You don't have to be a detective to know that emerging businesses breed jobs. And business incubators are just one place to find them. An incubator is an apparatus for the maintenance of controlled conditions. In hospitals, it's a warm environment allowing premature babies to grow until strong enough to thrive on their own. Not dissimilar, business incubators provide start-up companies with a controlled, nurturing environment in which to flourish. Housing several developing businesses under one roof, incubators range from 10,000 square feet to more than 400,000 square feet. The largest incubator houses 77 tenants; the median number is about 8.
Incubators serve practically all non retail industries, with a concentration on high-technology and light manufacturing. They're run by nonprofit organizations (universities and colleges), profit-making businesses, economic development agencies, and local governments.
The incubator acts as a mother hen to fledgling businesses, providing such critical business services as below-market rates, shared business operations (telephone answering, bookkeeping, word processing, and secretarial help), business and technical assistance (legal, accounting, and marketing advice), and financial assistance (advice for securing bank or venture capital aid).
If you're looking for creative new businesses, incubators are the place to find them. They're ideal for inventors, for example. An inventor's biggest problem is finding people who'll offer the right advice without charging exorbitant fees.
Companies starting out in incubators are lean operations, often employing just a handful of people. Because of their carefully nurtured beginnings, they grow rapidly. Within a few years, a 3 to 5-person operation will expand into a 35 to 40-person organization. Development Strategies Corporation, a market analysis company in Gloucester, MA, reports that businesses launched in incubators stand a much better chance of survival than traditional start-ups. About 50 to 75 percent of all businesses fail within the first 3 years, yet only 10 to 20 percent of companies nurtured in incubators die within the first 5 years.
The good news is that the incubator industry is relatively new and just taking off. About 500 business incubators house more than 6000 tenants throughout the United States, up from only 15 in 1980. New incubators are opening at the rate of 4 to 5 a month. By the year 2000, there'll be over 1000 incubators in the United States. Take the hint: Incubator companies need experienced people willing to roll up their sleeves and pitch in.
Finding Incubators: You may be pleasantly surprised to discover a couple of incubators in your own backyard. Here are three organizations that can point you to them.
Making Contact: The guardian of the gate is the incubator manager. Incubators are run by managers who also double as business counselors. They can tell you everything you need to know: kinds of tenants, how long they've been there, what stage the business is in, and most critical, which job prospects are the most fertile. Make a great impression. Get on their wrong side and you don't stand a prayer.
High-potential incubators are fertile business investments. It's something to keep in mind if you're sitting on a hefty severance package. More than just a great job, an incubator could also be an exciting investment. Be careful. First, you have to have an entrepreneurial gene dormant somewhere. As soon as you become a business partner, you're elevated your job to a 7-day-a-week obsession. Second, be sure to research the company thoroughly and get solid advice from a battle-worn attorney and accountant.
Run by universities throughout the United States, research parks are a sophisticated relative of incubators. Rather than housing different companies in one building, research parks are aligned with technologies that the university is developing. Whereas incubators nurture start-up companies, research parks house mostly mid-size and large companies, according to the Association of University-Related Research Parks, a central clearinghouse for information on planning, construction, marketing, and management of university research parks. Research park companies can take advantage of the university's facilities, faculty, and student body. Approximately 210,000 people work for 2800 companies located in research parks.
A Coopers & Lybrand study reported that the typical university-related research park has two buildings with 211,000 gross square feet, 12 tenant companies with 300 total employees, and a $250,000 operating budget-all on a 200-acre site.
Making Contact: Check out local universities to find out if they house research parks. Then call the park manager, the equivalent of the incubator manager. Ask all the right questions and, if you're lucky, you'll walk away with some exciting leads.
If you think incubators and research parks are far out, wait till you hear about enterprise zones. They were started in the early 1980s to combat poverty and restore depressed areas by offering tax breaks and other government incentives to attract entrepreneurs with a frontier mentality. Still in the development phase, they've been the subject of heated controversy. Opponents argue that instead of creating business opportunities for residents of depressed areas, enterprise zones attract outsiders who exploit tax savings. Supporters praise enterprise zones as vibrant tools for turning around decaying areas.
Getting beyond the politics, enterprise zones create jobs. If you've got a sense of adventure, you ought to check them out. But keep in mind that many of these neighborhoods are high-crime areas.
Approximately 32 states have enacted enterprise zone legislation. Each state insists that candidate zones meet certain economic distress requirements, such as high unemployment, population loss, or a high level of low-income residents. About 4700 businesses are located within the zones, employing anywhere from 6 workers to more than 200 staffers. The U.S. Small Business Administration (SBA) reports that companies with fewer than 100 employees are the most important sources of job growth in enterprise zones.
Finding Enterprise Zones: Your local economic development organization can tell you if any zones are near you. You'll be amazed at how different they are. Some are no bigger than a local neighborhood; others embrace a sizable chunk of a city. The Louisville, KY enterprise zone, for example, spans over 45 miles-that's twice the size of Newark, NJ.
Find out the objectives of the zone and the kinds of businesses located there. Most zones have similar objectives to encourage business activity and create new jobs for area residents. However, if the types of companies don't interest you, don't pursue this avenue.