Building Strong Networks for Entrepreneurs



-981075-704850Using Incubators to Support EntrepreneursCurriculum developed in part with funding from USDA/RCDI Building Entrepreneurial Community Capacity ProjectSlide NarrativeThis following provides a narrative to supplement the slides used during the instructor’s presentation on this topic. The numbered items below correspond with the power point slides used, with the title slide being number 1. Title slide: Using Incubators to Support EntrepreneursOverview for Instructor:Incubators are a successful method for providing support to emerging entrepreneurs. Primarily operating within a physical location, incubators provide space at reasonable rental rates, shared equipment to lower the start-up and operating cost for incubator clients and most importantly access to a network that can connect entrepreneurs to services and potential business to business partnerships/customers. This session shares with the class participants an overview of what incubators are and how they operate. It also provides some statistical information regarding the operation of incubators and examples of successful incubator based businesses. Design of Educational Session:This session will involve lecture/presentation interspersed with group discussion. Class participants are encouraged to ask questions and share their own experiences of incubators. The power point slides and attached notes will lead you through this presentation step-by-step. The discussion exercises will follow lecture/presentation points and are designed to make the presentation subject matter relevant to the local community situation. Also, the discussions will provide a way of obtaining information that can be used in future sessions and as background data for the community’s strategic plan to create entrepreneurship capacity.When you have completed this session, gather the group’s input on the flip chart so that it can be saved for the strategic planning and a final community report.Business Incubation slide: Business incubators nurture the development of entrepreneurial companies, helping them to survive and grow during the vulnerable start-up period. Incubation goals include creating local jobs, enhancing a community’s business climate, retaining businesses in a -304800480060region, accelerating growth in a particular industry, and diversifying local economies. Incubators offer their clients business support services and resources that are tailored to the individual entrepreneur’s needs. 3. Incubation Works slide:Incubator graduates create jobs, revitalize neighborhoods and commercialize new technologies, which strengthens local, regional and even national economies. In 2001 alone, North American incubators helped more than 35,000 start-up companies that employed nearly 82,000 workers and generated annual earnings of more than $7 billion.The National Business Incubation Association estimates that North American incubator clients and graduates have created about a half-million jobs since 1980. Even better, for every 50 jobs created by an incubator graduate, another 25 jobs are created in the community. 4.The Incubation Difference slide:The incubation difference really comes down to contacts and resources. It’s the incubator manager’s job to know the people in the community – university officials, business owners, lawyers, accountants, and so on – who can help small businesses thrive. For example, if a client is developing a new medical device and is having trouble with issues surrounding licensing its technology, the incubator manager can connect the client with an intellectual property attorney to provide assistance. Or if a client of a kitchen incubator needs to do a nutritional analysis of a new salsa to meet federal labeling guidelines, the incubator manager can put that client in touch with a lab that can help. The incubator manager knows what kinds of help a start-up company might need and has the contacts and resources to supply that help.5. History of Incubation slide: Incubation is not a new concept. The first U.S. business incubator, the Batavia Industrial Center, opened in 1959. Incubation really took off in the late 1970s and throughout the 1980s, as communities recognized the value of building and expanding new businesses to sustain their local economies. The industry grew quickly as forward-thinking economic developers realized the limitations of traditional business-attraction strategies. Today, there are some 5,000 incubators worldwide. The National Business Incubation Association, headquartered in Athens, Ohio, has more than 1,500 members from across the globe.6.What Incubators Offer slide: Incubators provide a myriad of services to their clients. Nearly all offer help with business basics – such as writing business plans – as well as one-on-one business counseling and mentoring, networking opportunities, marketing assistance. Incubators also provide shared facilities, equipment, and services such as reception and high-speed Internet access. Most have some mechanism to help their clients fund their enterprises, from links to venture capitalists and angel investors to in-house loan funds. These are just a few of the most common incubator services.7.Incubator Staff slide:The primary staff in an incubator is the Incubator Manager. A successful incubator manager is part coach, part trainer and part matchmaker. Most incubator managers have experience in business consulting, economic development, marketing and sales, or organization management. About three-fourths are or have been entrepreneurs themselves, making them especially empathetic to their clients’ needs. 8.An Incubator Client Might Be…. slide:An incubator’s clients might include a university researcher who has a new invention to market, but doesn’t know how to start and run a business. Another type of client is a serial entrepreneur who has successfully developed a business already and is launching a new enterprise. A third example of an incubator client is the owner of a home-based business who is ready to move out of the house and grow her company. Basically, an incubator client is anyone who wishes to connect with other entrepreneurs and share services and resources.9.Types of Incubators slide:Most North American business incubators are nonprofit organizations devoted to economic development. About half of all incubators are mixed-use, assisting a wide range of start-up companies. A third of all incubators focus on technology businesses. Other incubators attract manufacturing firms, service businesses, or niche markets such as arts and crafts or specialty foods. About 44 percent of North American incubators are located in urban areas and 31 percent are in rural areas.10.A Mixed-Use Incubator slide:About half of all North American incubators are mixed-use facilities; that is, they aid clients from a variety of sectors, including service, light manufacturing and information technology companies. The Entrepreneurial Center in Birmingham, Alabama, is one of the best. The center offers its clients business advice and counseling in-house. Partnerships with outside agencies give clients help with human resources issues and entrepreneurial training. As many as 70 companies may apply for space in the incubator each year; fewer than 10 are accepted. The center however still serves companies that are not successful in locating in the incubator. Through a contract with the city, the center offers assistance to up to 100 aspiring entrepreneurs each year.11.A Technology Incubator slide:Technology incubators, on the other hand, offer the specialized space and equipment needed to nurture a science-based company. Some, like the Quebec Biotechnology Innovation Center, specialize in helping biotechnology companies create pharmaceuticals, medical devices or other biological goods or services. These specialized amenities are valuable to small companies that are testing and refining products and cannot yet afford specialized equipment and lab space. QBIC offers wet labs, chemical storage space and access to a wide range of scientific equipment, as well as business counseling and other assistance normally provided incubator clients.12.A Specialty Incubator slide:Some incubators focus on a specific industry niche. The Chesapeake Innovation Center, for example, is the nation’s first incubator dedicated to homeland security. The center partners with defense agencies and contractors – including the National Security Agency and Northrup Grumman – to determine what technologies they would like to have for counterterrorism and defense purposes. The center then finds and fosters start-up companies that can meet those needs. Other examples of specialty incubators are devoted to gourmet or regional foods and the arts. 13. Incubator Sponsors slide:The vast majority of business incubators are sponsored by some kind of organization or consortium that provides a physical space for the incubator and/or some amount of financial backing. Academic institutions, government agencies and economic development organizations are the most common incubator sponsors. Nearly one-fifth of all incubators, however, do not have a sponsor or host organization.14. A Good Investment slide: A well-managed business incubator is a strong investment in the local and regional economy. A 1997 study of incubator impacts found that for every public dollar invested in them, NBIA member incubators and their graduates return about $30 in local tax revenues. 84 percent of incubator graduates remain in their communities, continuing to grow their business which provides returns on public investment. And incubator jobs are relatively cheap. It costs a little over $1,000 to create a job through a publicly backed incubator. Other publicly supported job creation mechanisms cost more than $4,500 per job created. Business incubation is an important tool in economic development. Incubators create jobs in a community, but they also can help attract and retain outside companies, which will be attracted by a region’s strong entrepreneurial base.15. Incubator Successes slide (1):Some of the United States’ most successful companies got their start in a business incubator. PeaPod, a pioneer of Internet commerce, was founded in 1989 at the Technology Innovation Center in Evanston, Illinois. It hit the Inc. 500 list of fastest-growing private companies in 1996; two years later, it made its 1 millionth delivery. Today, the online grocery service has more than 155,000 customers and is a subsidiary of Royal Ahold, owner of Stop & Shop and Giant Stores. When MindSpring entered the Advanced Technology Development Center in Atlanta in 1994, the company had three employees and only 20 subscribers. It graduated a year later with 45 employees and more than 8,500 subscribers. By 2000, when it merged with EarthLink, MindSpring had become one of the country’s biggest Internet service providers, consistently topping customer satisfaction surveys.16. Incubator Successes slide (2):Martek Biosciences may not be a household name, but chances are, if you have children, you have benefited from Martek’s products. Martek develops and sells products derived from microalgae, including nutritional oils included in baby formula that aid in the development of newborns’ eyes and central nervous systems. Martek has license agreements with 13 infant formula manufacturers, representing more than two-thirds of the world formula market. Formula containing Martek oils is available in more than 60 countries worldwide.17. Incubator Successes slide (3):If you’ve ever swiped on some sunscreen using one of those prepackaged towelettes, you’ve used another incubated company’s products. OraSure began its life as Solar Care Technologies Corp., the brainchild of three former Procter & Gamble employees. They developed a sunscreen towlette that they then licensed to Schering-Plough, makers of Coppertone. In 2000, the company merged with another firm to form OraSure Technologies, a leader in the oral fluid diagnostics market, developing tests that use saliva to simplify and speed testing for HIV and other infectious diseases as well as drug and alcohol abuse.18. Incubator Success slide (4)::In 2000, Pabst Brewing Co. tapped Object 9, an advertising and design firm, to help market its venerable Pabst Blue Ribbon brew to a new generation of beer drinkers. The strategies Object 9 devised – including a Web site that allowed users to register for special promotions – helped Pabst Blue Ribbon sales increase by 10 percent in both 2002 and 2003. So Pabst naturally turned to Object 9 again in 2004 to update the Old Milwaukee logo. Object 9 has worked similar marketing magic for other national brands as well, including Sprint; Realtree hunting clothes and supplies; and Advantis Technologies, maker of pool- and spa-care products.19. About NBIA slide:The National Business Incubation Association is the world’s leading organization advancing business incubation and entrepreneurship. NBIA serves more than 1,500 members from all over the world, providing information, education, advocacy and networking resources to promote excellence in incubation. NBIA offers conferences and training events, conducts and disseminates incubation research, produces publications to support business incubation practitioners, and consults with governments and corporations on incubator development.20. For More Information slide:For more information regarding the National Business Incubators Association visit Possible Group Discussion QuestionsWe encourage the session instructor to design their own group discussion questions for the session. To help the instructor think about questions that best fit their community we provide the following suggestions:What entrepreneur or home-based businesses in our community might be assisted by operating within an incubator? (Question is seeking to discover the types of businesses that could determine the type of incubator best matched to the community)What current businesses in the region or state do you know who began their operation in an incubator? (Question designed to help the participants discover examples of local companies who are successful graduates of incubators)What services could you imagine our community could offer entrepreneurs located within an incubator? (Question is designed to help participants think about services the local network could provide if a facility was in place)Are you aware of any local organizations that have shown interest in sponsoring a local incubator? (Question is designed to begin to think about who might sponsor and participate in an incubator locally)Have you had any experiences with an incubator within the region or the state? (Question is designed to help identify some local models to target to gain further information)What do you see as critical topics to address if our community was to establish a local incubator? (Question is designed to help identify first steps in creating a plan to create a local incubator)Are you aware of any public or private sector assistance available to help a local community establish an incubator? (Question designed to begin identifying potential resources to provide assistance in establishing an incubator)For further information or questions, please contact the author:Jim Currie, ATECH Program DirectorOhio Agricultural Research and Development Centercurrie.16@osu.edu330.263.3717 ................
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