2014
The
Iowa Small Business Report
Table of Contents
The University of Northern Iowa’s Regional Business Center (UNI RBC) team is very pleased to bring you the 2014
Iowa Small Business Report. A statewide survey has been conducted annually for three consecutive years, covering
the Iowa business experience in 2011, 2012 and 2013.
Welcome Letter
Each year the survey measures sales trends, job growth or loss, capital acquired and business use of technology
among Iowa business owners with fewer than 50 employees. We asked respondents about their business needs, their
experiences with service providers and programs in the state, and we invited their suggestions for how to make Iowa
a better place to conduct business.
This year we took steps to create a more innovative and readable publication. Sarah Bey, Program Manager at the
UNI Regional Business Center, developed the creative ideas around this publication format. Her magazine concept
has condensed the 144 page report into an easy-to-read publication, providing business owners, community leaders
and legislators a good look, both visually and in articles, about the Iowa business experience.
In this new format you’ll also find stories of Iowa companies who reflect the four unique kinds of entrepreneurs in
our state. In addition, we are directly sharing many of the comments from respondents concerning critical business
issues, and we’ve compiled the survey results into short briefs that offer suggestions for
how public and private sector providers might develop more effective programs, policy
and legislation to serve Iowa’s entrepreneurial community.
“We hope you will read this entire publication
At the center of the 2014
report is an in-depth look and come away as inspired as we are by the men
at the woman-owned
and women who are working every day in small
business experience in
companies across our great state.”
Iowa. For the past several
years Iowa has ranked
in the bottom third of U.S. states for the rates of woman-owned business startups and
growth. One study in particular has placed Iowa at the very bottom of the country for
the past two years. The 2014 Iowa Small Business Survey strives to better understand
woman-owned businesses and the unique challenges they face in accessing capital,
achieving business longevity, and growing their companies beyond the $1 million
mark—all elements that contributed to Iowa’s low ranking in 2013.
Best Wishes!
About the Survey Respondents................................................................................... 8
Jobs, Jobs, Jobs................................................................................................................10
Capital Investments .......................................................................................................11
Crowdfunding..................................................................................................................12
Sales & Markets................................................................................................................13
Technology........................................................................................................................14
Business Growth..............................................................................................................15
Maureen Collins-Williams,
Researcher in Residence
University of Northern Iowa
Pressing Problems ..........................................................................................................16
Government Relations...................................................................................................17
Peer Learning....................................................................................................................18
Across the board, business owners are calling for less regulation, more capital, better
access to their peers online and in person, and more supportive communities. How we
respond to these needs going forward will be rewarded by more business starts, new jobs
and business expansions in Iowa.
We hope you will read this entire publication and come away as inspired as we are by
the men and women who are working every day in small companies across our great
state. For more information about the survey, methodology or results in this publication,
please contact Maureen Collins-Williams, UNI Researcher in Residence at
maureen.collins-williams@uni.edu, or Paul Kinghorn, UNI’s Director of the Regional
Business Center and Entrepreneurship Outreach at paul.kinghorn@uni.edu.
Types of Entrepreneurs................................................................................................... 4
Most Improved Resource.............................................................................................19
In Their Own Words........................................................................................................20
Paul Kinghorn, Director
University of Northern Iowa
Regional Business Center and
Entrepreneurship Outreach
A Message from SMS......................................................................................................22
UNI Regional Business Center.....................................................................................23
Maureen Collins-Williams & Paul Kinghorn
Regional Business Center Entrepreneurship Outreach
2014 Iowa Small Business Repor t
3
Types of Entrepreneurs
4
T
echnically, the UNI survey targets any business in
the state with fewer than 50 employees. That covers
nearly 250,000 companies, multiple industries and
many kinds of different operations in Iowa. Are
they all entrepreneurs? Small business owners? There is
an ongoing debate in literature and in the field about the
accepted definition of an entrepreneur—is it the locally
owned manufacturing company that just expanded into
additive manufacturing (i.e. 3D mass printing of parts) and
now sells overseas? That’s entrepreneurial. What about the
art gallery on Main Street that hosts live entertainment,
local artwork and is packed every weekend with outof-towners? That’s entrepreneurial, too. To answer this
question, UNI developed a methodology to segment
entrepreneurs into four key groups: micro-enterprises,
small businesses, innovators and venture companies.
5
This approach suggests that the business intentions of
the entrepreneur, rather than the industry or size alone,
set them apart from one another and predict the kinds
of services or resources they require to be successful.
Mulholland Grocery, Malvern IA
SMALL BUSINESS
After a 30-year career in
View Tom Mulholland’s story and the impact
the grocery and specialty
that winning $15,000 from last year’s Dream
meats industry, Iowan
Big Grow Here
Tom Mulholland made
contest had on his business. [Scan QR code
the bold decision in
or visit
http://www.youtube.com/myentrenet]
2008 to buy back a rural
grocery store and meat
market once owned by his family in Malvern, Iowa, (population 1,114). In spite of going
into business for himself at the start of one of the worst recessions in recent Iowa history,
Mulholland had his eye on the long haul from the start. “Achieving the level of success
you desire”, he notes, “requires a certain level of internal perseverance. A successful
small business has to have the tenacity, vision, and willingness to do what it takes. You
have to make sacrifices to get your business off the ground, and perhaps for a lot longer
than that.”
Micro-Enterprise
More than half of all businesses in Iowa are microenterprises. These businesses are very small; they are
often home-based or downtown and clustered in service,
hospitality and specialty retail operations. Microenterprises are also characterized by low startup costs (less
than $50,000 on average) and fewer than five employees.
Walk into a micro-enterprise operation and the person
behind the counter is apt to be the owner.
Pawsha’s Pet Salon, Cedar Falls IA
MICRO-ENTERPRISE
Women across the country (and some men too!) flock to spas for pampered personal services such as manicures,
pedicures, hair color and hot oil treatments. So why not give a pet the same high-end experience? Ashley Barnholtz, an
expert pet groomer in Cedar Falls, mulled the idea of a pet spa around in her
head for years before taking the plunge into business ownership in September
of 2013.
Barnholtz’s innovative idea was a simple one. “Pets need to be groomed; it
is essential for their health,” she explains. “But I make the experience more
enjoyable both for the parent and for the pet—because grooming should be
about them getting pampered too.” And pampered at Pawsha’s is anything but
clinical.
Pawsha’s focuses first on all the right things a groomer should, like checking
for skin conditions, teeth problems or other health issues that might otherwise
go unnoticed by a busy owner. Barnholtz couples that with excellent trimming,
bathing and amazing fur-do’s for the mainly small dogs she cares for. But what
makes Pawsha’s special is her unique “spa” approach to serving those furry
Ashley Barnholtz, Pawsha’s Pet Salon
members of the family. Pedicures are standard, of course, but how about a little
nail polish to show off those cute toes? What about a hot oil treatment to calm the nerves? It’s a full service pet spa for
terrier Sophie, just like her owner gets down the street at the local Jiva’s Salon.
Barnholtz has also earned a reputation for taking special occasions up a notch with her honed coloring skills. Her team
now consists of a part-time bather and a new intern. This team can match a pet to the party with an array of pet hues
available, including Panther purple. “At Pawsha’s, it’s not just about making your pets look good,” says Barnholtz. “It’s
about making them feel good too.”
Regional Business Center Entrepreneurship Outreach
Tom Mulholland, Mulholland Grocery
Over the past seven years, Mulholland Grocery has put Malvern on the map in southwest Iowa, in part, because of the novel
vision Tom Mulholland carries with him. In the grocery store, Mulholland set out to differentiate his meats in such a way to
bring outsiders into town. “We carry items you won’t find in a small town normally,” he says, “like fresh seafood, homemade
brats, smoked bacon, smoked salmon, nearly two dozen types of homemade sausages, and numerous other homemade items
that are top quality, and draw people from a large surrounding radius.”
As a result of Mulholland’s perseverance, the self-made small business owner has been able to employ 11 workers and
establish a solid reputation within the community and throughout the state. Mulholland Grocery has been recognized and
honored with a number of awards from different organizations and agencies across the state, including the statewide Dream
Big Grow Here contest and Renew Rural Iowa’s Entrepreneur of the
Month. Aside from all the attention, Mulholland believes the real
measure of his success is based on the feedback from local residents
and surrounding communities, making the long hours and late nights
worth being in business. “There’s a sense of pride in going to other
towns and commenting on where I’m from, and then people telling
me they’ve heard about a great grocery store in Malvern, and they
– Tom Mulholland, Mulholland Grocery
don’t even realize who they’re talking with. That is success.”
“Small towns need their
stores, and small town stores
need all the help they can get.”
While micro-enterprises are not considered job creators, they
are placemakers. These locally owned businesses make Spencer
different from Red Oak and Cedar Falls different from West
Des Moines. Micro-enterprises are driven by passion more
than profits, yet they are known for their ingenious business
models. They’re the haunted bookstores, chocolate shops and
styling salons for dogs, like Pawsha’s Pet Salon featured here.
Moreover, they fill gaps in the economy that other businesses
can’t or won’t because the profit margins may not be large.
Micro-enterprises churn in and out of business rapidly (about
every three years), so it’s important to have lots of them with
their creative zeal to keep Iowa communities vibrant, unique
and attractive to other entrepreneurs.
2014 Iowa Small Business Repor t
6
7
(cont. from page 5)
Small Business
Innovators
Small businesses are often characterized as the “butchers,
bakers and candlestick makers” from the popular nursery rhyme
“Rub a Dub Dub”. These businesses operate in traditional
industries essential for a healthy economy; they are Iowa’s dry
cleaners and hardware stores, locally owned restaurants and
manufacturers. They are consultants and web designers, house
cleaners and construction companies. Small businesses seek
normal profits, a career and a particular community-respected
lifestyle for the owner, which sets them apart from both microenterprises and innovators. Small businesses tend to have a long
business life and create sustainable jobs, but they often don’t
pay above average wages or include benefits. Small businesses
are not headline grabbers, but they are essential to Iowa’s
economy; without them the rest of the economy would fail.
Innovators are a small but growing segment of the
entrepreneurial community. These companies are rapid growth
businesses, clustered in technology, green and bio-sciences and
other fast growing industries. A startup culture has developed
around these businesses in Iowa. Places like StartupCity Des
Moines and the Creative Corridor of Cedar Rapids/Iowa City
were formed in part because innovator business development
needs are so different from micro-enterprises, small businesses
and even venture companies. Innovators favor peer learning,
rapid scaling and most are serial entrepreneurs; they launch
multiple companies but do not keep them, preferring to sell or
merge in order to do it again.
iTracking Research, Cedar Falls IA
VENTURE COMPANY
Founded in 2008 in Cedar Falls, Iowa, as T8 Webware, Banno is an information technology startup from the Cedar
Valley initially built upon a proprietary digital engagement web platform enabling banks and credit unions to be more
involved in their customers’ financial decisions. T8 Webware quickly became known as a technology leader in the
financial services sector; they added employment rapidly in the Cedar Valley. While expanding into multiple software
clusters between 2008 and 2012, the name was changed to Banno and a second site established in Des Moines.
Under former CEO and managing director, Wade Arnold, Banno serves more than 375 financial institution customers
and offers three primary services: Grip, a white-label financial aggregation application that combines mobile
banking, mobile PFM and mobile bill pay in one native app; a web solution that offers the design and development of
responsive websites; and a targeted online advertising platform. In 2012 and 2014, Banno won a Prometheus Award
from the Technology Association of Iowa. The company was also recognized by the Des Moines Register in 2012 and
2013 when it was named one of Iowa’s Top Workplaces. According to Wade Arnold, Banno has grown well in Iowa in
its seven-year history, but the potential to generate greater economic impact is yet to come. In the first quarter of 2014,
Banno was acquired by Jack Henry and Associates (NASDAQ:JKHY).
Innovators are job creators and the jobs they create pay
well. They are, however, not rock solid jobs like small
businesses typically create, as failure is an expected part
of the startup experience for this segment. Innovators may
well be the startup model of the future for all of Iowa’s
entrepreneurial segments; these companies have adapted—
indeed they flourish—in the new economy.
INNOVATOR
In February of 2012, Dr. Bill Harwood and Mike Whitson, University
of Northern Iowa faculty and staff, respectively, launched iTracking
Research at the UNI Innovation Incubator. Initially, iTracking
Research was envisioned as a marketing and media intelligence
company providing advanced eye-gaze tracking research data using
analytical software to track eye movements of individuals online.
The array of subtle characteristics measured by iTracking Research
is comprehensive, including data associated with facial expressions,
heart rate, respirations, and galvanic skin responses. In 2013, another
application for the software was discovered which has launched
another diagnostic company called iTR Diagnostics. iTR Diagnostics
is a startup focused on understanding the correlation between eye
movement and different physical disorders, including Parkinson’s,
Alzheimer’s, autism, mild traumatic brain injury and schizophrenia.
Banno, Cedar Falls IA
The 4 Types of Entrepreneurs
Venture Companies
Bill Harwood, Mike Whitson & Alyssa Nolte of iTracking Research
“We’re dedicated to bringing the market a system that will greatly improve a physician’s ability to diagnose Parkinson’s
disease,” said Whitson. Currently there is no technology or definitive test capable of identifying early stages of certain
diseases, including Parkinson’s, which alone affects more than one million Americans. Sixty thousand people are diagnosed
with Parkinson’s every year and thousands more remain undiagnosed because of a lack of diagnostic tools.
Creating the technology needed to better interpret signs of serious illnesses will not only provide medical professionals with
a means to catch specific health issues, but will also give researchers a better understanding of how the brain is impacted.
“This information will help both doctors and researchers quantitatively monitor patients’ progress under treatment and in
experimental treatments,” said Dr. Harwood. http://www.itrackingresearch.com
Regional Business Center Entrepreneurship Outreach
available state resources and funding programs are helping
turn the tide. We are now seeing increasing interest and
activity from statewide, regional and national venture and
private equity firms who understand that innovation and
opportunity are not restricted to the east and west coasts.”
Venture companies are entrepreneurial endeavors which
have exceedingly high growth potential. Most venture
company development is the result of ground-breaking
inventions and/or processes which are commercialized
through management teams and multiple rounds of equity
investment. Venture company development is clustered
in a handful of emerging industries in Iowa, tied closely
to the research activities at the three regent universities.
Venture companies can transform a regional economy and
create hundreds of new economy jobs, yet these companies
represent only a tiny fraction of business activity in Iowa.
According to Gregg Barcus, Commercialization Director
at the Iowa Innovation Corporation (IIC), “While few
Iowa companies have traditionally attracted funding from
national venture capital firms, increasingly robust and
Micro-Enterprise
Small Business
Innovators
Venture Companies
2014 Iowa Small Business Repor t
About the Survey Respondents
9
The average company in the survey
employed 5.63 employees excluding
contracted workers. Women-owned
businesses were smaller on average,
with 4.54 employees while male-owned
businesses averaged 6.55 employees.
91 of Iowa’s 99 Counties Represented
Business owners from all over the state
of Iowa responded to the Iowa Small
Business survey request in February
2014. All respondents were asked to
complete the survey based upon their
business experiences in the calendar year
of 2013. Business owners from 91 of
Iowa’s 99 counties completed the survey
and offered their advice and suggestions
for how to improve the ecosystem around
smaller companies in the state.
Age of Business
% of Respondents
< 3 Years
19%
3-5 Years
19%
> 5 Years
62%
Sales Revenue Generated by Business
Owners
Gross Revenues in 2013
80
A Cross Section of
Industries Represented
Just like the rest of the country, Iowa
businesses are clustered in a few broadly
described industries. Nearly half (48%)
of respondents report owning a service
business. Another 27% operate retail
businesses either in a physical location or online. Eleven percent of the survey respondents own technology companies,
and 7% report owning a manufacturing company. These industry segments are broadly aligned with the overall industry
breakdown in the state of Iowa with the following exceptions: retail operations were over-sampled by approximately 9%
and professional services and wholesale trade were under-sampled by approximately 6% and 5%, respectively. All other
industries (agriculture, manufacturing, technology) fell within 2% of the state industry totals.
Survey Respondents by Industry
Wholesale
Ag
Manufacturing
Technology
Retail
The vast majority of woman-owned businesses reported sales
below $250,000 and are not well represented among businesses
with sales of over $1 million. Roughly 80% of woman-owned
businesses reported gross revenues of less than $250,000 in
2013, compared to 60% of male business owners. Conversely,
about 17% of male business owners reported revenues of $1
million or more, whereas only 6% of female business owners
reported revenues of $1 million or more.
70
60
Percent of Respondents
While more than half of the business owners reported being in
business more than five years, the majority (69%) reported sales
of less than $250,000 annually. Only about 5% of respondents
reported having sales between $250,000 and $499,000 and
between $500,000 and $749,000.
50
40
30
20
10
0
More Mature Companies
than Startups Responded
40
The majority of survey respondents (62%)
have been in business for more than five
years. Just less than 20% have been in
business between three and five years, and
19% have been in operation for less than
three years. These business owners offer a
nicely dispersed spectrum of expertise and
opinions concerning the business experience
from startup to exit in Iowa.
30
<$250K
35
25
20
15
10
Regional Business Center Entrepreneurship Outreach
0
$500-749K
$750-999K
$1M +
Contributing business owners were best represented by
the 50-59 year-old age group of owners, who made up
36% of all respondents. Only 3% of the businesses in this
year’s survey indicated they were younger than 29 years
old. According to the Kauffman Foundation, 23% of new
business start-up activity nationwide was from individuals
between the ages of 20-35 in 2013. Ensuring a larger number
of younger business owners participate in coming years
will be important, especially since younger entrepreneurs
tend to be engaged in emerging industries with high growth
potential.
5
Service
$250-499K
Age of Business Owner Respondents
Age of Business Owner
Percent of Respondents
8
<30
30-39
40-49
50-59
60-69
>69
2014 Iowa Small Business Repor t
10
Jobs Jobs Jobs
E
ntrepreneurs overall are known for creating—and shedding—tens of thousands of jobs
annually. Based upon responses from the UNI survey, and after accounting for layoffs in
2013, Iowa businesses with fewer than fifty employees added approximately 49,234 net
full-time jobs to the Iowa economy, 56,611 net part-time jobs and subcontracted 70,334
projects to subcontractors.
Iowa Small Business Owners Created
49,234 Full-Time Jobs in 2013
The job numbers reported here offer a richer and more
complete assessment of the job creation activity of
businesses of this size in Iowa than the Census Bureau’s
Business Dynamics Statistics (BDS) annual data series
commonly used to develop state-level job creation
estimates. This is because the BDS data does not count selfemployed individuals.
In 2012, and again in
Type of Employment
2013, sole proprietors
(self-employed business
Full-time Management
owners who have no
Full-time Non-management
employees) generated
the majority of business
Part-time
startups here in Iowa
Contracted Workers
and across the nation,
according to the
Kauffman Index of Entrepreneurial Activity in 2014. Sole
proprietors make up a substantial portion of the existing
business community in Iowa as well. The UNI survey
has captured information from both sole proprietors
and employer firms in the state, and all of those jobs
are reflected in these numbers. It is clear that smaller
businesses are significant contributors to Iowa’s workforce.
“Finding qualified, employable
people is a great challenge.”
- Survey Respondent
Approximately 13% of new Iowa jobs were full-time
management level positions with a starting wage of $22.54
per hour. Another 26% were full-time non-management
jobs paying an average wage of $15.69 per hour. Part-time
jobs created by entrepreneurs owners in Iowa averaged
$12.07 per hour.
The numbers of
Average Starting Wage subcontracted jobs
is also on the rise in
$22.54 Iowa, reflecting a well$15.69 documented increase in
$12.07 subcontract employment
nationwide. In 2013,
$27.01 the average subcontract
worker earned $27.01
per hour. Women relied upon subcontractors more than men
in 2013, citing more flexibility and the ability to receive
expertise they didn’t have in-house, while men primarily
subcontracted because of the financial benefits.
Businesses surveyed shed large numbers of jobs in 2013
as well. In fact, 86,745 full- and part-time layoffs occurred
among companies with fewer than 50 employees during
2013. This job churning, or what is sometimes called
“creative destruction,” is considered by many to be a sign
of a healthy economy as new innovation creates jobs while
making others obsolete. A small, but growing number
of the jobs created and lost during 2013 were related to
technology adoption. This kind of churning is expected to
continue throughout the next decade and beyond as our
economy evolves.
Capital Investments
M
ore than half of surveyed business owners
invested money into their companies during
2013. The vast majority of respondents who
invested (85%), did not seek formal outside
funding; rather, they invested personal money or funds from
family and friends. The average amount of personal money
invested, in particular, was relatively low and trending
downward at $11,000, down from an average of $23,000 in
2011 and $15,000 in 2012.
Bank Loans
Credit Union Loans
Crowdfunding
Friends /Family
Grants
Investment Groups
Personal Money
Revolving Loan Fund
Other
Average Invested
$100,100
$31,600
$50,000
$18,000
$7,500
$92,500
$10,700
$8,300
$25,700
The number of business owners utilizing outside forms of
financing remained steady in 2013, with 22% securing a
bank loan, down slightly from the 25% of business owners
who borrowed from a bank in 2011. Iowa’s slow recovery
from the recession, followed by more stringent banking
regulations nationwide has limited business access to
commercial bank capital since 2009. Many long-standing
Iowa business owners commented upon their inability to
secure outside financing in 2013, mirroring comments from
both 2011 and 2012.
below the nearly 25% loan approval rates from before
the recession, but business owners who made it through
the recession and those who have started a new company
since then should see better opportunities with commercial
lenders going into 2014 and 2015.
There is room for optimism. Recent reports from
Biz2Credit, a small business lending connector, reported an
increase in the portion of business loans approved by big
banks in December of 2013 to 17.6%, up from only 12.8%
loan approval in 2011. Overall approval rates are still far
Less than half of respondents (42%) indicated they intend
to invest new money into their business in 2014, echoing
the same cautious economic outlook reported in 2011 and
2012 when 38% and 43%, respectively, indicated an intention to invest in the coming year.
page 11
Indicate all sources used to invest additional capital in 2013.
“After being in
business for over
20 years, banks
are no longer
willing to do
short term loans
(60 days to 6
months). “
Crowdfunding Website
Investment Groups
Credit Union Loans
Revolving Loan Fund
Friends/Family
Grants
Bank Loans
- Survey Respondent
Personal Money
Other
0
Regional Business Center Entrepreneurship Outreach
Source of Funds
11
10
20
30
40
50
Percent of Respondents
60
70
80
2014 Iowa Small Business Repor t
e
h
TWoman-Owned
A
SP
SEG ECIAL
ME
THE NT OF
IOW 2014
A
BUS SMALL
IN
REP ESS
ORT
Business Experience
in Iowa
Darcy Swon
inTANDEM workspace
Webster City, IA
Betsy McCloskey
Plaid Swan
Dubuque, IA
Lydia Brown
Ascent
Cedar Rapids, IA
Alisa Roth
Bloom Works
Council Bluffs, IA
Lori Day
FocusFirst
Des Moines, IA
Martha Norbeck
C-Wise
Iowa City, IA
An Overview
Welcome Letter
2
S
ince 2011, UNI has conducted the Iowa Small
Business survey to understand sales trends, job
growth or loss, capital acquired, and business use
of technology among Iowa business owners with
fewer than 50 employees. This year, in addition to the
overall findings, we put on a gender lens.
For more information about the survey, methodology or
results please contact Maureen Collins-Williams at
maureen.collins-williams@uni.edu, or
Sarah Bey at sarah.bey@uni.edu. For an electronic
copy of the complete survey results contact Sarah Bey
319.273.4324 or sarah.bey@uni.edu.
This section of the 2014 report is an in-depth look at
the woman-owned business experience in Iowa. The
following articles, some of which are excerpted from
the upcoming book “WE-Women Entrepreneurs” by
Maureen Collins-Williams, offers perspective, historical
context and suggestions for how public and private sector
providers might develop more effective programs, policy
and legislation to serve Iowa’s woman-owned businesses.
In addition, Iowa was the only state in the nation where
overall sales revenue among existing woman-owned
businesses was negative—by more than 3%—between
1997 and 2011 (www.OpenForum.com). A direct link
to the report can be found here: openforum.com/
womensbusinessreport.
Maureen Collins-Williams
Researcher in Residence
University of Northern Iowa
Sarah Bey
Program Manager
University of Northern Iowa
Regional Business Center
KEY FINDINGS
•
I
owa ranks near or at the bottom of all U.S. states in
numbers of woman-owned business start-ups and more
importantly, business growth. According to an annual
survey released by American Express Open, between
1997 and 2011, the rate of woman-owned business starts
in Iowa increased by only 20%—a total of only 11,573 new
firms in fourteen years—as compared to an increased startup rate of 50% nationwide.
79% of woman-owned businesses reported sales of less than $250,000 annually. Conversely, only
6% of woman-owned business reported sales of more than $1,000,000 each year.
The 2014 Iowa Small Business Survey confirms that Iowa
woman-owned businesses are generally smaller and
younger than male-owned businesses in the state. In fact,
seventy nine percent of woman-owned businesses reported
sales of less than $250,000 annually. Conversely, only 6%
of woman-owned business reported sales of more than
$1,000,000 each year.
•
There are significantly fewer woman-owned businesses in Iowa that are older than ten years.
•
Woman-owned businesses in Iowa are clustered in retail and professional services, industry
sectors which are traditionally difficult to scale and exhibit slow annual growth.
70
•
Iowa woman-owned businesses borrowed less capital from banks on average than their male
counterparts in 2013, no matter the size, age or industry of their business.
•
•
•
Woman-owned businesses turn most, to informal peer networks (family and friends who are
business owners) for business advice or services, far outweighing any other resources offered in
the state.
Female
< 5 Years
34%
42%
5-10 Years
24%
31%
> 10 Years
42%
27%
successful companies offer well-documented differences in
corporate management and communications as compared
to male CEOs, and a timely focus upon what has become
known as the triple business bottom line, defined as
“people, planet and profit.” An increase in the number, and
success of midsized woman-owned companies offers many
benefits, not the least of which is building experiential
capacity for more women to compete as CEOs in publicly
traded companies where their unique perspective can
substantially impact business. Given that only 3% of
Fortune 500 companies’ CEOs are currently female, there is
much work to do to build this pipeline.
Male
This report offers the first serious look at the women
who do business in Iowa and provides insight into their
experiences, including women’s use of technology, their
attitudes about being in business, where they go to seek
help and what they believe they need to succeed. It is hoped
that these findings will offer a starting point for more
complete research and the improvement of resources and
services for Iowa women going forward.
50
40
30
20
10
0
Male-owned businesses reported much greater need for help with critical business issues such as
regulatory compliance, human resources, legal or accounting guidance. Women did not, and this
statistically related to negative revenue and growth patterns in the state among woman-owned
businesses.
Along those same lines, woman-owned businesses employ
fewer people than male-owned businesses in Iowa and do
not seem to persist past the 10-year mark.
In 2012 and 2013 Iowa women business owners were online more than male-owned business
owners and used the Internet to seek funding, get advice and network.
Improving upon these numbers will have a positive impact
on the economy in the state of Iowa. Woman founders of
UNI Regional Business Center Entrepreneurship Outreach
Male
Female
60
Percent of Respondents
There is a clear lack of woman-owned Iowa businesses in industries associated with the 21st
century economy, such as technology and advanced or additive manufacturing.
Number of Years in Business
Gross Revenues in 2013
80
•
3
<$250K
$250-499K
$500-749K
$750-999K
$1M +
Average Number of Employees (Includes
Contract Workers)
Male
Female
7.10
5.27
2014 Iowa Small Business Repor t Special Segment
Women in Business are Different than Men
4
F
or over 30 years, researchers have attempted to
understand why woman-owned businesses behave
differently than male-owned businesses. Several
factors stand out which seem to influence how
women approach starting and growing a company. Those
factors include gender roles in our society, the use by
women of role models and mentors and the industry
choices of women entrepreneurs. Collectively, these
roles, needs and choices have put a damper on womanowned business start-up and growth nationwide and here
in Iowa. More recently, technology innovation is being
viewed as both a barrier and transformational opportunity
for women in business as well.
on my ability to navigate my sons’ subsequent health
challenges over the years.”
In spite of opportunity and market potential to run a
larger company, the role of mom superseded high growth
entrepreneurship for Valentine. The UNI survey captures
what are likely some of these trends among other Iowa
women who may avoid entrepreneurship all together
“Family and
business can coexist, but it is a
delicate balance.”
– Nan Valentine,
Valentine Coaching
Women have multiple roles in American culture,
including that of wife, mother and daughter. These roles
are unique to the female gender. The role of mother,
for example, is widely acknowledged to contribute
to the churn of women in and out of micro-enterprise
businesses. It may also play a role in keeping womanowned businesses small, as entry, exit and management
are less complicated with a small company. Nan
Valentine of Valentine Coaching, for example, owns
a home-based executive coaching business in Des
Moines, Iowa, serving clients nationwide. The talented
author, speaker and coach purposely chose not to have
employees in spite of many opportunities to grow. She
remains home-based after more than 15 years.
“Family and business can coexist,” Valentine says,
“but it’s a delicate balance. When I had my first child,
I intentionally crafted a service firm that let me have
schedule flexibility. That decision has had a huge impact
UNI Regional Business Center Entrepreneurship Outreach
for a period of years. Men outnumber women in business
from teenage years until the age of 50, then women
outnumber men in business from that age forward.
Industry choice may play a role in the size of womanowned companies, too. Women entrepreneurs dominate
the healthcare industry, education and most retail sectors
in Iowa. These industries are traditionally made up of
small companies that are difficult to scale and grow very
slowly. In the Iowa survey, female survey respondents
made up more than half of the retail business owners,
more than half of the service sector businesses and only
small fractions of the technology and manufacturing
sectors. A technology company has faster growth
potential and can be scaled more readily than a retail
store, however, men own three times as many tech
companies and twice as many manufacturing firms
in Iowa as women. For this reason, some researchers
suggest that women have smaller companies simply
because of the industries they choose.
Peer mentoring among business owners has been affirmed
by this study and others as highly valued by women. We
know too, that there is a positive relationship between a
company’s financial performance and the social networks
of the founder. In the 2013 Iowa Small Business survey,
nearly two-thirds of all businesses surveyed received
advice from another business owner in their local area,
and more than half had been advised by a non-local
peer. Notably, one-third reported receiving advice online
from someone they had not met in person. But as noted
elsewhere in this report, connecting can be difficult when
there aren’t very many female peer business owners in
Iowa to turn to.
Technology and the Internet offer substantive
opportunities for woman-owned businesses going
forward, to overcome these barriers and to redefine
business success. Kauffman Foundation researcher
Robert Atkinson reports that most economic growth in
the next two decades will come from the application of
technology innovations to traditional industry. Retailers
selling online, for example, or using mobile apps
instead of cash registers are two simple examples of
technologically based innovations that can help most any
business grow or improve their operations.
While Iowa may rank poorly by national standards for
woman-owned business, there has never been more
opportunity for advancing women’s entrepreneurship.
More work and resources are needed to understand how
to convert this knowledge into programs, services and
connections, but the future is bright for Iowa women.
2014 Iowa Small Business Repor t Special Segment
5
Women and Growth
Women and Technology
N
M
ost economic growth in the United States is
being led by technology innovation across
industries, so it is important that womanowned businesses utilize technology to
compete, grow and more efficiently operate in a global
economy. To date, however, woman-owned business
owners in Iowa are slow to embrace technology
innovations or make changes to their business models to
account for technological advances.
More than 25% of male-owned entrepreneurs added
employees in 2013 because of technology needs as
compared to less than 13% of woman-owned businesses.
Among those businesses that hired new technology
employees, male-owned companies hired 1.6 times more
employees per company than woman-owned businesses
who hired.
Male-owned businesses
appear to be acting
more quickly to re-align
their workforce as well.
Approximately 15% of all
full-time and 19% of all parttime Iowa jobs eliminated last
year were due to technology
obsolescence (technology
advances that make jobs
unnecessary), but none of
those lay-offs were from
woman-owned businesses.
Owners Who Added
Employees due to
Technology in 2013
13% 26%
Woman-owned businesses know that technology
incorporation is an area where they need to improve their
operations; they indicated a need to address technology
issues and web development in their top four technical
assistance needs.
ationally, women are embracing
entrepreneurship at record rates. Over the
past 14 years, women have started business
operations at 1.5 times the national average,
and today, woman-owned businesses account for
approximately 29% of all United States companies.
In a recent interview with Kor, LLC., a ten-year-old
Cedar Rapids based woman-owned commercial interior
design business, the topic of technology is at the forefront
of the company’s strategic planning. According to
founder Mary Segriff, “Technology innovations offer
exciting opportunities for growth and diversification
but getting there is difficult.” Further, she says that,
“Although we are excited about what technology can
do in our industry, figuring out how to do it is a little
daunting. I often feel I am being held hostage by my lack
of comfort with technology.”
Segriff is not alone in feeling overwhelmed by
technology. For many women it is a new and foreign
industry dominated by men. Women business owners
however, don’t need to know how to code or understand
the tech culture – they just need
to know what problems their
Owners Who Eliminated
customers need solved. It is
Employees due to
likely that there ‘is an app for
Technology in 2013
that’ that would leapfrog her
company forward. She just
hasn’t asked for it.
“I often feel I am being held
hostage by my lack of comfort
with technology.”
0% 13%
– Mary Segriff, Kor LLC
UNI Regional Business Center Entrepreneurship Outreach
In spite of owning nearly one third of all American
business, woman-owned companies account for only 6%
of the country’s jobs and 4% of business revenues—a
figure largely unchanged from 1997. One reason for this,
according to a 2012 study released by American Express
Open, is that the numbers and performance by womanowned businesses tend to fall precipitously as revenue
approaches $1 million and higher, a business designation
loosely defined as Stage Two operations.
Gross Revenues in 2013
80
70
Male
Female
60
Percent of Respondents
6
50
40
30
20
10
0
<$250K
$250-499K
$500-749K
$750-999K
$1M +
In Iowa, and across the country, woman-owned
businesses are younger and smaller than their male
counterparts. New data indicates that woman-owned
businesses actually grow much more quickly than
male-owned businesses and achieve higher than average
employment and revenue growth while their sales are
between $10,000 and $100,000. Somewhere between
$200,000 and $1 million in sales, however, these firms
fail to thrive in comparison to male-owned businesses
of similar size. Companies who cross the $1 million
threshold tend to stabilize, but woman-owned businesses
are far less likely to get there and once there, they still
underperform. 7
“…it is time to
reverse this trend.”
– Lydia Brown, Ascent
Affecting these trends is central to the work of Ascent,
a new Iowa non-profit dedicated to helping womanowned businesses in the state of Iowa. Collectively,
only about 31% of female-owned businesses reported
business expansions in 2013, while 40% of male-owned
businesses expanded. In addition, more woman-owned
businesses than men reported their business activity
was flat or had downsized. According to Lydia Brown,
founder of Ascent, “The recent survey findings reflect
a concerning challenge. Iowa has consistently lagged
behind other states in creating and growing womanowned businesses and it is time to reverse this trend.”
More than half of the woman-owned business owners
surveys expect their sales to grow in the coming year
but few are translating that optimism into action. While
nearly half of male-owned businesses reported intentions
to hire, only about one-third of woman-owned business
reported they would add employees. “Women tend to be
conservative in their business outlook,” suggests Brown.
“However, when they add jobs, they keep them in part
because they cautiously planned for the added payroll. It
is one reason why women entrepreneurs are credited with
being strong managers.”
Business Owners who Anticipate
Adding Employment in 2014
Male
Female
49%
34%
2014 Iowa Small Business Repor t - Special Segment
8
Women and Capital
I
owa businesses turned to one or more of eight primary
sources of capital during 2013. These sources included
banks, credit unions, investment groups, revolving
loan funds, crowdfunding, friends & family and
personal money. While similar numbers of men and
women applied to each funding source during the year,
the amount of capital they obtained was different.
Among businesses that applied for bank financing, for
example, the average male-owned business secured
more money than the average woman-owned business.
Overall, male-owned businesses borrowed an average of
$150,500, while woman-owned businesses borrowed an
average of $29,625.
Accounting for industry differences, such as retailing
where survey respondents who were women own 10%
more retail operations, male-owned retailers secured
an average of $138,937, and female retailers secured
$20,333. The same was true of businesses in the
professional services industry. Male-owned professional
services businesses secured an average $111,714, while
woman-owned firms in the same industry secured
$31,571. Similar trends were found when comparing
male- and woman-owned businesses of similar ages.
A look back at the 2012 survey showed that in at least
one industry, women secured more financing than men.
Woman-owned professional service businesses borrowed
an average of $40,888 as compared to male-owned,
which borrowed $24,032. However, overall, the average
male-owned business in 2012 secured $64,500, while the
average woman-owned business secured $39,885.
Federal Deposit Insurance Corp. records show that
208,960 small business loans were approved by
Iowa banks in 2013, totaling more than $16.3 billion.
“…women tend to
be more financially
conservative than
men.”
– Lori Ristau,
Iowa Bankers Association
Women and Formal Networks
Capital Secured by Source
Male
Female
Bank Loans
$150,500
$29,625
Credit Union Loans
$83,250
$18,625
Crowdfunding Website
$50,000
$0
Friends/Family
$32,783
$2,800
Grants
$13,700
$3,619
Investment Group
$85,000
$100,000
Personal Money
$13,911
$7,892
Revolving Loan Fund
$7,083
$10,833
Other
$39,400
$12,000
According to Lori Ristau, Vice President of Marketing
and Communications for the Iowa Bankers Association,
the finding that men are borrowing more of those dollars
than women isn’t surprising. “Other studies have shown
that women tend to be more financially conservative than
men. They usually save more and take fewer risks when
investing, so it makes sense that they also would be more
conservative borrowers,” said Ristau.
For both men and women small business owners, it may
be that a lack of financial education is the biggest barrier
to the growth of their businesses, added Ristau. “In a
recent study in another Midwest state, small business
owners cited a lack of business finance education as one
of their biggest barriers to growth. This Iowa study also
found that help with financing is near the top of business
owners requests for assistance.”
To help provide easier access to financial education,
this year the Iowa Bankers Association rolled out a new
scholarship program for small business owners to attend
financial literacy training, which business owners can
apply for through their local Iowa bank. The discrepancy
between men and women suggests that women are
more conservative or that men are more risk tolerant in
business finance. This is not an Iowa-centric issue. A
July 2014 report of the U.S. Senate Committee on Small
Business and Entrepreneurship found similar capital
issues among woman-owned business across the country.
UNI Regional Business Center Entrepreneurship Outreach
M
ore than half of
Iowa woman-owned
businesses use
their Chamber of
Commerce and local networking
clubs as a preferred source to
secure advice and services. Lori
Day, President of FocusFirst,
Inc and current President for the
National Association of Women
Business Owners (NAWBO)
central Iowa chapter, says that
formal networking—local and
statewide—is critical to improving
the overall business climate for
women. “Women need industry and
business connections to share their
common challenges and identify
resources and solutions. These
connections maximize mutually
beneficial opportunities.”
9
Service Provider Use
Male
Female
Cowork Facility/Incubator Program
13%
8%
Chamber/Local Networking Club
45%
53%
Entrepreneur Contest(s)
12%
15%
Family/Friends that are Business Owners
65%
75%
IASourceLink.com
20%
24%
Iowa Department of Revenue and Finance
23%
26%
Iowa Economic Development Authority (IEDA)
12%
9%
Iowa Microloan Program
5%
5%
Iowa’s for Social and Economic Development (ISED)
3%
6%
John Pappajohn Entrepreneurial Center (JPEC)
11%
5%
Other Business Owners via Online Forum/Chat Room
37%
37%
Professional trade organization
47%
39%
5%
4%
20%
21%
Renew Rural Iowa
Small Business Administration (SBA)
Small Business Development Center (SBDC)
22%
22%
Women are going online, too,
to obtain advice and services.
announced expansion of NAWBO from a central Iowa
Approximately 65% of all the
resource for woman-owned business to a state-wide
UNI online Business Concierge users in 2013 were
association called NAWBO Iowa.
women and 61% of woman-owned businesses engage
with their professional trade organization mostly
The recent creation of a statewide women’s business
online. “Not surprising,” says Day. “We see that women
support organization, called Ascent, is timely as well.
business owners are open-minded and they consistently
Founder Lydia Brown envisions Ascent as a formal
demonstrate their interest in learning, growth and
connector of Iowa woman-owned businesses with the
development…all of which are good for business.
resources and services they need across the state. The
Women aren’t afraid to ask for directions—and they
Cedar Rapids based non-profit has begun serving women
certainly aren’t afraid to search online for the right people through bootcamps and counseling and more efforts are
and resources until they’ve gotten the answers they
planned. She notes, “We are working to meet women
need.”
where they are in their business lifecycle and to support
Day and others are calling for better statewide
opportunities for women to connect, including a newly
the individual woman business
owners’ needs.”
“Women aren’t afraid to ask for directions and
they certainly aren’t afraid to search online for the
right people and resources until they’ve gotten the
answers they need.”
– Lori Day, FocusFirst and NAWBO
2014 Iowa Small Business Repor t - Special Segment
Women and Mentors
10
N
T
early 70% of all survey respondents reported
turning to peer business owners in their closest
circles for advice, far more than any other
resource.
he Regional Business Center team philosophy is to listen to small business owners, imagine what
we can do to make life better, and to create solutions leveraging our university and technology
assets. Annually, we evaluate how we’ve done in terms of economic impact, user experiences, and
popularity. The programs below are just some of the resources made available to small business
owners across the state. For more information visit www.uni.edu/rbc.
The 2012 American Express Open study reports there are
approximately 72,000 Iowa businesses owned by women,
or about 28% of all businesses in Iowa. For female
entrepreneurs, then, finding other like-minded women
may be difficult. Male business owners have nearly three
times as many peers of their own gender to turn to, as
compared to woman-owned businesses in Iowa. Womanowned businesses are not evenly distributed throughout
Iowa either. Finding a mentor in Elkader may be far more
The Iowa Small Business Report is the only annual statewide survey of small business owners in Iowa. The
2014 report captures economic activity among small business owners with fewer than 50 employees and
offers the first in-depth look at woman-owned businesses in the state. First conducted in 2012, the survey
provides researchers, policy makers and service providers throughout the state a better understanding of the
needs of Iowa’s small business community.
“Women need to access the wisdom of other
women with similar issues.”
– Nan Valentine, Valentine Coaching
difficult than connecting with a woman in Cedar Rapids,
making rural woman-owned business less apt to connect
with other like-minded women. Does gender matter?
“It matters on many fronts,” notes Des Moines-based
Nan Valentine of Valentine Coaching. “When women
with young children have an office at home, problems
are inevitable. It can be a tough balancing
act. Since most men aren’t juggling a homebased business and primary child care
responsibilities, I expect it’s hard for male
mentors to relate. Women need to access the
wisdom of other women with similar issues.”
11
advice from government and paid professional sources.
This suggests that connecting growth oriented Iowa
women with other women of high growth companies is
especially important. According to Dun & Bradstreet,
however, there are only 1,301 woman-owned companies
in the state with 9-99 employees, a very small number of
women to connect.
Professor Kristine Kuhn of the University
of Washington has looked at the Iowa
survey data associated with the topic of
peer learning. In a paper under review,
she makes note of some primary research
suggesting that founders of rapid-growth
firms preferred peers as advisors over other
potential sources, despite the fact that these
entrepreneurs had incentives to obtain
UNI Regional Business Center Entrepreneurship Outreach
The Business Concierge gives small business owners a
single place to call, email, chat or tweet to get business
information, market research or a referral to an Iowa service provider partner. Our ‘Ask Us Anything’
approach gives confidence to the shy, empowers the excited and ensures no business question goes
unanswered. More than 600 businesses are served annually, at no charge. http://bizhelp.iasourcelink.com
Dream Big Grow Here is an online contest providing small
business owners across industries an opportunity to earn a $5,000
prize and another $10,000 grand prize annually. Launched as a
pilot in 2010, Dream Big Grow Here attracts more than 100,000
site visitors each year and culminates in live, pitch-off events.
http://www.dreambiggrowhere.com
IASourceLink is the premier online resource
connecting entrepreneurs and small businesses to
more than 320 resource providers across Iowa.
IASourceLink is a collaboration between the Iowa Economic Development Authority (IEDA) and the
University of Northern Iowa’s Regional Business Center. http://www.iasourcelink.com
Advance Iowa is Iowa’s recognized holistic consulting program for
mid-sized growth companies. Work is performed with companies
in a variety of industries across the state, assisting them with core
strategies. http://www.advanceiowa.com
Since 2008, the Regional Business Center has led a collaborative
effort among service providers to host a statewide small business
conference called EntreFEST. Now a public-private partnership,
EntreFEST attracts more than 500 attendees representing all facets
of the entrepreneurial sector for a three-day innovative event like no
other. http://www.entrefest.com
The Entrepreneurial Regions Project, in partnership with UNI’s Institute for Decision Making (UNI
IDM), provides in depth and hands on assistance to communities interested in supporting entrepreneurial
activity. Through training, planning assistance and support services, communities work to improve the
entrepreneurial culture and business access to capital, technical assistance and networks.
2014 Iowa Small Business Repor t - Special Segment
12
Crowdfunding
C
rowdfunding, raising grant-type money online via
websites like Kickstarter, has become popular on
both coasts and in the southern part of the United
States. The Midwest, however, has failed to
embrace crowdfunding in measurable numbers to date, and
it was largely ignored by Iowa business owners in 2013.
More than 300 different websites across the country offer
business owners the opportunity to rely upon the “wisdom
of the crowd” by soliciting money from many people online
to help a business start up or grow. David O’Shields, an
Iowa documentary producer, is one of a few hundred Iowa
entrepreneurs known to have used crowdfunding in 2013.
He successfully raised $10,000 in seed capital from 42
individuals at www.kickstarter.com for a new documentary
film. He suggests the lack of crowdfunding use in Iowa and
other Midwestern states is likely a lack of knowledge about
such sites, rather than a lack of interest. He notes:
“Crowdfunding is a great option to secure start-up or
new project funding. I used the resulting work from
my Kickstarter campaign to attract the interest of larger
organizations that specialize in funding documentaries.
I have two additional campaigns planned for 2014.
Kickstarter is my preferred site, but there is Indiegogo,
Peoplefund.it, Smallknot, RocketHub and hundreds of
others. Crowdfunding is indispensable. I think once Iowans
become more aware of it, the numbers of businesses using
it will go up.”
“Iowa could provide more
funds for entrepreneurs that are
easy to find and apply for.”
- Survey Respondent
“We need more available and
accessible financial
resources to help entrepreneurs.”
- Survey Respondent
Sales & Markets
I
owa business owners have not yet ventured into global
markets. More than half of Iowa business owners
reported they do not conduct business outside of Iowa
at all. Of those that do generate out-of-state sales, they
indicated it makes up only a small portion of their overall
revenue, averaging about 20% or less. At the same time,
opportunities for global business have never been better,
with the Internet and technology making access to far-away
markets, suppliers and financing more accessible than at
any time in the past. Increasing the amount of out-of-state
dollars into Iowa is an important tool for economic growth.
According to LaDene Bowen, CEcD, Associate Director
of the Institute for Decision Making at UNI, intrastate and
international trade is critical to bringing new dollars into
Iowa communities.
Percentage of Sales Outside of Iowa
100%
“Provide more grant money to
help small businesses improve
without going so far in debt.”
- Survey Respondent
Business owners in the 2013 survey repeatedly called
for more access to grants for entrepreneurs. Heightened
awareness and support training to assist businesses in
accessing crowdfunding might ease some of these concerns
in coming years.
“Crowdfunding is indispensable.
I think once Iowans become
more aware of it, the numbers of
entrepreneurs using it will improve.”
– David O’Shields, New Light Media
“We need help exporting and
entering new markets…”
- Survey Respondent
“We need help defining a path
of growth and direction.”
- Survey Respondent
“We need help expanding
to other states.”
50%-74%
- Survey Respondent
75%-99%
20%-49%
<20%
0%
“For example,” she says, “the growth of businesses that
export their end products (goods and services) outside
the state generates new local jobs and wealth that would
not otherwise be possible if those sales stayed and simply
re-circulated over and over in our local communities.
In essence, those sales represent ‘new money’ into the
local economy. Smaller businesses may find growth
opportunities they might not have otherwise by looking
outside the state too.”
There are plenty of resources and services available in
the state to support Iowa business owners ready to think
about this kind of expansion. The Iowa SBDC system has
an International Trade Center (http://www.IowaSBDC.
org), the Iowa Economic Development Authority provides
export trade assistance through their International Office
(http://www.IowaEconomicDevelopment.com), and
the U.S. Department of Commerce International Trade
Administration (http://www.trade.gov) has consultants
who regularly work with business owners on international
expansion opportunities. Lastly, the UNI Advance Iowa
program can assist companies of all sizes in identifying
new market opportunities, domestic and/or international
(http://www.AdvanceIowa.com).
“Small Businesses may find growth opportunities
they might not have otherwise if their market is
limited to only the local region.”
– LaDene Bowen, CeCD, UNI Institute for Decision Making
Regional Business Center Entrepreneurship Outreach
13
2014 Iowa Small Business Repor t
Technology
A
cross the country, businesses large and small are
becoming global, technology enabled and Internet
dependent. According to many economists, this
shift is profound and will greatly influence which
businesses are competitive going forward. For businesses
in rural regions, adopting to technology is slow, as
connectivity, bandwidth and costs continue to stifle business
innovation. While rural bandwidth legislation failed to pass
in the 2014 session, there is considerable interest to address
rural connectivity in 2015. Rural business owners surveyed
repeatedly called for faster, less expensive connectivity.
In urban areas, new
Owners Who Eliminated
ideas based upon
Employees due to
technology travel
quickly throughout
Technology in 2013
the entrepreneurial
community. Mobile
applications, known as
“apps” are changing
the way many Iowa
companies accept
payments, interact
with their customers
and do hundreds
of rote tasks.
Collectively, there are
more than 1 million
apps for Apple and
Android, with hundreds of thousands of them focused for
small business use. Other technologies offer entirely new
business models; 3D printers that make custom flavors of
cookies or “print” ice cream are on their way. According to
Amy Kuhlers, State Program Manager for Connect Iowa,
the importance of technology to business start-up and
growth cannot be overstated: “Our experience,” she says,
“has shown that Internet
0% 13%
Business Growth
“Get fiber optics to all small towns
in Iowa…at a reasonable cost.”
-Survey Respondent
“We need technology assistance
so we can compete in a global
marketplace.” - Survey Respondent
access, adoption and use is the great equalizer in the
21st century global marketplace. With Internet access,
entrepreneurs from Council Bluffs to Bettendorf can
sell their wares, reach
potential customers
and conduct business
locally, nationally and
even internationally
as seamlessly and
efficiently as Fortune 500
companies.”
1 in 5 of all
new jobs
added in 2013
were due to
technology
The 2013 survey shows
that Iowa business owners
are slowly catching
on. Increased business use of the Internet and associated
technology tools is reflected in the number of new
technology jobs added and the number of jobs lost because
they were replaced by technology tools. Of all the new
full- and part-time jobs added by survey respondents last
year, roughly one-in-five new jobs was a direct result of the
introduction and use of new technologies.
“Our experience has shown that
Internet access, adoption and use is
the great equalizer in the twenty-first
century global marketplace.”
– Amy Kuhlers, Connect Iowa
Regional Business Center Entrepreneurship Outreach
15
I
owa business owners reported ongoing
slow business growth during 2013. Sixtyfive percent of respondents indicated
their business either stayed the same or
downsized, slightly more than in either 2011
or 2012.
Sales volume was still sluggish, too, as 58%
of respondents reported their sales were flat
or decreased during 2013 and only 42% of business
owners saw an increase in sales. Slightly more maleowned businesses saw an increase in sales than those
owned by women and slightly more woman-owned
businesses experienced a downturn in 2013.
These are not new trends. In all three years of the
survey, respondents have reported slow sales growth.
Iowa business owners, as in other states, continue
building back business and sales in the aftermath of the
recession.
These views are mirrored by the state’s largest
companies as well. The Iowa Business Council (IBC)
surveys their membership, comprised of the state’s
largest companies, on a quarterly basis. Just like small
company founders, 67% of Iowa’s largest companies
expect sales to increase over the next six months. In a
2014 spring interview with Radio Iowa, IBC executive
director Elliot Smith noted the same kind of cautious
optimism among large Iowa companies. The IBC
Overall Economic Outlook Survey Index (OSI) for the
second quarter was 64 on a scale of 1-100. “We’re still
in positive sentiment territory, which is anything around
50 on our 100 point scale. All our numbers are well
above that,” Smith said.
In spite of this, UNI survey respondents across the
board are optimistic about improved sales going
forward. Sixty-seven percent of business owners expect
their sales to increase
page 23
during 2014 and only
During 2013 did you see your revenues...
7% expect their sales to
And in 2014 do you expect to see revenues...
drop. About a quarter of
80
all businesses surveyed
2013
expect their sales to stay
70
the same.
2014
60
Percent of Respondents
14
50
40
30
20
10
0
Increase
Decrease
2014 Iowa Small Business Repor t
Stay the Same
Pressing Problems
I
owa business owners rated growing sales, taxes, and
finding qualified employees as their top three pressing
problems in 2013.
Finding qualified employees became a more urgent
issue in 2013, replacing cost of health insurance and
other benefits cited in 2012 as the top problems facing
Iowa businesses. The Professional Developers of Iowa
(PDI) has identified workforce development as a top issue
as well. Stacy LoVan, current president of the statewide
organization, notes that much work is underway to address
workforce readiness.
“…Iowa is making
great strides in the
workforce arena.”
– Stacy LoVan,
Professional Developers
of Iowa
She says, “As economic development professionals, we
hear regularly that the availability of skilled workers is an
issue facing Iowa companies. The State of Iowa, education
officials, and local economic and workforce development
organizations are working on several initiatives to address
this. The Home Base Iowa, Skilled Iowa efforts, Iowa’s
STEM initiative, local school-to-work & internship
programs, and job training & apprenticeship programs are
all underway.”
On other fronts, communities across the state are working
to make their local region more attractive to incoming
residents which, according to Chris Gibbons, founder of
the National Center for Economic Gardening, is critical.
He often states that, “Creating communities that attract
entrepreneurs and the talent they hire is as critical as
“I don’t think people
realize how difficult
compliance can be.”
– Jim Olson, Iowa Waste
Reduction Center
heavy rail and
coal were to
the last century
business
owners.”
LoVan echoes
this and points
out positive
things that are
happening in
Iowa. “When
you consider the
investment Iowa
communities
are making,” she says, “in quality of life amenities such
as arts, culture, and built & natural resources to attract
professionals of all ages and skill levels to our state, Iowa is
making great strides in the workforce arena.”
Other issues that ranked highly among entrepreneurs
owners were competition and government regulations.
Between 2011 and 2013, incrementally growing numbers
of businesses identified regulatory compliance as a pressing
problem in the state. “I don’t think people realize how
difficult compliance can be,” notes Jim Olson, Director
of the UNI Iowa Waste Reduction Center. “On the
environmental side alone there are so many elements: air
emissions, community right-to-know, hazardous waste,
painting and coating, pollution prevention, solid waste,
storm water and wastewater. Our services (which are free
and confidential) strive to assist those business owners in
understanding their responsibilities—and we are always
busy.” Additional commentary concerning government
regulations is addressed in the Government Relations
segment of this report.
“I am certainly under-accessing
useful advising resources.”
Government Relations
I
owa business owners believe the governor and
legislature can do a better job of understanding and
addressing their needs, yet politicians ranked more
favorably in 2013 than in either of the two previous
years surveyed. On a scale of 0-4, the governor and
legislature ranked at 1.92 in 2013. This is a statistically
significant improvement over 2012 when public sector
servants ranked at a low of 1.65.
These rankings appear to be tied to how well the governor
and legislature have responded to key business concerns
about government regulations and taxes. Between 2011
and 2013, there was
a sharp rise in the
Respondents who listed
numbers of business
government regulation
owners identifying
as a concern.
30
regulatory issues
in particular, as a
pressing problem.
In the most recent
25
survey, one-infour companies
identified regulatory
compliance as a top
20
issue.
Percent of Respondents
16
According to
Senator Bill Dotzler,
15
2011
2012
2013
Assistant Majority
Leader in the Iowa
Senate, the legislature is eager to talk to entrepreneurs
in coming months to learn exactly where the regulatory
concerns are. He notes there is room for improvement in
state government. “We need to make regulatory compliance
simpler,” he notes, “and provide easier access to the right
people involved in licensing, regulations and compliance.”
“We understand that
government isn’t
always the answer.”
– Kim Reynolds,
Lt. Governor, State of Iowa
Understanding the needs of Iowa business owners has been
one of many focal areas for Lt. Governor Kim Reynolds
this past year. She has been a familiar face statewide during
2013, connecting with small business owners.
“We understand that government isn’t always the answer,”
she said. “We’ve worked to reduce Iowa small businesses’ tax
burden, cut cumbersome red tape, connect Iowans to the
global marketplace through increased broadband access and
put measures in place to help prepare Iowans for the jobs of
tomorrow.”
The Iowa legislature took up business taxes in 2013, with
a 10% reduction in taxable value on commercial and
industrial property, coupled with a $125 million property
tax credit targeting small business. Results of these
measures will not be seen for a year or more but should
begin to address some of the 121 separate comments shared
by business owners about taxes alone.
– Survey Respondent
“The state needs to concentrate
on education of the workforce/
employee training.”
– Survey Respondent
Regional Business Center Entrepreneurship Outreach
17
“We need to make
regulatory compliance
simpler.”
– Bill Dotzler, Assistant Majority Leader,
Iowa Senate
2014 Iowa Small Business Repor t
18
Peer Learning
I
owa entrepreneurs have many public and private
resources available to help them secure capital, technical
assistance or other guidance in starting or running a
business. Surprisingly, business owners tapped family
and friends
who are
also business
owners for
advice more
than any other
public, private
or professional
resource in 2013.
Nearly 70% of
respondents turned
to their peers for
help, and 37% said they turned to other business owners
online with whom they had no personal ties. All other
resources were used by less than half of the respondents.
This comes as no surprise to Andy Stoll, co-founder of
Seed Here Studio, a startup community-building business
in the Cedar Rapids/Iowa City’s Creative Corridor
region.“Often the best help for an entrepreneur,” he
notes, “is another entrepreneur. Iowa has been improving
its statewide network over the last three to five years to
decrease the frictions encountered when seeking help from
other people who’ve ‘been there, done that’.”
Today, many cities in Iowa, including Ames, Sioux City,
Decorah and Cedar Rapids have community builders like
Andy Stoll and his partner Amanda Styron. These new
“connectors” work to strengthen peer networks through
a multitude of approaches, including CoWorks, 1 Million
Cups events, StartUp Weekends and even Hackathons.
Many see these new networks as the most effective way to
accelerate entrepreneurial and small business activity.
“Often the best
help for an
entrepreneur
is another
entrepreneur.”
– Andy Stoll,
Seed Here Studio
“There needs to be a more
one-on-one approach with
entrepreneurs when they start
their business.”
– Survey Respondent
“Support incubator programs
in rural areas.”
– Survey Respondent
“I need access to people
that could give me fresh
perspective….”
–Survey Respondent
Professor Tera
Galloway of
Illinois State
University has
reviewed the
Iowa survey
data from the
2012 survey
and presented
her findings
at the Babson
College
Research
Entrepreneurial Conference in June of 2014. She notes that
it may be important not to just link up business peers, but
to do so among business owners in the same industry - for
example, competitors. She says that “business owners
operating in the same industry are particularly qualified
as advisors as they have valuable expertise and similar
knowledge base.” She found among Iowa small business
owners, when trust between competitors involved in peer
learning was high, it had a positive effect on business
growth.
Regional Business Center Entrepreneurship Outreach
Most Improved Resource
A
mong all resources reported to be used by
business owners in the 2013 survey, the
IASourceLink.com website saw the greatest
increase in use. IASourceLink was launched
in 2012 to provide Iowa business owners a single portal
to access resources and services, including referrals to
statewide service providers. Currently, IASourceLink
provides a wide array of free resources, including UNI’s
monthly business webinars and a Business Concierge
service.
FY14 Economic Impact
Outcomes for IASourceLink
Business License
Information Center Serves
Business Concierge Serves
Monthly Events Listed
Newsletter Readers
Service Provider Profiles
Webinar Attendees
792
360
65
10,000+
300+
1,600
19
Business
Concierge is
now averaging
more than 70
help requests
every month
and webinars
enjoy record
numbers of
attendees.
This approach
has enabled
both of our
organizations to
better reach and impact Iowa businesses.”
According to Sherry Timmins, Team Leader for Business
Development and IASourceLink at IEDA, IASourceLink
has been a strong addition to the online business resources
available to Iowans. Overall she notes, “We are pleased
with the progress that we’ve made thus far, but we know
that there is much more we need
to do to make Iowa a national
leader in entrepreneurship
support.”
“…there is much more we need to do to make Iowa a
national leader in entrepreneurship support.”
– Sherry Timmins, Iowa Economic Development Authority
The Business Concierge, in particular, is serving record
numbers of business owners at IASourceLink.com with
competitive intelligence, industry trends information and
a long list of other business information resources.
According to Rob Williams, MyEntre.Net and UNI
Regional Business Center Program Manager, the
statistically significant jump in the number of users
in 2013 was
gratifying. He
IASourceLink Use by
noted, “All of
Respondents
the site resources
have seen strong
2012
15%
growth in the
2013
22%
past year. The
“We need more and continued
web seminars.”
– Survey Respondent
“We need more networking
resources.”
2014 Iowa Small Business Repor t
– Survey Respondent
20
In Their Own Words: Survey Respondent Comments
“I appreciate the constant communication. I understand there are more
resources out there, but sometimes just don’t know how to ask.”
“The biggest hindrance, in my case, is the lack of an adequate workforce, and it
is getting worse every year.”
“As a rapidly growing business, there is often
encouragement to outsource, either outside the
county, state and even the country. We need to make
it attractive and supportive to stay where we are, to
improve the local/state/country economy.”
“Do more for very small businesses (under
20 employees). It is often difficult to afford
memberships in organizations, advertise
business-to-business, or participate in events with a
limited budget.”
“I love being able to have my own business!”
“Less regulation, lower taxes and less government control would help.”
“It was difficult to start my business in 1987 because there was a lot to know
and learn to operate within the law. If I had to start the business again today, I
don’t think it could be done, mainly because of added government regulations
over the past 25 years.”
Regional Business Center Entrepreneurship Outreach
21
“I think it would be beneficial to get a panel of local small business owners to
act as a mentoring source for new business owners who have questions.”
“Raising minimum wage only allows me to give fewer hours to existing
employees. It’s a deal breaker.”
“We need local city government support of small
business. Our local government is threatening and has
no appreciation of small business.”
“Keep EntreFEST going!”
“Obamacare is going to destroy the family business
unit. All of the additional costs they are adding to the
business owner is going to break us, as well as the
skyrocketing costs of health insurance.”
“We have used every bit of our savings to keep our small meat market/
catering business open. Today’s economy is risky and scary and sometimes
overwhelming. We truly believe we fill a need in our small community and want
to contribute to Iowa’s overall economy.”
“Very good survey - covers the important aspects of small businesses!”
2014 Iowa Small Business Repor t
22
A Message From SMS
S
trategic Marketing Services (SMS) is part of the University of Northern Iowa’s Business & Community
Services group—a collection of “outward facing” professional organizations enabling innovation among
Iowa’s communities. SMS has established a solid, nationwide reputation for delivering intelligence that is
accurate, actionable, and affordable to its clients’ marketplace. Utilizing the strengths of industry professionals
and talented faculty consultants, SMS has served more than 250 private and public organizations in its 21-year
history. Once again in 2013, Strategic Marketing Services worked closely with the UNI Regional Business
Center (RBC) project team to design a research methodology that enabled a broad assessment of Iowa entrepreneurs. The
protocol yielded statistically reliable comparisons between data submitted by male and female respondents, as well as
between corresponding data collected in 2011, 2012, and 2013.
The 2013 survey instrument was sent to a random sample of 16,913 Iowa businesses: 8,913 records were provided
by the UNI RBC and 8,000 were purchased through InfoUSA. Over a two-week data collection period, 668 potential
respondents logged onto the survey website. Partially completed surveys, respondents who opted out, businesses with
over 50 employees, and former and future business owners were removed, leaving 515 respondents to compose the 2013
aggregate data group.
D&B® Selectory estimates there are 245,005 businesses in Iowa with 50 or fewer employees. Assuming there are no
major differences between business owners who responded and business owners who did not respond, 515 aggregate
responses creates a statistically valid sample yielding a 95% confidence level with a +4.31% confidence interval.
This means that for any ranking or rating expressed by the aggregate group, if the number of responses matches or
approximates the total of 515 responses, we can be 95% certain that the data are within 4.31% of being accurate.
Throughout the report, as requested by the UNI RBC project team, SMS compared response data from male and female
respondents for select questions. For some questions, comparisons were also made between the 2013 and 2012 respondent
groups. Confidence levels and intervals associated with each subgroup are:
• 95±5.94% for 2013 male respondents (272 ea)
• 95±6.28% for 2013 female respondents (243 ea)
• 95±4.31% for 2013 total respondents (515 ea)
• 95±3.97% for 2012 total respondents (609 ea)
SMS also employed both non-parametric (chi-square test for independence) and parametric (independent samples t-test)
statistical tests to detect significant differences between respondent groups. The former test explores the relationship
between two categorical variables; the latter looks for differences between two independent groups on a continuous
measure. All statistically valid differences between groups are noted in the final research and analysis report.
We at SMS deeply appreciate the trust that the UNI RBC places in our market research organization. We look forward to
future involvement with this vital measure of Iowa entrepreneurs and the entrepreneurial climate in which they operate
and prosper.
— Greg Gerjerts, Director
Strategic Marketing Services
Professional Researcher Certification
23
T
he Regional Business Center team philosophy is to listen to small business owners, imagine what
we can do to make life better, and to create solutions leveraging our university and technology
assets. Annually, we evaluate how we’ve done in terms of economic impact, user experiences, and
popularity. The programs below are just some of the resources made available to small business
owners across the state. For more information visit www.uni.edu/rbc.
The Iowa Small Business Report is the only annual statewide survey of small business owners in Iowa. The
2014 report captures economic activity among small business owners with fewer than 50 employees and
offers the first in-depth look at woman-owned businesses in the state. First conducted in 2012, the survey
provides researchers, policy makers and service providers throughout the state a better understanding of the
needs of Iowa’s small business community.
The Business Concierge gives small business owners a
single place to call, email, chat or tweet to get business
information, market research or a referral to an Iowa service provider partner. Our ‘Ask Us Anything’
approach gives confidence to the shy, empowers the excited and ensures no business question goes
unanswered. More than 600 businesses are served annually, at no charge. http://bizhelp.iasourcelink.com
Dream Big Grow Here is an online contest providing small
business owners across industries an opportunity to earn a $5,000
prize and another $10,000 grand prize annually. Launched as a
pilot in 2010, Dream Big Grow Here attracts more than 100,000
site visitors each year and culminates in live, pitch-off events.
http://www.dreambiggrowhere.com
IASourceLink is the premier online resource
connecting entrepreneurs and small businesses to
more than 320 resource providers across Iowa.
IASourceLink is a collaboration between the Iowa Economic Development Authority (IEDA) and the
University of Northern Iowa’s Regional Business Center. http://www.iasourcelink.com
Advance Iowa is Iowa’s recognized holistic consulting program for
mid-sized growth companies. Work is performed with companies
in a variety of industries across the state, assisting them with core
strategies. http://www.advanceiowa.com
Since 2008, the Regional Business Center has led a collaborative
effort among service providers to host a statewide small business
conference called EntreFEST. Now a public-private partnership,
EntreFEST attracts more than 500 attendees representing all facets
of the entrepreneurial sector for a three-day innovative event like no
other. http://www.entrefest.com
The Entrepreneurial Regions Project, in partnership with UNI’s Institute for Decision Making (UNI
IDM), provides in depth and hands on assistance to communities interested in supporting entrepreneurial
activity. Through training, planning assistance and support services, communities work to improve the
entrepreneurial culture and business access to capital, technical assistance and networks.
Regional Business Center Entrepreneurship Outreach
2014 Iowa Small Business Repor t
2014
The
Iowa Small Business Report