BUSINESS INCUBATORThe 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

NW Georgia UnemploymentMay jobless rate jumps up

Jobless rate June Trendline

Floyd 9.3% Up from April's 8.5%; 4,446 looking for work

Bartow 8.6% Vs. 7.7% in April; 4,225 sought work.

Gordon 9.6% Down from May 2012; 2,518 unemployed.

Polk 8.2% Lowest rate in the region; 1,688 unemployed.

Chattooga 10.3% Highest jobless rate in region; 1,068 idle

2010 Unemployment

2008 Unemployment

Job Losses

Area 2008-09 2009-10 2010-11 2011-12

NW GA (27,632)

6,596

103

4,693

GA (250,887)

(48,101) 53,395

76,495

Population Growth

2008 2009 2010 2011 2012

NW GA #FMT 0.5% 0.4% 0.0% -0.1%

GA #FMT 1.2% 1.0% 1.0% 1.1%

US #FMT 0.9% 0.8% 0.7% 0.7%

-0.1%

0.1%

0.3%

0.5%

0.7%

0.9%

1.1%

1.3%

0.5%

0.4%

0.0%

-0.1%

1.2%

1.0% 1.0%1.1%

0.9%0.8%

0.7% 0.7%

YEAR

% C

hange

% Job Growth, 2008-2010MSA Total Non-resident ResidentGainesville 1.4 -0.5 1.5Athens-Clarke -1.2 -16.5 0.7Augusta-Richmond -3.0 -5.3 -2.8DALTON -3.9 -13.3 -2.0ROME -4.2 -4.6 -3.7Atl-Sandy Spgs-Marietta -8.1 -23.9 -4.1

Chattanooga, TN -1.8 -4.5 -1.1Gadsden, AL -4.9 -10.2 -3.6GEORGIA -5.4 -16.6 -3.0UNITED STATES -2.5 -6.4 -2.2

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:

EDA ARC OneGeorgia

Local TOTAL Project

$648,000

$250,000

$500,000 $1.02 mill.

$2.4 mill.

The Timing for Funding

Appalachian Regional Commission August 15 – annually

Economic Development Administration

September 14 – quarterly

USDA Rural Development Year round – October 1 starts FY 2014

OneGeorgia Authority Year round – July 1 starts FY 2014

GA Dept of Community Affairs Year round – July 1 starts FY 2014

Questions?