Nurturing rural businesses toward sustainability

While many rural regions have traditionally relied on one or two industries to support their economies, it’s become increasingly clear that a diversified economy helps ensure more sustainable growth.

But launching a new business is a formidable challenge, especially in areas without infrastructure in place to support entrepreneurs.

That’s where business incubators come in.

Much as an incubator nurtures eggs until they hatch into young chicks, a business incubator cultivates young startups, offering cheap space as well as business development tools and expertise.

Incubators can dramatically increase business success. A study by the National Business Incubation Association found that incubated companies had an 87 percent success rate after five years. In comparison, only 44 percent of non-incubated companies survived five years.

Rural business incubators are cropping up in Greater Minnesota. Several have received support from Great River Energy and its member cooperatives.

“Helping rural business incubators develop the local entrepreneurial spirit and workforce of tomorrow fits with our core cooperative principles,” said Tom Lambrecht, manager of economic development services at Great River Energy. “When the communities and businesses we serve thrive, so do we.”

North Shore Business Enterprise Center

A small center for biotechnology research with serious healthcare applications has emerged from the North Shore Business Enterprise Center in Two Harbors.

Bioactive Regenerative Therapeutics Inc. (BRTI) is one of the incubator’s promising tenants. BRTI has patented a unique 3D cell culture matrix with implications for regenerative medicine as well as cancer and diabetes treatments.

Another tenant, the Actives Factory, is extracting birch bark compounds for use in pharmaceuticals, dietary supplements and cosmetics.

Both companies have access to the on-site expertise of a specialist from the University of Minnesota-Duluth Center for Economic Development. Services such as business planning, market research, financing, product development and more are available.

In addition, the companies now have access to a new cancer cell biology research laboratory, funded in part through a $38,000 grant from the Iron Range Resources & Rehabilitation Board. Cooperative Light & Power (CLP) provided a $400,000, zero percent interest loan for the center’s initial construction in 1996. As tenants require future support and the facility considers expansions, Great River Energy and CLP have begun to discuss financing options with Business Enterprise Center leadership.

Pine Innovation Center

The Pine Innovation Center was built in 2013 in the former East Central Energy (ECE) office building in Pine City. The project was funded with the help of a U.S. Economic Development Administration grant.

The incubator provides tenants with technical expertise, product evaluation and help with marketing and business planning. Operated by Pine Technical & Community College (PTCC), the facility is geared toward high-tech and light manufacturing businesses.

“Our incubator program built a spirit of entrepreneurship within our community and college,” said Jason Spaeth, dean of continuing education and customized training at PTCC. “We take a sense of pride in startups that are locally owned and operated.”

EZ BOX Electrical Systems Solutions, LLC, which develops plastic components that enhance safety and efficiency in the electrical industry, currently occupies all three bays at the center. One of the promising startups’ products won the National Electrical Contractors Association’s “Show Stopper” award late last year.

Great River Energy and ECE have pledged their support for the Innovation Center and will consider financing for business expansions in Pine City. ECE provides continuous support to the Innovation Center and PTCC through the form of rebate programs that provide significant cost savings.