UMC chancellor pursuing a Small Business Development Center office in Crookston

    A few months into her tenure as University of Minnesota Crookston chancellor, Mary Holz-Clause is making a concerted effort to return a Small Business Development Center office to Crookston, and she’s asking the City of Crookston and/or CHEDA to kick in a bit of local money to match the federal dollars that would fund such an office.

    Holz-Clause made her pitch to City officials and city council members at their Ways & Means Committee meeting this week, and it seemed like just about everyone around the table liked what she had to say. But before taking any official action in favor of providing $15,000 a year to an SBDC, council members and Mayor Wayne Melbye said they’d like to hear what the CHEDA Board of Directors and CHEDA Executive Director Craig Hoiseth have to say about Holz-Clause’s proposal. (See the accompanying sidebar story for more on that.)
Local, area history

    The history of SBDCs date back more than three decades and are their offices are located in a handful of regions throughout Minnesota. Years back, this region’s SBDC office was located at Concordia University in Moorhead, and a regional SBDC consultant was based at Valley Technology Park in Crookston. But then the regional hub relocated to the University of Minnesota Duluth campus and the Crookston consultant went away as well, resulting in the closest SBDC consultant to Crookston being in Bemidji.

    Holz-Clause wants the SBDC office at UMD to open an office in Crookston, with UMC – institutes of higher education in the vast majority of SBDC scenarios coordinator and/or host the office and consultant – serving as the lead local partner. The chancellor said at this point she is open to discussing where the SBDC office would be located in Crookston, whether it’s on campus, at VTP, or downtown. She seemed to have a particular affinity for housing an SBDC office off campus.

    “It’s important for them to be involved and engaged in the community,” Holz-Clause said. “The more public presence we can give this, the more helpful it is.”

    SBDC offices work on three-year contracts, and the UMD office is in the second year of a three-year accord. SBDC officials there, Holz-Clause explained, have indicated they could make around $45,000 in the contract’s third year to launch an office in Crookston. After the third year, the chancellor said, the budget would be adjusted accordingly for the next three-year contract.

    Taking that $45,000 and adding salary and benefits, potential office rent, travel, office equipment and other related expenses, Holz-Clause figures the annual budget for an SBDC office in Crookston would be around $100,000. She’s asking the City for a $15,000 commitment starting this year and a $15,000 commitment in 2018, with an admittedly ambitious goal, she added, of having an office open and a consultant hired by January 2018. The university would contribute around $19,000 per year, she noted.

    “This is a pretty tight budget but I think it’s doable,” Holz-Clause said.

Role, mission, CHEDA involvement

    SBDC consultants meet with would-be business start-ups and provide them advice and expertise as they determine if their business idea has actual legs and could lead to long-term success. Consultants also meet with banks and other financiers to put business plans and cash-flow models together. SBDC consultants also either directly educate would-be entrepreneurs or connect them with educational business opportunities. In addition, Holz-Clause explained, much of what an SBDC office does is create awareness that it exists and is willing and ready to help small businesses get off the ground.

    “We all know the lifeblood of any community, particularly rural communities like ours, is small businesses, but we also know the failure rate is fairly high,” the chancellor said. (An SBDC office in Crookston) could only help with that.”

    Considering the university’s major role in the SBDC mission, Holz-Clause said that business students at UMC would obviously have many opportunities to tie learning opportunities to projects that benefit the SBDC and its clients.

    In 2016, the SBDC office in Bemidji, with it’s full-time staff person and three regional consultants, provided approximately 3,000 hours of business counseling. In that year, just under 700 jobs were created and/or saved in part because of the SBDC’s efforts, Holz-Clause said. Nineteen new businesses were created, but she questions that number, which the chancellor said is significantly lower than many prior years.

    Melbye said he thinks VTP would be an ideal location for the SBDC office to maximize collaborations with CHEDA.

    Ward 1 Council Member Jake Fee said he’d be more comfortable with the local investment if he knew that the SBDC and CHEDA were “feeding off each other” and producing results and sharing successes. But, he added, if the CHEDA Board is on board with opening an SBDC office in Crookston, “I’m OK with it, too. I just don’t want (CHEDA and the SBDC) doubling up,” Fee said. “…I think it would be a huge benefit; I just don’t want CHEDA to feel its toes are being stepped on.”

    City Administrator Shannon Stassen said there typically isn’t “a lot of crossover” between SBDCs and local economic development authorities. “(An SBDC office) involves a lot more coaching and training and things like that,” he said.

    Ward 5 Council Member Dale Stainbrook said he thinks Holz-Clause’s proposal should be green-lighted by the council. “As far as the City cost, I don’t think it’s a lot,” he said. “We talk about spending some of this money we have at our strategy sessions; I think this would be a good start.”

    “I’m with Dale,” added Ward 4 Council Member Dennis Regan. “We talk about money we have available to spend, and this is about our businesses and jobs. This is a step in the right direction.”

    As a small business owner, Ward 2 Council Member Steve Erickson said he thinks starting a business is easier than keeping a business open and reasonably successful over the long term. An SBDC here could help in both aspects, he said. “The most critical lessons you learn aren’t in starting the business, but running it right and keeping it going,” he said. “These people are very knowledgeable and very help and can be a big plus for a small business.”

    Holz-Clause said the City and/or CHEDA would be represented on the search committee charged with hiring the SBDC consultant, and the entities would/could also be represented on an accountability board that would monitor the SBDC’s work and impact.

    Melbye said he’ll be speaking this week with leaders of the Downtown Crookston Development Partnership, who are revamping their mission a bit in the wake of terminating their part-time facilitator, who was paid with a $120,000 City commitment over three years. The City paid its first installment, Finance Director Angel Weasner said, but the second year’s installment is currently on hold as the DCDP decides if it’s going to hire another facilitator or not. Melbye left open the possibility the DCDP could somehow work with a local SBDC office, too, even if it only involves finding a downtown space for it. To that, Ward 6 Council Member Tom Vedbraaten said the City might be better off allocating some of its DCDP dollars to an SBDC office.

    Melbye, nothing that it sounded like the SBDC possibilities were trending in the right direction, said the City was definitely “interested” in helping to make Holz-Clause’s proposal happen.

    “There are a lot of opportunities out there for (small business) people that maybe they don’t know about,” the mayor said. “I feel this is an opportunity and a resource that makes sense for Crookston and the university. …I doesn’t hurt to be in business with the U of M and show them we’re willing to work with them.”