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Business incubator. The Case for Business Incubation In NW Georgia. NW Georgia Economy. Employment 16,240 jobs lost from 2008-2012 Population 14,282 new residents added in the same period Unemployment Rate
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Business incubator The Case for Business Incubation In NW Georgia
NW Georgia Economy • Employment • 16,240 jobs lost from 2008-2012 • Population • 14,282 new residents added in the same period • Unemployment Rate • Recent gains do not account for existing residents that dropped out of labor market or new residents yet to join in
Economic Rankings • Dalton and Rome ranked 12th and 13th, respectively, of 14 GA MSAs in Total Job Growth – YourEconomy.org • Rome and Dalton rank 352 and 364, respectively, out of 380 MSAs for Economic and Job Growth – Area Development Magazine
Incubation FAQS • The average five-year survival rate for incubation graduates is 75%, compared to the national average of 50-60% • Incubation programs produce on average four graduates per year • An average incubator after five years of operation has 17 resident clients, 32 affiliates, and 55 graduates • 73% of incubation graduates stay in the area • Communities hosting successful incubators range in size from 4,149 people to 22 million
Business Incubator Defined • Key Distinction • A Business Incubator Program IS NOT A Business Incubator • One must exist for the other to thrive
Business Incubation Program: • A program designed to accelerate the development of entrepreneurial firms though an array of business support resources and services, developed and/or orchestrated by incubator management, delivered both by incubator staff and through its networks of outside service providers. • Business incubation programs usually provide client firms access to shared basic services and equipment, improved access to capital and business management training. • Source: Incubating Success. EDA. 2011
Business Incubator: • A multitenant facility with on-site management that directs the business incubation program. • An incubator facility provides client firms appropriate rental space and flexible leases. • Co-locating entrepreneurial firms in a business incubator facility creates more opportunities for clients to network, share experiences and operate in a supportive atmosphere conducive to creating successful firm outcomes. • Source: Incubating Success. EDA. 2011
Success factors • Targeted business assistance aimed at meeting the needs of early stage businesses • Program goals • Management practices • Services provided • Operational structure • Advisory board composition • Other factors
Program Goals • Primary Goals: • Job Creation • Fostering entrepreneurial climate in the community • Others: • Industrial diversification • Targeted industries • Neighborhood improvement • Targeted groups: Women, minorities, disabled
Management Practices • Written mission statement • Written marketing plan • Plan for financial sustainability • Review of client needs at entry • Effective entry and exit criteria • Select clients based on cultural fit and potential for success • Introduce clients to community and funders • Provide pre- and post-incubation services • Track outcomes and budgets
Services Provided • Business basics • Presentation and business etiquette • Managing a new enterprise • Investment capital • Accounting and legal services • E-commerce assistance • Networking and marketing assistance • Strong mentoring program • Strong support from local higher education • Administrative services • Broadband Internet • Production assistance and product development
Operational structure • Nonprofit models predominate • Budgets and finances • Robust payment plan for rent and service fees • Majority of revenue from client rents and service fees • Some level of subsidy to be expected • Larger budgets allow provision of more services • Staffing • Smaller staff-to-client ratios • Competent staff with dedicated resources –and time- to service the incubator
Advisory Board Composition • 8 to 20 individuals • Incubator graduate firm • Technology transfer specialist • Experienced entrepreneur • Accountant (preferably CPA) • Legal and Intellectual Property assistance • Government representation • Financial institution representative • University official • Chamber of Commerce • FIRE
Key Findings: EDA/NBIA • No one service is silver bullet, synergy is key • Most incubators are not for profit • Public sector investment is important • Incubator program outcomes are not tied to the growth or size of the host region’s economy • Measures of a host region’s capacity to support entrepreneurship have a limited effect on outcomes • Business incubation best practices are highly correlated to incubator success
Key Findings:ARC/NBIA • Best practices for rural and urban incubation programs do not differ. • There are unique challenges to operating a rural incubation program • The most successful incubation programs have developed regional networks. • Location in a rural or urban area does not determine the potential for incubator success. Rather, program policies and procedures influence program success the most.
Burson Center, Carrollton • Owned and Operated by Carroll Tomorrow • 24,454 SF Facility houses 23 offices and 5,000 SF warehouse space, 2,000 SF conference room • Serves six counties • 103 graduates, 392 jobs since 2006 opening • Business clients have 88% success rate • Funding:
