Track Your Program’s Performance

Incubator managers should evaluate outcomes to know whether their programs are effective. There is not a more powerful tool available to prove your program’s successes and to identify where program improvements are needed. Evaluation results can be used for attracting sponsors, strategic partners, and high-quality clients.*

Linda Clark, director of the Ohio University Innovation Center in Athens, Ohio, undertook an economic impact study of the incubator for the first time in 2005. “I needed a way to objectively evaluate that we were headed in the right direction,” she says. She was pleased with what she found out about her program’s impacts. For example, in 2006 alone, incubator clients and graduates employed 217 people in Athens County, Ohio. (For more information about Clark’s economic impact study, see the Case Study.)

Similarly, Sam Funchess, president & CEO of The Nussbaum Center for Entrepreneurship in Greensboro, N.C., conducted a formal economic impact study of the program for the first time in 2006 (the incubator began serving clients in 1988). The impetus for the study, Funchess says, was twofold: the program was preparing to seek grant funding, and also wanted to demonstrate to the community at large that it was a significant player in improving the local economy. “While we are respected in our community, we are not looked at as an economic development engine for this area,” Funchess says. “The report details otherwise.”

For example, Funchess found that the Nussbaum Center’s clients and graduates directly employed 655 individuals in Guilford County, N.C., in 2005 alone. Those jobs created another 562 jobs through indirect and induced impacts; in total, the 1,217 jobs were estimated to have generated a total of $46.4 million in labor income. Additionally, the jobs paid an average salary of $38,169 – much higher than the median county income of $26,000.

Armed with data that proved the center’s effectiveness, Funchess issued more than twenty press releases in the first thirty-seven days after the release of the study in January 2007. “We will be a force known in our community for job creation at higher-than-average salaries,” he says.
One reason tracking economic impact can be a significant boon to your program is the fact that you can use those numbers to demonstrate results. Consider the impact of the Ohio University Innovation Center in Athens, Ohio. In 2006 alone, the incubator’s six clients had the following impact on Athens County:
  • Employment for 217 individuals
  • Direct wages paid of $10.1 million
  • Nearly $1.5 million in state and local taxes generated
Those figures are particularly impressive when you consider the context. The Ohio University Innovation Center is located in a rural Appalachian county where nearly 30 percent of the population lives below the poverty line.

Taking those numbers one step further paints an even more impressive picture. Linda Clark, Innovation Center director, contracted with OU’s Institute for Local Government Administration and Rural Development to conduct an economic impact analysis of the program. ILGARD used the Impact Analysis for Planning (IMPLAN) economic modeling software program to analyze the incubator’s impact.

After taking into account indirect and induced jobs created as a result of incubator clients, the total impact of all six businesses on Athens County in 2006 is estimated to be:
  • Employment for 344 individuals
  • $12.6 million in labor income
Impacts like these mean a lot to local economic developers, university officials, and the families in the region who benefit from the jobs and income. Encouraged by the numbers, Clark has begun tracking graduate employment. Given that since 2003 the Innovation Center has graduated nine firms that together employ approximately 194 individuals, just imagine what Clark will learn about the overall impact of those graduates when she crunches those numbers next year.

 

  


* Adkins, Dinah, “A Report: Summary of the U.S. Incubator Industry and Prospects for Incubator Model Globalization.” Athens, Ohio: National Business Incubation Association, 2001.