Iowa State University
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News Service

News Service:

Annette Hacker, director,
(515) 294-3720

Office: (515) 294-4777

11-30-05

Contacts:

Jon Ryan, Iowa Small Business Development Center, (515) 294-2030

Kevin Brown, News Service, (515) 294-8986

Studies show value of Iowa's Small Business Development Centers

AMES, Iowa -- The Iowa Small Business Development Centers (SBDC) have a significant economic impact on Iowa's tax revenues, job creation and retention, capital acquisition and sales growth, according to two recent independent studies.

The Iowa SBDC network is based in Iowa State University's College of Business and has 12 centers covering all 99 Iowa counties.

James Chrisman, professor of management and information systems at Mississippi State University, has studied Iowa's SBDC program for several years and prepared the two studies. Chrisman looked at Iowa entrepreneurs who received between three and five hours of counseling (medium-term clients), or five or more hours of counseling (long-term clients), by the SBDC.

Both studies showed the Iowa SBDC returned, in one year, additional taxes at the state and federal levels greater than the total annual cost of Iowa's SBDC program.

A total of 2,481 jobs were created or retained in the year studied, according to Chrisman, who regularly reviews most of the SBDC programs nationally to determine results of counseling.

The studies also showed an increase in sales of $91.7 million for medium-term clients and an increase of $77 million for long-term clients. Long-term clients are typically older, more established businesses. Sales retained (sales that a business kept but might have lost without SBDC counseling) for medium-term and long-term clients totaled $24 million and $13.8 million, respectively, for the first full year after counseling, for a total of $37.8 million.

Long-term SBDC clients grew 97 percent faster than Iowa businesses that had no assistance from the SBDC.

In the first full year after counseling, SBDC medium-term clients generated $3.36 in taxes for every programming dollar spent, a return on investment of over three to one. Long-term SBDC clients generated $4.65 in taxes per dollar of SBDC programming, a return of nearly five to one.

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Quick look

The Iowa Small Business Development Center, based in the Gerdin Business Building, has a significant impact on the economic health of the state. The network of 12 centers serving all 99 counties results in additional state and federal taxes greater than the costs of the business resource service.