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Indiana mayor’s specialty food incubator creates buzz

By MICHELE F. MIHALJEVICH
Indiana Correspondent

BLUFFTON, Ind. — A northeastern Indiana mayor is hoping to spark economic growth in his city and county by creating a specialty food business incubator and test kitchen.

“A business incubator follows the same principles of what most people think of when they think of an incubator,” said Ted Ellis, mayor of Bluffton in Wells County. “We keep the business warm and hold it close until it can grow on its own.”

The idea is to help and expand on businesses already in the area, such as the two salty snack manufacturers in town, Ellis said.
“We’re trying to carve out our little niche in the business world. We’re looking at what services do we need to support them and to attract more,” he added.

The test kitchen would allow potential entrepreneurs to try out or perfect recipes in a sanitary, certified workspace without going into debt, he said.

“If you have a great recipe for spaghetti sauce and you want to take it to market, you have to make sure you can profitably make 1,000 to 2,000 jars. You would have to add some preservatives. There’s a lot of chemistry involved in getting this ready to mass market.”

The business incubator would help the same entrepreneurs with writing a business plan, marketing, label design, packaging requirements and warehousing and shipping, he said.
“It occurs to us that most people who are good with specialty foods have little interest in the business side,” Ellis said. “This will help give them the kind of support they need. We want to help people be successful.”

Ellis said he wants to use a commercial kitchen already up and running in Bluffton-Harrison Metropolitan School District. The kitchen is currently only available for students and classes, but school officials hope to have it open to the public by the fall.
The increased interest on the part of consumers about where their food comes from should be a boost to the idea of the specialty foods incubator, Ellis said.

“There’s a lot more of an emphasis on home-grown foods because of quality concerns,” he said. “This is a great opportunity in that area as well. The test kitchen is a great way to foster business growth.”

The Bluffton project has been stalled by the faltering economy and the search for a new superintendent in the district that runs the commercial kitchen, Ellis said.

“This is a long-term, 10-year project,” he said. “It’s like growing a chicken. You don’t plan dinner the next week.”

Commercial or certified kitchens can cost thousands of dollars to get started, said Vickie Hadley, Allen County extension educator for consumer and family sciences. One of the challenges is deciding what equipment and services to offer, she said.

“It’s all totally dependent on demand,” she said. “Do you want to offer baking? Processing? These require different types of equipment.”

Despite the cost, certified kitchens are a help to those interested in starting a new business, Hadley said.

Kitchens provide opportunity

“Certified kitchens are a boost to those entrepreneurs who need a place to get started instead of paying to put in a certified kitchen on their own site. If the project isn’t a success, you haven’t spent a lot of money.”

The kitchens are certified by the state board of health and offer adequate table space, refrigeration and areas to wash up. A manager is on hand to oversee the process and to provide education on safe food handling, she said. A fee is charged, usually by the hour.

Studies show that the majority of companies started through a business incubator stay open and remain in the community, said Karl R. LaPan, president and chief executive officer of the Northeast Indiana Innovation Center (NIIC) in Fort Wayne. LaPan and his staff wrote the business plan for the Bluffton project.

According to figures presented in the plan, 87 percent of companies started through an incubator remain in business and 84 percent remain in the community. On average, businesses created through an incubator return $4.96 for every $1 of public investment.
There are 45-60 specialty food incubators across the country, LaPan said. The NIIC has helped, at varying levels, hundreds of business incubators get started, LaPan said. The center opened in 2005.
“There needs to be broad-based stakeholder support and broad-based community support,” he said. “Is there strong interest in the project and making it happen?”

Funding for such projects usually comes from the federal, state and local governments, or from foundations, LaPan said.

The business plan submitted by LaPan and his staff estimates pre-opening development expenses will range from $984,000 to more than $2 million. Savings may be made if officials don’t have to buy land or build their own kitchen, he said.

LaPan said Bluffton’s mayor and the community deserve praise for attempting to make the incubator happen. “I applaud the vision of the community to transform itself rather than waiting for the world to transform them,” he said.

“They’re taking some measured risk to create something with an upside. The mayor is showing a very decisive, forward thinking view in doing this.”

The director of a specialty foods incubator in Hart, Mich., said it’s important that the campaign for a business incubator have a strong leader.

“You need to make sure you have a champion who will personally drive the project,” said Ron Steiner, director of The Starting Block - West Michigan Regional Kitchen Incubator. “You need someone willing to get their hands dirty and work for the project.”

The not-for-profit facility, in Oceana County, serves an eight county region.

The Starting Block was incorporated in June 2005 and first offered low-cost office rental and entrepreneurial support, Steiner said. The licensed kitchen opened in October 2006.

The idea for the incubator began in 2002 when several groups and organizations, including the Michigan Department of Agriculture and Michigan State University, were looking for ways to advance the state’s value-added agriculture, Steiner said.

The Starting Block has a base of 40 to 45 clients who use the kitchen to make a variety of products, including jams, jellies, dry seasonings, meat rub, breads and granola, he said.

“We’re drawing from a base of people who have been making a product at home for their family and friends and who want to expand.”

The Starting Block has met or exceeded the expectations for the use of the kitchen, but hasn’t on the educational side, he said.
“We’ve been emphasizing hard the need for courses on business planning, food safety and marketing. They need to realize that the marketing and financing are as important as the product itself. While they’re working on developing a legally saleable product, we encourage them to learn about this other stuff concurrently.”

7/8/2009