One of the first steps was to develop partnerships with major local companies such as Texas Instruments and Kodak to train management and instruction staff in areas of interest (e.g., Total Quality Management [TQM]). The manager indicated that "that type of training was really expensive to master so [local industry] trained us for free and now . . . whenever they need employees trained they send them down to us." After the institute established these relationships, it began to charge a nominal fee to cover basic expenses for the training provided for participant companies. Another management strategy was to establish good working relationships with each of the seven campuses of the county community college system, in particular, the business divisions. The business deans usually contact the center manager to refer groups of students who are interested in becoming entrepreneurs. Usually, the majority of the students who come to the incubator from the community colleges are enrolled in business programs. Further, a monthly tour of the center is conducted for groups of 25 to 30 dislocated workers who receive help writing résumés and cover letters and practicing interviews, and who are also exposed to entrepreneurship opportunities. The next step is to work with local high schools in the area to promote entrepreneurship among youth.
The institute is comprised of various programs to provide for comprehensive assistance to in-house and external clients. One such program is the Small Business Development Center. The objective of the center is to help clients interested in starting a small business. Staff help clients to obtain licenses, set up partnerships, and help with other aspects of starting up a business, with no charge to the client.
Another program is offered by the Center for Government Contracting, and targets clients who have been in existence for at least a couple of years and need information on writing government proposals for municipal, local, state, and federal contracts.
The Business and Professional Institute provides training for local corporations under a partnership agreement. The center also houses a Job Training Center to train low-income students from the community in four- to six-month business-related courses, including accounting, data input, and desktop publishing. Another program is the International Business Center, which assists clients interested in starting a business in international trade.
Finally, the Technology Assistance Center was created in 1992 to assist entrepreneurs in getting a patent, a trademark, or a license on an idea, product, or service. Center staff conduct a patent search, consult the legal implications with a local law firm, and try to get a discount on the patent search if possible.
All clients interested in business incubation through the Small Business Development Center (SBDC) are required to submit a viable business plan whether or not they move the business into the center. The plan is reviewed by a committee, and clients are interviewed before services can be provided to them. Although no requests are turned down, preference is given to clients with residence in the local county. Clients are referred to the incubator by word of mouth; through the chambers of commerce; or as a result of attending center workshops, seminars, and short courses. Participant presenters also serve as sources of advertisement for center services. There is also a public information director who is in charge of informing prospective in-house clients of services available and providing free publicity for new businesses.
The make up of the in-house clientele is currently 25% Caucasian, 22% Hispanic, 3% Native American, and 50% African American. About 35% of the in-house businesses are female-owned. Prospective clients are required to participate in a brainstorming session to form an idea of what they want and need, then they meet with one consultant who has experience on the product or idea of interest to identify their business feasibility and immediate needs. Free business consulting is available to the public, students in the community college district, and to in-house clients operating at the incubator.
The manager believes the most important benefits to clients are not the office space and clerical support, but the opportunities for consulting and education in becoming an entrepreneur. To support these activities, many of the center consultants work pro bono.
An effective strategy to set up education and training opportunities is to work in partnership with local companies. For example, once a month a seminar is offered in collaboration with the city bus company, which has an extensive program for hiring minority vendors. The Internal Revenue Service also participates with a seminar on business taxes. Other local companies and agencies talk about financial statements, government contracting, and negotiation techniques.
The center provides a flexible schedule to accommodate as many people as possible, and has experimented with offering the education and training courses in locations convenient to people who could not come to the center otherwise.
To provide for a variety of education and training opportunities, the center designs conferences and a series of seminars instead of individual seminars and workshops. These series of seminars can be taken independently of one another or as a sequence. The seminars are taught by businesspeople, as well as faculty from nearby community colleges. These seminars and workshops are offered frequently and, in most cases, the emphasis is on describing examples of success stories which are similar to the type of businesses clients want to start up, as well as examples of common mistakes made by businesspeople. Using a business plan as a reference to stress important points is an important instructional strategy because it provides concrete examples and helps refine business plans. Topics are identified informally through feedback from other centers located in other parts of the state and by presenters who are knowledgeable about a particular topic.
Groups of students from the seven campuses in the community college district are invited to tour the program facilities and become aware of business services and entrepreneurship-related courses offered by the institute. This program is a pilot program at the postsecondary level serving the community college district. In addition, participants in the Job Training Partnership Act (JTPA) program housed in the facilities can take advantage of internship opportunities with in-house clients. This is usually a two-week internship which may turn into a permanent job for many of the students. Under this format, owners hire and pay students who have completed their four- to six-month course. If students are from a low-income background, owners can deduct it as a job tax credit, and JTPA will pay half of the salaries. Concurrently, this is an opportunity for owners to learn about hiring procedures and handle personnel reports. To date, 30 students have been hired as full-time employees, and some of them have become partners with the business owners.
The seminar coordinator characterized first-time entrepreneurs as having a strong technical background but little management experience. He also indicated that lack of financial support is another hurdle for entrepreneurs, who, despite innovative plans and an ambition to carry them out, do not know how to establish a business, including funding and creating a business plan--a process the center leads them through, step by step. According to the center manager, many minority and female entrepreneurs are able to use their status to their advantage--for example, in the area of government contracting, where certain contracts are set aside for just such groups beginning and operating businesses.
Finally, one of the advantages of affiliating incubators with community and technical colleges is the flexibility to react and implement curricular changes in comparison to university settings. The two-year college system can move faster from an idea to program development and implementation to meet the needs of the community than the university. Thus, there is potential to participate more effectively in economic development through two-year postsecondary institutions because of the close linkages with the community.
The training center, and eventually the incubator, were also developed to foster economic development for the city during a time when job development was scarce. Today, the center remains popular even with high employment and a strong economy. Since its existence, the center has had an impact on the community by having clients start 295 new businesses and by creating 656 jobs with an $18 million gross revenue from sales. It has also begun to attract entrepreneurs with low to moderate income to become successful business owners. The center was also established to attract people with ideas for possible businesses, as well as to serve those struggling to fully implement their business ideas.
Priority for enrollment in the incubator is given to low-income adults, women, and minority entrepreneurs. Recruiting for this group of clients is done through an advisory committee, talk shows, and articles on the center.
The center's services have three components: (1) courses, (2) counseling services for new and emerging businesses, and (3) office space and clerical services for existing small businesses that choose incubation services. To teach the courses, staff invite volunteers who may be graduates of the center or representatives of business and industry and chambers of commerce, and who are interested in teaching and have a background in areas that are relevant to the topics taught in the course. These volunteers are used in the business assistance center, as well as in teaching the training courses. When individuals have succeeded as volunteers, they may be hired as teachers. These volunteers also serve on the advisory committee for the center. Several modes of teaching are used in the classes, including small and large group discussion and presentation, written work, and open discussions of business issues.
Another key aspect of the center is the networking and peer support obtained through business incubation. Networking serves the clients by helping them alleviate the stress that is part of starting a new business. It also serves as a way to generate business exposure to the market. The networking philosophy is encouraged throughout the course, particularly when the client ventures out or starts a new business. Normally, clients "graduate" from the incubator in two to three years. The center's purpose is to help the new business expand, and clients graduate when their business ventures are autonomous. Through a review of the clients' finances and after consultation, the manager helps the client determine the appropriate time to expand, that is, move on and graduate.
The director of the center spends a great deal of time making contacts, promoting the center, and raising funds throughout the community. The funding for the center comes from a variety of sources. The major source is the $400 fee paid by enrollees in a 14-week training program. Seminars open to the public generate additional revenue. Sliding fees are also charged to those who are in-house clients in the incubation center. Finally, grants from a variety of private and corporate sponsors help to fund the center.
"Once a client, always a client," is the director's philosophy, and clients are encouraged to develop a relationship with the teachers and consultants. Clients can use the technical assistance on an extended basis, paying only as much as they can afford for the services. This consulting period may be available for years after clients have left the course or incubator and have successful ventures operating. The open and continuing relationship may be a major reason for the high success ratio of clients in this center.
Clients are concerned with operating capital when starting a new venture, which they perceive to be the major obstacle in keeping their business operating, an issue that is even more severe for minority and female entrepreneurs. Many clients blame bankers' reluctance to take a chance on new businesses operated by minorities and women. The business plan development within the course thus becomes an important tool when starting a new business, since it not only provides the direction to take in a variety of management areas, but it also provides an entrepreneur with sound directions for approaching the banks for the necessary capital. The manager of the center felt that more than capital, however, success was dependent on how well the money is managed.
Entrepreneurial development for minorities and women remains a challenge which can vary depending on the area they are working in, such as in females trying to enter a male-dominated field. Further, some minority and female entrepreneurs advise that when developing a pool of business clients in the government field, the work of maintaining that relationship demands extra effort in order to keep their affirmative action contracts. Applicants must devote a lot of time and energy to completing forms that often do not result in a contract. For this reason, a majority of the new contracts for minority- and female-owned firms come from referrals of satisfied customers.
As a result of major economic restructuring strategies to face these problems, employment growth of almost 100,000 new jobs in the nonmanufacturing industries was experienced. This change affected the local industry in wholesale and retail trade, government and services, insurance and finance, and real estate, and required the adaptation of new skills and work practices in the area. Other causes of concern were the need to address the dependency on social welfare programs among the poor and/or disadvantaged in the region. Out of this need, a community partnership embarked upon the creation of a "new workforce"--a workforce ready to face the demands of new and more technically oriented jobs as global market demands become more sophisticated. Presently, the workforce is comprised of minorities, women, the disabled, and, in general, the disadvantaged. Thus, members of these groups needed to be empowered with the necessary skills to sustain themselves in the future.
To meet the challenges of these economic and social trends, several community leaders promoted the vision to create an incubator in the middle of the business district. A large vacant warehouse was selected for this development, and construction begun in 1990. By December of 1993, the facility was well over 90% leased and surpassing all leasing guidelines for incubators in that region of the country.
The Business Innovation Center is run by the amalgamation of several key groups into a solid partnership. This partnership consists of two organizations that have a long history of serving the disadvantaged population in the area. One is a Community Council, and the other partner is a training center. From this association, a business and industrial development group was created.
The Training Center was incorporated in 1988 to strengthen the existing organizational mission to develop, manage, and operate real estate and entrepreneurial development projects. The Training Center has turned into a nationally recognized, private, nonprofit, vocational, and academic educational institution whose primary purpose is to serve the economically disadvantaged. Their inaugural program was the conceptualization and development of the small business incubator, which focuses primarily on serving prospective minority- and female-owned enterprises. Of the 38 clients currently at the incubator, 29% are minority-owned companies, 21% are female-owned firms, 34% are white male-owned enterprises, and 16% represent nonprofit organizations.
In order to satisfy the need to offer entrepreneurial opportunities to minority and female entrepreneurs, the first development in this direction was the creation of the Innovation Center. The business and industrial development group and its partner, the Training Center, have been constantly involved with the development, renovation, and leasing program phases. As developers of entrepreneurial opportunities, the center has established a program of technical assistance to special populations which are based outside the incubator. The primary focus of this program is on (1) serving the at-large population of prospective minority and female entrepreneurs in the area; and (2) assisting the for-profit ventures initiated and owned by a nonprofit corporation, and a sister nonprofit organization involved in the crafts.
An important feature of this operation is that a professional organization located in the area was brought in to provide support services to the incubator clients. This organization represents one of the most successful operators of incubators in the country. The philosophy of business incubation brought about by the external professional organization focus on cultivating business opportunities for minority- and female-owned businesses. As the incubator manager explained, "what makes an incubator successful is not the common building nor the shared occupancy, it is the business support services offered and the level of intervention between building management and the tenants."
With this service mission in mind, the consortium of agencies has three major working strategies. The first strategy involves entrepreneurial development and technical assistance offered to prospective minority and female entrepreneurs within three categories: (1) business plan assistance, (2) financial counseling, and (3) building acquisition and renovation feasibility analysis. The second strategy includes entrepreneurial development and technical assistance for the for-profit enterprise sponsored by the Training Center (a food enterprise). The third strategy within this scheme is the operation of a small business incubator focusing on minority and female entrepreneurs within the structure of the Innovation Center. As part of its entrepreneurial development/technical assistance program, the development group is involved in the development and management of the small business incubator. The business and development group, in conjunction with the external group hired to provide support services to the incubator clients, has specifically designed and is presently implementing three operational and programmatic components for the Innovation Center.
The first component focuses on outreach activities. This program is designed to recruit potential minority and female incubator clients for the Innovation Center through a structured entrepreneurial outreach program which consists of five sessions spanning a two-month period during the year. The second operational component involves the development of a small business incubator portfolio and management plan. This program consists of 22 office practice services and 21 management and technical services provided to the clients at the incubator site. These incubator services help in reducing the business failure for incubator businesses from a typical rate of 80%--within the first five years--to 16% while leasing space as an incubator client. The third operational component includes an advisory council to assist in the planning and implementation of events at the Innovation Center.
In addition to entrepreneurial opportunities to low-to-moderate income minority and female entrepreneurs, the following entrepreneurial development programs have been specifically designed for minorities: (1) a trade program, (2) an artisan program, and (3) a food production program. These programs focus on a particular industry sector in an attempt to develop a cluster of emerging companies that are able to supply a variety of similar products to that industry's distribution channel. Thus, the evolution of a business concept and the products it makes are structured around specific market sectors that will readily accept the new business' products and/or services.
Further, the Training Center offers a Medical Technology Program, under which the following plans of study are offered: (1) pharmacy technician program, (2) medical transcriptionist, (3) medical secretary, (4) electroencephalography (EEG) technician program, (5) medical claims processor, and (6) chemistry laboratory technician. Upon completion, trainees are offered entry-level positions as externs with renown national companies. This training facility complements the skill building programs with basic adult literacy and General Educational Development (high school equivalency) programs. Their commitment to supportive services includes career education, job placement, counseling, remedial education, reduced-cost lunch programs, aides, and interpreters.
Another training facility offered through the auspices of the Training Center is the community arts resource program for the minority community served by this agency. This art center has national recognition as a neighborhood-based effort to promote ceramic arts and crafts. This is a cooperative program set with the public schools to offer artist-in-residency status to high schoolers who become practicing artists. Through this residency period, high school students are exposed to programs that complement existing, established, quality teaching programs allowing the student to enhance their career opportunities while getting trained in the arts. A photography studio readiness and training program is also offered and includes an art exhibition and workshop program. Additionally, there is access to a performing music hall and auditorium, complete with sound reinforcement and a 24-track recording system, performance lighting, 16mm film projection capabilities, and multi-image slide projection. This coordinated effort allows the development of a comprehensive performing arts program coupled with training and master classes, which in turn offers high school students an opportunity to acquire marketable, entrepreneurial skills while still in school.
The Training Center also offers a self-sufficiency program. Through this program, the Training Center created a food services company and a joint venture with a local radio station. The food venture is a restaurant business at the local airport, and the joint venture with the radio station produces and distributes 12 one-hour audio-video productions of selected jazz concerts to be held at the center's Music Hall.
In regard to business plans, the requirements are flexible because the manager uses them for training purposes. He prefers entrepreneurs who can offer a dynamic business plan rather than a blank opportunity to get cheap rent for their business. He even allows clients to accrue rent for several months if they are willing to improve or expand their business according to a well-defined and feasible business plan.
The incubator's flexibility regarding the requirement for a business plan at the onset allows the manager to work one-on-one with entrepreneurs who develop this plan based on the clients' needs. In one case, a computer software company began work on a business plan after being in business a year and a half, at the point of expanding its business where the financial needs were most crucial. Others may present a "dynamic idea" rather than a business plan, and they get help from the incubator in developing one as they begin their business operations.
The incubator's commitment to assist the immediate community in getting a hold of employment opportunities is well-represented by the "equation" which adds vocational skills training with minority entrepreneurial development to obtain economic development for all groups of the population, minorities and women in particular.