LAWRENCE — The University of Kansas School of Business has launched a new program designed to keep rural businesses open for business.
The Redefining Retirement program – nicknamed RedTire – will match qualified graduates who want to own a business with business owners who are looking to retire. The program is aimed at preventing rural businesses from closing because an owner can't find a successor or buyer.
"Every day in rural communities, businesses close forever because an owner retires and can't find someone to take over the business," said Neeli Bendapudi, dean of the KU School of Business. "This is crucial to rural Kansas communities that depend on the services, jobs and tax revenue that these businesses provide. RedTire will address this issue by matching graduates with current business owners and facilitating a succession plan to keep the business running."
In effect, RedTire is a matchmaking service. Program staff will screen prospective replacement managers and candidate businesses, then identify good matches for purchase opportunities. From there, the program will help negotiate the purchase and transition of ownership terms, help establish a business purchase loan, and monitor and help the new owners successfully run and grow their new business.
The program will be supervised by two separate boards – a Board of Advisors and a Board of Governors – which include a number of highly regarded Kansas entrepreneurs and business leaders in Kansas.
"Nearly 13,000 businesses in Kansas have owners who plan to retire in five years but do not have succession plans in place," said Wally Meyer, a RedTire director and the director of entrepreneurship programs for the KU School of Business. "So there's certainly a need for this type of program in rural Kansas. This is another example of how KU entrepreneurship is working for Kansas."
RedTire will assemble teams of graduates to provide the multidisciplinary capabilities that successfully managed companies require. For example, RedTire would team a pharmacy student and an MBA student to work together on purchasing a pharmacy, rather than have either individual do so alone. Ownership teams will be built across the core industries of business, pharmacy, medicine and agriculture.
"By screening participants and learning about their personal and professional goals, we can match the right graduates with the right businesses in the right community to ensure long-term success," Meyer said. "We want these businesses to thrive and drive economic development in rural communities into the next generation."
RedTire is available to all graduates of a Kansas Regents institutions and to current Kansas business owners. Services are free. For details or to apply for services, visit www.redtire.org.
Meyer first developed the idea for RedTire a few years ago when he was visiting with an economic developer from Goodland.
"The economic developer told me, 'We have no one to succeed our small business owners when they retire,'" Meyer said. "And subsequent research proved that this need is nationwide, and likely to increase due to the growing number of expectant retirees who are part of the Baby Boomer population now reaching retirement age. RedTire can help fill this successor void with Kansas Regents institutions' educated labor pool, as well as alumni looking to return to the heartland."
The RedTire program has been in the planning stages since 2009. Since then, countless presentations about RedTire have been given to economic development officials, business owners, bankers and others statewide. The RedTire idea won best business concept in June 2009 at the U.S. Department of Commerce-sponsored University Center Showcase and in various annual showcases since then.
RedTire is an initiative of the KU Center for Entrepreneurship, housed within the KU School of Business. The program will be financed through existing KU business school funding streams.
In addition to helping recent graduates, the RedTire program could be especially useful to alumni of Kansas universities who have left Kansas but are looking to move back. In that regard, RedTire dovetails perfectly with a number of other State of Kansas programs, including the Rural Opportunity Zone program.
"We're pleased that Governor Sam Brownback and many other business leaders, some of who are helping us implement the RedTire program from their positions on the RedTire Board of Advisors, are such enthusiastic supporters of this initiative," Bendapudi said.