Friday, March 19, 2004

New focus warms things
up at business incubator

More companies seek support
services at Cincinnati agency

By John Eckberg
The Cincinnati Enquirer


Business incubators, organizations that provide knowledge, networks and tools for emerging small companies, have had a great impact on American commerce.

In 2001, the last year for which figures are available, North American incubators assisted more than 35,000 start-up companies, provided full-time employment for 82,000 workers and generated earnings of $7 billion.

National Business Incubation Association members report that 87 percent of all firms that graduated from their incubators are still in business.

There are 950 business incubators in North America, up from 587 in 1998 and just 12 in 1980.

For every $1 of estimated annual public operating subsidy provided to the incubator, clients and graduates of NBIA incubators generate $45 in local tax revenue.

Every 50 jobs created by an incubator client generate another 25 jobs.

Source: National Business Incubation Association

OVER-THE-RHINE - A new president and a new mission have nearly doubled the number of small businesses seeking revenue through the Cincinnati Business Incubator Inc.

The 15-year-old incubator in 2003 abandoned extensive training programs for its client companies and instead focused on the creation of jobs at companies in its offices on Central Parkway near Findlay Market.

"I think we took a good look at our mission and our strategy and realized that we wanted to be an economic development and job center," said Wayne Hicks, who came in as president and chief executive a year ago after serving as director of the Internal Revenue Service Processing Center in Covington.

"We provide incubator services for emerging businesses owned by women and people of color."

While the nonprofit still brings mentoring and management assistance to some firms, a focus on job creation kept 99 people employed at incubator client companies. Those firms had $3.3 million in revenues last year, Hicks said.

The incubator receives $150,000 in federal community development money administered by the city and $8,000 a year from the U.S. Small Business Administration.

It provides services to two levels of clients. The first, known as resident clients, maintain offices and share a secretarial presence at the center, which is owned by the city.

Another level occurs with affiliate clients, which pay $100 a month for an address at the center but do not generally staff offices.

The address enables incubator companies to bid on work for Cincinnati Public Schools or other city agencies, which sometimes only contract with companies based in the city or award preference bid points for firms with a city address.

This year 32 companies call the incubator home, compared with 17 client firms in 2002-2003.

Firm foundation

McGhee's Contracting Co. has a satellite office at the incubator and offices at owner Michael McGhee's Mount Orab farm in Brown County. Having two locations means twice as many chances to seek work, he said.

"It's a great deal to have several jobs a month referred to us through contacts at the incubator," said McGhee. His company employs 17, providing concrete work for sidewalks and driveways and offering general construction work such as landscaping, ditch digging and demolition.

Founded in 1989, the incubator rents office space, equipment and secretarial services to client companies for $325 per month. Add-ons such as T-1 modem lines, additional telephone lines and additional secretarial time cost more: from $13 an hour for a secretary to $50 a month for the T-1 line.

"The benefits are twofold," said Papino Loyd, 43, a resident of Fairfield and owner of P.R. Electric. "You do not have to have a lot of money up front, and there is a networking benefit.

"When your business lives from check to check, networking is real important."

Hicks expects the incubator to grow as nearly $1 billion in capital improvement construction begins to take shape in Cincinnati Public Schools and as the Cincinnati Center City Development Commission gains traction with its multimillion-dollar redevelopment plans for Fountain Square and Over-the-Rhine.

While about 87 percent of the incubator building has tenants, the third and fourth floors are vacant.

"So far we have a pretty eclectic mix of companies," Hicks said. "But I am looking forward to the day when we have those client companies upstairs."

The next level

Steven Taylor, the 32-year-old chief executive and president of Best Information Technology Solutions, thinks his company may be among those headed to the upper floors.

Best Information Technology Solutions is an information technology consulting company that provides Web infrastructure services including network security and support and installation of wireless and cable systems.

The company is distributing and installing 3,300 personal computers for teachers, staff and administrators throughout the Cincinnati Public Schools. That $3.4 million bid was produced by Best and its joint venture partner Sarcom, a Columbus-based technical firm.

Best Information Technology, which employs five and has contracted with 24 other high-tech specialists on this job, was founded in 2001 as an affiliate client of the incubator. It soon expanded.

"The incubator has led us to take our business to the next level," said Taylor. "We initially signed on as an affiliate.

"The new programs Wayne was implementing led us to make the decision to open an office."


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