News

Mastering Business: New Resources for Business Start-Ups

by Joe Rallo
The Macomb Journal
8/1/04

Readers of this column are no doubt aware that Western Illinois University (WIU) has been selected by Governor Blagojevich as one of about 10 state-wide Entrepreneurship Centers (EC) designed as catalysts to create jobs within his 'Opportunity Returns' Campaign. This EC is an 'anchor tenant' in the newly opened Western Illinois Business Technology Center (WIBTC) housed in the former PPC facility and recently renovated as a 'one stop' economic development location in Macomb.

The EC will be the 'umbrella' organization for WIU's economic development activities to include the Small Business Development Center (SBDC), the College of Business and Technology's Business Technology Center, and the Center for the Application of Information Technology (CAIT). This new partnership raises several interesting questions related to economic development for the region: What is an entrepreneur? Do I want to be one? How does being an entrepreneur differ from being a small businessperson?

I grew up in New York City as a 'first generation Italian.' My grandfather came to the city from Italy as part of the great immigrant wave in the early 1890s. If he had a third grade education I would be surprised; but he was a natural small businessman. Starting with nothing he became a baker, an importer of Christmas trees, and finally opened an Italian restaurant on the beach at Staten Island. Everyone in the family – cousins, uncles, and in-laws – worked at the restaurant during the busy summer months.

My grandfather cooked and my grandmother, all of 4 feet 8 inches tall, worked the register and had the shotgun under the counter in case of trouble. They worked incredible hours and lived on the revenue from the restaurant. He never took out a loan from the bank and certainly did not seek out investors in his business. When he retired in 1962, the restaurant closed, since family members had their own families and livelihoods. When I left for college in 1967 my grandfather in his still heavily accented English said, "Joey, business is a good life, but don't own one."

Fast forward over 30 years where I am the dean of the business school at the Colorado Springs campus of the University of Colorado. We are approached by an engineer who left his position at Intel to start a business around the technology he developed for a wireless communications system. He doesn't mind working long hours but has no desire to own his own business. He is the perfect candidate for the university owned 'high tech business incubator.' Accepted as a client, his company gets free rent in the facility, access to the university computer system for research, MBA students to work on a marketing plan, and guidance from 'mentoring teams' of professionals who are interested in getting a 'first look' at possible investment opportunities.

In return, the company gives up an equity stake of about 10% of its stock to the incubator. Most importantly, the relationship with the incubator and the university 'legitimizes' his business in the eyes of potential investors. Quickly he moved from 'angel financing' from friends and relatives, to infusion of money from venture capitalists, to going public with an IPO. I recently heard that the engineer walked away with a sizeable buyout, a management team was brought in to grow the company, and several new jobs were created to staff the firm. The clear intent of the new team is to make the firm as attractive as possible in order to sell it again and move on to another revenue generating opportunity.

Clearly my grandfather and the Intel engineer shared some common attributes: hard work, a willingness to take a chance, and the desire to make a profit. But there were also clear differences between them. My grandfather saw the restaurant as his livelihood and his life, while the engineer saw his firm as a means to translate an invention into a sizeable return of revenue.

My grandfather was the model of a small businessman and one who could have benefited greatly from the services of a Small Business Development Center. The engineer is the model of an entrepreneur, and one who benefited from the services of a business incubator/entrepreneurship center. While they gave back to their communities in different ways, their personal business goals dictated the type of assistance they could have benefited from in pursuing their objectives.

So, to answer my initial question, there is indeed a difference between an 'entrepreneur' and a 'small businessperson', and that difference rests on how they define the purpose for starting a business. This is not a question of 'better or worse' but rather a reflection of how the business venture fits into their personal goals. From the perspective of the community in which they live, both the small businessperson and the entrepreneur will contribute to its economic development and sustained vitality.

By partnering together, the WIBTC and WIU's Entrepreneurship Center hope to provide the full spectrum of business resources needed to give either category of individual the best possible chance to succeed. After all, it was the chance to succeed based on hard work and giving back to the community that brought my grandfather, and many others like him, to this country.

Dr. Joseph C. Rallo is the provost and academic vice president at Western Illinois University, and is also a professor of management in the College of Business and Technology at WIU.