part of the mindset. But this is changing and entrepreneurs should take note.

“I think the fact that entrepreneurship is even in the economic development conversation is a big change,” says Patti Greene, dean of undergraduates, Babson College, which is a leading entrepreneurial education institution in the Boston area. Greene was recently the former chair of the Kauffman Foundation of Kansas City, Mo., which partners with organizations to encourage entrepreneurship across the country.

Greene says that communities are increasingly learning how they can help people grow their own businesses and are creating environments where other entrepreneurs want to relocate or in which they can grow their businesses. Greene notes that entrepreneurship is flourishing in not so obvious areas of the country.

For instance, the Flathead Valley of Montana is an emerging hotbed for entrepreneurs. “There have been recent studies that talk about the emerging economies that are near national parks,” says Liz Harris, president, Jobs Now, Inc., part of the Flathead County Economic Development Authority. “These studies have looked at the Flathead Valley (Kalispell, Whitefish and Big Fork) and at Bozeman and have found these areas are attracting well educated people who are bringing their entrepreneurial ventures with them. The Flathead Valley’s 1,000 miles of fiber optics provides the telecom capacity for a creative class to work in a beautiful environment.”

Kalispell is the gateway to Glacier National Park and Bozeman is the gateway to Yellowstone National Park. Visit the National Parks Conservation Association’s Web site at http://www.npca.org and download “Gateway to Glacier: The Emerging Economy of Flathead County,” which details how the proximity to a national park is an economic advantage for gateway communities such as Flathead County.

Harris also notes that Montana is on the frontier of creating a formal angel investor network. “Montana is an area that attracts a great deal of outside wealth, particularly from California, with people who have second and third homes here,” Harris says. “They are interested in the emerging entrepreneurial opportunities here.”

Venture capital is no doubt important to entrepreneurs as they start out. The Entrepreneurship Initiative of the Appalachian Regional Commission has assisted in funding venture capital funds. The initiative is a multi-year, $25.6 million effort that provides 400 counties in 13 states with the tools to assist entrepreneurs.

“We supported a nonprofit group in West Virginia that is creating an investment fund to work with rural businesses,” says Ray Daffner, manager of the Entrepreneurship Initiative. “The nonprofit has obtained matching investments through the U.S. Treasury and various philanthropies.”

Daffner says the Entrepreneurship Initiative has also funded a Virginia nonprofit group that is working with tobacco farmers, who no longer receive federal allotments, to assist them in becoming certified organic farmers.

In Kentucky, the Kentucky Capital Network was created to take companies’ ideas from the six Kentucky Innovation and Commercialization Centers and match them with private equity. The centers, in just a couple of years, have assisted 10 companies with about $8.5 million in angel capital. There are two stages a company must go through to be enrolled in the Kentucky Capital Network.

“Companies’ financials must mirror what they are really trying to do,” says Angela Copple, commercialization manager, Kentucky Science and Technology Corporation (KSTC). “We act as a coach for companies and help them reach the private equity stage. If the business plan is in order we look at the valuation of the company and we talk about what happens when a company raises private equity money, and what happens during a company’s B or C round and how they impact financials.”

The Community as Your Partner

While communities generally have been slow in cultivating entrepreneurial climates, Littleton, Colo., economic development officials have been following a strategy of “economic gardening,” which nurtures existing businesses and start-ups for 15 years. Littleton has an extensive offering of marketing tools and databases, which are free to Littleton businesses. (See sidebar titled “Economic Gardening” for complete details on Littleton’s unique services.)

Doug Marshall has built two businesses by implementing the services offered by the Littleton Business and Industry Affairs Department. “With the department’s assistance, drive and professional manner, I was able to build Glass Weld Systems into Colorado’s largest windshield repair company,” Marshall says. Beginning in 1993, Marshall made use of the department’s marketing services, including its marketing group, to get the word out about his product.

“With our tools, businesses become stronger and grow, generate more revenue and create more jobs,” says Chris Gibbons, director, Littleton Business and Industry Affairs Department.

This is the road Marshall hopes to travel as he undertakes his second business, running the Colorado office of Accord Human Resources, a professional employer organization headquartered in Oklahoma City.

Bayless says now that Bozeman’s residents have seen that entrepreneurial ventures can be successful in building interesting and profitable high-growth businesses, “it encourages others to believe they can do the same,” he says. “There is an active appreciation for entrepreneurial ventures and the active support is growing. This is important for the longer term.”

For instance, the Gallatin Development Corporation has become a consistent and valued voice to ensure the community pays attention to, understands and supports entrepreneurial businesses. In addition, Montana State University has become more actively involved in fostering an entrepreneurial climate in Bozeman.

“One of the first things the new dean at the business college did was to create the Center for Entrepreneurship in the New West, which is affiliated with the Tech Ranch, a technology incubator co-founded by the Gallatin Development Corporation,” Bayless says.

At Babson College, Greene also stresses the role of the community in supporting entrepreneurship. “If you pick up a local newspaper and don’t read anything about small businesses or entrepreneurship, that could be a clue that they are not a big part of the local agenda,” she says.

Daffner adds, “It is important for the community leadership to recognize the importance of entrepreneurs so when an entrepreneur starts his/her businesses, or gets a $200,000 contract that hires five more employees, it gets the same celebration as a plant opening,” he says. “This creates a culture of entrepreneurship and leads others to considering taking those risks.”

How’s the Water?

As entrepreneurship begins to become a part of the site selection process, entrepreneurs should understand that not all communities are alike. Claiming to foster an entrepreneurial climate is different than actually having such a climate.

Minnesota has begun increasing its entrepreneurship efforts, which were boosted last fall when a dislocated worker study found that many dislocated workers were interested in starting their own businesses.

“They wanted to know what steps they needed to take and what resources they could tap into,” says Bob Isaacson, director, analysis and evaluation office, Minnesota Department of Employment and Economic Development.

“Of course, some of these programs already existed but this report brought entrepreneurship to mind more prominently,” says Neal Young, an economic analyst in Isaacson’s office.

Minnesota officials put those who were interested in starting their own business in a track where they attend an entrepreneurship class at a private or public higher education institution. Isaacson notes that the University of Minnesota and the University of St. Thomas feature major programming for entrepreneurship instruction. Additionally, the state’s small business development centers are located near higher education institutions, with most counselors employed in the higher education system. “In terms of technical assistance, there is quite a bit of interface,” Isaacson says.

Greene notes that entrepreneurs should look carefully at the opportunities in communities to understand the resources they need and the connections to get them. For instance, look for communities with bankers who understand the debt side of small businesses. Daffner asks if there are not adequate banking resources or angel investors, are investment groups forming to provide that capital?

On the higher education side, are schools developing workforces companies will need? For instance, will high-tech businesses be able to find the workforce to support their particular business models?

Entrepreneurs should also look for communities where different disciplines within a college are talking to each other to find out where ideas are coming from and the supports needed to create these businesses.

“Is there discussion with post-secondary schools about R&D and how to go about moving the technologies from the university to the marketplace?” Greene asks. Additionally, find out if R&D dollars are being spent in the area and if there are organizations that can assist with writing research grants.

Copple says KSTC works with companies and technologies that are being commercialized through Kentucky’s higher education system through three commercialization investment funds. “The R&D Voucher Fund awards $100,000 a year up to $200,000,” Copple says. “At least 51 percent of the money has to be spent through a university.”

The Kentucky Rural Innovation Fund awards $100,000 across two years, or $50,000 to commercialize a technology. The Kentucky Commercialization Fund (KCF) is a $75,000 per year award up to three years with a maximum of $225,000 to commercialize technologies out of a university. The KCF has funded 68 companies for about $2.2 million and in the upcoming months will fund about another $2 million.

Copple notes that one of the company’s funded through the Kentucky Rural Innovation Fund is also a client of Kentucky’s Innovation and Commercialization Centers and has raised about $300,000 of private equity. “The company has tremendously advanced its ability to commercialize its technologies,” Copple says.

While higher education and funding source connections are important, don’t overlook sources that are familiar, or peer networks. “Don’t be shy about talking to former employers because more times than not people like to do business with people they know and are comfortable with. If you have a relationship with a former employer and can be a new supplier, it gives you a leg up on other suppliers because you understand their business needs.”

Marshall says entrepreneurs should surround themselves with professionals to handle something they don’t understand, such as legal or accounting issues.

Through Pioneer Entrepreneurs, Bayless brings entrepreneurs together online to develop peer networks. “As an entrepreneur, every day you are faced with new challenges that are outside of your experience,” Bayless says. “Our Web site allows companies to connect to their peers and other resources more readily and cheaply so they can make a better decision faster.”

Quality of life is also an important criterion when looking at places to start up a business.

Gibbons notes that Littleton is home to a 650-acre nature park, which is the second largest in the country after Central Park in New York City. Additionally, Littleton features extensive bike trails. “If I was an entrepreneur, I would seek a place that is attractive to my employees because the community has to be attractive to employees in order to draw them to your company,” Gibbons says.

Bayless notes the outdoor-oriented lifestyle in Bozeman, combined with university amenities, are attractive to entrepreneurs. In networking with Bozeman entrepreneurs, Bayless finds many were looking for a university town for the elements of culture, energy and sophistication that a university creates. He notes many of these entrepreneurs where also looking at universities as a potential source of future hires.

Understanding the Disadvantages

Naturally, a seemingly outstanding climate for entrepreneurship can have its drawbacks for certain types of businesses. “If your business model heavily calls for face-to-face interaction, by selecting Bozeman, you will be spending a lot of time on a plane because we are 500 miles from a major metro area,” Bayless says. “Additionally, this is not a strong place for a business model that relies heavily on skilled middle management. Look honestly at the advantages and disadvantages of a particular place.”

Bayless notes the challenges of a community like Bozeman turn into an advantage because it forces businesses, by and large, to think nationally and globally from the onset. He adds that this can make getting started and gaining traction difficult. “But if an entrepreneur can survive those first few years, you have created an advantage because you have built a business model that offers compelling, differentiated services that can be delivered on a national scale.”

That is sage advice from an entrepreneur who has been there. If you think you have what it takes to start your own business make sure you find a community that will partner in your success. While the Internet eliminates the barriers of time and distance, which makes it tempting to conduct business from anywhere, remember, not all communities will foster your entrepreneurial venture. Make sure the support networks, the higher education system and financing are in sync to achieving entrepreneurial success. Finally, make sure the word “entrepreneur” is spoken there.

For complete information on the organizations featured in this article visit:

Accord Human Resources, http://www.accordhr.com

Appalachian Regional Commission’s Entrepreneurship Initiative, http://www.arc.gov

Babson College, http://www.babson.edu

Flathead County Economic Development Authority, http://www.flatheadport.org

Gallatin (Bozeman, Mont) Development Corporation, http://www.bozeman.com

Kentucky Innovation and Commercialization Centers, http://www.kyicc.com

Kentucky Science and Technology Corporation, http://www.kstc.com

Littleton (Colo) Business and Industry Affairs Department, http://www.littletongov.org/bia

Minnesota Department of Employment and Economic Development, http://www.dted.state.mn.us

Pioneer Entrepreneurs, http://www.pioneerentrepreneurs.com

Economic Gardening

Fifteen years ago Littleton, Colo., took a different approach to its economic development attraction and retention strategies and cut out incentive packages in favor of growing its own companies through a unique set of business tools.

“We realized after conducting research that existing companies produced the larger proportion of jobs in our community,” says Chris Gibbons, director, Littleton Business and Industry Affairs Department. “Companies have paid taxes once so they ought to get something in the way of economic development. So instead of giving funds to a company that isn’t located in the community to entice them, our council has developed a pre-paid service to benefit our community. The idea is that we want our businesses to be more competitive.”

Gibbons says that with the city’s resources, Littleton companies will be smarter when they go up against competition from, say, the coasts, particularly the small- to medium-sized companies who wouldn’t otherwise have access to these sophisticated tools. The tools are mostly free to Littleton residents, and nominal fees are charged in very few instances.

Gibbons’ department handles about 1,000 requests per year, varying from small questions to large projects, where the staff will run a focus group and conduct marketing analysis research, among other activities.

The Littleton toolbox includes subscriptions to a series of database services, which gives companies access to 100,000 publications worldwide. Other services include tracking industry trends and legislation, generating marketing lists, conducting brochure development and creating marketing and business strategies, as well as conducting focus groups.

Gibbons says that his office’s goal is to respond to requests with a first answer within four hours, and that it tries to close accounts within 24 hours.

“After 15 years of conducting ‘economic gardening,’ we have had tremendous success and we are one of the few Colorado economies not in a severe recession right now,” Gibbons says.

For complete information on Littleton’s economic gardening approach visit http://www.littletongov.org/bia.

MicroMentor Program Unveiled

Entrepreneurs, on the smaller side of the scale, can now access an online pilot program that matches entrepreneurs with business mentors.

MicroMentor.org, a program of the Aspen Institute, allows proteges (or microentrepreneurs) to partner with a mentor, someone who has successfully grown, or who is in process of successfully growing their business. Microentrepreneurs are those who have started a business with $35,000 or less and have five employees or less. They are estimated by the Aspen Institute to number 2 million to 6 million.

To take part in the online program free of charge microentrepreneurs should be affiliated with one of the 654 microenterprise programs in the country. These programs provide the technical assistance, information and business assistance tools that a mircoentrepreneur needs to get started.

Mentors who become part of the MicroMentor program share their skill sets and expertise by committing to one hour per week for six months when working with proteges in their same industry. “Communication is mostly through e-mail and mentors are asked to respond to queries within 72 hours,” says David Rand, director, MicroMentor.

Rand says that MicroMentor is beginning to form partnerships with national trade organizations whose members could volunteer to become part of the program. He says there are still plenty of opportunities for mentors to become involved.

Rand is an associate with the Aspen Institute’s Economic Opportunity Program, which researches and discovers ways to empower low-income people to access wealth creation tools. He believes that the numbers show more and more people are starting businesses to supplement their incomes. “The future of entrepreneurship in this country may be in some ways the key toward reviving inner cities and lifting people from dire economic circumstances into a more economically healthy situation.”

For complete information on the MircoMentor program and the Aspen Institute visit http://www.micromentor.org or http://www.aspeninstitute.org.

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