Home | About the Project
Context
The U.S. Small Business Administration awarded a grant (SBAHQ-06-I-0046) to the School of
Business at the University of Redlands. The grant began in September 2006 and originally was
for two years; it was extended to a third year, expiring in August 2009. The stated goal was:
The University of Redlands (University) is proposing to work in partnership with the Small
Business Administration (SBA) to develop an extension program to assist small businesses
in southern California’s Inland Empire. This extension program will be conducted by the
University’s School of Business as applied research, working directly with local SBA staff
and a diverse group of small businesses to transfer the theory, methods and tools of
geographic information science (GIS) toward improving business operations.
Early stages included building the infrastructure and capacity to deliver the envisioned products
and services, as well as discussions with the Inland Empire Small Business Development Center
to better understand local markets and candidate small and medium-sized enterprises (SMEs).
The first year involved a series of Literature Reviews on spatial thinking in business Logistics,
Marketing, and Strategy, and of Training Workshops to expose SBA personnel, small business
owners, private investors, and other interested parties to the art of spatial thinking, the
potential value of spatial thinking in identifying business opportunities and guiding business
analyses, and to the science of spatial-enabling technologies. The workshops introduced
concepts and sources of spatial data, and demonstrated geographic information systems (GIS).
Case Studies also were initiated during the first year, and continued throughout the grant
period. Three primary case studies involved School of Business faculty working directly with
owners and employees of an individual small business, applying GIS to one or more critical
elements of the enterprise. The ABC Blinds case demonstrates analyses of competitors, of
customers, and of distribution routes. The Jacobs Appraisal case considers the utility of handheld devices for collection of real-time spatial data for subsequent GIS analysis. The BODAS
Bridal Magazine case documents the role of GIS in a start-up operation, exploring market
potential and identifying optimal product distribution strategies. In a different vein, the Inland
Empire Minority Business Enterprise Center case attempts to “train the trainers”, working with
personnel who then work with approximately 100 client SMEs to apply GIS to their business.
Grant activity also included co-hosting (with ESRI, Inc.) the annual GIS Business Summit (2008 in
Chicago; 2009 in San Diego), and development of this Small Business Spatial Resource Center.
All grant activities are documented at the Virtual Portal (Vortal) Spatial Business Knowledge
Repository, which also includes an extensive library of on-line business GIS resources.
RIGHT-HAND SIDE BUTTONS:
Operating Model
Small Business
Inland Empire
Business Atlas
IMAGE SOURCES:
http://faculty.ksu.edu.sa/adosari/Pictures%20Library/GIS-1.jpg
Microsoft ClipArt
http://business.redlands.edu/atlas/about/
http://www.uflib.ufl.edu/fefdl/gisday07/
Operating Model
Regardless of definition varieties, the overwhelming majority of businesses, in the United States as
elsewhere, are SMEs. The primary goal of small businesses, especially during its early stages, simply is
survival. Examination of Survival Rates indicate that (1) after four years from inception, only about 1/2
survive, whereas about 1/6 close as successes and 1/3 close as failures, and (2) this outcome is largely
invariant across industries and prevail without regard to the relative maturity or level of technological or
other disruption within the industry. SMEs can most be helped by increasing their survival rates. One
approach is to incorporate survival rates directly, as a proxy measure of risk exposure, and this approach
is demonstrated by industry in Survival Rate Costs of Capital. Another, less direct, approach follows.
We construct SME Turnover Rates for each of the “51 states” (50 + D.C.), dividing business starts by the
sum of business bankruptcies and terminations in a given period. The national rate for 2006 was 1.15,
suggesting a growth rate of 15% in the SME sector of our economy. However there were marked
differences among regions and among states. The index equaled a robust 2.62 in Nevada, 1.76 in
Colorado and 1.64 in New Mexico, with these three states experiencing the greatest growth, down to
0.68 in West Virginia. The State of California index was not dissimilar from West Virginia, at 0.78.
Plausible explanations are not difficult to find, based on State Rankings. California ranks 1st in personal
income tax rate, capital gains tax rate, and 5-year government spending growth rate. It ranks 2nd in
gasoline taxes, 5th in per capita government expenditures, 7th in electrical utility costs, 7th also in the
number of health insurance mandates, and so on. California seems not friendly to small businesses.
Of course, there are other rankings, and other criteria for assessing SME-friendliness perceptions and
reality. According to the State Innovation Index, a careful compilation across multiple measures of
entrepreneurial readiness and support, California ranks 5th (whereas West Virginia remains lowest).
Why might this matter? In A Matter of Life and Death, a study of 3,275 SMEs reveals that (1) innovators
are more likely to survive than are non-innovators, and (2) process innovators increase their probability
of survival more than do product innovators. This is crucial to the purposes of this grant, since spatial
thinking and GIS technology represent process innovations in the internal conduct of SME activity.
In working with small businesses, our operational model has been that those enterprises most likely to
benefit from what we have to offer are (1) amenable to recasting their business opportunities and
threats through a spatial lens, (2) inclined toward innovation, and (3) willing to share both time and
internal information with independent outside researchers. Given that, our task was to work with them
to (1) provide value-added to the business by injecting spatial thinking into their core business model,
(2) sustain that value so that the enterprise can continue to benefit without further intervention from
the researchers, and (3) spread the word on our experiences so other SMEs might benefit as well.
Small Business
In the United States, the Small Business Administration (www.sba.gov) recognizes at least 37
definitions of what constitutes a “SME” (Small or Medium-sized Enterprise, or “Small
Business”). The Small Business Act states that a small business is “one that is independentlyowned and which is not dominant in its field of operation”. The SBA has established a table of
size standards, but applies the standards differently to different industries.
Different parts of the world apply different standards in defining SMEs and/or small businesses.
The European Union has adopted a single definition for each of three categories of SME. A
business can be classified as “Micro” if its headcount is less than 10, or its turnover is less than €
2m, or its balance sheet total is less than € 2m; as “Small” if its headcount is less than 50, or its
turnover is less than € 10m, or its balance sheet total is less than € 10m; or as “Medium-sized” if
its headcount is less than 250, or its turnover is less than € 50m, or its balance sheet total is less
than € 43m. All European countries that are members of the EU abide by these definitions.
By contrast, Asian countries have no such agreement. For China, an SME has less than 100
employees, but the exact standard varies by industry. Japan has a general requirement of less
than 300 employees or less than ￥ 10m in assets, but then it adjusts this standard for
wholesale (50, but ￥ 30m) or retail (50, ￥ 10m) operations. Thailand applies eight measures,
with employee and capital limits for each of the production, service, wholesale and retail
sectors of the economy. Korea applies a single criterion: an SME is an enterprise of less than
300 employees.
Sometimes there even are disagreements in a country. For example, Industry Canada defines
an SME as a business with fewer than 500 employees, and a “Small Business” as that subset of
SMEs for which the number of employees is less than 100 (if goods-producing) or 50 (if servicebased). However, Statistics Canada adds the requirement that an SME must also have gross
revenues less than $50m.
Given this array of acceptable definitions, we rather loosely refer to “SMEs” throughout this
project, ascribing or inferring different definitions at different times, in different places.
SOURCES:
http://www.sba.gov/contractingopportunities/officials/size/index.html
http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf
http://sbinfocanada.about.com/od/businessinfo/g/SME.htm
http://ec.europa.eu/enterprise/enterprise_policy/sme_definition/index_en.htm
pirun.ku.ac.th/~fsciang/km4sme/library/SME/Eng/Annex%202.doc
Inland Empire
Given that it not a formally-recognized jurisdiction, it may not surprise you that there are
various definitions of which geographic entities collectively comprise the “Inland Empire” of
Southern California. The general idea is that “greater Los Angeles” ends somewhere to its east
and south, flowing into what once was a plethora of orange groves. Indeed the general area
once was known as the “Orange Empire(1)”. As Orange County developed and urbanized
following the opening of Disneyland in 1955, remaining orange groves were those inland from
both Los Angeles and Orange counties, but generally bound by the San Gabriel Mountains and
by the desert lands leading to Palm Springs, the name naturally morphed into “Inland Empire”.
Of course, the “empire” claim is more problematic. History records the Persian Empire, the
Roman Empire, the Han Empire, the Byzantine Empire, the German Holy Roman Empire, the
Russian Empire, and so on. These invariably were formal states, usually ruled by a monarch or
oligarchy. There is no “Inland Empire” in that sense, as the region is comprised of autonomous
governmental entities (counties, cities, special districts) and, of course, has no ruler.
The most commonly used definition of “Inland Empire” is simply the two counties of Riverside
and San Bernardino. Among the 3,143 counties in the United States, a count that varies slightly
based on definitions), these two rank #47 and #12, respectively, in land area; the 11 largest all
are in Alaska. In terms of population (in 2006), they rank #11 and #12, respectively. However,
in terms of density (population per square mile, also in 2006), Riverside stands at 281, and San
Bernardino at 100 – well below the 234 average for the entire State of California. Combined,
the two counties provide 1.2 million jobs, and generate 20 million square feet of new industrial
space each year. Clearly, this is a potent and significant economic region. But an Empire? No.
Another label, less used but perhaps more accurate, is the “San Bernardino Valley”. Other
definitions of the “Inland Empire” tend to spill into Los Angeles and Orange counties. This Atlas
offers a precise economic geography definition (see About | Where is the Inland Empire?),
based on job centers and work migration patterns, rather than historical political boundaries.
REFERENCES and SOURCES:
(1) Sackman, Douglas Cazaux, Orange Empire: California and the Fruits of Eden, University of
California Press, 2005
http://astore.amazon.com/rxsq-20/detail/0520238869
http://www.inlandempire.us/news/2006/01/how-inland-empire-got-its-name.html
http://www.census.gov/statab/ccdb/ccdbstcounty.html
http://www.busjournal.com/
Business Atlas
The Business Atlas is a community resource focused on better understanding business basics,
constraints and opportunities in the Inland Empire. Given the differing definitions of just what
constitutes the “Inland Empire”, and recognizing that, in any event, the region cannot be
understood in isolation from the dynamic surrounding markets that collectively constitute what
we loosely define as Southern California, most Atlas data includes all eight of these counties:
Imperial
Riverside
Kern
San Bernardino
Los Angeles
San Diego
Orange
Ventura.
In a related attempt to standardize Atlas information, it was decided that primary focus would
be on collecting, displaying and analyzing data at the 5-difit zip code level. This represents a
compromise between representations at the county level (highly aggregated data) and at the
block group level (highly disaggregated data). There are departures from this norm, for
example when examining school data, where school district boundaries are more appropriate.
The Business Atlas provides background information on Where is the Inland Empire? and a
History of the Inland Empire. It examines information on its People, using demographic data
regarding population, age distributions, race and ethnicity, education attainment levels, and
various health and lifestyle characteristics. It looks at Income and Employment, including as
well consumer expenditure levels and patterns. It investigates Housing in the Inland Empire,
looking at profiles of these markets and the dynamics of changes over time. The core section
on Business and Industry identifies the major sectors and industries, and then focuses on
particular sectors (Not-for-Profits, School Districts), industries (Aeorospace), or characteristics
(employment concentration; poverty; logistics centers; job centers; minority markets). The
concluding section ponders Our Future, surmising possible ranges of projected growth. It also
should be noted that there is a Resources and Tools section for those seeking more information
on spatial data sources, GIS software choices, and selective topics in spatial analysis.
Please note that there is a companion Global Trade and Competitiveness Atlas, which takes a
macro-view to explore seemingly distant international trends that, nonetheless, quite likely
have a direct impact on your particular sector, industry and business. There is data for about
800 industries, for each of 200 countries, over about a 20-year span.