Success story:
Carbolytic Materials Co.
Northwest Missouri manufacturer recycles tires in new process for carbon black production
A manufacturing revolution has arrived in northwest Missouri. Ray Riek, CEO of Carbolytic Materials Co., and his operations staff in Maryville are applying a recently developed proprietary method to produce carbon black, a substance much like graphite with a multitude of applications in everyday products.
The extraordinary manufacturing process has brought a new production plant and a couple of dozen manufacturing jobs to northwest Missouri in the past year.
Carbon black is among the 50 top industrial chemicals produced worldwide. It's used as a reactant in rubber to provide abrasion resistance. Its primary use is in the manufacture of tires. In addition it has a variety of industrial rubber applications, and it acts as a tinting agent in almost every product tinged black.
Until this new manufacturing process was developed, carbon black production relied on two manufacturing methods — furnace black and thermal black — which involve incomplete combustion of hydrocarbons from primarily petroleum-based sources.
CMC's new approach to carbon black production relies on discarded tires as the raw material. The process reduces the amount of used tires going to landfills, while simultaneously recovering carbon black and oil.
The resulting product — ApexCM™ — possesses physical properties comparable to other types of carbon black. It comes in pellet or powder form. Applications include hoses, gaskets, belts, rubber boots, roofing material, bags, plastic pipe and sheet plastic in the automotive, agriculture, construction, electronics and industrial equipment markets.
Decades of experience in chemical engineering and R&D work in product development set the stage for Riek's latest venture.
He is a 30-year veteran of product and process research and development with the St. Louis-based Monsanto Co. After leaving Monsanto in 1997, Riek worked as a product commercialization consultant. It was during this stage of his career that Ray learned of a new technology for carbon black production.
"We assembled a team of folks with experience in the industrial chemical business in late 2006," recalls Ray. "We are quite proud of what has been accomplished to this point by both the management team in building the company, and the operational team in Maryville in learning to operate a new technology and produce a product that has been well accepted."
CMC's arrival in Maryville was based on a series of factors.
Read this complete success story with additional photos.
Entrepreneurial activity rises in 2009 despite recession, says Kauffman Foundation
KANSAS CITY, Mo. - Rather than making history for its deep recession and record unemployment, 2009 might instead be remembered as the year business startups reached their highest level in 14 years — even exceeding the number of startups during the peak 1999-2000 technology boom.
According to the Kauffman Index of Entrepreneurial Activity, a leading indicator of new business creation in the United States, the number of new businesses created during the 2007-2009 recession years increased steadily year to year. In 2009, the 340 out of 100,000 adults who started businesses each month represent a 4 percent increase over 2008, or 27,000 more starts per month than in 2008 and 60,000 more starts per month than in 2007.
"Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators," said Carl Schramm, president and CEO of the Kauffman Foundation. "Because entrepreneurs drive the economy, the growth in 2009 business startups is encouraging and hopefully points to a hopeful trend in terms of our economic recovery."
Capturing new business owners in their first month of significant business activity, the Kauffman Index of Entrepreneurial Activity provides the earliest documentation of new business development across the country. The percentage of the adult, non-business owner population that starts a business each month is measured using data from the monthly Current Population Survey (CPS), conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics. In addition to this overall rate of entrepreneurial activity, the Kauffman Index presents separate estimates for specific demographic groups, states and select metropolitan statistical areas (MSAs). It provides the only national measure of business creation by specific demographic groups.
New 2009 data allow for an update to previous reports, revealing important shifts in the national level of entrepreneurial activity, and in the demographic and geographic composition of new entrepreneurs across the country between 1996 and 2009. Interactive data spanning all 14 years is available at www.kauffman.org/kiea.
Entrepreneurship rates by race show that African-Americans experienced the largest increase in entrepreneurial activity between 2008 and 2009. Rising from 0.22 percent in 2008 to 0.27 percent in 2009, the rate was the highest over the 14 years of reported data but remains below other racial groups. In contrast, both Latinos and Asians experienced declines in entrepreneurial activity rates.
Entrepreneurship growth was highest among 35- to 44-year-olds, rising from 0.35 in 2008 to 0.40 in 2009. The oldest age group in the study (55-64 years) also experienced a large increase in business creation rates from 2008 to 2009, contributing to a two-year upward trend to 0.40.
Among states, Oklahoma and Montana had the highest entrepreneurial activity rates, with 470 per 100,000 adults creating businesses each month. The other states with the highest rates were Arizona (460 per 100,000 adults), and Texas and Idaho, both with 450 businesses started per 100,000 adults. The five states with the lowest rates of entrepreneurial activity were Mississippi (170 per 100,000 adults), Nebraska (200 per 100,000 adults), Pennsylvania (200 per 100,000 adults) Alabama (210 per 100,000 adults) and Minnesota (220 per 100,000 adults).
"Entrepreneurial activity rates follow strong geographical patterns," said Robert W. Fairlie, the study's author and director of the master's program in applied economics and finance at the University of California, Santa Cruz. "Entrepreneurial activity generally is highest in western and southern states, and lowest in the Midwestern and northeastern states."
Other key findings for 2009 include:
- Entrepreneurial activity increased from 2008 rates for both men and women (from 0.42 percent to 0.43 percent for men and from 0.24 percent to 0.25 percent for women).
- The business creation rate increased from 2008 to 2009 for non-Latino whites, from 0.31 percent to 0.33 percent, but declined for Latinos (from 0.48 percent to 0.46 percent) and Asians (from 0.35 percent to 0.31 percent).
- The immigrant rate of entrepreneurial activity declined slightly from 0.53 percent in 2008 to 0.51 percent in 2009, but remained substantially higher than the native-born rate of 0.30 percent.
- Although the western states continued to have the highest rates of entrepreneurial activity, this region saw a sharp decline from 0.42 percent in 2008 to 0.38 percent in 2009. Business creation rates increased in the Midwest and South.
- Among the United States' 15 largest metropolitan statistical areas, Houston had the highest entrepreneurial rate (0.63 percent) in 2009. Seattle had the lowest rate (0.16 percent).
Business going green
Going green with the "King of Green"
The "King of Green" raises smiles with his Elvis sideburns and his swagger, but he is serious about the effects of chemicals on health and the environment.
"As small businesses we need to be smart, to look for opportunities to innovate, bring new ideas to the table and look for something that has never been done before," says Gary Walker, who, along with his wife Trisha, transformed their business, Magic Touch Cleaning in Lee's Summit, into one of the first green cleaning services in the Midwest. Five years ago the Walkers, who opened Magic Touch in 1992, started the journey toward green, and they haven't looked back.
"We invested lots of time and money on developing a program that hadn't been invented yet. People within our own trade industry were telling us we would be bankrupt in a year because there was no interest in green cleaning. I guess we were just ahead of our time," observes Trisha.
Their company, which now utilizes eco-friendly products and processes, has 170 accounts and loyal customers who have been with them for 15 years.
Read the rest of this story on the "King of Green."
IRS roundup
Recent legislation offers small businesses special
tax incentives to provide health care, hire new workers
WASHINGTON, D.C. - The Internal Revenue Service encourages small businesses to take advantage of tax-saving opportunities included in recently enacted federal legislation.
A variety of business tax deductions and credits were created, extended and expanded by the American Recovery and Reinvestment Act of 2009 (ARRA), this year's Hiring Incentives to Restore Employment (HIRE) Act and the Affordable Care Act. Because some of these changes are only available this year, eligible businesses only have a few months to take action and save on their taxes.
Here is a rundown of some of the key provisions:
New health care tax credit helps small employers
The small business health care tax credit, created under the Affordable Care Act, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.
The credit takes effect this year and is generally available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small employers that primarily employ low- and moderate-income workers.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers. The maximum credit goes to smaller employers — those with 10 or fewer full-time equivalent (FTE) employees — paying annual average wages of $25,000 or less. The credit is completely phased out for employers with more than 25 FTEs or with average wages of more than $50,000.
Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. More information about the credit, including a step-by-step guide and answers to frequently asked questions, is available on the IRS website.
Two new benefits for employers that hire and retain recently unemployed
Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2 percent payroll tax incentive, in effect exempting them from the employer's share of Social Security tax on wages paid to these workers after March 18. In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return.
These tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives generally do not qualify.
Employers must get a signed statement from each eligible new hire, certifying under penalties of perjury, that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer. IRS Form W-11 can be used to meet this requirement. Further details, including answers to frequently asked questions, are posted on IRS.gov.
Work opportunity tax credit aids employers that hire certain workers
The work opportunity tax credit (WOTC) offers tax savings to businesses that hire employees belonging to various targeted groups. These groups include people ages 18 to 39 living in designated communities in 43 states and the District of Columbia, recipients of various types of public assistance, certain veterans, ex-felons and certain youth workers. The instructions for Form 8850 detail the requirements for each of these groups.
Certification by the state workforce agency is generally required. Normally, a business must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work.
An eligible employer can claim both the WOTC and the new hire retention credit for the same employee. However, an employer may not claim both the payroll tax exemption and the WOTC for the same employee. Therefore, any employer that chooses to apply the exemption to wages paid to a qualified employee may not receive the WOTC on any wages paid to that employee during the one-year period beginning on the employee's hiring date.
Exclusion of gain on the sale of certain small business stock
An extra incentive is now available to individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009, and before Jan. 1, 2011, and held for more than five years. For previously-acquired stock, the exclusion rate remains at 50 percent in most cases.
COBRA credit
Employers that provide the 65 percent COBRA premium subsidy to eligible former employees can claim credit for this subsidy on their quarterly or annual payroll tax returns. To help avoid imposing an unnecessary cash flow burden, affected employers can reduce their payroll tax deposits by the amount of the credit. For details, see the instructions for Form 941.
Small business owners can find a variety of helpful online resources in the Small Business and Self-Employed Tax Center on IRS.gov. Also, consult these videos on YouTube for additional information:
SBA News
SBA, USDA agreement aims to stimulate business, job creation, access to capital
HILLSBORO, Mo. - Agriculture Secretary Tom Vilsack and U.S. Small Business Administrator Karen G. Mills last month announced the two agencies have signed an agreement to encourage sustainable growth and development of rural small businesses. The announcement was made during the National Summit of Rural America, which gathered agricultural leaders, farmers, ranchers, community leaders, and residents of rural communities to share their vision and ideas that can help rebuild and revitalize rural America.
"The Obama administration strongly supports efforts to develop new and existing businesses and this new partnership will help increase access to capital in rural communities which can spur business growth and job creation," Vilsack said. "USDA has many business programs designed to promote small business development, including direct and guaranteed loans and grant assistance and we look forward to partnering with the SBA in our business development and support efforts."
The agreement between the SBA and USDA is designed to reach out to people and places in rural areas and small communities with underserved financial needs. Prospective small businesses owned by minorities, women and veterans also are expected to benefit from this joint effort to encourage sustainable growth and development. USDA Rural Development's Rural Business Service will provide loan guarantees, loans and grants; the Small Business Administration will provide loan guarantees.
The MOU will remain in effect for three years. Under the agreement, USDA Rural Development and SBA will use their respective resources to provide small businesses in rural areas with loan guarantees and technical assistance to help build diverse and sustainable economies, reverse population decline, create and sustain jobs, and improve quality of life. The agreement is expected to:
- Improve opportunities for small businesses to start and grow;
- Improve coordination in the delivery and development of programs; and
- Increase the number of small business loans guaranteed by USDA and SBA.
"Small businesses and entrepreneurs are a key source of job creation and the foundation of local economies in rural communities across the country. Both SBA and USDA are committed to bring our collective expertise, financial resources and experience to help start, grow and sustain rural businesses and promote entrepreneurship," Mills said. "This partnership represents the Obama administration's ongoing commitment to working across our various agencies to increase economic opportunity for rural citizens."
Key goals of this partnership include strengthening marketing and outreach by enabling each agency's field offices to advise potential small business borrowers of the other agency's credit programs that may support all or a portion of the small business' financing needs. USDA Rural Development and SBA field offices will exchange promotional and reference materials, including brochures and training schedules, and will distribute the other agency's information to its field network and its potential applicants when appropriate.
USDA and SBA also will encourage their networks of resource partners to refer rural businesses to the other agency's resources, where appropriate. Rural Development's network includes National and State Rural Partnership Councils, state and sub-state offices, and appropriate technology transfer to rural areas. SBA's network includes Small Business Development Centers, SCORE chapters, U.S. Export Assistance Centers, Veteran Business Outreach Centers and Women's Business Centers. By mutual agreement, USDA and SBA may identify pairings of state and district offices to explore mutual best practices available to serve clients.
Entrepreneurs create economic growth across state
and county lines
WASHINGTON, D.C. - Entrepreneurial activity in one U.S. county or state often reflects similar activity in neighboring jurisdictions, according to an analysis of geographic and other patterns in new business formation across the United States.
The study, New Business Clustering in U.S. Counties, 1990-2006, sheds light on business activity related to levels of education, industry, economic growth patterns and geography. The report uses 1990-2006 business startup and closure data from the Census Bureau's Statistics of U.S. Businesses.
"State and local policymakers are continually looking for ways to generate new businesses, industries, jobs and economic activity," said Susan M. Walthall, acting chief counsel for advocacy. "The big question is always how and where new businesses are most likely to grow. This research provides some important clues to the relationships between business startups and various underlying factors in industries and across counties and states in the United States."
The study offers a number of insights about new business clusters. Among them:
- As expected, populous counties — Los Angeles, Cook (Chicago) and New York — have the highest levels of entrepreneurial activity.
- The nation's interior and northwestern counties — especially in states like Colorado, Utah and Washington — tend to have the highest firm birth rates and levels of entrepreneurial activity.
- Retail trade has the highest rate of new firm births, followed by local market industries.
- High technology is the only industry sector specifically favored in counties with access to an educated workforce and a local research and development structure.
- New startup rates in high technology are tied to startup rates in business services, an indication that business service firms may form in response to high tech entrepreneurial activity.
- Higher unemployment is correlated with higher firm birth rates except in the business services industries — an indication that business service firms depend on the success of other firms.
For more information and a complete copy of the report, visit the Office of Advocacy website at www.sba.gov/advo.
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