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A model of self-sustainability: Louisiana Business & Technology Center enhances services, secures finances through auxiliary programs

by Linda Knopp

October 2005

Louisiana Business & Technology Center Executive Director Charles D’Agostino understands its takes money to run a successful business incubation program. That’s why he doesn’t rely solely on funds from rent and service fees to cover the Baton Rouge, La., program’s expenses. Instead, during his 17-year tenure at LBTC, D’Agostino has strategically sought out partnerships with federal and state agencies both to bring in additional revenue and to enhance client services – what he refers to as having more “toys in the toy box.”

These partnerships have resulted in management contracts for Louisiana State University’s Small Business Development Center and the Louisiana Technology Transfer Office and have contributed to LBTC’s ability to operate without financial subsidies for most of its existence. “On a pure dollars and cents level, these extra programs help us run the incubator and ensure its long-term financial viability,” D’Agostino says. “But more importantly, they help us expand the services we provide to entrepreneurs.”

With more than 100 graduates in 17 years, LBTC has a long history of helping start-up businesses grow. LSU partnered with the Greater Baton Rouge Chamber of Commerce and the Louisiana Public Facilities Authority in 1988 to open LBTC on a trial basis. Today, the program operates as an integral part of LSU’s E.J. Ourso College of Business and serves as an economic catalyst for the state. Since 1988, LBTC-assisted businesses have created nearly 9,000 jobs in Louisiana. In 2004 alone, the incubator’s 25 client companies employed 75 full-time and 35 part-time or student workers, had a combined payroll of more than $2 million, and boasted combined sales of $6.6 million.

At the 19th International Conference on Business Incubation in Baltimore, NBIA recognized LBTC for its achievements by awarding the program the association’s highest honor, the Randall M. Whaley Incubator of the Year award. Read on for more details about what makes this long-time member incubation program special.

Diversifying revenue

LBTC supports its operations through several revenue sources, including rents and services (30 percent); seminars, workshops and training events (10 percent); and service and management consulting contracts (60 percent). “Having a self-sustainable program is very important,” D’Agostino says. “LBTC is aggressive about going after new programs to bring in outside funding, improve services and increase staffing. That way, the staff can focus on helping companies grow rather than having to spend time raising money to keep their paychecks coming.”

Over the last 17 years, LBTC has strategically brought on additional supporters and added new programs and services to diversify its revenue streams. And in some cases, LBTC has even received funds for just doing what it does best – assisting small businesses.

For example, LBTC applied to the U.S. Small Business Administration for funds to manage an SBDC at LSU in the 1990s. D’Agostino says the decision to go after this money was an easy one because LBTC already employed business counselors who were doing similar work. The additional funds would allow the staff to assist an even greater number of entrepreneurs in the region, he says.

With the added revenue, the incubator hired five additional graduate assistants to provide business counseling to both incubator and SBDC clients. (The incubator already employed two business graduate students who assisted incubator clients.) Now, these seven MBA students, under the direction of three full-time business counselors employed by LBTC, advise nearly 400 entrepreneurs annually – including more than 350 SBDC clients from nine parishes in the Baton Rouge area. In 2004 alone, these SBDC-assisted firms created more than 200 jobs and had sales of $16 million.

LBTC also operates the Louisiana Technology Transfer Office to foster business relationships between Louisiana companies and federal laboratories through a contract with Louisiana Economic Development. Under this agreement, LBTC helps Louisiana technology firms prepare grant applications for the federal Small Business Innovation Research program through offices at both LSU and the nearby NASA Stennis Space Center.

Using both state and federal funds, LBTC hires grant writers who can help incubator clients and others identify and apply for appropriate SBIR awards. “We provide very hands-on services,” D’Agostino says. “We roll up our sleeves and sit down with these businesses. We help match clients with solicitations, help them learn how to prepare their proposals and make sure their proposals comply with the rules.”

D’Agostino, a former NASA employee who brought SBIR experience with him to LBTC, says this assistance is a natural match with the incubator’s other services and benefits both LBTC and other Louisiana entrepreneurs. Over the last three years, LBTC-assisted businesses – including some incubator clients – have received more than $17 million in SBIR awards, helping Louisiana move into the top 30 states in terms of the number of SBIR awards won (up from the state’s number 47 ranking before LBTC stepped in).

D’Agostino says it’s just good business sense to help Louisiana companies apply for SBIR funds, which can be up to $100,000 for Phase 1 awards and up to $750,000 for Phase II awards. “When you help a client win a $750,000 Phase 2 award, you don’t have to worry about them paying the rent,” he says. “These funds also help companies take it to the next level and improve the success rate of businesses.”

LBTC also shares its SBIR expertise with entrepreneurs and incubators throughout Louisiana through seminars and resource centers.

Back to the basics

LBTC hasn’t forsaken its incubation roots for the sake of additional revenue streams. Instead, decisions about each new program or funding source are made strategically, ensuring that all ancillary programs complement LBTC’s existing services and help the staff better serve incubator clients and other entrepreneurs, D’Agostino says.

For example, each of the graduate business students employed through the SBDC works 20 hours per week, helping start-up businesses (including LBTC clients) develop business plans, tweak financial models and refine marketing strategies. According to D’Agostino, these interactions provide clients with more individual attention and advice than would otherwise be possible. The SBDC also offers approximately 40 workshops and seminars each year, which LBTC incubator clients can attend at reduced rates.

Back-to-the-basics business assistance like that provided by LBTC’s business counselors and graduate assistants is at the heart of LBTC’s mission – and it’s what incubator graduates remember most. When Beryle Ramsey started Ramsey Enterprises, a telecommunications training firm, in LBTC’s incubator in 1995, she and her three partners knew the telecommunications industry but lacked entrepreneurial experience. “We didn’t even know what all we didn’t know,” she says. LBTC and SBDC staff helped the firm create its first business plan, which Ramsey says helped her company get off on the right foot.

“As an entrepreneur, you have to make a tremendous number of decisions each day,” she says. “Overall, we’ve made more good decisions than bad ones, which is why we’re still around. Charlie and his staff have guided us through many of those decisions, helping us avoid some of the pitfalls of business and serving as a support system.”

In fact, LBTC continues to serve as a guiding force to Ramsey Enterprises, even though the firm graduated from the incubator in 1998 and today employs approximately 100 workers. “Sometimes, you still need someone to consult with,” Ramsey says.

Continuing interactions between the incubator and its graduates are the norm at LBTC. Incubator staff contact graduates quarterly to ensure they have the support and resources they need to continue their growth. “Certainly, graduates need to continue to be nurtured,” D’Agostino says. “It’s just good business to keep people involved, and we’ve positioned ourselves to do just that.” These ongoing discussions allow LBTC to serve as a sounding board for the incubator’s still-growing graduates, D’Agostino says. And at the same time, they help the incubator maintain relationships with successful graduates who can – and often do – sponsor incubator events.

Next steps

Next year, LBTC will take its expertise on the road, thanks to a donated 18-wheeler and a $135,000 grant from the U.S. Department of Agriculture. The mobile training unit, valued at $300,000, will feature a 30-seat classroom, computer and satellite hookups, and an exhibit area, allowing LBTC to share its expertise with entrepreneurs throughout the state, including many who might not otherwise have access to entrepreneurial training programs.

LBTC expects the unit, which was donated by a graduate of LSU’s E.J. Ourso College of Business, to be delivered this fall. The outreach program will travel to approximately 30 communities throughout Louisiana annually, including many rural areas without incubation programs. In communities with a business incubator or other entrepreneurship support program, LBTC will partner with the local organizations to provide training on topics about which LBTC has particular expertise, such as how to apply for SBIR funding.

NBIA isn’t the only organization that recognizes LBTC’s impressive achievements. After LBTC staff returned from Baltimore, they learned that LBTC had won a 2005 Lantern Award from the Louisiana Department of Economic Development and the Louisiana Industrial Developers Executive Association. The award, presented to D’Agostino and other staff members at a ceremony at the governor’s mansion, recognized LBTC’s role in forwarding Louisiana’s economic development strategy. In honor of its accomplishments, Louisiana Governor Kathleen Babineaux Blanco proclaimed June 2005 “LBTC Month” in the state.

But LBTC received perhaps its best reward in August when the incubator moved into its new home. Earlier this year, the state of Louisiana purchased the former Albermarle/Gulf South Research Institute, an 86-acre research campus near the university. LBTC and its clients now reside in the park’s main administrative building and in an adjacent lab/manufacturing facility. Previously, LBTC operated 45,000 square feet of incubator space in four buildings on campus – each of which was more than 50 years old and one of which was in particularly bad repair. Now, LBTC has a new place to hang all of its awards. “This is a great new facility, very functional and sought after by several research units within LSU,” D’Agostino says. “LBTC was given the first choice of buildings here, and we’re now in the keystone building in the research park.”

Randall M. Whaley Incubator of the Year

Louisiana Business & Technology Center
8000 GSRI Road
Louisiana State University – South Campus
Building 3000
Baton Rouge, La. 70820
www.bus.lsu.edu/lbtc

Year Opened: 1988

Size: 35,000 square feet

Focus: Technology

Current Number of Clients: 25

Number of Graduates: 101

Organizational Structure: Department of Louisiana State University’s E.J. Ourso College of Business

Mission: To help entrepreneurs and small businesses access the resources they need to grow and attain long-term success, and to enhance Louisiana’s economic potential by promoting the formation and growth of businesses, cultivating jobs and commercializing technology.

Keywords: best practices, self-sustainability, strategic partnerships, student intern

Contact NBIA

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