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Week of August 8 - August 12, 2005

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news. 

Capitol Hill Update

Congress has rushed out of town to enjoy its summer recess, and the August lull gives us an opportunity to review some key legislative initiatives now moving forward. In addition to the association health plan bills discussed in last week’s edition, a number of other measures might be of interest.

  • Save America’s Biotechnology Innovative Research (SABIR) Act of 2005 (H.R. 2943/S.1263): SBA and America’s biotech industry have been tussling for some time over recent changes in the Small Business Innovation Research (SBIR) program. In 2001, SBA officials ruled that firms could not be legally defined as “small” if they were majority-owned by a venture capital firm.This decision has made it difficult for many biotechnology firms to access the SBIR program. In response to complaints from these firms, the SABIR Act has been introduced to reverse SBA’s ruling.The bill has been the subject of hearings in the House Science Committee, but must still move through the Committee process.

  • Tax Reform: At present, many small business advocates are pressing for the permanent extension of Section 179 expensing (now set to expire in 2008).These rules allow small firms to immediately deduct the cost of equipment purchased up to $100,000. Other issues include extension of the R&D tax credit and permanent repeal of the estate tax. Further action on these bills is likely to be postponed until the President’s Advisory Panel on Federal Tax Reform (www.taxreformpanel.gov) completes its work in September 2005.

  • New Missions for Small Business Development Centers (SBDCs): The House Small Business Committee has passed a number of proposals that would expand the missions of the nation’s SBDCs. These centers generally provide advice and support to new and aspiring entrepreneurs. Thanks to a series of bills passed in mid-July, SBDCs will now be authorized to provide entrepreneurship education in vocational-technical schools, expand existing programs for Native Americans, support more established “second-stage” businesses, and assist firms with federal regulatory compliance. This package of bills awaits action in both the full House of Representatives and the Senate.

Fastest-Growing Small Businesses

The August 2005 issue of Fortune Small Business (FSB) includes its annual list of the nation’s fastest growing small businesses. FSB’s rankings examine publicly-traded firms with annual revenues over $200 million and stock prices over $1 per share; firms are then ranked according to earnings growth, revenue growth and stock performance over three years. Taser, the maker of stun guns, is this year’s top performer, followed by Laserscope, a maker of medical lasers, and NGAS Resources, a natural gas exploration and development firm. When the composition of the FSB 100 is examined more closely, some interesting trends emerge. Health care and technology continue to be hot sectors, but manufacturing is also growing rapidly. In fact, 26 manufacturing firms made the FSB 100. Analysts attribute this strong showing to the export-promoting effects of a weaker dollar, and spillovers from strong demand in the defense and real estate sectors. From the regional perspective, California hosts the most FSB 100 firms (13). Other strong performers are Pennsylvania, New York, Florida, and Texas.

The 2005 Fortune Small Business 100 appears in the August 2005 issue of Fortune Small Business, and is available online at: http://www.fortune.com/fortune/fsb100/0,15254,,00.html

Creating a State of Innovation in New York

If you look at economic statistics from the past decade, upstate New York has regularly ranked near the bottom in terms of new job creation and economic dynamism. This isn’t for lack of trying, as New York’s political and business leaders have devoted significant time and resources to jump-starting the region’s economy. As part of this effort, many state leaders are looking at how they can support and nurture entrepreneurship in upstate New York. You can find a number of interesting ideas in a new report, Creating a State of Innovation: Unleashing the Power of New York’s Entrepreneurial Economy, from State Assemblyman Joseph D. Morelle. The report recommends a number of changes in New York’s current tax rules and regulations so that they become more business-friendly. It also recommends that the state make entrepreneurial development into a core part of its economic development portfolio by improving business-university collaboration and creating new networking opportunities for entrepreneurs. It also suggests that new financing sources, such as angel investor networks, are needed to help grow new ventures in the state.

The 2005 report, Creating a State of Innovation: Unleashing the Power of New York’s Entrepreneurial Economy, by New York State Assemblyman Joseph D. Morelle, is available at: http://assembly.state.ny.us/member_files/132/20050511/report.pdf

Government Innovation Awards

The winners of the prestigious Innovations in American Government awards have been announced. These awards, a joint project of Harvard University and the Council for Excellence in Government, recognize outstanding public sector programs that are innovative, entrepreneurial, and effective. This year’s winners are:

  • Iowa Charter Agencies program: Under this program, state agencies agree to a strict set of performance measures, and, in return, receive exemptions from various rules and bureaucratic restrictions.

  • US Office of Management and Budget (OMB) Program Assessment Rating Tool: OMB was recognized for its agency performance measurement system.

  • SEED School (Washington, DC): SEED is the first U.S. urban public boarding school.

  • State Forensic Program (Allegheny County, PA): Assists in the reintegration of former prisoners with behavioral health diagnoses.

  • Youth Civic Engagement (Hampton, VA): A comprehensive program that engages youth as advisors to key city agencies and programs.

  • Los Angeles (CA) Systematic Code Enforcement Program: This program proactively inspects rental housing for livability and building code and regulatory compliance.

To learn more about the 2005 winners of the Innovations in American Government awards, visit http://www.ashinstitute.harvard.edu/Ash/pr_2005w_index.htm

Kauffman Foundation    The Public Forum Institute

National Dialogue on Entrepreneurship
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Mark Marich, Editor

All stories © 2005 The Public Forum Institute
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