For many people, the idea of starting a small business is idyllic. The chance to be their own boss, roll up their sleeves, produce goods or supply a service ranks with homeownership as one of the American dreams.
The environment for starting a small business in the Capital Region has improved over the past few years, according to The Business Journals’ annual ranking of the nation’s 100 largest metropolitan areas that are the most conducive to the creation and development of small businesses.
Baton Rouge ranked No. 14 in 2011, down from No. 2 in 2011 but a huge leap from No. 45 in 2009. The survey obviously is good news for entrepreneurs and city officials alike.
“Whenever small businesses are having success, that creates a good environment because small businesses in a lot of places bear the brunt whenever an economic downturn hits,” says Metro Council member Scott Wilson, who also owns Derashnie Enterprises, a trucking company.
“A good small business environment puts more dollars into the economy, it brings jobs and sales tax dollars, and generally helps the quality of life. Job growth is always desirable because we want to attract more people.”
Mark Hebert is one of those people.
A Baton Rouge native who has spent his adult life as a Southern Baptist minister, Hebert came home in summer 2010 after spending 11˝ years as a missionary in Kazakhstan.
Blending what he called a passion for coffee with a passion for interacting with people, he opened Hebert’s Coffeehouse last April, in a former women’s clothing boutique on Jefferson Highway. The family-run business specializes in coffee made from beans roasted within a few days of harvest along with pastries made by his wife, Terry.
As much as Hebert and his family—all three children work at the shop—have enjoyed the launch of the coffeehouse, he says getting off the ground has been more of a challenge than he realized.
“I knew from the beginning it was going to be hard, but I also was very naďve about just how much it takes to start a small business like this,” Hebert says. “You’ve got to set yourself apart in some kind of way. To have a chance to compete, I had to do something different, and I think we have done that.”
While Hebert’s approach has been a mixture of hard work and passion, other small businesses in the Capital Region have needed the right environment and some tax incentives.
Baton Rouge Area Chamber President/CEO Adam Knapp says the economic climate in the region is conducive to small business launches, as evidenced by The Business Journals’ survey, which ranked metropolitan areas by the number of small businesses in 2008, the number of small businesses per 1,000 residents in 2008, the change in private-sector employment from 2005-10, the change in population from 2004-09 and 2009 population.
“Fortune has played in our favor,” Knapp says. “The Capital Region has really fared well throughout the national recession. Most places got hammered through housing-price losses, and residential home values have a significant effect on small business starts.
“The amount of wealth that was lost in other places was not lost here. That means we’re in great posture as a growing economy for new entrepreneurial ventures to start.”
Providing incentive programs also plays a major role in encouraging research and innovation from small business ventures, Knapp says.
He highlights three that have helped the region lure small businesses to the area and enabled them to succeed: the Louisiana Enterprise Zone program, which provides income and tax credits to a business hiring at least 35% of net new jobs from one of four targeted groups; the Quality Jobs program, which provides a cash rebate to companies that create well-paid jobs and promote economic development; and BRAC’s Regional Innovation Organization, which works as a liaison among area business incubators and also provides support for the area’s growing entrepreneurial community.
Companies that develop a new product or service could qualify for as much as a 40% tax credit, which Knapp identifies as one of the highest in the U.S. And earlier this year, BRAC received a $429,000 grant for its RIO program from the U.S. Economic Development Administration.
“For every business that’s making a new investment, we always encourage them to look at these programs,” Knapp says. “As you’re growing jobs and making new investments in facilities, companies are eligible for these incentives.”
Another beneficial development for small-business launches and growth is the recent revival of the state’s Angel Investor Tax Credit, which rewards qualified individuals for investing in early-stage, wealth-creating businesses.
“It motivates high-net-worth individuals to risk their capital in entrepreneurial companies,” Knapp says. “We want to give them motivation to put that money into goods-producing companies that are focused on innovation.”
As difficult as getting his coffeehouse open has been, Hebert says he received the guidance that he needed from city and parish entities.
“All the agencies are in place to help you, and they do,” he says. “I’ve been very pleased with the city and feel like we got a lot of good information from people who helped us through the process.”
While the incentive programs foster the viability of small-business starts in the Capital Region, there are still hurdles that need to be crossed—one in particular.
Knapp says the quality of education is a major factor when small-business owners are looking for a place in which to launch.
“A good school system and a good school in a neighborhood can either create or kill the chance for a small business to succeed,” he says. “If you’re a company trying to recruit people, if they don’t see good schools, they may go elsewhere in the country to find a place where schools are better.”
In the recent report cards issued by the Louisiana Department of Education, one of the 11 public school systems in the Capital Region received an “A” (Zachary Community Schools), four received a “B” (Ascension Parish, Central Community Schools, Livingston Parish and West Feliciana Parish), one received a “C” (West Baton Rouge Parish), four received a “D” (City of Baker, East Baton Rouge Parish, East Feliciana Parish and Pointe Coupee Parish) and one received an “F” (St. Helena Parish).
Still, East Baton Rouge public schools continue to show improvement—from a district performance score of 72.3 in 2007 to 86.2 in 2011—and can boast of a strong magnet program anchored by Baton Rouge High School, Westdale Heights Academic Magnet School, Baton Rouge Visual and Performing Arts Center, McKinley Middle Magnet School and Sherwood Middle Academic Magnet School. But the parish’s public school system lags behind most areas of the country.
But despite the problems in education, Wilson lauds the Capital Region as a great place to live and start a business.
“We always want new businesses to come to this area and succeed,” he says, “because that doesn’t do anything but help us economically.”
