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Indiana bill enhances rural areas for young entrepreneurs

March 24, 2011

Let’s face it, the scores of small towns dotting the Hoosier landscape aren’t exactly magnets for young entrepreneurs aspiring to build companies.

But a bill introduced by Sue Ellspermann, R-Ferdinand, and signed by Gov. Mitch Daniels March 22, could help stem the tide of population and job losses plaguing so many communities.

“It’s not going to solve world hunger, but it might create 50 to 100 new businesses,” she said. “If one in 100 becomes a large company, that would be fabulous.”

The legislation, introduced as House Bill 1251, mandates the Indiana Economic Development Corp. to establish a young entrepreneurs program. It would promote business proposals of graduates of entrepreneurship programs at certain state universities by conducting an annual “auction” in which communities would bid to host their startup.

The program costs virtually nothing to launch, which might have influenced the unanimous votes in both the House and Senate favoring the legislation.

IEDC spokeswoman Blair West said the agency is on board with the proposal.

“I think the universities have been very supportive of this,” she said. “We’re quite accustomed to partnering with them on economic development projects.”

Indeed, the bill was backed by Ball State, Indiana and Purdue universities, and the University of Southern Indiana in Evansville—Ellspermann’s employer.

Ball State and IU offer majors in entrepreneurship, while Purdue and USI offer minors.

As director of USI’s center for applied research, which Ellspermann founded in 2006, she pairs faculty, staff and students with companies in need of research data.

The University of Southern Indiana introduced an entrepreneurship minor two years ago. But what most entrepreneurship programs lack, Ellspermann asserted, is guidance after graduation.

“If you were in any other major—education or business—you would go to the placement office,” she said. “But there is no mechanism today to encourage those students to start those businesses.”

That’s where Ellspermann thinks her plan can help graduates no more than three years removed from an entrepreneurship program.

They would submit their business plans annually to IEDC, which would review them to ensure legitimacy. IEDC then would invite community and economic development leaders from across the state to hear student pitches including a list of preferred locations.

Officials from listed communities, in turn, would create a bid package to lure a potential business to their city. Office space, fiber-optic availability or simple geographic needs might help recruit a startup, Ellspermann said.

Professors at IU’s Johnson Center for Entrepreneurship & Innovation and Ball State University’s Entrepreneurship Center support the concept but expressed a few concerns.

Mark Long, a clinical professor at IU’s Johnson Center, is a former president and CEO of the Indiana University Emerging Technologies Center, the Indianapolis location where fledgling companies attempt to turn research into products and services.

What’s particularly vexing for Long is, how would the smaller communities targeted by Ellspermann’s bill compete with the bigger cities for the entrepreneurs, which may be more alluring to young business owners?

And even if they do set up shop in, say, Bedford or Paoli, will they stay? Long wondered.

“How are you going to keep them down on the farm after they’ve seen the big city; well, then what?” he asked. “It’s great in theory, but how will this really be executed and really play out?”

Ellspermann argued that the state’s Office of Community and Rural Affairs, which provides resources and technical assistance to small communities, has offered to support the towns in their efforts to attract new business.

Still, a company’s success rests on the old adage—location, location, location, said Susan Clark Muntean, an assistant professor of entrepreneurship at Ball State.

“If it’s taking them away from where they need to be for business reasons, it could cause them to fail,” she said.

Ultimately, Ellspermann conceded, if the program fails to deliver tangible results, the IEDC can pull its support.

Ellspermann’s home county of Dubois boasted a healthy 6.6-percent unemployment rate in January—the fifth-lowest in the state. By comparison, the state’s overall rate was 9.1 percent.

Corporations such as Ferdinand-based residential upholstery manufacturer Best Home Furnishings Inc., as well as furniture and electronics manufacturer Kimball International Inc. and Jasper Engines & Transmissions, both in Jasper, have kept the county’s unemployment rate in check, Ellspermann said.

Still, smaller towns in her district such as Huntingburg, Rockport and Tell City continue to lose population, she maintained.

“Bringing that high-intellect, 25-year-old in to start a business could help,” she said.•

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