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Basic training: Educational programs help incubators serve clients, other entrepreneurs

by Herb Amey and Linda Knopp

August 2006

Alicia Diozzi was facing a dilemma: She knew she wanted to operate a tutoring business, but she didn’t know where to start. The Enterprise Center at Salem State College in Salem, Mass., helped her find the answers.

“There was a class about choosing to buy a franchise or starting from scratch,” Diozzi says. She attended the class, which the mixed-use incubator presented as one of its free workshops for small business owners in the community. The class presented basic business information geared toward potential entrepreneurs, including the pros and cons of buying a franchise vs. going it alone. “It definitely helped me decide,” Diozzi says.

Diozzi ultimately chose to establish Tutoring by Design, an in-home tutoring service for kindergarteners through college students. She also became an incubator client and took additional classes there, which helped her start her business off on the right track. In its first year and a half of operation, the company has grown to a staff of 27, most of whom work part time.

Like the Enterprise Center, many incubators offer entrepreneurial training programs as a way to help existing clients grow their businesses and to attract potential clients into their facilities. But these programs also benefit incubators – and their communities – in other ways. Training events can raise awareness of an incubator’s mission, which can attract sponsors and contribute to its bottom line, and can help create a thriving business community. Read on for more details about how several incubators have structured their training programs to bring value to local entrepreneurs and their communities.

The value of training programs

The @Wales Digital Media Initiative in Cardiff uses its monthly training events as a way to market programs and services to potential clients. Each event has a general topic, such as developing brand image or profiting from intellectual property, and is conducted as a two-hour workshop, with time for socializing and networking.

“The main way we get clients is through the marketing and networking events that we run,” says Evan Jones, director of @Wales. “They [events] will attract sometimes quite a significant number of people, over 100, which is a lot for that sort of event. It gets the word out about what we do and gets different companies talking to each other.”

Sometimes, entrepreneurs sign on to become incubator clients soon after attending a training event. But more often, training is a long-term investment in growing a community’s entrepreneurial pool. In fact, some incubators specifically offer fundamental business training for nascent entrepreneurs who are not yet ready to become incubator clients. For example, the Central Valley Business Incubator in Clovis, Calif., conducts pre-incubation workshops that allow potential entrepreneurs to interact with other business owners and become comfortable with the incubator setting, easing their way into tenancy, CVBI Chief Operating Office Kelli Furtado says.

When they’re successful, training programs for nascent entrepreneurs can do more than bring new clients into the incubator; they can even help open new doors for individuals who have not considered entrepreneurship to be a career option, including those who are transitioning off of public assistance and those with disabilities.

Canada’s Toronto Business Development Centre has found a way to serve under-represented groups – and to bring more money into the incubator at the same time. With funding from several Canadian government agencies, TBDC operates entrepreneurial training programs for individuals with disabilities, people who receive public assistance, and young adults under the age of 30.

During a series of visioning sessions in the late 1990s, TBDC staff and board members realized that the overhead expenses of operating a downtown facility would prohibit the program from breaking even with incubation activities alone. So, they proposed adding entrepreneurial training and community outreach activities to generate revenue to help fund the incubator’s operations.

Through these programs, TBDC advises non-client entrepreneurs during the research, planning and start-up phases of business development and helps other nonprofit organizations develop and deliver entrepreneurial training.

Becoming the go-to source for business information can enhance an incubator’s role in the eyes of stakeholders and funders. “There is a great opportunity to become more broadly a source of ‘how to’ business information, or at least a conduit to helpful information, whether to our own staff, client companies or experts we know in other organizations,” says Eddie Hill, vice president of client services at The Entrepreneurial Center in Birmingham, Ala.

Hill also sees an opportunity for training programs to take an expanded role in helping incubator clients become successful by teaching all employees of incubated companies how to perform their jobs better. “Generally, in past years the seminars have been targeted to the entrepreneur to help that person make better decisions to grow the company faster, avoid liability, hire good personnel,” Hill says. “We still do much of that, but we’re also broadening the scope for these events. For instance, I firmly believe that we can help companies grow by building the capabilities of their employees as well as the CEO, and so we schedule education or training sessions that offer skills that employees can use every day.”

Employees of incubator clients learn business writing skills, presentation skills, business etiquette and ethics, Hill says. With this training, they are better able to work with their customers.

“There is a limit to what we can do with CEOs,” Hill says. “And while it’s the CEO who drives the bus, he’s not necessarily the one who does the day-to-day work. We can help companies grow by helping their employees gain more skills.”

Training topics and formats

At many incubators, training means short (one- to two-hour) sessions on business fundamentals: developing a business plan, attracting investors, marketing, hiring and evaluating employees, maintaining cash flow, and the like. But John Ferland, president of the Maine Center for Enterprise Development in South Portland, Maine, says his incubator looks for different ways to cover the business basics to keep things fresh. “For the last several years, we’ve focused on different angles within key subject areas such as early-stage financing, intellectual property and others,” he says. “It is a system that has worked well for us.”

Recent topics of MCED training events include “Wanted: More Competitive Seed Grant Applications,” “Can You Commercialize Your Idea: Tips From an Intellectual Property Expert,” and “How I Did That: Case Study in Technology Entrepreneurship.”

Identifying topics is not a problem for Christine Sullivan, executive director of the Enterprise Center. Before taking on this role, Sullivan founded Hawthorne Associates, a company that specializes in marketing corporate training programs. Sullivan uses her marketing background and talks with local businesses and staff of the Small Business Development Center to get training ideas, she says. “This means we have a good handle on what people want, and we repeat the most frequently requested topics.”

Feedback from training participants is an important gauge of a topic’s viability. Incubator managers informally gather information about the effectiveness of training programs by chatting with training participants or asking them to complete simple opinion surveys after class. “We do not directly trace activity based on session topics, but we usually do speak to clients on an informal basis to get their feedback on how useful the topic and the speakers were,” Hill says.

At the Center for Emerging Technologies in St. Louis, the incubator test-drives potential training topics during informal one-hour breakfast sessions, says CET Vice President and Chief Operating Officer Bill Simon. Those that are well-received by attendees are expanded and offered as a two or three-hour afternoon session, followed by a networking event.

With the help of a $70,000 grant from the Monsanto Fund, CET offers a range of training programs for technology entrepreneurs from throughout the St. Louis region, most of whom are not CET clients. Programs run the gamut, from one-hour breakfast sessions to more structured – and lengthy – classes where attendees can earn professional development credit.

Twice a year, CET offers a two-day workshop to help entrepreneurs prepare applications for the federal SBIR and STTR programs, featuring federal program managers and technology commercialization experts.

“We work every angle to provide the real meat,” Simon says. “With our connections in the community, we’re able to bring in some real heavyweight speakers, which attract entrepreneurs and encourage high-level discussions about a number of technology topics.” Recent workshops have covered factors that affect the valuation of early-stage companies and how to start and grow advanced technology companies.

Many incubators, like CET, conduct training events on site, but the Louisiana Business & Technology Center is taking its training program on the road. With the help of a $135,000 grant from the U.S. Department of Agriculture and a donated 18-wheeler (valued at $300,000), LBTC has created a mobile classroom, Driving Louisiana’s Economy, to bring business training to rural communities throughout Louisiana.

The mobile classroom is equipped with broadband wireless Internet connectivity and state-of-the-art audio and visual capabilities, and it can seat up to 30 people. The program will help LBTC expand its reach beyond the incubator’s walls, says Executive Director Charlie D’Agostino.

“To have a major impact on Louisiana’s economy, we felt we had to take entrepreneurship and business incubation on the road to reach as many people as possible, especially underserved entrepreneurs in rural Louisiana,” he says. “Incubating companies, although significant, is not enough to satisfy the LBTC mission.”

LBTC hopes to take the mobile classroom to 37 rural communities within its first year of operation.

Managing training programs

There is no question about it: Managing a training program takes time – choosing a topic, recruiting instructors, marketing the events and handling registration. And then there are the physical details – setting up the room, making sure audiovisual equipment is on hand and working, and buying refreshments and other supplies. But incubator executives say it’s worth it.

Sometimes the payoffs are monetary, but more often they’re not. For example, the Amoskeag Business Incubator in Manchester, N.H., emphasized its training programs when applying for its 501(c)(3) designation. Following its initial application, the Internal Revenue Service reviewer came back with two pages of additional questions.

Many of the follow-up questions related to Amoskeag’s community outreach activities, and Executive Director Julie Gustafson says she believes having the information to illustrate the incubator’s role in helping educate both incubator clients and other community entrepreneurs played a vital role in the acceptance. “I think we were teetering on getting it,” she says. “I believe the fact that we emphasized the educational component of what we do, especially our outreach activities and services to disadvantaged businesses, made a difference.”

But how much time does it really take to organize and host a training event? And what is involved? The answers, as one would expect, depend on the type of training event. A brown-bag lunch, for example, might require an hour or two to pull together. However, organizing a multiweek seminar on marketing techniques, with a series of speakers or a facilitator, might require several days of a staff member’s time.

At The Entrepreneurial Center, Hill oversees training programs, which typically includes selecting topics, working with presenters (service providers, professionals and academics) and marketing. The incubator annually hosts 60+ seminars, workshops and other training events, some of which are developed by Entrepreneurial Center staff and some that are presented by other organizations.

Many of the incubator-sponsored events are lunchtime seminars, which Hill estimates take two to three hours of preparation time. Hill’s estimate covers time to publicize the event both inside and outside the incubator, communicate with speakers, set up the room and make arrangements for food. Longer training events – and lunchtime events conducted by an incubator staff member – take more preparation time, Hill says.

In fact, the sheer volume of training activity can require extensive staff time. At the Enterprise Center, the operations manager spends about half her time managing the incubator’s training programs and marketing programs that are offered by Salem State College’s Small Business Development Center, which is located within the incubator. Many of the incubator’s events are presented jointly by the Enterprise Center and the SBDC.

“Collaboration allows organizations with small staffs to offer more and better programs and events,” Sullivan says. “The advantage of collaboration and co-sponsorship is that we’re able to reach more small businesses. In a resource-starved environment for nonprofits, I believe we have to help each other and allow each organization to do what it does best.”

The Enterprise Center markets its training programs to incubator clients and other entrepreneurs, stakeholders, members of local chambers of commerce, and names on a purchased mailing list. “We mail about 40,000 pieces a year, and we also supplement with an e-mail newsletter to our database,” Sullivan says. The effort seems to pay off; last year 1,000 business owners attended 70 training events marketed by the incubator.

Fee or free?

Fee-based programs demonstrate to clients the value of training; if they have to pay for it, then they are committed to completing the training and learning from it. But money is tight for many entrepreneurs and many service providers offer free or low-cost workshops to attract customers, so reality often outweighs theory when incubator managers face the question of charging fees for training programs. Many incubators charge just enough to cover their costs.

“You have to charge for expenses,” Simon says. “Otherwise, you end up with lots of RSVPs and a 6-foot-tall stack of uneaten pizzas.”

CET supplements its $10 to $20 event registration fee with money from its Monsanto Fund grant to cover costs. Still, Simon says, he doesn’t consider training events to be revenue generators in the traditional sense.

That doesn’t mean the incubator can’t make money off the process, however. CET’s training programs provide a means to get service providers and other regional business leaders into the building, where they can see what the incubator is all about. “It gets people in, so they can see how good you are, which gives you an opportunity to build relationships,” Simon says. “Then, you can hit them up for money down the road.”

CET annually receives between $250,000 and $500,000 in donations, largely a result of relationships built and developed through the incubator’s training program.

Sometimes, incubators use grants to fund training programs, and the grants themselves provide revenue to the program. For example, the Marina Technology Cluster of Marina, Calif., received a $300,000 Community Development Block Grant through California’s Department of Housing and Community Development to provide free business training to low-income entrepreneurs in the region.

Still, many incubators consider training programs an essential service rather than a revenue generator. Thanks to funding from Norway Savings Bank, MCED offers a Lunch & Learn brown bag series to give incubator clients and other entrepreneurs an opportunity to interact with local professionals. The incubator does not charge participants to attend. Presenters conduct the workshops for free, valuing the opportunity to market their companies and expertise.

“We used to charge a $10 fee but have picked up a corporate sponsor [Norway Savings Bank] and a program partner [School of Business at the University of Southern Maine], each of which has helped us to market the program and offer the monthly workshop series at no charge,” Ferland says.

However, incubator managers say, attracting sponsors is becoming more difficult; challenging economic times mean many corporations and government agencies are reducing their financial support at a time when the demand for assistance is growing. So, for the most part, managers hold fees low to attract more participants to the training sessions.

“We do generate a small amount of revenue through half-day programs for which we charge $15 per person. The two-hour workshops are free,” says Sullivan. “We tried charging for them three years ago but no one would come. I think the mission to give entrepreneurs some basic business skills overrides the money issue at this point.”

Most incubators cover training program costs by building the expense into their budgets, incorporating the costs into their rental structure, or charging nominal fees for training. “All of the money we have comes from the rents that our tenants pay us,” says Sullivan. “We therefore cannot afford a more elaborate (training) process. And frankly this works so well I would not want to change it.”

Sometimes, change is good

Entrepreneurs must be fast to react to change; so must incubator managers. Three managers interviewed for this article are getting ready for big changes at their incubators.

The Central Valley Business Incubator in Clovis., Calif., is partnering with the Fresno State-based International Center for Water Technology on a $5 million, 13,000-square-foot building that will focus on developing water technology and clean-energy start-up companies. To be built on California State University’s Fresno campus, it is expected to be completed in October. The Clovis incubator will remain open and will oversee both facilities. The new incubator will combine the technical expertise of the International Center for Water Technology and the business expertise of the Central Valley Business Incubator, a mixed-use incubator in operation for 10 years. There will be space for at least seven new businesses. “Working with Fresno State faculty and students, we’re in a position to really expand,” says Marie Baker, CVBI’s business development director.

The Entrepreneurial Center in Birmingham, Ala., is moving to a new site four blocks away – but what a move it is. A partnership involving the city, county, University of Alabama at Birmingham, and private investors will transform the former Sears building in downtown Birmingham into the home of The Entrepreneurial Center and the Office for the Advancement of Developing Industries, the university’s technology business incubator. Eddie Hill, vice president of client services for The Entrepreneurial Center, says the new facility will combine the companies now operating at the separate incubators. (The Entrepreneurial Center manages the university’s incubator, which now is located in the university’s research park.) Hill says local news coverage of the move is increasing the community’s awareness of the incubator. The 150,000-square-foot building, which has been vacant for more than 20 years, will take about a year to prepare. Hill says the move will mean more clients (he estimates 60 to 65, up from the present 45 at both incubators), more training opportunities, and the first wet lab research facilities in downtown Birmingham.

A pending move by the Maine Center for Enterprise Development in South Portland, Maine, is creating a new outlook for the business incubator. MCED will be moving from the campus of Southern Maine Community College into the research wing of the science building at the University of Southern Maine, according to John Ferland, MCED president. The incubator will have approximately the same amount of space, he says, but will have the opportunity to create a partnership between the incubator and the university. Ferland says the incubator intends to maintain its clients and levels of service but will be expanding as well. One idea: a series of entrepreneurship classes targeted to faculty and university students, since creation of companies on the campus accounts for one-fourth of the incubator’s client base.—HA

Commercial training programs are an option

There are commercial options when it comes to training programs for entrepreneurs. FastTrac, a product of the Ewing Marion Kauffman Foundation of Kansas City, and NxLeveL, developed by the University of Colorado Center for Community Development, are comprehensive training programs designed to guide entrepreneurs through the business development process.

The commercial training programs are more extensive – and, in most cases, more expensive – than training workshops conducted by incubators, which often are topic specific. But many incubator managers have found that the commercial programs can complement the training their incubators offer.

FastTrac offers nine distinct programs and NxLeveL has five turnkey programs. The curricula are similar: business fundamentals, start-up options, understanding budgets and financials, and developing your business concept.

NxLeveL’s Business Start-Ups program includes 10 weeks of three-hour classes. Clients receive a textbook, workbook, resource guide and support materials.

FastTrac’s similar program, NewVentures, runs for 11 weeks, with weekly three-hour classes. Depending on the level of sponsorship by the community organization hosting the classes, participants in either program can expect to pay several hundred dollars to attend.

Both NxLeveL and FastTrac are administered through chambers of commerce, Small Business Development Centers and other community development organizations – including business incubators – which act as local sponsors. Certified trainers, most of whom are experienced entrepreneurs, conduct the trainings in communities throughout the world.

For more information about FastTrac and NxLeveL, visit www.fasttrac.org and www.nxlevel.org.—HA

Keywords: entrepreneurial pool, fee structuring, marketing and promotion, seminars and training programs

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