Res 034-2020 4A Funds for i.d.e.a. Wichita Falls 3/17/2020Resolution No. 34-2020
Resolution approving the programs and expenditures of the Wichita
Falls Economic Development Corporation (WFEDC) and amending
the budget to include up to $50,000 to i.d.e.a. WF for economic
development services
WHEREAS, Texas Local Gov't. Code §501.073(a) provides "The corporation's
authorizing unit will approve all programs and expenditures of a corporation and annually
review any financial statements of the corporation"; and,
WHEREAS, on February 20, 2020, the WFEDC approved the Project listed below
and as stated in its agenda.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS, THAT:
1. The Wichita Falls Economic Development Corporation's approval and funding
of the following programs and expenditures as described below and in said corporation's
agenda, are approved:
• A total of $50,000 to i.d.e.a. WF for economic development services;
2. The current fiscal year budget of the WFEDC is amended to provide for the
aforementioned expenditures and changes thereto.
PASSED AND APPROVED this the 17th day of March, 2020.
ATTEST:
City Clerk
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Proposed Contract for i.d.e.a.WF 2020
Dr. Scott Manley
Director, Lalani Center for Entrepreneurship & Free Enterprise
Dillard College of Business Administration
Midwestern State University
3410 Taft Boulevard
Wichita Falls, TX 76309
940-397-4366
scott.manlev@msutexas.edu
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Proposed Contract for i.d.e.a.WF 2020, page 1
Context
In a recent study commissioned by and for the Wichita Falls Chamber of Commerce and
Industry, Market Street Services correctly affirmed that employment growth is primarily driven
by entrepreneurship and the expansion of existing businesses. Within the strategy which
Market Street and the Chamber co -developed, an important recommendation is the
establishment of "small grants for firms... to leverage existing community strengths and activate
new entrepreneurs" (Wichita Falls Economic Development Strategy, page 26). Through this
proposal, i.d.e.a.WF supports the economic development mission of both the Chamber of
Commerce and the Wichita Falls Economic Development Corporation (WFEDC) by providing
such a grant program for businesses to create and retain primary jobs.
Objective
The objective of i.d.e.a.WF is to facilitate access to capital for business owners and potential
entrepreneurs in Wichita Falls who might not be aware of or otherwise able to obtain the
funding. By participating in i.d.e.a.WF, entrepreneurs gain a better understanding of how to
develop, build, and grow viable and sustainable businesses that will strengthen the local
economy. Participants will also be afforded access to additional in-depth training and extensive
consulting services to enhance their knowledge and chance for success.
History & Impact
i.d.e.a.WF recently celebrated its tenth year of providing resources necessary to empower
innovative ideas and fuel economic development across north Texas. To date, the WFEDC 4A
board has provided the cash that has been awarded to the winners. In -kind providers such as
marketing agencies, attorneys, accountants, IT firms, human resource consultants, and media
providers have donated their services to the winners. Other business owners have subsidized
the competition by donating small cash amounts ranging from $500 to $2,500 annually; these
funds are used to administer and promote the competition.
Most recently, the competition awarded $30,000 cash and $50,000 of in -kind services to three
winners: Horseshoe Bend Winery, Wichita Valley Pet Cremation, and Endunamoo Strength &
Conditioning. In a recent survey of the first nine years' winners (see Appendix 1), it was
determined that i.d.e.a.WF has helped to create more than 105 full-time equivalent jobs and
sales revenue of more than $9 million annually. Of those 105 jobs, 89.5 were primary jobs. Out
of thirty winners over its 10-year history, only seven businesses have failed. Unfortunately, two
of the "judge's choice" winners either did not start their business or have not yet started.
Nonetheless, a 70% survival rate for ten years is impressive in light of SBA's stated 66% 10-year
failure rate (https://www.investopedia.com/financial-edge/1010/top-6-reasons-new-
businesses-fail.aspx).
Partners
i.d.e.a.WF is funded by the WFEDC, overseen by the Lalani Center, and administered through
the SBDC. The competition specifically targets both startups and existing business wanting to
expand. It is intended to foster community involvement and innovation by bringing local
entrepreneurs and other business professionals together to continue the economic
Proposed Contract for i.d.e.a.WF 2020, page 2
diversification of Wichita Falls. The outcomes contribute to the community's identity that
preserves the unique character and rich entrepreneurial heritage of the city. Other benefits are
increased employment and tax base, while keeping employee salaries and owners' profits in the
greater Wichita Falls area.
The Wichita Falls Economic Development Corporation (WFEDC)
In 1998, the voters of Wichita Falls approved a 1/2 cent economic development sales tax. Since
1998, the WFEDC has approved $fig million for 81 projects. Funds may be used individually or
collectively. Type A EDCs are typically created to fund industrial development projects such as
business infrastructure, manufacturing, and research and development. Type A EDCs can also
fund military base realignment, job training classes, and public transportation. However, an
over -arching requirement for these funds is the creation of primary jobs. Since 2009, the
WFEDC has partnered with the Lalani Center to provide an alternative source of funding for
small businesses in the Wichita Falls Metropolitan Statistical Area.
The Munir A. Lalani Center for Entrepreneurship & Free Enterprise
Located in the Dillard College of Business Administration at MSU Texas, the Lalani Center
supports and promotes entrepreneurship and free enterprise in North Central Texas. The Lalani
Center assists entrepreneurial ventures, encourages creativity and innovation, and develops
and provides curriculum for students at Midwestern State University. The Lalani Center works
with students, faculty, and staff, as well as members of the North Texas business and economic
development community to encourage and support successful student innovation and regional
growth. The Lalani Center also engages with entrepreneurs throughout the region in support of
new product development, business startups, expansions, and other entrepreneurial activities.
The Lalani Center impacts the local economy by teaching skills to students and entrepreneurs
and by assisting in business plan development and supporting angel and venture capital
development through programs such as i.d.e.a.MSU, i.d.e.a.WF, and the Texoma Angel Investor
Network. Dr. Scott Manley serves as the director and only employee of the Lalani Center.
America's Small Business Development Center at MSU Texas
The SBDC provides knowledge, guidance, and a significant amount of value to the
entrepreneurial community. This value comes from one-on-one counseling sessions to help
prepare business and strategic plans, develop marketing strategies, and prepare financial
projections that are designed to attract capital infusion. Since 2010, the MSU SBDC has assisted
2,244 clients, helped to open 191 businesses, created 801 new jobs, and facilitated more than
$11 million in capital formation. Ms. Vanda Cullar serves as the director of the SBDC, and Mr.
Dan Leslie is a business consultant in the Wichita Falls office. Mr. Walter Lambert is a business
consultant serving the rural areas across the MSU SBDC service region.
Unfortunately, due to state budget cuts resulting in loss of staff, the SBDC is hard-pressed to
meet the needs of the small businesses requiring assistance in their 13-county service area. For
example, Ms. Lynda Cannedy recently retired as the assistant director and there is insufficient
funding to hire a replacement. Mr. Lambert's position has been re -allocated to rural
communities because his position is wholly funded by a grant from the United States
Proposed Contract for i.d.e.a.WF 2020, page 3
Department of Agriculture for rural economic development. From its inception, the SBDC has
served as an integral partner in i.d.e.a.WF. However, without the proceeds from this proposal,
i.d.e.a.WF is not sustainable because the SBDC will not be able to provide the depth and
breadth of services needed by contestants.
As part of i.d.e.a.WF contestants will be offered three primary services: business training and
continuing education, consulting, and research assistance.
SBDC Services
Business Training Programs
i.d.e.a.WF contestants will be offered a series of face-to-face training sessions specifically
designed to enhance their ability to succeed, both in the competition and in business. This
training will be designed for and offered to contestants free of charge as part of the SBDCs
contractual obligation. Other entrepreneurs will be invited to participate for a nominal fee.
Orientations (6 total)
In these free, 1.5 hour workshops offered to the general public, prospective contestants and
other stakeholders will gain better understanding of the competition and its requirements.
Business Planning
In this two hour workshop, attendees will learn about the various components of a business
plan, including the narrative section, financial projections, and supporting (research)
documentation.
Market Research
Attendees will learn about the expectations of various stakeholders and the resources available
to them. Specifically, they will learn how to conduct industry and market analyses and how to
interpret and apply that information in developing their business model and plan, thus
satisfying lender expectations and facilitating their access to capital.
Understanding Financial Statements
Financial illiteracy is a primary cause of small business failure. In this workshop, attendees will
learn the intricacies of the cash flow statement, income statement, and balance sheet.
Sales Forecasting
After participants have developed their business model and gained a basic understanding of
business financial statements, they will learn how to build a sales forecast. The information
from the sales forecast will further populate their pro -forma financial statements.
Pitching a Plan to Investors
Finalists will be required to attend this workshop to learn how to successfully pitch their plans.
They will be given a specific outline of the requirements for their pitch, and shall submit their
preliminary pitch materials to the SBDC and Lalani Center for feedback and evaluation.
Proposed Contract for i.d.e.a.WF 2020, page 4
QuickBooks®
After having established their businesses, participants will be granted access to an all -day,
intensive workshop teaching them how to use QuickBooks® to keep their business records.
Following completion of the workshops, SBDC consultants will provide ongoing support to help
the business owners understand, interpret, and apply the information contained in their
financial statements.
Guerrilla and 21" Century Marketing
Once established, every business must connect and develop mutually beneficial relationships
with their customers. In this 2-hour workshop, participants will learn the basics of developing a
marketing strategy, as well as basic guerilla and social media marketing tactics
Consulting
Once qualified, all entrants will have access to in-depth business consulting, expertise, and
other pertinent resources offered at the SBDC. These face-to-face meetings will discuss
strategy, assist with building financials, and provide valuable feedback on the participants'
business plans before they are submitted for judging.
After winning the competition, contestants will be required to meet with the SBDC consultant
monthly for additional consulting and to review their progress towards meeting contest
deliverables or fulfilling contractual obligations.
Research
For those trying to start a new business or grow an existing business, the many sources of
information available can provide much -needed direction and guidance. However the time and
expense required to learn about, access, use, and interpret that information is cost -prohibitive
and confounding to all but the largest firms. For example, one such research report —the
IBISWorld Industry Report —costs $925 for a single report. While there is tremendous value in
such a report, it is extremely unlikely that an entrepreneur would see the need for that
information, much less have the cash necessary to purchase the report. However, the SBDC has
access to the most sophisticated research databases available and will provide that research to
i.d.e.a.WF contestants at no charge.
Award monies
This fiscal year, the plan includes $250,000 total available award money to be distributed in
increments of not more than $100,000 to each selected winner(s) selected through the
deliberation of the judges and approval of the WFEDC 4A board. It is anticipated that 3-5
winners shall share the $250,000 award package in increments of $50,000 to $100,000 each.
Award amounts shall be based upon the (proposed) creation and retention of primary jobs.
Judges
Entrants' business plans will be evaluated by a panel of five (5) judges. Judges will be selected
according to their prior business experience as well as the relationship with the various
stakeholders of the competition. For example, the director of the Lalani Center shall serve as an
Proposed Contract for i.d.e.a.WF 2020, page 5
ex-officio judge, and the WFEDC 4A board will appoint a second judge. Other judges shall
include a rotating cast that includes commercial lending officers, small business owners, and
community leaders.
Proposed Guidelines for i.d.e.a.WF Contestants
• Winning businesses must be headquartered in the Wichita Falls Metropolitan Statistical
Area (MSA) to be eligible to participate.
• Winning businesses cannot sell or relocate the business outside of the MSA before the
contractual obligations to the WFEDC 4A board are met.
• Participants cannot be an immediate relative of administrative officials or judges or
engaged in any other business partnerships with an administrative official or judge. All
special circumstances will go under the review of the Director of the Lalani Center, who
will make the final decision.
• Each participant in the competition must become a client of the SBDC by
completing the 641 SBA form.
• Award recipients must provide the SBDC with monthly financial reports until
their contractual relationship with the 4A board has been satisfied.
• Participants must have a credit score of at least 680to participate. Participants
shall be required to provide a copy oftheir Equifax, Transunion, or Experian credit
reports (includingthe score report) when entering the competition.
• Attendance is mandatory for all seminars throughout the competition unless
excused by either the SBDC or Lalani Center director.
• Past winners cannot reenter the competition for the same business for five years.
➢ Past winners may enter for a different business with approval from contest
officials.
➢ Past contest losers may reenter the following year.
• A participant is not allowed to participate if he or she has ever been convicted of a felony.
The SBDC will conduct background checks on all entrants.
Disbursement of Funds
• Award amounts are calculated based upon the creation and retention of primary jobs,
i.e., those jobs that are:
1. available at a company for which a majority of the products or service are
ultimately exported to regional, statewide, national, or international markets,
thereby infusing new dollars in the local economy, and
2. included in certain sectors of the North American Industry Classification System.
• The amount of each cash award will be calculated at a rate of $4,000 per primary job
created and retained for at least six months. For example, to receive $100,000 in
funding, a winner must plan to create and retain 25 primary jobs.
• Winners may be eligible to receive advance funding provided certain criteria are met.
➢ To qualify for advance funding and ensure the creation of primary jobs and that
the 4A board is being a good steward of its taxpayer funding, award recipients
must provide an irrevocable letter of credit equivalent to the amount of the cash
Proposed Contract for i.d.e.a.WF 2020, page 6
award. Upon fulfillment of the winners' contractual obligation (i.e., primary job
created and retained for six months), the irrevocable letter of credit shall be
invalidated.
➢ If requesting payment in advance, prior to being named as an i.d.e.a.WF finalist
contestants must provide verifiable evidence that they have obtained a lender's
commitment for the irrevocable letter of credit.
➢ Otherwise, payment shall be in arrears following the winner's meeting of the job
creation and retention requirements as stated above.
• To receive payments, winners must provide invoices that are consistent with the
strategy stated in their business plans.
• Invoices will be approved or rejected by the SBDC. If approved, the invoice will be
forwarded to the WFEDC for payment.
Schedule of Events
It is anticipated that the competition shall span a course of approximately six (6) months once
the commitment of the WFEDC 4A board is established. Orientations shall occur over the
course of approximately 3-4 weeks immediately following contract issuance between the
WFEDC and MSU Texas, and the remaining introductory courses will follow as entrants are
completing their business plans. Contestants shall have approximately three months to
complete their plans, and selection of finalists shall occur over the two -week period
immediately following contestants' submissions. After the judges have selected the finalists,
contestants will be required to prepare a 15-minute pitch, which will be made to the
competition judges. Judges shall select the proposed winners, and request the 4A board to
approve the winners. At a community event in late fall 2020, winners will be announced. Funds
will be disbursed after winners meet the conditions stipulated by the WFEDC.
Budget
Use of funds
Cash awards to winners
Amount Requested
(not to exceed) $250,000
Payroll expenses
• Salary of i.d.e.a.WF consultant
$20,750
• Benefits (35% of salary)
$7,250
Total payroll expenses
$28,000
Competition marketing expenses
• Website design & hosting
$2,000
• Television ad production &
placement
$12,000
• Social & digital marketing
$1,000
Total marketing expenses
$15,000
Awards event
$2,000
Administration (Lalani Center)
$5,000
Total Funds Requested
$300,000
Proposed Contract for i.d.e.a.WF 2020, page 7
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