BY GREGORY A. HALL
The Cincinnati Enquirer
COVINGTON -- A new report from a state policy think-tank says Kentucky must give the same attention to encouraging small business development as it does to recruiting large industrial employers.
That's even true for a job-rich region like Northern Kentucky, said one of the report's authors, Michael T. Childress, executive director of the Kentucky Long-Term Policy Research Center.
The report, titled Entrepreneurs and Small Business -- Kentucky's Neglected Natural Resource, is not an attack on incentives for large companies, Mr. Childress said.
"It's hard to argue against Toyota, for instance, and what a great benefit it has been to the state," he said.
Toyota's North American headquarters is in Erlanger and the Japanese automobile maker operates a plant in Georgetown.
Similar efforts need to be given to small firms, he said. "That's not something we focus a lot on, I'm afraid, in this state."
Two such businesses new to Northern Kentucky had mixed reactions. Michele Babb and Eddie Ehrman found Covington city officials helpful when they presented their idea for a reptile store in the city's MainStrasse neighborhood. But other state and federal programs they looked at were contingent on having several employees, something they don't.
"Their helpful things for small businesses didn't really seem to help small businesses," she said.
Steve and Jayne Barnett of Taylor Mill had better luck when they looked for a Northern Kentucky location for their Indianapolis-based business.
The company, called Indy Honeycomb, makes metal pieces resembling the structures made by bees. The pieces are used primarily by the aircraft industry and act as a buffer between the metal that goes around the rotating blades and the blades themselves. The honeycomb keeps the blades, which expand during operation, from cutting into the permanent parts of the engine.
The Barnetts bought the firm, which employs about 25, in 1996 but wanted to have operations closer to home. They're opening a Covington location that will employ 20 along Madison Pike (Ky. 17).
Putting the deal together for low-interest loans required talking with the city of Covington, Tri-County Economic Development Corp. and the Northern Kentucky Small Business Development Center at Northern Kentucky University.
"They did Northern Kentucky very well," Mr. Barnett said. "It just was a trail," Mrs. Barnett said. "You sniffed here, and it led to here, which led to here. . . . It seemed to work."
However, she said a key factor in finding the Northern Kentucky location was her being able to work full time on it while he took care of the day-to-day business.
"I could not have done it," he said.
She said the process was cumbersome, but worth it.
Marketing programs for small businesses and entrepreneurs is much more difficult than looking for companies that want to move. "You don't know who your possible clients may be," she said. "It's Joe Blow who has an idea, and how do you find Joe Blow."
The policy center's report says the state nonetheless needs to find the Joe Blows in the state who have the ideas that can be the backbone of the economy.
"We find that Kentucky entrepreneurs have little familiarity with a variety of state and federal programs designed to assist them," the report states. "Those who are familiar with these services often find them less than satisfactory, suggesting that our infrastructure of public support for entrepreneurial development is, at best, weak and, at worst, ineffective."
Lacking marketing
State economic development cabinet leaders defend their efforts with small businesses and point out that most of Kentucky's economic growth comes from existing industry.
In a response attached to the book, state Economic Development Secretary Gene Strong said the assistance is there and programs are under way to market it better.
A lack of marketing is "probably valid," said Tri-ED Vice President Bryan Quinsey.
"If there's an opportunity to work with a small company, we'll do it," he said, pointing to the Barnetts' business.
Tri-ED refers many of them to Small Business Development Center, which is based at Northern Kentucky University. The center offers seminars and other assistance to new businesses starting up.
The low-interest loans available require lots of paperwork, Mr. Quinsey said. "We just don't have the staff to do that."
Helping small firms
Mrs. Barnett suggested having a group like Tri-ED, which recruits larger firms, to help small businesses jump through start-up hurdles. Mr. Quinsey also said criticisms of efforts for small and existing businesses are the result of misconceptions of incentives offered to larger companies.
"We just don't offer them (the incentives) carte blanche," he said.
Distribution firms must pay employees an average of $12 to even get half of the incentives they would normally be eligible for. To get the full amount, firms must pay an average of $15 an hour.
That may force existing companies to pay local workers more, he said.
"If we can do that by raising the wage levels, we're going to do that," Mr. Quinsey said. "That's just good American common sense, I think."
Attracting large businesses also helps lure small businesses, Mr. Quinsey said.
"Big companies come with small ones," Mr. Quinsey said, "and they all add up."
