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

Strength in numbers: Incubators, SBDCs partner to help grow businesses

by Herb Amey

April 2007

Going it alone isn’t the easiest way to start a business. That’s why many entrepreneurs turn to business incubation programs for assistance getting their new ventures off the ground. Sometimes, though, that assistance is limited by the size of the incubator staff and limited resources. In those cases, even incubators can use a helping hand.

In Carbondale, Ill., the Small Business Incubator at Southern Illinois University at Carbondale works with the university’s Small Business Development Center to provide business assistance to incubator clients and other entrepreneurs in the region. The two organizations – as well as several other technical assistance providers that participate in the Illinois Entrepreneurship Network – are located within the Dunn-Richmond Economic Development Center in the university’s research park, providing a one-stop shop for entrepreneurs.

“The SBDC provides low-cost or no-cost business-related seminars that are marketed to SBI and SBDC clients,” says Kyle Harfst, SBI director. “Limited SBI resources do not allow a full staff, so the SBDC staff is very complementary to the small SBI budget.”

As Harfst and many other incubator managers have discovered, partnering with local SBDCs often makes good business sense. “As the incubator director, I benefit because our tenants receive excellent business counseling from the SBDC, and I am free to pursue other activities and responsibilities,” says David Lawrence, director of the East Tennessee State University Innovation Laboratory in Johnson City, Tenn. “If the SBDC services were not available, the incubator would need to hire additional staff to provide counseling.”

How do incubator managers create and maintain successful partnerships with their local SBDCs? To gather helpful ideas, NBIA asked several incubator managers and representatives of the SBDC program about their experiences. Following are some of their collective suggestions.

Get together

Colocating incubator and SBDC offices facilitates interaction among staff members, which allows business counselors to coordinate services. Sharing space – at least some of the time – also increases foot traffic which, in turn, raises awareness about your incubator. Someone who visits an SBDC office or counselor in your incubator is likely to be curious enough to ask what services the incubator offers.

“When you’re colocated, it’s good,” says Marie Longserre, president and CEO of the Santa Fe Business Incubator in New Mexico. “But when you’re not, and this is a common occurrence, the question is, how do you strengthen the bond?”

Incubator managers have found many ways to increase face time between their own staffs and those of SBDCs. Some incubators host the SBDC as an anchor tenant at their incubator or make meeting and event rooms available for SBDC activities. Others, like SFBI, provide periodic use of office space so SBDC staff can have a satellite location to meet with clients.

Longserre lets SBDC counselors from Santa Fe Community College use an office at the incubator so they can have regular office hours for meetings with their own clients and with incubator clients. “This gives them [SBDC counselors] a new venue in another part of town, and it gives our clients ‘walk-up-the-hall’ access to the SBDC,” Longserre says.

In San Angelo, Texas, the Concho Valley Center for Entrepreneurial Development provides office space to an SBDC business counselor two afternoons a month. “This has proven beneficial to our current clients, as they can make an appointment and not have to leave the office for the meeting,” says CVCED Executive Director Donna Osborne. “As the SBDC is located on the university campus, parking can be a problem for their clients. Having the off-site [incubator] location has helped their clients who may be reluctant to deal with the campus parking issues.”

The University of Central Florida Technology Incubator and the university’s SBDC take colocation one step further. One SBDC counselor has an office at the incubator, located in the university’s research park 15 minutes from downtown Orlando, to give incubator clients and other area businesses easy access to information about U.S. Small Business Administration programs. The SBDC’s main office, located in downtown Orlando as part of the Disney/SBA National Entrepreneur Center, also houses a small incubator office.

“[The counseling needs of] our incubator clients usually are at the high end of what the SBDC can offer,” says Tom O’Neal, UCFTI CEO. “But SBDC seminars often expose particular needs or weaknesses to an entrepreneur. Once they know they need help, we can step in and provide it.”

Match your strengths

Incubators and SBDCs offer similar services, so managers of the two organizations should look for ways to put their collective resources to work to advance the goals at their respective organizations. The best arrangements are those that play off each partner’s strengths. In the best scenarios, the incubator or SBDC has an expert on staff who can help both offices. That’s the case in Bethlehem, Pa., where the Ben Franklin Business Incubator Center is a partner with the SBDC at Lehigh University.

Wayne Barz, manager of entrepreneurial services for the Ben Franklin Technology Partnership organization, says a staff person at the Lehigh SBDC acts as a clearinghouse for information about importing and exporting; another SBDC staff member coordinates several government contracting activities; and two others are connected to several area banks. “We really don’t refer any of our clients to any of them [SBDC counselors] for general business plan development work,” Barz says. “However, for specific issues, and when the SBDC has a ‘right’ person responsible for the issue, we have found some good reasons to work with them.”

The Marina Technology Cluster in Marina, Calif., works closely with the regional SBDC from Cabrillo College to meet specific training needs, says Susan Barich, incubator director. For example, the Marina Technology Cluster receives Community Development Block Grant funding through California’s Department of Housing and Community Development to provide free business training to low-income entrepreneurs in the region.

Once a quarter, the SBDC provides four consecutive one-day seminars to introduce these low-income entrepreneurs to the fundamental concepts of starting a business. The SBDC also provides follow-up consulting to those who are interested in developing business plans, Barich says. Shortly after the SBDC seminars, the incubator provides a series of workshops to delve more deeply into issues pertaining to business development. “The SBDC presents business concepts,” Barich says. “We drill down into them.”

In Madison, Ind., the partnership between the Venture Out Business Center and the local SBDC has even resulted in funding for some incubator clients. “Our SBDC has successfully applied for and received grants for microenterprise loans for our clients,” says Galen Bremmer, executive director of the Madison Area Chamber of Commerce, which sponsors both the SBDC and the incubator.

Of course, it’s hard to play to the other organization’s strengths if you don’t know what those strengths are. Therefore, it’s important for incubator and SBDC staff to understand what their counterparts are doing. Some incubator managers invite SBDC counselors to sit in on client meetings; others – like Debbie Neuman, director of the Target Technology Incubator in Orono, Maine – encourage incubator staff to take some of the SBDC’s training programs.

In Carbondale, Ill., both the incubator director and the SBDC director report to SIUC’s economic development director, so the two meet frequently to discuss client progress and other activities. These regular discussions help cement a strong working relationship that benefits clients, Harfst says.

For example, founders of DxR Development Group received the assistance they needed to take their patient simulation software from the laboratory to the marketplace through SIUC. The incubator provided the firm with flexible leases that allowed the firm to expand, management coaching, and contract and IT assistance. The SBDC helped the firm develop its business plan and provided help with financial statements. DxR Development Group now employs more than 25 workers – including SIUC students and graduates – in a newly constructed multitenant facility in the university’s research park.

Share marketing activities

It could be as simple as sharing the cost of promoting co-sponsored activities, or taking turns with marketing duties. Or it could evolve into something like Maine’s model. A statewide Web site, www.mainebusinessworks.org, pulls together information about training programs and other business assistance offered by private organizations, government programs and nonprofits throughout the state. “I try to drive clients to that Web site, and the SBDC does, too,” says Neuman.

Neuman’s incubator and the local SBDC, which is located nearby, also actively promote each other’s activities on a smaller scale. “We brand our marketing materials with the SBDC logo, and they do the same for us,” she says.

The Web site for the ETSU Innovation Laboratory prominently displays information about and links to its partner SBDC, says Lawrence. In addition, its brochures and advertising always refer to the SBDC’s location within the incubator facility. “We believe this [colocation] is an important source of competitive advantage,” Lawrence says.

In Columbus, Ga., the Columbus Technology Incubator and the SBDC from the University of Georgia, which is colocated with the incubator, have successfully co-hosted an Entrepreneur Bootcamp program for two years. The full-day event includes seminars on business plans, marketing strategies and financing; a question-and-answer session with a panel of successful entrepreneurs; and a case-study workshop.

“We are constantly supporting each other’s clients in some shape or another, so it just made sense to work together on the event,” says CTI Director Jim Bowie. “It is perceived as a stronger value within the entrepreneurship community when we have joint sponsorship of services.”

Staff of the incubator and the SBDC developed the curriculum together and shared marketing duties. The most recent Bootcamp attracted about 20 attendees, including two incubator clients.

Share your clients

The Southwest Michigan Innovation Center in Kalamazoo gives a small office to the Small Business and Technology Development Center – a subsegment of the SBDC program that focuses specifically on technology firms – where the SBTDC’s regional director and counselors meet with clients one or two days a week. The SBTDC director also serves as an important member of the incubator’s advisory team, sitting in on quarterly review meetings with clients and attending monthly meetings with several business service providers in the region.

“Whenever I get a potential client, I automatically refer them to SBTDC and use SBTDC as part of the review team to determine if the prospect should be a client of [ours] or not,” says Sandra Cochrane, chief operating officer of the incubator. “If the SBTDC gets a client that might fit in our center, they introduce the client to me and we get them started with the application process. We regularly cross-reference clients, especially those that are potential incubator clients.” This arrangement ensures that services are made available quickly, she says.

“We consider [SBTDC staff] part of our team. They sign client confidentiality agreements, they sit in on quarterly meetings with our tenants, they are very pro-active,” Cochrane says. “Having the SBTDC participate in the quarterly meetings allows them to immediately put resources to bear on any issue that a company may be facing.”

The incubator also has monthly Tech Team meetings involving business assistance providers from several institutions, including the SBTDC. “During these meetings, the service providers discuss training session ideas, identify services for companies with specific needs, and share information on other events and programs going on in the community and state,” Cochrane says. That way, entrepreneurs in the region can have access to the training they need – no matter who sponsors the events.

The Concho Valley Center for Entrepreneurial Development often refers incubator clients to their local SBDC for additional training. In fact, CVCED sometimes requires a company owner to complete basic business training offered by the SBDC as a condition of entrance to the incubator, Osborne says. “Quite often, company owners know that they need additional training, particularly in marketing, human resources and accounting,” she says. “However, the need gets placed on a back burner due to other obligations and the overwhelming tasks of running their daily operations. We write the requirement into our client agreements to ensure the company makes the training a priority, thus helping to further ensure their success.”

Osborne says her incubator staff refers prospective clients to the SBDC for one-on-one, intensive counseling assistance. “We also refer clients to the many workshops provided by the SBDC staff as a first or next step in their business growth,” she says. “We strive to avoid any duplication of effort, as we both have very limited resources.”

And that’s the key to an effective partnership. As Longserre says, “By working together in a collaborative framework, [SBDCs and incubators] can minimize inefficient overlaps and maximize leverage, synergy and impact, producing improved results for their clients and communities. They are natural partners in the economic and business development process.”

A successful model

Charlie D’Agostino arranged the partnership between his incubator and the Louisiana State University Small Business Development Center. And it has been a success for everyone involved – especially for entrepreneurs in Louisiana.

Hosted by LSU in Baton Rouge, the Louisiana Business & Technology Center has a 20-year record of success, thanks in part to its unique partnership with the SBDC.

“Early on, we determined that if we were going to fulfill our mission, we would have to incubate more than 20 businesses at a time,” says D’Agostino, LBTC’s executive director. That meant looking for ways to break out of the walls, to offer outreach services and to partner with other agencies.

In 1988, LBTC established a Management Assistance Office for outreach and counseling. Through that office, LBTC staff, MBA students and LSU business college faculty worked with incubator residents and outreach clients. Over the next 10 years, the MAO served over 250 clients annually. “We were doing the work of an SBDC,” says D’Agostino. With that track record, LBTC successfully applied to the Louisiana SBDC state director and the U.S. Small Business Administration to become an SBDC in 1998.

Because D’Agostino was able to set up LSU’s SBDC office the way he wanted it, the director reports to him, and LSU assigns MBA students to the incubator to work with SBDC and incubator clients on business plans, financial models, and market and competition assessments. The state pays the incubator about $100,000 a year to operate the SBDC, but it does not cover all the office expenses. Still, D’Agostino says having such a close relationship between the incubator and SBDC is worth it.

“This is a great arrangement, as it allows tenant firms to have 24/7 access to the SBDC counselors and its resources,” he says. “It also is a great ‘farm system’ for recruiting incubator companies. We assist over 300 entrepreneurs and small business owners through the SBDC and complete over 50 business plans per year. This allows potential incubator tenants to get their act together before we take them on as tenants.”—HA

An SBDC primer

Through the Small Business Development Center program, the U.S. Small Business Administration provides management assistance to current and prospective small business owners in the United States. The SBDC program delivers one-stop counseling, training and technical assistance from more than 1,100 locations in cooperation with the private sector, higher education and local government. A lead organization in each state operates the SBDC program. This lead organization tailors the range and scope of services that local offices deliver to address the economic development needs of a region, so there are differences in services and delivery methods from office to office.

Each center has a director, staff members, business counselors, volunteers and part-time personnel. Volunteers include people recruited from professional and trade associations, the legal and banking community, academia, chambers of commerce, and SCORE (formerly known as the Service Corps of Retired Executives). Some SBDCs use paid consultants, consulting engineers and testing laboratories from the private sector to help clients who need specialized expertise.

SBDCs assist small businesses with financial, marketing, production, organization, engineering and technical problems. Core activities include training through workshops and seminars, one-on-one counseling and answering specific questions.

According to Marie Longserre, president and CEO of the Santa Fe Business Incubator in New Mexico, SBDCs typically help entrepreneurs with business plan preparation and financial management; work with small businesses at all stages of the business life-cycle; and provide loan packaging assistance and links to financing. Incubators, on the other hand, help start-up businesses by offering professional business locations, structured mentoring programs, and more coordinated opportunities for team-building and partnering with other businesses, programs and organizations. Incubators also provide ongoing rather than episodic services.

There are fundamental differences between SBDCs and incubators. SBDCs cannot screen their clients; it is their mission to help anyone who walks through their doors. And while an incubator may choose to serve only one type of start-up, such as software companies, SBDCs help all types of businesses, whatever their stage of maturity.

For more information about the SBDC program, visit www.sba.gov/sbdc.—HA

Quality counts

Developing a good working relationship with your local Small Business Development Center can bring rewards for your incubation program. But sometimes a relationship doesn’t make sense.

For example, Mark Long, president and CEO of the Indiana University Emerging Technologies Center in Indianapolis, says the SBDC located near his incubator is geared more toward general nontechnical businesses than the life science companies he serves. “It’s a difference in focus,” he says.

Similarly, John Overby, technology incubator manager for the Spokane Intercollegiate Research & Technology Institute (Sirti) in Washington state, says his incubator focuses on high-tech businesses, while the Spokane SBDC, which is located in one of his incubators, works with non-high-tech companies. “My experience with SBDCs in general is that very few have the kind of high-tech staff needed to really help these kinds of companies beyond just the business basics,” Overby says. “High-tech companies normally sell technology-based products to national and international markets and grow very rapidly. This takes experienced counselors to do well. SBDC counselors seem to be more generalists.”

When you are considering a partnership with your local Small Business Development Center, you must consider the personalities, skills and dedication of the staffs involved, as well as the reputation of the SBDC office. Several managers on the NBIA member listserv warn to be aware that the quality of the SBDC services can vary greatly from office to office.

For example, one incubator manager used to have the local SBDC director on her board of directors until that person started siphoning off ideas from the incubator’s seminar committee for the SBDC. “They were really only interested in building their own business,” she says. “It was a numbers game, as they wanted to count our clients as their clients [for funding]. They really weren’t interested in helping start-up businesses.”

Another former incubator manager, who has worked with programs in several states over the last 15 years, says the quality of SBDC programs varies greatly by state. For example, in one state, his clients received quality direction from SBDC counselors, he says. But his experiences in other states have been quite different. “In some areas, SBDCs can be extremely territorial and view business incubators as their competitors,” he says. “And sometimes, SBDCs are too driven by numbers. There’s no quality in bulk.”

Why is there a range in the quality of services given by SBDCs? “For the same reasons that incubator staff, services and quality vary from incubator to incubator – level of staff experience, personalities, composition and philosophy of ‘higher authorities,’ culture, compensation … and the list goes on,” says Bob Justice, director of East Tennessee State University’s Small Business Development Center in Johnson City.

The key is being able to recognize when a partnership isn’t working. “Sometimes, SBDC counselors are not very good,” says Marie Longserre, president and CEO of the Santa Fe Business Incubator in New Mexico. How do you deal with this? “You try to work around [the ineffective SBDC counselors], but it’s critical to retain the relationship with the SBDC if you can. It should be a healthy working relationship. But if it’s not, you need to protect your clients.”—HA

Keywords: business assistance provider, coaching clients, partnerships -- organizational/corporate, seminars and training programs, service provider network

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