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Community and economic development go hand in hand in Jacksonville, Fla.

by Bridget Lair

August 2011

Starting a new business venture is never an easy task. But during the recent economic downturn, many entrepreneurs – and the business incubation programs that assist them – have faced even more challenges. Add to this situation poverty, crime and high out-migration of skilled individuals and you face the same challenges as the Beaver Street Enterprise Center in Jacksonville, Fla., winner of NBIA's 2010 Dinah Adkins Incubator of the Year award in the nontechnology category.

BSEC is Jacksonville's only incubator and one of few in the U.S. located in a core city environment. High unemployment and a deteriorating neighborhood surrounding the incubator have created obstacles to strong business development, yet BSEC has prevailed. Since 2003, BSEC resident and affiliate clients generated more than 1,300 new jobs and $36 million in revenue. Operating at 92 percent occupancy, BSEC recently broke ground on a new 13,000-square-foot Leadership in Energy and Environmental Design facility in its Beaver Street neighborhood to house stage-two companies and recent incubator graduates.

Opened in 2003, BSEC is managed by nonprofit organizations FreshMinistries and Core City Business Incubators. Fresh Ministries, a faith-based community development organization, offers a variety of programs to strengthen the Jacksonville community. Several years ago, the organization decided the missing link was jobs, so it pursued local and federal funds to create a business incubation program.

The U.S. Economic Development Administration provided an $850,000 grant, and the local community provided block grants to fund the incubator facility. With this funding and community support, the incubator flourished. "The presence of the incubator has been good for the neighborhood; it has brought people back to the center for commerce," says Jacqulyn Perry, BSEC executive director. "People are talking about the core city and recognizing the needs of the people and the place."

BSEC works primarily with minority, veteran and women entrepreneurs who operate a variety of service businesses. In addition to its in-house incubation program, BSEC also offers an affiliate program for home-based businesses.

Perry attributes much of the incubator's success to its client companies. "Beaver Street was able to expand because of the success of incubated clients," she says. "We have had some good graduates that have helped us attract entrepreneurs. Success breeds success. People see the success of our incubator clients and say, 'Look at that; that works.'"

Returning commercial viability to the area means that other businesses see the region as a core development zone, rather than as a hollow economic void. BSEC's expansion project will house incubator graduates who will continue to build the capacity of the core city. "We encourage graduates to stay in the NW quadrant [of Jacksonville] to build and strengthen the community," Perry says.

As part of the expansion, BSEC will build on services currently offered to incubator clients and develop new services specific to the needs of later-stage companies. The expanded technical assistance will include advanced leadership/CEO classes, CEO roundtables, small business-hosted services (e.g., customer relationship managers, contact management systems, etc.), and appropriate technology infrastructure, such as virtual IP. "We wanted to carry our entrepreneurs a little further," Perry says. "Just because entrepreneurs are able to generate revenue, it doesn't mean that they no longer need support."

The $2.1 million expansion project is funded by $925,000 in federal stimulus dollars and $480,000 – a $380,000 loan and a $100,000 grant – from the Northwest Jacksonville Economic Development Trust Fund, a local fund that seeks to spark private investment in the northwestern part of the city. BSEC received a $472,000 grant from EDA's Global Climate Change Mitigation Incentive Fund in April to complete a Phase II, LEED-certified expansion for additional office and entrepreneurial training space.

How did BSEC grow into an award-winning program?

During its eight-year history, BSEC has grown substantially by adjusting to new obstacles, benefiting from new experiences and learning from mistakes. Its major road blocks are similar to those many incubator managers face: identifying appropriate clients, securing sustainable funding, maintaining a reasonable staff-to-client ratio and providing services for growing companies.

BSEC reevaluated its funding model in the economic downturn. Perry attributes the success of the incubator to a dedicated board of directors and support from the city of Jacksonville's business community, the city of Jacksonville and FreshMinistries. "What saved us was that we have a good plan for sustainability," Perry says. "Challenges are ongoing, but they are diminishing as we build strength and capacity."

Incubator operations are funded through a combination of grants from the city of Jacksonville, incubator rent and service fees, sponsor contributions, and a federal earmark grant. Perry expects the expansion project and increased services to growth companies will increase net revenue and decrease the reliance on grants and sponsorships.

When the incubator opened, it had only three clients, so identifying suitable clients was initially a challenge. To address that challenge, BSEC partnered with a number of local business resource networks. Now, the demonstrated success of incubator clients and graduates attracts potential clients.

In 2009, BSEC helped to create 72 new jobs, retain 259 existing jobs and generate more than $9.3 million in revenue. In addition, in 2009 BSEC graduated two clients and one spinout company that collectively generated $9.5 million in revenue and created more than 200 jobs. Shortly after graduation, these companies generated an additional $34 million in contracts and added 22 more new jobs to the Jacksonville community.

To help even more companies succeed, BSEC has developed a revolving loan fund for incubator clients. The fund significantly improves access to capital for clients who come from a challenging socio-economic setting. Clients can use loans of between $5,000 and $25,000 to develop working capital or to develop lease agreements for equipment and purchase supplies to grow their companies.

Jacksonville's Office of Community Services made a one-time contribution of $150,000 to help with the micro-lending program. "When we hit that bubble [in 2008], companies closed their doors," Perry says. "We retained jobs and businesses. Companies were able to leverage the loan fund to secure funding from outside banks to stay afloat. It was a good thing, too, because those companies are now growing and very successful."

Plans for the future: Building a strong commercial center

BSEC's expansion project will allow the program to assist companies with more advanced business needs, while drawing on the expertise of these later-stage firms. Incubator graduates and second-stage firms can advise BSEC staff how to improve programs and services to better meet client needs, serve as speakers at incubator training events and be mentors to early-stage clients.

The BSEC expansion will house a combination of current incubator clients that meet the entry criteria and new growth clients seeking to reach second-stage status. The expansion project increased incubator clientele even before the doors opened. In the process of recruiting businesses for the new building, BSEC identified clients so eager to enter the incubator that rather than wait for the new LEED-certified building, they entered BSEC right away. The grand opening of the new building is this summer, and Perry says they already have clients lined up at the door.

2010 Incubator of the Year
Nontechnology Category

Beaver Street Enterprise Center
1225 West Beaver Street
Jacksonville, FL 32204
www.bsecenter.net

Year established: 2003

Incubator size: 25,000 square feet (soon to add 13,000 square feet)

Incubator clients: 21 in-house clients; 14 affiliate clients

Incubator graduates: 8

Organizational structure: 501(c)(3)

Mission: To stimulate economic growth by recruiting, training and nurturing entrepreneurial talent to fuel growth, create wealth and encourage reinvestment in the community.

Goals:

  • Maintain at least 85 percent incubator occupancy, targeting companies with high growth and job creation potential.
  • Create 125 new jobs over the next two to three years.
  • Launch a capital campaign to support a new facility, BSEC II.
  • Identify and secure significant government funding (city, state and federal) to support new entrepreneurial programs and fund operations.

Executive Director Jacqulyn Perry (center) and BSEC staff proudly accept their 2010 Dinah Adkins Incubator of the Year award.

Keywords: NBIA programs, Economic development

Contact NBIA

Phone: (740) 593-4331
Fax: (740) 593-1996
PO Box 959
Athens, OH 45701-1565
info@nbia.org