AGENCY RECOMMENDATION SUMMARY:
Taking Care of Business: WSU’s Small
Business Development Centers Expansion and Enhancement
A request to expand small business
counseling services with a first-time legislative appropriation of critical core
funding. The request establishes three new offices in Southeastern Washington,
Kelso-Longview and the Aberdeen-Shelton area. The core support will also add one
position at each of the existing centers operated by Highline Community College
in Des Moines and Olympic Community College in Bremerton. WSU MBA internships
with SBDC offices are also created.
|
|
2007-08 |
|
2008-09 |
|
2007-09 |
|
|
FTE |
Dollars |
|
FTE |
Dollars |
|
Biennium |
|
General Fund
State |
3.6
|
346,000 |
|
3.8
|
361,000 |
|
707,000 |
|
Total |
3.6
|
$346,000 |
|
3.8
|
$361,000 |
|
$707,000 |
PACKAGE DESCRIPTION:
Washington State University, as the prime
contractor for 25 Small Business Development Centers state-wide, is requesting
$707,000 to enhance that system by:
1.
Establishing three new Small Business Development Center offices operated
directly by WSU ($563,800). These are at locations where there currently are no
centers, either operated by WSU, an economic development organization, or a
community college. The centers will:
·
Serve Grays Harbor, Mason
and Pacific Counties, probably with an office Aberdeen-Hoquiam or Shelton. The
Grays Harbor SBDC closed in 2001 due to lack of local funding.
·
Serve Cowlitz, Wahkiakum
Counties in Kelso-Longview. This location has never had a SBDC.
·
Serve Whitman, Asotin,
Garfield Counties. Probably in Pullman or Clarkston. There was an SBDC office in
Pullman until 1999 when it was moved to Spokane at the request of the U.S. Small
Business Administration, which provides federal support.
2.
Provide critical core operating funding ($50,000 per center) to community
college-operated centers in Des Moines and Bremerton that have contractual
relationships with WSU for some services. Because of limited federal matching
dollars, these are only two of 25 centers in the state that receive no SBDC
allocations. The funding will provide a state-funded business counselor at the
Des Moines office, operated by Highline Community College. It will provide a
state-funded business counselor for Bremerton’s office, operated by Olympic
College.
3.
Provide $43,200 funding for WSU College of Business summer internships
for students in a Masters of Business Administration program. Successful
internships have been completed with SBDC, usually funded by private sources.
Internships provide valuable real-life experience to students and leverage
significant resources for SBDC clients. Five internships will be made available
in fall, 2007, with seven internships in 2008.
NARRATIVE JUSTIFICATION AND IMPACT STATEMENT:
Background:
SBDC currently serves 25 locations
statewide through WSU as the prime contractor for the U.S. Small Business
Administration. The three new proposed offices will be in locations identified
as underserved by WSU and SBA:
Washington SBDC currently receives no
direct state appropriations. There are 63 Small Business Development programs
nationwide, including one serving all of this state through Washington State
University. Fifty-eight of the 63 showed direct state support, according to the
Association of Small Business Development Centers.
Twenty-five SBDC offices operate in
Washington, either directly by WSU or under a WSU “sub-contract” with a
community college or economic development organization. The federal Small
Business Administration matches funding from WSU and WSU subcontractors with
federal dollars that helps operate 23 of the 25 offices. Fourteen of the
contractors are community and technical colleges. Four are at economic
development councils (such as the Economic Alliance of Okanogan County. Other
sites are in Lewis, Skagit, and in the International District of Seattle.). Two
other offices operate exclusively with local funds under a memorandum of
understanding with WSU. (They are at Highline Community College in Des Moines
and Olympic College operates a center in WSU extension offices in Bremerton.)
·
Highline Community College
has offered the Des Moines SBDC training classes under a subcontract with WSU
for the past 12 years. It began offering limited SBDC one-on-one counseling
services without an appropriation in March of 2003. The counselor was originally
funded through a grant, and is currently made possible by contributions from a
number of partners in the Southwest King County Economic Development Initiative
(SKCEDI), as well as foundations and banks who are approached yearly to cover a
funding gap. SKCEDI is an inter-jurisdictional and inter-institutional effort
comprised of the cities of Burien, Des Moines, Normandy Park, Sea-Tac, and
Tukwila, as well as Highline Community College, the Port of Seattle and King
County. WSU’s requested funding will provide critical core operating funding to
this center, thus assuring at least one funded counseling position.
-
Olympic College, in partnership with
the city of Bremerton, and WSU Extension opened the Kitsap Business
Assistance Center (KBAC) in early 2004. Funding for a full time counselor
is provided by the KBAC partners. WSU’s requested funding will now fund the
counselor, allowing the college to use its local funds to add a training
officer or other essential staff to complete the SBDC center.
Washington State University exclusively
operates seven Small Business Development Centers staffed by faculty in the
College of Business. This proposal would expand WSU direct-managed offices from
seven to ten. The lead office for the state is in Spokane, with other WSU
locations in Port Townsend, two offices in the Seattle downtown area, Tacoma,
Yakima, and Vancouver. The newest WSU office is in Yakima, reopened in March,
2006 with matching funding by Evergreen Community Development Association,
Seattle.
Performance
Last year, 802 small businesses were
helped by six WSU SBDC counselors, which acquired $38.5 million in additional
funding and created 677 jobs. In the last five years, more than 2,500
jobs have been created or saved by WSU SBDC. Forty seven percent were service
businesses, 18 percent of the clients were in retail business, 16 percent in
manufacturing, six percent wholesale, and four percent in construction (9
percent in other categories.) The balance of the network (18 non-WSU centers)
accounted for an additional 2488 small business clients, $66 million in capital
investment and 1211 jobs. On average, the six WSU counselors saw 133 business
clients, helped their clients access $6.4 million in capital (debt & equity) and
create/retain 113 jobs. The expectation is that the three new centers should be
approaching the average performance of the other WSU centers by the end of the
biennium.
WSU client satisfaction has been high.
Ninety-eight percent regarded the counseling services at the highest level,
“good to very good.” A similar percentage said they would recommend SBDC to
others.
WSU SBDCs help companies achieve success.
For instance, Mark Stair, owner of Cosmic.Net first came to SBDC in March,
2005. The counselor helped Mark decide which business best fit his goals and
gave him the tools he needed to acquire a financial software company. The
acquisition of the company and its intellectual property closed for
approximately $500,000. In doing so, two jobs were saved, one was created, and
more will be created in the next several years.
Another good outcome was achieved by SERE
Solutions working with WSU Certified Business Advisor Rick Thorpe in Spokane.
His client, Michael Lyons, a combat duty disabled veteran, was able to
successfully compete for and secure a $57.7 million Air Force contract. With
Rick’s assistance Michael was to put together the complicated contract proposal
for submission to the Air Force and also obtain bridge funding to keep the
company in operation until the contract was secured.
The company provides survival training to
military personnel with a high potential to be captured by enemy forces. As a
result of the five-year Air Force contract, SERE Solutions (Survival, Evasion,
Resistance and Escape) was able to hire 38 additional employees, bringing the
total to 63. 80% of the employees are military veterans.
Michael Lyons says, “I came to the SBDC
to get information on how to start a business. Rick gave me the confidence to
start. He showed me how to organize the whole business plus helped create
budgets for all of my government contract proposals. He helped me access the
start-up money I needed to compete for the bid. Rick has been an ongoing source
of motivation and inspiration.”
Return on Investment
The most recent independent (August 2006)
Impact Study completed for the Washington SBDC network estimates that Washington
state received an additional $6.7 million in sales tax revenue in 2005 because
of increased sales generated by Washington SBDC clients. It also concluded that
compared to the total cost of operating the SBDC ($3.31 million), the counseling
provided to both established business and pre-venture clients generated $3.20 in
tax revenues in one year for every $1 spent on the entire program. The average
cost of each new job generated was $2,783.
Performance Expectations
The expectation is that the three new
centers should be approaching the average performance of the current centers by
the end of the biennium.
-
Specifically, will be serving 100 –
140 clients per year.
-
Each is expected to create/retain 50
– 75 jobs per year in their service area. Average capital investment should
be approaching $750,000 - $1,000,000 for each of the new centers by the end
of the biennium.
|
FISCAL DETAIL TABLES - SMALL
BUSINESS DEVELOPMENT CENTER EXPANSION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007-08 |
|
2008-09 |
|
2007-09 |
|
By
Program |
FTE |
Dollars |
|
FTE |
Dollars |
|
Biennium |
|
Public
Service |
3.6
|
346,000 |
|
3.8
|
361,000 |
|
707,000
|
|
Total |
3.6
|
$346,000 |
|
3.8
|
$361,000 |
|
$707,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Object |
|
|
|
|
|
|
|
|
Salaries/ |
|
|
|
|
|
|
|
|
Faculty |
3.0
|
150,000 |
|
3.0 |
150,000 |
|
300,000
|
|
A/P |
-
|
- |
|
- |
- |
|
-
|
|
TA/GA |
-
|
- |
|
- |
- |
|
-
|
|
Classified |
0.6
|
11,000 |
|
0.8 |
25,000 |
|
36,000
|
|
Benefits |
|
52,000 |
|
|
54,000 |
|
106,000
|
|
Goods/Serv
(1) |
|
129,000 |
|
|
128,000 |
|
257,000
|
|
Travel |
|
4,000 |
|
|
4,000 |
|
8,000
|
|
Equipment |
|
- |
|
|
- |
|
-
|
|
Total |
3.6
|
$346,000 |
|
3.8 |
$361,000 |
|
$707,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes: |
|
|
|
|
|
|
|
|
1. FY2008
Goods & Services includes $3,000 in one-time funding. |
|
