National Business Incubation Association; Your source for knowledge and networks in business incubation

Who you know really can make a difference

by Jim Phillips

February 2008

At a networking picnic for biotechnology firms sponsored by the Sid Martin Biotechnology Development Incubator in Alachua, Fla., incubator manager Patti Breedlove chatted with a local business editor who was having trouble finding a subject to profile in a newspaper column.

“There was a new CEO … with one of our companies, and I said, ‘He’d be a really interesting profile.’ So I dragged him over,” Breedlove recalls. “The whole front cover of the business section was about him the next week.”

That’s the kind of thing that happens when people network. And it’s why fostering client networking has graduated from a good idea to an indispensable service in the world of business incubation.

Networking brings a package of benefits to fledgling entrepreneurs, from helping them develop needed business skills and relationships, to providing vital emotional support. Such help can mean the difference between success and failure for some.

Take Zaher Hajo, a New Jersey chiropractor who is developing a healthier type of chocolate product. He says without guidance from the Food Entrepreneurs Network at the Rutgers Food Innovation Center in New Brunswick, N.J., he’d “basically be lost” in trying to start his own food business.

Hajo started out trying to invent a more wholesome hot dog, but after listening to an expert speak on trends in the healthy food market at a FEN workshop, he dropped that idea to concentrate on chocolate. In another instance, Hajo was able to interact through FEN with a former executive from a large yogurt manufacturer, who provided him with specific advice on selling to retail giant Whole Foods Market. “He had the direct information and knowledge of the retailer,” Hajo recalls.

Incubator networking activities like these are on the rise. In the 2002 State of the Business Incubation Industry report, about 80 percent of incubators reported that their client services included providing networking opportunities. By the 2006 edition, that figure had risen to 96 percent.

But if networking is something nearly everyone promotes, the ways incubators try to make it happen, and the benefits they see from it, vary in important ways.

Many incubators offer regularly scheduled brown-bag lunches, aimed at keeping clients in touch with each other. Some go in for more ambitious public events that draw in the local business community, or for tightly focused problem-solving sessions with selected clients.

Events can aim at making deals, attracting investors and launching spin-off companies, or at giving entrepreneurs and experts a chance to swap news and tips. They can be big or small, formal or casual, indoors or out. Not surprisingly, given the Internet’s power as a networking tool, they are moving online as well.

With different approaches come different opportunities – and potential pitfalls – though some general rules seem to apply.

Keep it focused

While informal schmoozing has its value, just sticking clients together in a room with snacks may not result in much real networking. Some focus – an agenda, having clients give updates on their companies or providing a speaker – can make events more productive.

Christina Reddin, executive director of the Business Incubation Center in Grand Junction, Colo., always brings in a speaker for monthly meetings. Over the last year, speakers have addressed issues including how to interact with the media, women in entrepreneurship, private equity financing and how to prepare for graduation.

“I would never have [a monthly meeting] without a topic,” Reddin says. “People would just talk about the weather.” She warns that a regular networking lunch can easily become stale and a chore to attend, rather than something clients look forward to.

“To me, it’s absolutely essential that you make those fresh and new all the time,” she says. “It’s not a program that you can just put in place and sit back and let it roll.”

Charlie D’Agostino, executive director of the Louisiana Business & Technology Center in Baton Rouge, La., says his incubator’s monthly client lunch also features a speaker, with the bonus that some guests – usually law firms, CPAs and insurance groups – pick up the lunch tab for the chance to address potential customers.

“We just had somebody talk about health-care programs for small companies,” D’Agostino recalls. “He didn’t sell his company; he talked about the industry and what’s happening. But he’ll probably get two or three clients out of that.”

Getting them there …

Some incubators require attendance at networking events, while others rely on gentle reminders and the lure of a free lunch. Ideally, the value of the opportunity is enough draw in itself.

The Louisiana Business & Technology Center requires every client company send someone to its monthly luncheons. D’Agostino admits that’s not strictly enforced, but from around 25 clients, a turnout of 15 to 18 is typical.

For bigger events that expose clients to important contacts, D’Agostino says, the obvious value almost guarantees attendance.

For instance, the incubator lease agreement mandates each company have a presence at its yearly anniversary celebration. But with 400-500 local business notables on the guest list, D’Agostino suggests, he probably couldn’t keep clients from coming if he tried.

“For some of them, that event is a big part of their marketing program,” he notes. “They make sure they don’t miss that.”

The Regional Growth Partnership in Toledo, Ohio – which operates a virtual program to help start-ups commercialize new technologies – can’t hold in-house lunches or require attendance at events. For it, the key to fostering turnout is finding what clients want in a networking venue and then giving it to them.

That’s why Tasha Hussain Black, director of the Launch program – RGP’s virtual program – sought client feedback on networking needs. She learned that her clients wanted a loosely structured networking opportunity, open to anyone interested in technology or its commercialization, with a short but informative educational aspect.

What they got were “Tech Connect” events, where entrepreneurs and start-up company principals from an 18-county area can meet over hors d’oeuvres and drinks, and compare notes with investors and each other four times a year. The first event attracted about 40 people; the second, over 150.

… And getting them talking

Even if willing to attend networking events, entrepreneurs and scientific researchers are sometimes more skilled in the lab or office than in a social milieu, so incubator directors must sometimes play the role of ice-breaker.

There are painless ways to do this. When the Regional Growth Partnership held its last Tech Connect event, every participant got a color-coded badge based on his or her field – blue for researchers and “idea people,” green for bankers and venture capitalists, and yellow for service/support providers.

At monthly networking lunches for client and graduate companies at the Sid Martin incubator, box lunches passed out to participants have numbers on the bottom, and everyone with the same number sits at the same table.

“That forces them to sit with someone besides their own colleagues, their own company, which a lot of people have a habit of doing,” explains Breedlove.

If an incubator has a natural gathering spot in the building, staff can use it to subtly encourage more client interaction. At Sid Martin, the incubator puts out coffee and pastries every other Tuesday, and when clients show up, staffers will draw them in to interact with each other.

Incubator managers may also steer one client toward another, or toward someone from outside the incubator, if they see a natural match-up.

Reddin says she plays matchmaker “all the time,” when she spots clients with complementary knowledge. In one case, she introduced a client who resells used medical equipment to principals from a company that designs new medical equipment. “They know the market,” she explains, and can help the reseller figure out where best to market his goods.

Such an obvious match-up might seem like something the entrepreneurs should have spotted for themselves. But Reddin warns that “entrepreneurs do not come with labels to let the world know their strengths and weaknesses up front.”

She says a “nudge” from an incubator director is sometimes needed, “because one entrepreneur seeking answers may not know right away that someone else has expertise in a specific area. I would love to say that our clients are running around asking everyone they can find for input, but actually it is normally quite the opposite.”

Host unique and creative events

In pursuit of networking, some incubators go well beyond the monthly speaker and brown-bag lunch.

The Sid Martin incubator has helped create a “Celebration of Biotechnology” event with the industry group BioFlorida. Beginning in 2003 as “no more than a cookout,” this gathering has taken on a life of its own, Breedlove says.

“This was done on a very modest budget, very low-key, the first year, and had such a huge response that we realized we had tapped a vein,” she recalls. “Anybody in the biotech field, whether they were related to our incubator or not … they got invited.” The most recent event drew over 300 attendees.

For a modest admission fee ($5 for BioFlorida members, $10 for nonmembers), the two-hour midday event – held outdoors under tents – offers a catered lunch and speaker, and is partly underwritten by scientific equipment vendors who set up tables.

“It has turned out to be hugely popular because it sets itself apart from all the other conferences because it’s informal, it’s casual, it’s outdoors,” Breedlove explains. The event opens at 11 a.m. with lunch and a chance to visit vendor exhibits, brings on a brief speaker at noon, and wraps up at 1 p.m., with optional incubator tours afterward.

“It’s clearly designed to give people a chance to stand around and talk with their paper plates,” Breedlove says. “They are not going into breakout sessions; they’re not having to focus on discussing business and how to raise venture capital or something. It’s purely intended to be just networking.”

Use technology

To facilitate communication between entrepreneurs in the food and agricultural fields in New Jersey and surrounding states, the Rutgers Food Innovation Center launched the Food Entrepreneurs Network five years ago. Initially, FEN hosted casual meetings three to four times a year, either at the incubator office in Bridgeton, N.J., or at a local restaurant.

But according to Diane Holtaway, the incubator’s associate director for business development, “we found that was difficult to do, because everybody is so busy, especially people that are in start-up businesses. It was a challenge, getting people to come to the meetings on a regular basis.”

That’s when FEN developed its free member listserv, which now reaches about 250 food entrepreneurs. One advantage of the online approach is that it allows a wide range of companies – incubator clients and outside firms alike – to pick each other’s brains, even if they’re hundreds of miles apart and have little free time for networking.

“It doesn’t matter if you’re an established small company or a medium-sized company,” Holtaway says. For company officials short on networking time, the listserv can provide the kind of information service that traditionally has come through professional organizations, and do it more quickly.

“Even established, medium-sized companies … enjoy having that opportunity, just to have somebody to bounce ideas off of, and just to get to know people,” Holtaway says.

Consider costs and benefits

It doesn’t cost much to promote networking, particularly for regular events that require minimal staff preparation time. Other events break even or earn money, if the incubator can charge admission or find corporate sponsors.

Breedlove spends under $400 a month from her operating budget for monthly lunch meetings. The “Celebration of Biotech” picnic, though, with its sponsors and ticket price, makes money every year for the regional chapter of BioFlorida.

“We love it,” Breedlove says. “And we’ve hardly had to lift a finger to get sponsors.” That’s because the event is the prime networking opportunity for those in the area who are already involved in the biotech industry, or looking to get involved, she says.

D’Agostino spends around $10,000 annually on networking efforts, with much of this budget provided by outside sources. For 2007, for example, the $8,500 tab for the incubator’s annual anniversary/graduation event was covered by the dean of the College of Business at Louisiana State University, the incubator’s sponsor.

The benefits of networking almost always outweigh costs, incubator managers say. Although networking sometimes raises concerns among clients in similar fields about revealing business or tech secrets to potential rivals, most incubator managers can readily cite occasions when networking provided clients with immediate, concrete benefits.

D’Agostino recalls a client working on micro heat exchangers. The chancellor of LSU, who once worked at NASA, spotted the company’s booth at a networking event, and soon the company had won a NASA contract. “These kinds of little things happen on a regular basis,” he says.

Tips to encourage client networking

  • Provide a focus – a speaker or a topic – to get discussion rolling
  • Allow time for informal discussions at networking events
  • Vary topics, locations and formats to keep events from getting stale
  • Assign seating to bring together people from different companies
  • Introduce clients with complementary skill sets
  • Provide refreshments in common areas to bring entrepreneurs out of their offices
  • Use technology to allow interaction among in-house and affiliate clients

Networking 101

An incubator can set up networking opportunities, but clients won’t benefit if they don’t know how to effectively connect with the people who can help them. Lynne Waymon, president of Waymon and Associates of Silver Springs, Md., and co-author of Make Your Contacts Count, says any incubator manager can probably help clients get more out of networking events with a little coaching about how to present themselves.

Managers can help clients:

  • Get comfortable telling others about their accomplishments. “Most people are not very good at telling those stories,” Waymon notes. Have clients practice on each other at in-house networking lunches.
  • Practice remembering names and teaching their own. (Using a simple mnemonic is often helpful, Waymon advises. For example, she’ll tell people to remember her last name as being way down at the bottom of an alphabetical list.)
  • Be ready with answers to the common question: “What do you do?” The answer to that question should not be a job title, Waymon says, because it leaves nothing to build a conversation around. Instead, clients should mention a specific talent or skill they have, and then recount a time they “saved the day, sold a product or served a [customer].”
  • Walk into networking events with a specific agenda for talking. Many people asked “What’s new?” are likely to answer “Not much” – a guaranteed conversation stopper. Waymon recommends clients answer that question by telling the questioner something they’re looking for – maybe it’s more office space, maybe it’s a new employee. “Then there’s some reason to exchange business cards,” she says. “It’s a way to seed the conversation.”—JP

FEATURED SOURCES

Tasha Hussain Black, director, Launch program, Regional Growth Partnership, Toledo, Ohio

Patti Breedlove, assistant director/incubator manager, Sid Martin Biotechnology Development Incubator, Alachua, Fla.

Charlie D’Agostino, executive director, Louisiana Business & Technology Center, Baton Rouge, La.

Zaher Hajo, chiropractor, Paterson, N.J.

Diane Holtaway, associate director for business development, Rutgers Food Innovation Center, New Brunswick, N.J.

Christina Reddin, executive director, Business Incubation Center, Grand Junction, Colo.

Lynne Waymon, president, Waymon and Associates, Silver Springs, Md.

Keywords: practices, in-house loan and equity financing program

Contact NBIA

Phone: (740) 593-4331
Fax: (740) 593-1996
340 West State Street, Unit 25
Athens, OH 45701-1565
info@nbia.org