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Cultivating Entrepreneurship: A Pennsylvania Town-Gown Partnership

by Fred D. Baldwin

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RG Technologies an information technology company

Steve Jobs, the entrepreneur who co-founded Apple Computer, once defined creativity as "just connecting things." That's a succinct description of the role of the Juniata College Center for Entrepreneurial Leadership (JCEL) in Huntingdon, Pennsylvania. JCEL is the linchpin for a cluster of partnerships between the college and local government entities, including a business incubator, state loan and tax credit programs, and student participation in local business activities.

Huntingdon County is a large, mountainous county near the center of Pennsylvania. Its population is approximately 45,000. In 2000 it launched a planning exercise called the Partnership for Economic Progress, which led to a 2003 action plan emphasizing asset-based development and support for small and medium-sized businesses, especially in high-tech fields. Both the county and the town of Huntingdon, which is the county seat, were eager to encourage sustainable economic development. Juniata College, a small liberal-arts school with about 1,400 students, was equally eager to expand entrepreneurial opportunities for its students. The result was JCEL, which began operating in temporary offices in 2003 with the financial support of Juniata College alumni.

Michael Lehman, JCEL's assistant vice president, describes the JCEL's programs as falling under four broad headings: physical facilities (the Bob and Eileen Sill Business Incubator), entrepreneurial support, financial capital, and broad-based economic development. In practice and by design, the categories overlap. The community benefits from expertise at the college, and the college benefits by expanding opportunities for its students. Lehman's own academic credentials include both an MD and an MBA, equipping him to communicate effectively with people whose backgrounds may be either in science or in business.

Space for Start-ups

The Sill Business Incubator, a JCEL program named for two Juniata College alumni, provides a tangible symbol of the town-gown partnerships that JCEL embodies. The incubator occupies about 5,000 square feet of space renovated with the help of an Appalachian Regional Commission (ARC) grant. It's located about halfway between the college's hillside campus and downtown Huntingdon. "The college used to be up here," says Charles States, a county commissioner, gesturing toward an imaginary map. "The town was down here. And there was nothing in between. We're working together now."

The Sill Business Incubator currently has two full-time tenants. Other tenants rent space part time, including a few who use office cubicles for only a few days a month under the incubator's "hotel" plan.

One of the incubator's first tenants, Best Instrument, took the next step in its growth plan in the summer of 2006 by relocating to a 6,000-square-foot manufacturing facility in Centre County, adjacent to Huntingdon County. The firm designs instrumentation suitable for precise control of liquid flows during a process called high-performance liquid chromatography. Applications by the pharmaceutical industry include identifying active ingredients in naturally occurring organic compounds—for example, extracts from plant tissue.

John Best, the firm's owner-president, expects that within three to five years his firm will have annual sales of perhaps $3–4 million and create jobs for 20 to 30 employees in western-central Pennsylvania. "To bridge the gap between prototype and mass production, that's my next challenge," Best says. "We're definitely at the right place at the right time. It'll happen."

That's a plausible claim. In 2005 the Ben Franklin Venture Investment Forum held its seventh annual business plan competition for start-up firms across a 34-county area in central and northern Pennsylvania. No Huntingdon County firm had ever entered. With the support of JCEL, Best Instrument not only entered but won—a $35,000 cash prize.

The incubator's other tenant, SimPlusEXP, also supported by JCEL, became one of six finalists in the business plan competition. The "Sim" in the firm's name stands for "simulation," and the "EXP" for "experiential." It designs software for online training. For example, one goal is to convert high school and middle school science lab experiments into online simulations—in effect, building lesson plans into a video game in which players' decisions have visually dramatic consequences. Three of the firm's principals are Juniata College faculty or staff members.

Helping Students Become Entrepreneurs

Before the creation of JCEL, Juniata College had only a single course in entrepreneurship, which was typically taken by business majors during their senior year. The college now has the equivalent of an academic major in entrepreneurship, with courses open to other students as electives. Starting in the first semester, entrepreneurship students develop business plans, which may be either hypothetical or real. Other classes provide consulting services for local business owners who are struggling with issues like accounting rules or inventory control. Students may also work as interns in start-up firms. Finally, if they want to try to turn their business plans into actual businesses, they can apply for actual dollars in the form of "seed capital." "We don't have to fool around with simulations," says Patricia Weaver, chair of the college's department of accounting, business, and economics. "This is the real thing."

One example of a student business is Absolute Creo, founded in 2005 by entrepreneurship major Demetri Patitsas. It's a revival of the Good Humor ice cream truck concept, originally launched in 1920. (Patitsas, invoking his Greek-American heritage, explains that creo is Greek for "cool.") The bells and music of his truck lure kids and nostalgic adults from blocks away. Like the original Good Humor Man, he cruises his route in a spotless white suit and black bow tie. He also caters parties and weddings.

To buy his truck Patitsas pooled a $5,000 "seed capital" investment from the college fund with a family loan and his own modest savings. In the summer of 2005 he grossed $26,000, about half of which was profit, enough to pay off all his loans. He's bought a second truck and hired several fellow students. He has other ideas for future businesses, but sees the ice cream service as an ongoing seasonal winner. "When I first did the presentation [in an entrepreneurship class]," Patitsas says, "the running joke was, 'Oh, maybe you'll have a fleet someday.' It looks as if that's how it may work out."

Boosting Economic Development

JCEL also manages or works with a wide range of economic development programs. Huntingdon County once had a strong manufacturing base, which included brick making (not residential bricks, but fire bricks for steel-industry furnaces) and the firms in the textiles industry. Most of those businesses and the jobs they created had closed or moved away by the 1960s. For two to three decades, the county often ranked at or near the bottom of the state in terms of unemployment.

Some of the remaining firms, however, are now expanding with the help of loans through a state-funded revolving loan program for qualifying businesses within an Enterprise Zone (EZ). The EZ boundaries are defined on the basis of economic disadvantage, and eligible businesses must have the potential to become competitive on a statewide basis. With the help of Juniata College analysts, local decision makers chose three business sectors to qualify for loans: tourism, "active retirement," and wood products. All three reflect Huntingdon County's natural assets—a large lake, historic sites, and forests. Local loans to date have totaled more than $1 million. The money comes in the form of a grant to the Huntingdon County Enterprise Zone, a county-sponsored program managed by JCEL. Repayments by borrowers—about $30,000 so far—can be loaned to other businesses.

Huntingdon County Business and Industry is the funding vehicle and JCEL the administrative arm for a state tax-credit program called the Huntingdon County/Juniata College Keystone Innovation Zone (KIZ). It's one of 16 such zones in the state, all built around partnerships between educational institutions and local governments. KIZ-based firms are allowed to claim half of any increase in revenue, whether from sales or grants, as tax credits. Of course, a fledgling firm rarely needs a large tax credit. KIZ-based firms are allowed to sell theirs to larger companies at a discount of perhaps 10 to 15 percent.

The KIZ's sector focus is life sciences and information technology. Both Best Instrument and SimPlusEXP are KIZ-eligible. Other participating startups include New Age Consulting, which specializes in online network design, and Raystown Wireless, which provides its customers with wireless broadband Internet access.

Raystown Wireless illustrates how a startup can expand. The business's founders worked at tourism-related businesses on Raystown Lake, one of the county's major tourist attractions. They found that vacationers at the lake expected to be able to connect to the Internet. Quotes from telecom companies providing cable or DSL were far too pricey, but they found a way to offer affordable wireless connectivity to the vacationers. "Then we realized we could put these [wireless] antennas on anyone's house and provide wi-fi at a reasonable cost," says vice president and general manager Pauline Hetrick. The result was provision of Internet access to almost 100 rural households across the county and a business model that the company has since replicated elsewhere.

The list of projects goes on. It includes student participation in design of bike trails around the lakes. Volunteers have identified more than 30 miles of trails, and a search is under way for a bike store and rental agency. Meanwhile, one student participant with biking experience developed his own business plan for a mobile bike repair and service center to be operated from the back of a van. Still another effort involves a leadership program now in its fourth year. Susan McLaughlin, executive director of a local hospital foundation, was part of a leadership program group that developed "Team Brain Gain," in which young professionals from the town and from the college get to know each other. "That's just another way of keeping someone in Huntingdon," McLaughlin says.

"There's a lot of untapped potential for business startups and growth," Lehman says. "A business that has its roots in Huntingdon will more likely stay here through business cycles. And, in addition to providing their own services, any business supports other businesses. Bit by bit and step by step, we're strengthening the local business infrastructure."

Fred D. Baldwin is a freelance writer based in Carlisle, Pennsylvania.
August 2006