First-Aid for Cuts in Employment
An incremental approach to creating small businesses can help crack the joblessness riddle. The good news for Kansas City? We already have a lot of those pieces in place.
How does the nation fix its lethargic economy? Maybe by paying attention to a few statistics. Consider:
• Averaged over the two decades from the first President Bush through Bill Clinton’s two terms and two more for Bush II, new businesses in America bloomed at a rate of 11.1 startups per 1,000 Americans, varying little from that benchmark between 1998 and 2008.
• Under President Obama, the same set of Census figures shows that rate had fallen to 7.8 percent—a decline of nearly a third in what had been a short-term historical norm.
Now factor in the net job creation by small business over much of that time period. The Kauffman Foundation famously reported in 2009 that nearly all of that net new job growth since 1980—which included Ronald Reagan’s two terms—had come not just from small business, but from small businesses less than five years old. That study was a landmark that has helped spawn congressional bills, which are aimed at fostering more startup business and producing the gazelles of new job creation for an economy stuck on stall since the 2007 recession began.
Washington policies may have contributed to the decline in job creation, but local factors—replicated in community after community across a nation—may hold the key to real recovery. If that’s indeed the case, Kansas City is well-positioned to generate additional jobs in the coming years, work-force professionals say. One reason? We’ve got a terrific seedbed to get that crop growing.
“I think the region has a number of good resources for small business, no matter what kind—it could be a micro enterprise or a high-tech company,” said Maria Meyers, director of the UMKC Innovation Center’s KCSourceLink program. “These are resources that help start and grow that business, and we’re lucky to have resources on both sides of the state line that can support small businesses out there.”
SourceLink itself provides a rich tapestry woven from 180 disparate services that support emerging businesses—from business plan consulting and access to loans and new markets to assistance with technology commercialization and leadership training.
A growing trend in this market, she says, involves some of Kansas City’s biggest established—and entrepreneurial—companies getting involved with start-up development. “More of our big industry players are getting interested in the entrepreneurial space as well, making good connections between startups and older, established and well-known companies,” Meyers said. “That’s an area we can focus on and one that’s going to open up a lot of new opportunities for both the large and small companies.”
Example: Digital Sandbox, a new venture through the Center for Innovation, involving big-business icons like Sprint, UMB, Cerner and VML lending support to that proof-of-concept venue. Meyers said the connections forged there can help small businesses land their first big clients, setting a baseline for success and future growth.
Across the state line, the University of Kansas is matching efforts like those step for step. It’s Center for Technology Commercialization, with offices on both the mother campus in Lawrence and at the University of Kansas Medical Center, focuses on both medical and general research, while the Bioscience and Technology Business Center serves as an incubator for various new technologies.
One beneficiary of the BTBC is a new company called Likarda, incorporated just this year, co-founded by recent PhD recipient Karthik Ramachandran and Lisa Stehno-Bittel, chair of the department of physical therapy and rehabilitation science at KU Hospital. Ramachandran’s doctoral project led to creation of the company, but he credits the center for its help in getting the doors open.
Likarda’s research has produced 3-D cell clusters called organelles, which mimic the functions of organs more closely than can single layers of cells, creating a better platform for testing treatments of illnesses in animals. Its most promising breakthrough to date has been the successful transplantation of those cells to cure diabetes in rats.
Next up come tests on cats and dogs, to verify that they have indeed found a cure for animal diabetes, which affects 400,000 companion pets in the U.S. each year. At current treatment rates of $900 per animal, the potential is huge—especially if the work can eventually be replicated for human testing.
“Being in the animal-health corridor, it’s a very exciting region to be in,” says the native of Colorado, who earned his PhD from KU in bioengineering. “There are a lot of companies locally, especially in pharma, like Bayer, Boehringer Ingelheim, Teva, companies that are really big not just within this market, but even globally. Having that support in the Kansas City region definitely helps.”
As part of that corridor, the BTBC, its director, Frank Kruse, and the center’s team “is almost essential,” for start-up success in that field, Ramachandran said. “They brought in a business perspective, helped us build business plans, and actually were instrumental in being a part of the development at Likarda. The model is one of the keys for start-ups that the region can really use.”
Sean O’Neill would second that. The director of operations for Midwest Energy Solutions, based in Platte City, still maintains its engineering office at the BTBC, and says both the center and the other support elements in the region not only helped the company get started, but reorient Midwest Energy after the revenue model for wind-turbine development faded.
Like true entrepreneurs, O’Neill and CEO Mike Batten retained a focus on alternative energy sources, but added a liquid propane services and LPG fuel-conversion systems that allow cars to run on a cleaner, and for now cheaper, fuel source. “We got help from so many different areas,” O’Neill said. “It’s just tremendous that people want to embrace this concept of energy independence for America, and that’s what we want to provide.”
The company drew on expertise from the Clean Cities Coalition as well as the team at the BTBC, which “offered tremendous business services to us, with our limited resources. You take the cheaper rent, the fact that it’s a great place to meet other business owners, the networking capabilities—all of those wrapped together have been a tremendous help, as well as being able to help us to develop and stick with a strategic plan for the business. Their involvement was very important.”
Return to Ingram's November 2012