Check back over the next month as we will be highlighting the different programs created this year by the Nebraska Legislature through the Talent and Innovation Initiative.

Entrepreneurs can face many challenges as their businesses gain steam. One of those challenges is actually two-fold: how to find and attract talented employees and how to pay them. This article, part of a series on Nebraska’s Talent and Innovation Initiative, will examine InternNE, an incentive program designed to address this two-fold challenge.

InternNE was created by Legislative Bill 386, introduced by Elm Creek Sen. Lavon Heidemann. The law became effective in June and created a program administered by the Department of Economic Development to cover some of the costs of an internship, as well as provide a portal for employers and students to find one another.

Employers and students can register at InternNE.com, a site hosted by careerlink.com, after which they can look for either internship opportunities or potential interns, depending on the perspective.

Also at the site, employers can review eligibility documents and guidelines to find out whether their business qualifies them to receive grant funding to cover a portion of the cost of the internship.

What does all this mean for cash-poor startups? Opportunity.

Consider AgilX, a Lincoln-based software development company. Founded by Jake McElroy and Dustin Clonch, AgilX is in the favorable position of having boot-strapped itself into profitability. While this keeps the company’s corporate equity safe at home, it also leaves much to be desired in terms of paying employees.

McElroy and Clonch learned about InternNE and applied after having incorporated AgilX in March. They were approved to have two internships partially reimbursed under the new program. This perfectly matched their corporate goals and culture.

“We’re not just about selling software, we’re passionate about keeping high-tech jobs in Nebraska,” Clonch said.

The two internship positions have come at an opportune time in the lifespan of AgilX. The company’s goal was to maintain as much internal equity as possible without releasing liability to angel investors.

However, now AgilX is poised to ramp up its productivity, a difficult task without employees – and employees are difficult to bring on without capital. InternNE is making it possible, through subsidies, to bring on those employees below market rates, helping AgilX make its ramp-up easier, and allowing the company to bring on talented interns.

And it isn’t just software companies that are able to take advantage of this new program. “About 22 percent of the positions that have been approved fall within marketing, market research or sales and marketing fields; other highly requested internships are within the finance/accounting, IT/computer technology and engineering and architecture fields,” said Allison Hatch, business development consultant at the Department of Economic Development.

“About 60 percent of the businesses approved for the program are located in the Lincoln and Omaha area, and nearly 45 percent of the filled internship positions are located in Lincoln,” Hatch said.

So what does this mean for you, as an entrepreneur? If you’re looking to expand your staff, and want to utilize this program, there may be grant funding available to your company to reduce the cost of an internship.

Here’s what you do:

• Go to InternNE.com and register yourself as an employer.
• Also available on the InternNE website is the “Employer” section, which contains the necessary documents to be filled out and filed with the state:
• InternNE application form.
• Program guidelines.
• Request for reimbursement form.
• Student verification and evaluation forms.
• Documentation for the Nebraska State Treasurer and the IRS.

After having completed the requisite paperwork and getting approved, companies are then able to post jobs, recruit interns and receive reimbursement for their internships.

For more information on this program, contact Allison Hatch at the Department of Economic Development. Hatch is in charge of bringing employers on board and can be reached at 402-471-3368.

Check back over the next month as we will be highlighting the different programs created this year by the Nebraska Legislature through the Talent and Innovation Initiative.

Being an entrepreneur – or being involved in any capacity with a start-up — can be quite the challenge, yet successful entrepreneurs provide reward not only for themselves, but state economies are also spurred to new heights by these entrepreneurial successes.

With this in mind, the Nebraska state government has created and is now implementing a new set of government incentives for investment in businesses (start-ups and others) in the form of the Talent and Innovation Initiative, or TI2.  The goal is to spur investment in start-up businesses and to also grow existing businesses.

Historically, incentives for business growth in Nebraska were dominated by the Nebraska Advantage Act, a comprehensive set of incentives for new and existing businesses, as well as the Employment and Investment Growth Act. These endeavors, according to the state’s Department of Economic Development website, have provided businesses with partial refunds of sales tax paid on capital investments as well as a tax credit given to businesses based upon their hiring and wage metrics.

But, recognizing that these incentives could be structured in other ways, Nebraska Gov. Dave Heineman and leaders in the Legislature worked to pass a new round of government incentives in the last legislative session.

“Our vision for Nebraska’s economic future is for our graduates and young professionals to have access to high-quality, high-skill careers with dynamic companies doing business in Nebraska,” Heineman said in an Oct. 3 press release. “The Talent and Innovation Initiative provides tools that will help build Nebraska’s innovation economy.”

In January, Heineman, together with the Department of Economic Development and the Legislature, crafted economic development gold in the form of legislative bills that, in part, would later become known as the Talent and Innovation Initiative – thus named for the section of an economic study released the previous fall. Other significant legislation related to economic development included:

• LB 345: The Economic Gardening Technical Assistance Act. This bill laid the groundwork for technical assistance and a portion of funding to grow the companies already in Nebraska.

“The Nebraska economic gardening program is designed to ramp up small businesses across the state,” said Kevin Andersen, program director at the DED. “We (DED) intend to fund a diverse set of business mixes and technical assistance providers to award qualifying businesses the opportunity to explore their respective marketplaces and increase sales.”

This funding closely mirrors that of another program suited to providing loans to qualifying businesses from across the state.

• LB 386: The Nebraska internship bill. This bill provides funding for Nebraska companies to bring on interns currently enrolled at a two- or four-year institution. A portion of the cost of the internship is incurred by the state.

“InternNE, which began June 1, 2011, has more than 100 businesses that are currently participating who are creating more than 300 new internship opportunities across the state. Participating businesses fall within a wide range of industries, from distribution to software development to financial services; though a majority is manufacturing,” said Allison Hatch, development consultant at DED.

• LB 387: Business and Innovation Act. This bill provided for a variety of levels of technical assistance and financial assistance for the transfer of technology into the marketplace for commercialization in different stages. With funding and assistance at multiple levels, this act packs quite a punch.
• LB 388: Sites and Building Development Act. This program allocated resources to the Department of Economic Development for the refurbishing of industrial sites and building across the state, to make them all the more welcoming to potential new companies.
• LB 389: Angel investment tax credit. This measure provided generous tax credits for those making substantial investments in start-up companies.

Another component of LB 389 is a “sidecar fund” geared toward matching and accelerating private investment, administered by Invest Nebraska.

Given that these incentives are packed with different opportunities, there are many details to cover in soon-to-come articles detailing how entrepreneurs can help government incentives become functioning and contributing members of their successful entrepreneurial family. As always, check back at Nebraska Entrepreneur to read more about these helpful new resources.

NEF works as an intermediary between national, state and local funds and grants and the businesses that are benefiting from said funds and grants. In 2010, programs funded by NEF as a contract provider for the Nebraska Microenterprise Act assisted 3,739 participants. Their entire portfolio value was more than $7.5 million. A survey conducted in 2009 of those businesses who benefited from NEF and program support in 2007 showed that the loans benefited an average of 2.8 employees (not including the owners of the businesses) with these employees earning an average of $11.01 an hour.
Recently, NEF began providing direct loans to businesses to fill financial gaps. NEF is planning to expand this service in areas where there is an unmet need. As a certified Community Development Financial Institution (CDFI), NEF can provide businesses up to $150,000 in direct loan assistance.

NEF’s provision of loans and program assistance for businesses is great for these businesses, but perhaps its most innovative new product is the Certificate of Deposit Guarantee, which involves bank loan operators. Often, when a business applies for a loan, a bank may be willing to make the loan, but the business owner may not have sufficient collateral. This is where NEF’s CD Guarantee steps in. NEF opens a CD with the bank that is providing the loan, and the CD is pledged as security for the bank’s loan. NEF will support a business loan with up to $30,000, or 50 percent of the business loan (whichever is less), with this assistance.

With the innovative CD project, NEF is an excellent partner to banks as well as businesses. John Laflin of Pinnacle Bank said: “We are glad to be able to work with Nebraska Enterprise Fund to utilize their CD guarantee product to back our loan to help a young professional business get their start. NEF utilized our underwriting information to help in their approval process and it all flowed easily for us.”

One such Nebraska business that benefited from NEF’s CD Guarantee is Rider Chiropractic, a professional medical business that started during the summer of 2010 and serves the northern Lancaster community and the Waverly area. Licensed chiropractor and owner Rachelle Rider has seen an exciting start to her new business as new patients entered her doors at triple the rate originally projected. Looking toward the future, Rider Chiropractic will focus on providing necessary services to clients and growing the business. If the business demand grows beyond the capacity of one chiropractor, there could be potential to bring in another chiropractor and provide a job for him or her and an assistant.

“Nebraska Enterprise Fund CD backing allowed me to realize my dream of opening my chiropractic clinic,” Rider said. ”Without them I would not have been able to have the cash flow necessary to cover expenses until the business could support itself. They made the process so easy and have been a joy to work with.”

Another business benefiting from NEF’s CD Guarantee is Rief Design and Manufacturing, LLC. Adam Rief, a 2008 graduate of the University of Nebraska’s mechanized systems program, and his father Steve Rief founded the micro-business in January 2006. According to NEF’s profile on Rief Design, the business “specializes in custom manufacturing of agricultural equipment as well as general welding on and off site. The business provides new and innovative equipment used in agricultural applications that is more efficient than other brands that customers have used in the past. Their products can be custom ordered to fit the customer’s exact needs…The Riefs have produced and helped custom fit 25 different products.”

Soon, the building Rief Design used for operations and manufacturing became too small to build multiple items at once. With growing demand for their products, father and son determined they needed a larger production building.

Northeast Nebraska Economic Development District (NENEDD) staff prepared a business plan and participated in financing part of a loan package that included the local bank’s assistance. The NEF’s CD Guarantee enabled the bank to make its direct loan (part of the total loan package) to help finance the construction of a new building for the Riefs. With this expansion, Rief Design and Manufacturing, LLC has been able to continue to provide the Riefs with full-time jobs and open a new full-time position for additional help.

Kris Jerke, the business banking vice president of Platte Valley State Bank and Trust, has worked with NEF on three loan deals. Of the process, he said: “I would highly recommend that other business bankers seek out dialogue with the NEF staff to see how they may be able to utilize their programs for their respective organizations…NEF is one of the non-traditional means that needs to be explored and can come in quite useful as an alternative to more traditional means.” In regards to NEF’s future, Jerke said: “As awareness grows, I can see NEFs financing programs continuing to expand in their outreach to assist businesses all across our state. The key will be education of our bankers in Nebraska and their willingness to think ‘outside the box’ in their search to make business owners’ dreams a reality.”

Nebraska Enterprise Fund partners with several business development services that operate across Nebraska, like Nebraska Edge; organizations that target specific areas of Nebraska, like Northeast Economic Development Inc.; those that aid minorities, like Midland Latino Community Development Corporation; those that operate on a county level, like Hastings Community Redevelopment Authority; and large nationwide charity organizations, like Catholic Charities as well as several others in these categories.

A complete list of NEF’s partners can be found here: http://www.nebbiz.org/business_resource_directory.php

To learn more about Nebraska Enterprise Fund, or to see how NEF can help your growing business, visit http://www.nebbiz.org/.

This presentation was given on September 14th, 2011 at the Lincoln Chamber of Commerce event Face the Chamber.

A growing degree of uncertainty in the world economy accompanied by chronic unemployment in many parts of the world has focused considerable attention on the specific role of start-ups. It is believed that entrepreneurship may be the most valuable tool for reducing unemployment. Start-ups in the United States create 39.75% of new jobs annually, however, 40% of these firms shut down within the first three years, leading to job destruction and a high cost to the workers. In an effort to cultivate entrepreneurial activity, support programs and “business incubators” have emerged globally mostly focused on providing skills and management training, or removing infrastructural and regulatory hurdles.

Most of these programs forget that entrepreneurship is primarily about the entrepreneurial ability of the individual at the helm of the firm. This study explores the role of the entrepreneur in explaining economic growth and job creation.

Nebraska will be the first state use a new business-to-business mentoring program developed by the Gallup Organization, Gov. Dave Heineman announced at a press conference in Omaha Thursday. The initiative will provide business development assistance to early-stage entrepreneurs and to established firms with high-growth potential.

Governor Dave Heineman

“We want to be an ally for small businesses, particularly those invested in innovation,” Gov. Heineman said.

The mentoring initiative is a joint venture of the Nebraska Department of Economic Development, the Gallup Organization, the Greater Omaha Chamber of Commerce and the University of Nebraska’s Institute of Agriculture and Natural Resources.

“We want to develop a more coordinated, intensive partnership to provide the guidance and expertise that small businesses need to be successful,” Gov. Heineman said. “This is an outstanding example of the partnerships that exist in Nebraska, and the ways we are willing to work together to move Nebraska forward.”

According to the U.S. Census Bureau, new businesses create more than 39 percent of new jobs annually, but 40 percent of those start-ups will close within the first three years. The mentoring initiative aims to give entrepreneurs the training and support necessary to build stable enterprises that will continue to provide jobs and add to Nebraska’s economic productivity.

Todd Johnson, a managing consultant in global job creation at Gallup, cited research from the Kauffman Foundation that shows that on average, the largest companies in the United States have not created a net new job in the past 15 years. New firms in their first year of business, however, create more than 3 million jobs. Public and private entities are motivated to support these entrepreneurs who are driving growth.

To launch the mentoring program, Gallup has been training 27 small business and economic development leaders from across Nebraska in using its Entrepreneur Acceleration System. These business leaders will each mentor five to 10 entrepreneurs over the next several months. Johnson described the group of mentors as “eclectic and diverse,” and said they come from different geographic areas of the state, from academia, from government and from business.

The mentors will use Gallup’s talent-based development system. While many small business support programs focus on helping start-ups overcome  infrastructure and regulatory hurdles, EAS will focus on developing the individual entrepreneur’s talent. Gallup’s research has indicated that an individual’s own entrepreneurial ability, motivations and attitudes are the most important drivers for a business’s survival and growth.

“We need to focus on the entrepreneur and understand the individual differences that cause successful entrepreneurship,” said Jim Krieger, Gallup chairman and chief financial officer. ”Many times the biggest hurdle to an enterprise’s growth is the individual’s own self-limiting view of his or her strengths and capabilities.”

During the mentorship program, the selected entrepreneurs and their mentors will meet with Gallup for large-group workshops and individually with their mentors. Gallup will follow participating firms for up to two years to gauge the value of the mentorship effort.

“Ultimately our goal is to create a best-practice EAS model right here in Nebraska that can be showcased across the country and world and that quantitatively demonstrates via research that when mentors are unleashed with the right behavioral economic tools and support, good things happen, businesses grow, and jobs are created,” Johnson said.

High-potential entrepreneurs must be nominated to participate in the program. The program’s partners are covering the cost of participation. There are still a few openings remaining in the program. Interested entrepreneurs may contact Todd Johnson at Todd_Johnson@Gallup.com for more information.

Olsen is one of several speakers at next week’s 2011 Nebraska Summit on Entrepreneurship in La Vista. His panel discussion will focus on the lessons he learned as an entrepreneur and on some advice for potential entrepreneurs.

Olsen studied computer science, earning a few associate’s degrees from Metropolitan Community College in Omaha and a bachelor’s degree from Bellevue University. He then went on to work for Vente Inc. and worked for Stephanie Healey (another speaker at the Summit) for a few years. Olsen and one of his co-workers at Vente Inc. decided to launch their own venture in 2004. That’s when Phenomblue began.

When they started, there were only a few studios that delivered 3D/animation and software development our of one house to advertisers. Now there are about 50, and Phenomblue was one of the original companies that others followed.

His real-world experience has taught him that even if the idea seems unrealistic, it may still be possible despite the challenges.

“I don’t know if it’s ever easy,” Olsen said. “When we started, it was a visual effects company in Omaha, Nebraska. I think starting a nontraditional business in a city like this is challenging and continues to be challenging.”

“[Phenomblue was] selling a service business, we weren’t really developing a produt. We just found ourselves in a perfect spot again and again. We were small enough to quickly adapt to the tiny ripples that kept happening.”

Olsen said that the common misconception entrepreneurs hear is that failure comes with the territory of starting a new business. He believes that sometimes failures do occur but sometimes taking risks pays off without failure.

“Coming out of a successful startup, one of the things I hate is when people say, ‘You have to fail,’ but I think for us the first startup was a huge success,” he said. “That was a huge ego boost and great exposure to how venture capital works and culture works and learn about things that go right and things that go wrong.”

Olsen said a successful startup isn’t one that simply generates revenue for the company. A successful startup is one that generates economic development for the community as a whole.

“If we become a startup community of a lot of one- and two-person companies, we’re not going to do anything to impact the economic development side of our community,” Olsen said. “We need to get bigger so we can create jobs and they can put money back into the economy, and that cycle goes on and on.”

His focus at the Summit will be on this economic development, on partnerships between companies and on the need for a business to grow.

For more information on the 2011 Nebraska Summit on Entrepreneurship, visit this website.

The Lincoln Journal Star had a great writeup of his talk and can be found here: Forbes debunks negative entrepreneur myths

You can also watch the entire presentation to the Chamber along with the introduction by Bob Milligan.

When he talked with them about how he could help, a theme emerged that would spark Krieger’s well-known and respected efforts to develop entrepreneurial programs in Nebraska.

Krieger’s sons didn’t see the reason to learn the topics taught in school, and they didn’t see the relevancy to their lives.

“I thought, ‘How do I help my sons understand the relevancy of something going forward?” said Krieger, who has been with Gallup for 33 years.

The Krieger Family Foundation established by Jim and his wife, Penny, has focused on the importance and relevancy of learning entrepreneurial skills, supporting and helping develop programs such as the University of Nebraska-Lincoln Extension 4-H Youth Development Program and the Lincoln Public Schools Entrepreneurship Focus Program.

Entrepreneurial skills are useful in all types of professions, not just starting a business, Krieger said.

“Anything with risk toward a successful and positive income, in all walks of life … there’s entrepreneurship in all of that.”

Engrained Within the Curriculum
With the LPS entrepreneurship program, in which Southeast Community College and UNL are involved, Kreiger worked with administrators and teachers to ensure entrepreneurial messages were developed into the core curriculum, even in seemingly unrelated subjects such as English literature and American history. Then, more specific entrepreneur lessons were developed, such as how to write business plans as well as the ins and outs of running a business.

“Our objective was education and awareness among kids, teachers, parents and support systems, but we chose to start with education,” Krieger said. “Education doesn’t necessarily make the entrepreneur, but let’s make sure we support the idea of enterpreneurism and what it is. And then some day later in life, when you choose to become a businessman, they maybe I’ll know a little more about it and be more supportive. That’s the big picture of why we got involved.”

Likewise, when building economic development programs, Krieger said, Nebraska needs to create a business climate that supports individual entrepreneurs and gives them the tools to succeed.

“There’s no silver bullet about what you can and can’t do,” he said. “You have to get back to what each individual does and what we can do to support that effort.”

Here’s what Krieger says the state can do to help foster a better entrepreneurial climate in Nebraska.

Support for ‘lifestyle entrepreneurs.’ Lifestyle enterpreneurs are those who start a business to improve their way of living, not necessarily to make huge profits. Some deride these type of startups, Krieger said, because they aren’t investments that lead to high growth. But small and home-based businesses that provide individual flexibility are important because they improve quality-of-life issues in a community, which can lead to a healthier and more-vibrant economy.

Tax credit for angel investors. Krieger says he has long advocated for a state tax credit for local angel investors. This would help preserve investment capital in Nebraska and add more to the state’s economic environment than the state would ever pay out in tax breaks, he said.

“We can’t make it (angel investment) occur, but we need to develop the environment to help it occur.”

Revitalize economic development funds. Nebraska has many economic development funds that now are little used – legacy programs from 50 or so years ago that no longer serve a purpose, Krieger said.

Many could be modernized to provide needed capital to economic development programs to revitalize the state’s economy. Of particular interest to Krieger are programs that let colleges and universities share resources, such as classes taught online and through video.

Literacy in finances, economics and entrepreneurism. The state needs to invest more time and resources into schools’ financial literacy and economics programs, all of which should touch upon aspects of entrepreneurism, just like the Lincoln Public Schools’ program.

In 2011, it’s more vital than ever that students understand the basics of finances, economics and entrepreneurism to achieve both individual success and to enhance the economic vitality of the state.

“It needs to be embedded in the curriculum, because then it becomes a requirement and, therefore, more important,” Krieger said.

Ken Jones Interview from Nebraska Entrepreneur on Vimeo.

Heineman Interview from Nebraska Entrepreneur on Vimeo.

Governor Heineman and University of Nebraska President J.B. Milliken are scheduled to address the summit, which is open to the public.  Students and members of the news media are also encouraged to attend.

Other summit highlights will include:

·         Opening presentation by Ken Jones, chairman and CEO of Globe Wireless in San Francisco, on business opportunities in today’s world of technology.  Jones, a 1968 graduate of the University of Nebraska-Lincoln, also founded Automated Call Processing Corp. and Ditech Communications.  He is a member of NU’s Engineering Dean’s Advisory Board and a recent recipient of the NU Alumni Association Achievement Award.

·         Business leaders revealing how companies in Nebraska are investing in technology and seeing real returns.

·         Guidance on how businesses can develop collaborative arrangements with other businesses and the academic community to enhance their operations through new technology and research.

·         Presentations by NU researchers on the groundbreaking work being conducted in the fields of agri-business, engineering, energy, nanotechnology, material science, biotechnology, medicine and computer science.

Registration fee is $75, which includes lunch.  To register, call the State Chamber at (402) 474-4422 or e-mail csibley@nechamber.com.

A recent study commissioned by the Nebraska Department of Economic Development found the Cornhusker State is lagging in productivity due to the lack of technology-based development programs.  The report, compiled by the non-profit Battelle Technology Partnership Practice, concluded that Nebraska must address modernization and deployment of technology, while creating stronger links between industry and university researchers in areas such as applied R&D, technology commercialization and talent generation.

“The State Chamber’s technology summit will address the areas in which Nebraska is leading the way, as well as areas in which improvement is necessary,” said Gary Warren, president of Hamilton Telecommunications Service Corps. in Aurora.  Warren is the chairman of the State Chamber’s Innovation and Technology Council.

The State Chamber is Nebraska’s largest business association, representing employers of all sizes, as well as local chambers of commerce and other statewide associations.  The State Chamber has proudly served as the voice of Nebraska’s business community since 1912.