Starting Block or Stumbling Block?

[XLFD]

Ron Steiner (far right), founder of the "Starting Block" business incubator in Hart, Michigan spoke at the West Shore Inventor/Entrepreneur Network (WIN) Monday night (March 25).  "Starting Block" was created in 2005 to 'incubate' entrepreneurial ventures involving food products in the area, by providing low rent facilities, access to industrial equipment, advice and other help to make fledgling entrepreneur's dreams come to a reality.  The Mason County Press did a story on Steiner's presentation at West Shore Community College, which has its own incubator program incubating with WIN.

 

In the classical sense, one may have a problem with these business incubators.  Ones who would be, are not against capitalism and free markets, but if you discerningly look at business incubators and analyze what they stand for, you may reasonably come to terms that they may be. 

 

Consider our high school economics class: we should have learned the main driver of the free market is competition among those offering similar products.  Competition leads to good products at good prices for consumers.  We found that monopolies were bad.  We found that when businesses colluded to form oligopolies it was bad.  Only when competition is allowed to freely flourish,  does a free market flourish, and the benefits are shared by all-- except those businesses that were not fit enough to keep up. 

 

Here we create facilities for start-up businesses, some potentially fighting for the same niche as the facilitator, and expect a positive result.  Such a result may occur if the facilitator's intentions are entirely altruistic, but business incubators are, for lack of a better term, businesses.  Incubator facilitators, by and large, are not giving out their facilities and services at a loss so that their community can prosper or that an entrepreneur can finally get his shot.  They're businessmen also, and they have to look at their bottom line.  Let's consider the eight year old "Starting Block" as an example.  Here's a video promoting their cause:

 

Their mission is "to incubate and support the entrepreneurial spirit, in the food systems and natural resources sector, by providing licensed commercial kitchen facilities, entrepreneurial education and peer-to-peer networking to new and expanding businesses in the multi-county, West Central Michigan region."

Scroll down, and you find out more about them:  "A nonprofit, regional economic development organization committed to small business development initiatives – for businesses just starting out, or companies outgrowing their current facilities."

And then before you can form the thought and say "economical development organization?  How much do taxpayers put into this?", the next section tells you: 

 

Community Partners – Initial funding for The Starting Block came from a federal USDA Rural Development grant, and state grants from the Michigan Economic Development Corporation and MIFFS. Without these partners, The Starting Block could not operate.

Federal (USDA) and State "economic development" grants of nearly $300,000 initially made this incubator possible in 2005 and without them they could not operate.  The incubator says so itself, and just guess who funds this program generously each year.   Here's a clue, and more influxes of cash in 2007:

 

 

Just so you know, MIFFS (Michigan Food & Farming Systems) is another non-profit funded by Federal and State dollars itself as seen here.   Instead of providing for our national defense or paving our roads, our taxes are going for funding projects like incubators and starting up private businesses that may not even be feasible in the real world.  The Starting Block can offer their services because they get that extra money from grants and other government partnerships, and their managers are getting a fair share of that money in general.

 

Are entitlement-based  'business incubators' breeding an entitlement culture in entrepreneurs?  How could they not be?  The incubator itself is often fully dependent on government grants and handouts.  Real free market capitalism depends often on investments, investments by those who believe in an idea.  But when those investments come from the government, bureaucrats without any of their own money in the mix make those decisions, often without any idea of whether it's a good investment or not. 

 

WIN, our county's local business incubator in progress, is looking for some of the same action that Starting Block got, as shown here (last paragraph): 

 

"The West Shore Incubator Initiative is supported with a grant from the US Department of Agriculture Office of Rural Development.  WSCC and CBAIS are working with leaders from Mason County Growth Alliance, Manistee Alliance for Economic Success, Lake County Economic Development Committee, Oceana County Economic Development Corporation, MSU Extension, MI-SBTDC, SCORE, and The Starting Block, who provide insight and direction on all project phases."

 

All the organizations listed are either government agencies or government-funded institutions or non-profits.  What better way to grow business, than to use government modeling and other people's money?  Karl Marx and friedrich Engels would undoubtedly approve.

[Willy]

Great job of journalism X. I had no idea our tax dollars are paying for this kind of pork barrel handout. The incubator idea is a good one but should be paid for by those that use it and not by taxpayers.

[XLFD]

Thanks, Willy, and you're absolutely right, an incubator ran privately to nurture and teach entrepreneurs could be a good thing.  It all comes under my old adage:  If private concerns will not throw money into some business venture, then why the heck do we throw public money into them. 

[XLFD]

Starting Block is expanding according to an article in todays COLDNews.  The Torch will try to find out how much this cost the taxpayers: 

According to Ron Steiner, Starting Block director, this will be a first and will allow people who want to create products for sale using meat as an ingredient — jerky, sausage, or meat-filled products, for example — to have a place to produce and package the product in a USDA-certified facility. A smoker is also available.

Guidance will be available for prosepective [sic] meat producers to develop required HAACP plans before beginning production.

The idea for a meat building came up when a client discussed making a meat-filled pasta at the Starting Block, the regional kitchen incubator that specializes in food product startups. In talks with the U.S. Department of Agriculture which inspects the facilities with an eye for consumer safety, it was suggested that a separate building be used to minimize concerns of cross-contamination.