The Economy Less Traveled: Fort Collins above national trends, entrepreneurial attraction

By Melissa Schaaf

Fairy tales just might be the explanation for entrepreneurial success in Fort Collins according to Kelly Peters, chief operations manager of Rocky Mountain Innovation Initiative. It’s not about brightly colored cartoons or catchy melodies; however, Peters attributes the attraction of entrepreneurs to Fort Collins because of its affliction with the Goldilocks Syndrome.

“It’s not too big, and it’s not too small,” she said. “It’s just right.”

Peters’ theory may have some merit.

In March 2009, Fort Collins was ranked the No. 2 best city for business and careers by Forbes Magazine, despite national economic hardships. This may be attributed to Fort Collins’ innovative atmosphere and employee retention rate. According to a 2006 report on select industry clusters by the city of Fort Collins, employment in Fort Collins alone has increased an average of 0.6 percent per year from 2001 to 2005, compared to an average annual increase of zero percent throughout the United States. Four years later, Fort Collins has managed to stay afloat concerning economic development in times of uncertainty.

Dawn DeTienne, an associate professor of entrepreneurship at CSU, attributes this to Colorado State University acting as a stabilizing factor for the city.

“The university is a big part of the total population, which creates a positive impact on the economy,” she said. “It is the number one employer in Fort Collins.”

Additionally, DeTienne noted the recent trend of the movement of companies from urban to more rural areas.

“Not only is it cheaper to relocate to more rural areas, it’s also easier to find an area where bigger firms are not meeting the need very well.”

In this sense, smaller companies can step in and fill the need and demand of the population, as well as inspire entrepreneurs to establish new businesses.

In contrast to Fort Collins’ positive numbers, an article in The American, a business-oriented magazine, supplied a correlation of the small business failure rate with the decreased numbers of entrepreneurs in the economy.

According to the United States Small Business Administration, an estimated 627,200 new employer firms began operations in 2008, and 595,600 firms closed that year. The majority of these were small businesses, defined as a business with fewer than 500 employees, fostered by entrepreneurs.

“To say that a business has failed is inaccurate,” DeTienne said. “People leave businesses for lots of reasons, not necessarily failure. It’s a concept that people have just started getting a handle on: The exit of a business does not equal failure.”

Shaping ideas

Fort Collins is no stranger to entrepreneurial business.

“We’re a very business-friendly culture,” said Josh Birks, economic adviser for the city of Fort Collins. “It’s simply about having the right support environment.”

The challenge of the community is how to retain the young, educated work force that attracts larger companies while maintaining a unique identity and managing growth, according to the industry clusters report. Fort Collins breaks down and targets different industries for growth and retention as a part of its economic development strategy.

The breakdown identifies four major industry clusters: agricultural technology, computer and electronics manufacturing, information technology/software and uniquely Fort Collins. The uniquely Fort Collins cluster is made up of companies that are unique, independent and contribute to Fort Collins’ high quality of life, according to the 2006 clusters report. Arts, cultural, tourism, breweries, creative firms and hospitality businesses fall in this category. An industry cluster is defined as a geographic concentration of interconnected companies and institutions in a particular field.

According to Birks, the challenge of breaking into one of these industry clusters as an entrepreneur is getting from the original idea and developing it into a service or commodity.

“There are so many resources for people trying to start their own businesses in Fort Collins,” he said. “It’s just knowing where to look and making the effort to do so.”

One of these non-profit resources is the Rocky Mountain Innovation Initiative. RMI2’s mission is to accelerate the success of high impact innovation-based startup companies, and to promote the development of an entrepreneurial culture and ecosystem in Northern Colorado.

“We believe in innovation as a tool to help rebuild the economy,” Peters said.

RMI2 screens business applicants to decide which projects to take on. When one is selected, they are provided with a number of resources to help get the business off the ground, including subsidized facilities, access and connections with academic and government institutions, a number of advisors, discounted professional service providers and educational and networking opportunities.

“It’s all about people helping people,” Fort Collins Business Librarian Anne MacDonald said. “It’s part of the whole concept of entrepreneurship.”

According to Peters, the typical success rate of an entrepreneurial business is 30 percent, compared with 85 percent of the businesses that go through an incubation process. An incubation process is a developmental process, where a business is given resources and guidance in order to foster its full potential.

“We try and pull people out of basements, screen them, put them in an incubator and grow them,” Peters said.

While innovation and creation are essential for entrepreneurship, maintenance and retention are necessary for business success as well.

“It’s important to establish a niche market,” DeTienne said. “Not everyone is a client; there needs to be a focus.”

One of the Fort Collins-based RMI2 success stories that found its niche is that of Sprig Toys, Inc. Established in 2007, Sprig Toys creates eco-friendly, battery-free, paint-free toys for children. The toys are composed of bio-composite material made from bits of reclaimed wood and recycled plastic. They even smell like wood chips. From dump trucks to dragonflies, Sprig Toys can be found in stores such as Target and Wal Mart, as well as on their Web site sprigtoys.com.

In addition to resources like RMI2, financial assistance can even be given by the City of Fort Collins, depending on the project.

“We are not a community that just hands out money,” Birks said. “The city doesn’t provide to companies, it provides to projects that have been highly scrutinized and have a high quality analysis. It’s an investment.”

“We have to be responsible with taxpayer money,” he said. “If we can’t find a need for a project, it would be disingenuous to fund it. We need to remain credible.”

Making a statement

Fort Collins is home to many thriving businesses, including Anheuser Busch, Agilent Technologies and Woodward Governor, among several others.

The one that has outlasted them all, though, is City Drug, now on the corner of Laporte Avenue and College Avenue. City Drug is Fort Collins’ oldest business, founded in 1873, making it 136 years old.

Berni Wilkins, owner and manager, attributes the prosperity and length of the business to adjustments.

“We just try to come up with innovative ways to adapt to the times,” he said. “Finding a need and adjusting to that need is key. A lot has changed in 16 years.”

Wilkins stated that products for sale have changed several times in order to accommodate the need of consumers. Currently, there is a plethora of greeting cards, home and office supplies, and trinkets, and then there’s the aisle on the very south end of the store. This southern aisle is dedicated to a plethora of pre-packaged food from around the world. From spicy chocolate to spicy pickles, this aisle may spark a food-lover’s interest, especially if they’re looking to satiate a sweet tooth with Norwegian bonbons, or satisfy a salt craving by browsing the sardine selection.

With its array of different items coupled with its legacy, City Drug falls into the uniquely Fort Collins cluster.

City Drug just recently relocated in September 2009 from the corner of Mountain Avenue and College Avenue in an attempt to expand and be a more central location for north Fort Collins.

Throughout his 16-year ownership, Wilkins has learned a very valuable lesson:

“Never be afraid to compete with other stores.”

Kool-Aid incentives

With a plethora of entrepreneurs and established businesses in Fort Collins, what keeps attracting new innovators to the area?

“People love Fort Collins,” Birks said. “The climate, mountains and small-town feel make it unique.”

Birks also mentioned the education system and how at least 50 percent of Fort Collins residents have a bachelor’s degree, or an equivalent.

Fort Collins also has the most patents per capita in the entire world, according to DeTienne. Fort Collins residents have generated patents at the rate of 11.45 a year per 10,000 people, nearly four times the U.S. city average, according to Fast Company magazine.

“We have some really intelligent people here,” Birks said. “More often than not they’ll come up with great ideas, especially if they’re bored.”

Money Magazine ranked Fort Collins the No. 2 place to live in America in its 2008 Best Places to Live on Money’s list of America’s best small cities. One of the reasons for this ranking is FortZED, a long-term vision for a zero energy district in downtown Fort Collins.

“It’s just got it all,” Birks said of Fort Collins. “When people drink Kool-Aid, they have a specific flavor that they’re looking for, and once they’ve found it, they don’t want to drink another flavor.”

“Well, Fort Collins is my flavor of Kool-Aid.”