Business Incubators Thriving, Especially the "Joiners"

CONTACT:
Susie McKinnon
Director, Member Serivces
Tel: 740-593-4331 Fax: 740-593-1996
e-mail: smckinnon@nbia.org

ATHENS, OHIO — The National Business Incubation Association's (NBIA) 1998 State of the Business Incubation Industry study shows that since their inception North America's nearly 600 incubators have added some 19,000 companies and more than 245,000 jobs to the economy. It also showed — in the words of the old American Express sell line — that membership has its privileges.

"This is the fourth such study NBIA has conducted since 1989, but for the first time we compared the performance of members to nonmembers to see if members had an edge," says Dinah Adkins, executive director of NBIA, Athens, Ohio. "Boy, did they ever! Member incubators outperformed nonmember incubators in every category."

For instance, member incubators served, on average, twice as many client companies and nearly twice as many graduates as nonmember incubators did. The average member incubator's client companies created one-third more jobs than client companies from nonmember incubators.

NBIA saw positive trends in general among business incubators, which house very-early stage companies and provide on-site management and a full array of business planning, management and financial services. The study showed that the number of client companies and graduates has steadily climbed. The operating budgets have done the same. More importantly, incubators are offering a wider variety of services to their clients, including fundamental ones — such as building management teams or drafting realistic marketing plans — and more specialized ones. For instance, 58 percent (62 percent of members) help connect their companies to investors and strategic partners.

The 1998 State of the Business Incubation Industry contains 67 charts and graphs profiling the industry and highlighting results. Some findings:

Forty-five (45) percent of today's incubators are urban, 36 percent are rural and the remaining 19 percent are suburban.
Most (43 percent) are mixed use and another 25 percent are technology. Ten (10) percent focus on manufacturing companies and 6 percent on service companies. The study revealed growth of the newer, "targeted" incubators — ones that focus on a specific industry such as software, food manufacturing, multimedia or the arts. They are 9 percent of the total.
The average incubator was established in 1991.
The average operating expenses are $256,713 (and about $280,000 for members).
There is no such thing as a standard size for incubators. The average incubator is 36,657 sq. ft., the mean is 16,000 sq. ft. and the range is from 600 to 500,000 sq. ft. (These numbers exclude space rented to tenants not receiving incubation services).
Eighty-five (85) percent of all senior incubator managers have a college degree or post-graduate education.
The average incubator offers full incubation services to 20 in-house and affiliate companies; member incubators serve an average of 24.
A relatively new concept in economic development circles, business incubation has grown markedly — from 12 North American programs in 1980 to the 587 identified by this study.

The 1998 State of the Business Incubation Industry joins "The Impact of Incubator Investments" study (conducted in 1997 by Ohio University, the Southern Technology Council, University of Michigan and NBIA) to paint a picture of today's incubators and the effect they're having. "There's no question they are viable economic development tools," says Adkins. "Now we also know incubators are better at what they do if their managers remain involved through membership in the Association, the industry's best professional development resource."

For further information on the study or to obtain a copy of the 1998 State of the Business Incubation Industry ($22 to NBIA members, $32 nonmembers, plus $7 shipping and handling), contact NBIA, 20 East Circle Drive, #37198, Athens, Ohio 45701; 740-593-4331; fax 740-593-1996. Information on the book is available on NBIA's online bookstore, which allows you to order directly and securely through the Internet.