Welcome:With this report, we celebrate another year of one of the most effective economicdevelopment projects in the region. A partnership, born of the need to find a future ina changing economy, brought together the vision and management of AndersonUniversity, an independent college with an outstanding business school, and theadministrative leadership of our city. What resulted was the Flagship Enterprise Center(FEC), one of the most effective business incubators in our state, drawing significantsupport from federal and state governmental partners. The FEC has provided thenecessary support to start and grow numerous small businesses that in turn haveadded many badly-needed jobs to the local economy.The added benefit in this dramatic engagement is an immersive experience throughinternships and service learning projects. Student leaders are finding their futurethrough this effort, and the future is bright both for them and for the region.We are indebted to so many for the progress we can report. FEC has had exceptionalleadership from CEO Chuck Staley. The services of the staff and each member of theFEC Board and the Chair Jim Ault, are a significant part of this story of remarkabledevelopment. Our legislative servants in local, state and federal arenas have madegreat contributions to the partnership. We are especially indebted to the faculty andstudents of Falls School of Business at Anderson University, to Dean Terry Truitt, and toall who have guided this project to the promise we know today.On behalf of Anderson University, our board of trustees, and all who see the benefitsof new business development, jobs added to the local economy, and studentsmentored toward such a promising future, we offer the pages that will follow. Whathas been achieved in the past gives us hope for a dynamic future.James L. EdwardsJames L. EdwardsPresident, Anderson University
TABLE OF CONTENTSMission and History 3Year at a Glance 4Challenges 5Performance 6-7Annual Payroll 8Capital Raised 9Rents and Services Income 10Financial Statements 11Anderson Business Incubator 12New Construction 13Client Headlines 14Flagship Accelerator Building 15New Programs and Initiatives 16Challenges 17Looking Ahead 18 – 19FEC Board of Directors 20
Our MissionTo be a premier technologicalBusiness incubator creating newjobs and contributing to the long-term economic development ofthe communities of Anderson,Madison County and the state ofIndiana by encouraging andnurturing the entrepreneurialspirit in communities and byproviding mentoring, networking,business services, educationalopportunities and access to Our Historycapital. Created through a partnership between Anderson University and the City of Anderson, the Flagship Enterprise Center (FEC) serves as a new business incubator and growth stage business accelerator. Through its client-specific Client Support Program, the FEC helps emerging companies become independently viable. Located at I-69 and Martin Luther King Blvd. (exit 22) in Anderson, the FEC provides ongoing contact with management consultants, university researchers, student mentoring programs and access to capital. The FEC and its partners seek to encourage and nurture the entrepreneurial spirit within the community. The Flagship Enterprise Center is both an educational and technological incubator helping businesses develop and transition their technologies into real world applications and products in global markets. The FEC is one of the largest such centers in Indiana.
YEAR AT A GLANCE•Number of Training Events 21•Number of people trained 400•Student training hours provided 1768•Total clients engaged 85•Clients currently being served 32•New clients for CY 2009 16•New client growth for 2008 and 2009 combined 125%•Cumulative jobs through 2009 850•New jobs for CY 2009 79•Client Payroll for CY 2009 $18.6M•Average client wage vs. average county wage 177%•Client Capital raised for 2009 $ 34.7M•Total direct economic effect of incubator for CY 2009 $53.3M
The recent economic history of Madison County is well known, and so will not be repeated here. However, there is merit in taking stock of our current situation, and using that as a baseline for moving forward. Unemployment remains stubbornly high in MadisonChallenges County. Of course, the recession has not helped, but our area remains more severely affected than several surrounding counties, the state as a whole, and the nation. Unemployment Rates - 2009 15.0% 12.0% 9.0% 6.0% 3.0% 0.0% Wage Rates, for those who have jobs, remain inordinately low as compared to nearly all our neighboring counties, the state and the nation as well. You can see from the chart below that only one county (Henry) in central Indiana has wage rates slightly lower than those in Madison County. Average Annual Wage - 2009 $50,000 $40,000 $30,000 $20,000 $10,000 $0
PerformanceCommunity Outreach – TrainingFrom its inception, FEC has recognized a need to assist our community,not only by helping to create jobs, but also to be a real factor in a re-emergence of the overall community economically. FEC has continued toexpand its outreach to the community. We have expanded our trainingofferings, bringing the total number of training events to 21 for FY 2010.By doing that and enlisting knowledgeable, well-known speakers andfacilitators, we have been able to reach almost 400 people during the2010 fiscal year. Some of the attendees are clients, but most are othersmall business people in the community. Evaluation surveys arecollected at every event, giving us the opportunity to improve ourofferings significantly over time.New Business – Clients EngagedOur growth in total clients engaged continued through this past year, andwe have now reached 85. As you can see from the chart below, thisinvolved a near-doubling from 2006 to 2007, and another doubling from2007 to 2009 calendar years. For the past twenty four months, we haveaveraged almost two new clients every month. At the same time, wehave dramatically increased the services offered to every client, so thatthe total staff workload has been increased significantly. 90 85 80 Clients Engaged 69 70 60 50 40 40 30 15 21 20 10 0 2005 2006 2007 2008 2009
Performance - Continued Jobs Created We understand that the FEC does not create jobs; businesses do. We are, however, very proud to speak of those jobs that our clients have created, because they are significant contributors to our economy. As we all struggled through the deep trough of the recession, FEC clients continued to expand overall, and create an additional 79 jobs this past calendar year. While that is the smallest year-to-year gain in the past five years, it is nevertheless a gain, when the rest of our economy was suffering through large losses. These jobs are all the more important because the Madison County unemployment rate continues to lag behind Indiana and the nation. As of April 2010, unemployment in Madison County stood at 10.7%, while Indiana and the nation stood at 9.8%*. Jobs – Full-Time Equivalents Cumulative 850900 771800700 576600500400300 171200 73100 0 2005 2006 2007 2008 2009 Calendar Year http://www.bls.gov/ro5/qcewin.htm http://www.bls.gov/bls/unemployment.htm
Annual Payroll The economic effect of jobs amounts to more than just the number of jobs, of course. The payroll that is generated adds to economic activity, and multiplies as the money is exchanged in the local economy. In spite of the ongoing recession in 2009 and 2010, FEC clients were able to report an increase in annual payroll to $18,637,062, a very significant increase. One of the most meaningful statistics in measuring economic effect is the average annual wage. For Madison County in April, 2009, the average annual wage was $29,700. FEC clients were instrumental in raising the bar as they reported an average annual wage of $52,499. Annual Payroll – FEC Clients $20,000,000 $18,637,062 $15,000,000 $11,573,754 $10,000,000 $3,952,930 $5,000,000 $1,341,967 $293,291 $0 2005 2006 2007 2008 2009 Calendar Year
Capital Raised - Flagship Clients $34.707 $35 $26.974 $30 $25$ Million $20 $15 $5.264 $10 $2.221 $5 $0.341 $0 2005 2006 2007 2008 2009 Calendar Year Another extremely important aspect of the economic effect brought to us by our clients is the amount of capital they raise, and thus bring in to the local economy. This capital comes in three forms: debt, equity and grants. By far the largest capital contributor among these is in the form of grants, either federal or state. This capital is very important to our economy because it comes from outside the area, and constitutes a fresh infusion of economic vitality. FEC is very active in assisting our clients in their efforts to obtain grants. As can be readily determined from the chart above, the last two years have been especially fruitful for us in this regard. For Calendar Years 2008 and 2009 together, we have brought over $61 million into the community. In addition to the above, the Flagship Enterprise Center itself has raised grant money to continue operations, and also to expand by building additional business incubator and accelerator space. Grants totaling $3.455 million have been obtained from the Economic Development Administration to build a new 80,000 ft2 accelerator building, and a 3,500 ft2 addition to our current incubator building.
Rents and Services Income One of the more important aspects of managing a business incubator is ensuring that the operation is economically sustainable. Although the FEC receives a significant amount of assistance from several sources, we need to supplement that with income received from rents and services. We are very cognizant of the fact that our services must offer real value to our clients, so we have spent a good deal of effort in polling and surveying our client base to determine their needs and wants. As a result of that effort, we have partnered with the Anderson University School of Adult Learning, SCORE, SBDC, and several for- profit companies to bring a long list of topics to our training calendar. Rents and Services Revenue Growth 1,000 800$000 600 400 200 0 2005 2006 2007 2008 2009 2010 Fiscal Year
Financial StatementsIncome Statement 2010 2009 2008 Gifts and Grants 268,240 605,350 300,000 Rents and Recoveries 826,065 639,816 427,187 Other Income 13,624 11,188 28,497Total Operating Income 1,107,930 1,256,354 755,684 Program Expense 254,303 376,517 443,553 Administrative Expense 168,370 125,240 123,224 Fund-Raising Expense 121,536 116,516 113,425 Building Operation 518,191 513,606 515,230ExpenseTotal Operating Expense 1,062,399 1,131,879 1,195,432Net Operating Surplus / Loss 45,531 124,475 -439,748 Extraordinary Income 326,160 671,005 Extraordinary Expense (99,893)Change in Net Assets 450,635 131,364Balance Sheet 2010 2009 2008 Cash and Cash Equivalents 790,488 $ 729,599 $ 611,919 Other Current Assets 264,058 349,943 540,511 Land 559,121 293,608 293,608 Buildings and Equipment 3,511,837 3,332,739 3,050,122 Total Assets 5,125,504 4,705,889 4,496,160 Current Liabilities 311,886 89,582 187,292 Long-Term Liabilities 2,205,730 2,053,950 2,197,146 Net Assets (Worth) 2,607,888 2,562,357 2,111,722 Total Liabilities and Net 5,125,504 4,705,889 4,496,160 Assets
This year brought a number of Each partner provides value to the ABI:changes to the AndersonBusiness Incubator. With a • City of Anderson – Funding for reducedtightening budget, the ABI had rent programto change it’s business model. • FEC – Management of ABI and clientWith the help of Dr. Terry Truitt, servicesDean of AU’s Falls School of • AU Falls School of Business – StudentBusiness, a new model was interns and business consulting on a projectdeveloped. Now that the ABI is basisconsidered more of a program, • Local Property Owners – Provide localthan a physical location, growth retail space in Andersonfor the program is limitless.Currently there are 6 ABI clientslocated in the PNC Bank Localbuilding at 931 Meridian Plaza, Spacein downtown Anderson. Current ABI clients include: AU Falls ABI City of School of Program Anderson • Anderson Black Expo Business • GG Enterprizes • Madison County Firefighters Foundation • Mobile Seamstress • The Character and Self-Esteem Institute FEC • WATN Enterprises
The past year has been an exciting oneat the Flagship. We announced, andbegan the construction of two new New Constructionbuildings, both scheduled forcompletion in the second half of 2010.Flagship Accelerator BuildingThe Flagship Accelerator Building willbe an 80,000 square foot multi-tenantbusiness/industrial facility similar tothe FEC’s existing Energy SystemsCenter. The new Accelerator Buildingwas made possible through a $2.7million grant from the U.S. Departmentof Commerce – Economic DevelopmentAdministration (EDA), and a $400,000contribution from the City of Anderson.FEC Lab AdditionThe 3,200 square foot addition willserve as a laboratory and prototypingspace, the addition will house the FEC’ssecond full-chassis dynamometer, atool used to measure the torque andpower characteristics of automobiles.The construction of the Lab Additionwas spurred on by a $475,000contribution from the US Departmentof Housing and Urban Development’sEconomic Development Initiative-Special Project (EDI-SP) grant.
Client Headlines 2009 July 14, 2009 – Amatra Technologies, Inc. Partners with IBM Aug 14, 2009 – Soveryn, Inc. Expands to Flagship Enterprise CenterOct 26, 2009 – Bright Automotive secures $1.4 million U.S. Army Contract Jan 22, 2010 – XADS selected for U.S. Air Force Contract Feb 4, 2010 – Obama officials tour Flagship Mar 5, 2010 – Bright Automotive receives contract to electrify U.S. Postal VehicleApr 6, 2010 – Coeus Technology receivespromising results from U.S. Army testing Apr 22, 2010 – Flagship clients XADS and TECT are nominated for the prestigious TechPoint Mira Award May 13, 2010 – Accelerator and Lab Expansion Groundbreaking May 27, 2010 – ABI Open House in New Building 2010
Flagship Accelerator BuildingThe Flagship Accelerator Building, scheduled to open in the fall of 2010, willserve as a light manufacturing and prototyping facility designed to house upto eight companies. The building will join three other buildings within theFlagship Campus, the Flagship Enterprise Center, the Energy Systems Centerand the Anderson University Flagship Center. The project is made possible inlarge part through a grant from the Economic Development Administration(EDA) of the U.S. Department of Commerce and a financial commitment fromthe City of Anderson.The new facility will have 80,000 square feet of floor space with a 32-footinterior height. Exterior walls will be made of pre-stressed, insulatedconcrete panels and the building will house twelve docks and two drive-inbays. In addition, the facility will be LEED certified, utilizing geo-thermalHVAC units, passive solar panels, and green construction practices. AnAnderson based architecture firm, krM Architecture, was selected to designthe building.The project will cost approximately $4 million, and will be funded as follows: • $2.7 million Economic Development Administration Grant • $400,000 through the City of Anderson • Remaining costs through a loan secured by the FEC.
New Programs As a business incubator the Flagship Enterprise Center is and Initiatives always seeking ways to improve the resources and services that we provide to help our clients find success. Here are just a couple of FEC’s new initiatives:SBA Microloan Program EducationFEC is now a SBA Microloan andIntermediary. Eligible small Access tobusinesses can apply for small loans Networking Capitalbetween $5,000 and $35,000 to helpestablish a new business or expand Mentoringan existing business. This programwill encourage small businessthrough access to capital.Strategic Partners ProgramFEC is actively seeking to buildrelationships with local professionalsin the fields of law, tax, finance, andequity investment. Certain strategic Successfulpartners provide FEC clients withprofessional services for free or at a Clientsreduced rate.
ChallengesOne of the major challenges forany small business incubator isthe dilemma of clientgraduation. The purpose of abusiness incubator such as FECis to help clients grow into FECsustainable, profitablebusinesses that can “graduate” Sustainabilityinto the community. Althoughwe celebrate when a clientsuccessfully graduates into thecommunity, for the Flagshipmanagement this can be adifficult time. The graduationof a large client can have adramatic impact on incubatorrent revenue, and hindermanagement’s ability to createa self-sustaining businessmodel. Client GraduationIt is for this reason, that we atFlagship are so grateful to ourpartners and supporters whounderstand the challenges ofbusiness incubation, and offertheir continued support.
FEC Board of DirectorsJim Ault – Chairman• Retired General Manager Delco RemyTim Lanane – Vice Chairman• Indiana State SenatorSena Landey – Treasurer• VP of Finance Anderson UniversityDr. Terry Truitt – Secretary• Dean, AU Falls School of Business Linda Dawson • Exec. Director City of Anderson Economic Development Bill Wylan (Ret.) • President, International Energy ,LLC Mary Jamerson • President Myers Autoworld, Inc. Don Henderson • Retired CEO – United Farm Family Life Ins. Co Oz Morgan • Star Financial Bank Dr. Victor Lechtenberg • Vice Provost for Engagement, Purdue University Eddie Rivers • Founder/Owner, Esource Resources