Give us the 30-second rundown on what CIFT does.
We’re the Edison Technology Center that’s responsible for technology-based economic development within food processing and agriculture and agribusiness, and we tend to define that rather loosely. (more…)
Steven Weathers, president and CEO of the Regional Growth Partnership, knows that the automotive industry isn’t likely to come back to northwest Ohio anytime soon — and he’s OK with that. He is focused on increasing employment and growth in RGP’s pipeline of growing companies. Just last year, 1,700 jobs were created at 29 different companies (not even including technology firms) — with investments totaling more than $300 million. Weathers, a 49-year-old transplant of Southern California, knows what it’s like to transform an economy. He’s done it before. Twice. Once in San Diego, Calif. and once in Tucson, Ariz., where he held economic development positions in both cities. hiVelocity caught up with Weathers to learn how he’s helping to shake off some of the rust from Toledo’s economy.
Without the staple of the automotive industry, what is the new economic face of Northwest Ohio?
The new economic face is alternative energy, biotechnology, advanced manufacturing and materials and electronics. We have 65 new innovative technology companies started with support of the Third Frontier. Of those, none are in the automotive business.
How would you compare your effort in San Diego in turning around that economy to what’s happening in Toledo now?
We’re probably about 15 to 20 years behind what we did in San Diego. San Diego was a region based on tourism, real estate development and defense. With a downturn and high unemployment, San Diego was suffering in the late-1980s. There is almost a parallel dynamic to what we’re doing here in Northwest Ohio. San Diego converted its economy out of necessity in 1990, and we’re trying save our economy (in Toledo) in 2010. In 1990, there were 60 biotech companies in San Diego. Today, there are well over 1,000. In Northwest Ohio, we have 70 biotech companies — the biotech industry has been one of our biggest areas of growth. If I laid the numbers out on a board you would see so many similarities. The key to this area is diversifying our economic base.
What are some of Toledo’s new strengths?
There’s a diverse base of companies starting to grow here. I always talk about … economic development is a lot like human evolution. We’re changing. Without the base of the glass industry in Toledo there wouldn’t be a solar industry — the main material for the solar industry is glass. It’s kind of a logical thing. There are a lot of other ancillary businesses that come with solar industry. There are assemblers installers, framers, inverter companies and suppliers of chemicals.
There are many companies in RGP’s portfolio, but what’s the company that has you excited at this moment?
Right now, we’re very excited about the rail company CSX. They are building their largest intermodal transportation hub in North Baltimore — about 30 minutes from here. It’s going to be their epicenter for intermodal transportation in the Midwest — their Midwest headquarters. There will be hundreds of jobs, and it could turn into thousands of jobs, from what they’ve said.
A lot of the new jobs in Northwest Ohio are highly skilled. How much does education play a role in the success of growing Toledo’s economy?
Education plays a big role — anywhere from community college to applied research institutions. We engage the University of Toledo, Bowling Green State University, University of Findlay, Owens Community College, Terra Community College and Northwest State Community College. They all bring different skill sets. The idea is we’re always trying to help you grow you’re company. We don’t want you to be at the back of the boat.
Is Toledo on the right track?
We have a long way to go, but we’re moving in the right direction. The goal is to get to 100 new companies. We’ve seen $41 million capital dollars come here because of a new economic value that we’re creating. Of 65 companies we’ve started, 21 have come from outside of the state of Ohio. They’re coming from California, New York, Boston, Connecticut and Chicago. One of the unintended consequences from the Third Frontier is that companies are coming from outside the state to do business here. That’s been extremely positive.
If you had a crystal ball, what would it say about the future of Toledo? Let’s say five years in the future.
I think you’ll find in five years, people will say ‘Wow, we’ve made great progress.’ In five years, we’re going to have greater venture capital, a diversifying economic base, new opportunities and we’ll continue to have new employment. It’s a marathon without an end. We look back and learn lessons, but we don’t get depressed when stuff happens. Lay-offs are the stroke of a pen. If you want to hire people, that’s a six-month process. We need move forward with job creation. That’s never-ending battle.
There are a number of ways to evaluate your chance of success, including whether you are an entrepreneur with the “right stuff” or if your business has the “right stuff.”
The following evaluation should be made before making any new start-up business decisions:
A) Market assessment
B) Securing realistic funding sources
C) Forecasting sales, expenses and cash flows
D) Potential profitability
E) Regulatory, legal issues
F) Personal costs
Arguably, the most important issue revolves around determining who or what your market niche is. You need to quickly address a market review that indicates who are your clients, where are they located, how will you reach them and what are the costs associated with this process.
Secondly, start-up businesses require varying amounts of cash. Figure out how much it will cost to get your business open on its first day and then determine how much working capital will be needed to keep it running for a period of time - typically 90 to 120 days. Be prepared to personally provide a great deal of this early money from your own finances, and then work to secure traditional funding (banks) or from possible angel investors.
When you have completed your market assessment, it is vital that you work with an accountant or local economic development agency to develop projections which will include sales, expenses and burn rates. This information is not only vital when determining potential profitability, but will also help guide you in your effort to secure the proper amount of financing, and also timing as well.
Most businesses have either regulatory or legal issues that have to be dealt with at some point, such as OSHA, the FDA, health departments, city, state and federal laws, etc. The sooner you identify them, the better prepared you will be.
Last but not least, very few entrepreneurs take into consideration the personal “life” costs associated with starting their own business. How does this impact your family, your personal financial situation, your “day” job, personal and legal risks?
Although there are many more issues you should work through before making a decision, this exercise will certainly help you decide if you have the “right stuff!”
Daniel P Slifko
From our first humble days with only one employee, through a very quick ramp up to a fully staffed office, and ending in third quarter 2009, Rocket Venture’s clients have received almost $28M in investment, grants, sales, licensing agreements, and joint development efforts. That’s not just a couple of “lucky” entrepreneurs – that number represents the success of twenty-six different early-stage companies! That doesn’t count any money from the State of Ohio, either, such as grants from the Alternative Energy Program. We only measure how much “New” money comes into these Ohio businesses. It also doesn’t include other deals in the works, which we expect will dramatically increase that total.
Why is this important and what should it mean to you? Well, if you are an entrepreneur with a technology idea, it means that we have a proven track record of success and you should talk to us to see if we can help you. If you are looking to relocate a business, it means that Northwest Ohio is on the upswing and will continue to be a great place to be based. If you are a tax-payer, it means that we have taken $5.5M of a Third Frontier bond issuance and leveraged a 5.1 return.
Even though these are great numbers, some of the impact on Northwest Ohio is a little tougher to see. We are accustomed to hearing about “new jobs” and large existing companies moving here from out of the area. We don’t often hear about or think about how companies get started and what needs to happen before an entrepreneur can even hire the first person. But that is what Ohio’s Third Frontier Entrepreneurial Signature Program is designed to do – help position companies for that initial step and continued growth. We are taking the lessons from the start of the glass industry in Toledo, the auto industry in Michigan, and more recently personal computer industry in Seattle in order to apply them here today. We are creating industries from small groups of related technologies. Those industries will take hold, grow, expand, and grow some more. It will take some time to see the full effects of our efforts today, but the point is that these numbers indicate we are on the right track.
Craig Ortega
Program Manager
Tags: Add new tag, Economic Development, Money, ODOD, Ohio, Starting a business, Strategy, Technology, Third Frontier Posted in Current Ventures, News, Ohio, Technology | Comments Off