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Making a difference: William Factory incubator improves living, working conditions in Tacoma

by Linda Knopp

December 2005

The William M. Factory Small Business Incubator has come a long way since it started in a vacant restaurant in Tacoma, Wash., nearly 20 years ago. After a series of moves into a variety of leased spaces – none of which were conducive to client networking – the mixed-use incubator relocated in 2003 into its own 20,000-square-foot building, just three blocks from its original site.

The new $3.2 million facility, one of the most technologically advanced office buildings in the Puget Sound region, has 20 client offices, more than 100 workstations and four conference rooms. The building also features a fiber-optic communications system, an interior parking garage, and balconies overlooking Mount Rainier and Commencement Bay. But despite their classy new digs, incubator staff haven’t forgotten the program’s roots.

In 1986, William M. Factory, a community activist who helped expand employment opportunities for minorities and economically disadvantaged entrepreneurs in East Tacoma, joined forces with other residents and United Neighborhoods of Tacoma to start the Tacoma-Pierce County Small Business Incubator. The incubator, renamed in Factory’s honor in 1996 after his death, helps women, minorities and low-income entrepreneurs grow their businesses as a way to improve living and working conditions in Tacoma’s east side – one of the area’s poorest neighborhoods.

In its nearly 20-year history, the incubator has graduated more than 200 companies; 78 percent of those firms remain in business or have successfully merged. During the last year alone, incubator clients have created nearly 300 jobs, many of which benefit residents of East Tacoma.

In recognition of the incubator’s accomplishments, NBIA presented the William Factory program with the 2005 Incubator of the Year award in the mixed-use category at NBIA’s 19th International Conference on Business Incubation in Baltimore. Read on to learn how the incubator benefits both its clients and its neighborhood.

Growing entrepreneurs

The William Factory incubator has opened up new career options to a number of local residents who might otherwise be unemployed, according to Executive Director Tim Strege. “Most of our clients are the first in their families to engage in entrepreneurship, so they don’t have experienced family members to learn from,” he says. “The incubator gives them a safe place to acquire the skills they need to compete and helps them develop marketable businesses.”

Dave Hunt and Cynthea Williams are two nontraditional entrepreneurs who have thrived in this safe haven. With the incubator’s assistance, Hunt, a Pacific Islander who was injured in an earthquake in 2001, used his 38 years of welding experience to develop a successful business in spite of a disability. Williams, a disabled veteran and single mother of a special-needs child, combined her military background with the incubator’s strategic guidance to create a firm that provides textiles, medical supplies and other commodities to the military and federal agencies. Both entrepreneurs credit the incubator with contributing to their success.

Hunt moved his start-up welding business, DK Field Construction Welding, into the incubator soon after it opened its new facility. As the site of the U.S. Department of Transportation’s Northwest Minority Resource Center, the William Factory incubator assists small businesses like DK Welding with low-interest loans and bonding for transportation-related contracts. The incubator also has construction plans for all regional transportation projects, and its staff serve as advocates for start-up companies interested in transportation-related work with larger contractors.

Incubator staff alerted Hunt to meetings he could attend to learn about potential transportation-related jobs, helped him create AutoCAD drawings for his bid presentations, and guided him through business and marketing plan revisions. Thanks to this assistance, DK Welding received a $700,000 contract to perform welding, deconstruction and material support for a baggage handling facility at Seattle-Tacoma International Airport. The company, which employs 14 full-time workers, is finalizing a contract for an additional $1 million in work at the airport. DK Welding now is merging with another small business and is moving into its own facility.

Williams’ incubator experience is similarly noteworthy. As someone who had the drive – but not the entrepreneurial experience – to start a new venture, she consulted with the incubator staff several times before she started Another Level Products in 2004. During the first six months, the staff helped Williams plan and market her new business. And, in the process, Another Level products won a few small supply contracts and expanded its network of vendors.

The company’s big break came earlier this year when the Joint Contracting Command-Iraq chose Another Level Products from among 40 competitors for a $2.5 million contract to supply uniforms to U.S. troops and the newly formed Iraqi Highway Patrol. Incubator staff helped the firm secure capital financing for the project and helped design the new Iraqi Highway Patrol logo.

After learning that no one could guarantee the cargo’s safe delivery, Alan Collinge, project director at the William Factory incubator, volunteered to accompany the shipment to Iraq’s Abu Ghraib district. Collinge, who studied military transportation logistics extensively in graduate school, says he felt compelled to help. “Because no one would ensure the shipment after arrival at the Baghdad [International] Airport, it was decided that someone should accompany the shipment to make sure there was no loss or theft,” he says. “We can now truly say that we go above and beyond for our companies at the William Factory incubator.”

Thanks, in part, to this above-and-beyond assistance, the William Factory incubator is fully occupied (with a waiting list) most of the time. In fact, its new facility reached capacity just three months after it opened. But that doesn’t mean that admission to the program comes easily. All prospective incubator clients are thoroughly evaluated to ensure that the entrepreneurs’ backgrounds match the products or services they hope to offer and that their business models are viable. “We have a very strict selection process,” says Assistant Director Colleen Barta. “Otherwise, our 78 percent success rate could easily be a 78 percent failure rate.”

Local entrepreneurs recognize the value of the incubator’s assistance. Clients pay above market-rate rents, which cover fees for all incubator services, including specialized assistance in accounting, human resources, engineering and other business functions. Consultants and instructors from Bates Technical College and Clover Park Technical College, as well as volunteer professionals, share their expertise with incubator clients to complement the experience of incubator staff and to keep overhead costs down, Barta says.

Revitalizing a neighborhood

The incubator’s impact isn’t limited to its clients, however. The William Factory program plays a vital role in the community’s redevelopment, serving as the headquarters for a neighborhood revitalization effort that is bringing development back to Tacoma’s east side. In 2000, the incubator organized the Portland Avenue Business District Association, now led by Collinge, to coordinate community activities and to facilitate neighborhood business development.

The incubator also has helped counteract years of plant closures and urban blight by bringing private commercial development back into the neighborhood. Even before the incubator began its own construction project, the staff directly assisted eight commercial development projects valued at $8 million.

“From 1997 to 2000, the incubator sought private investors to purchase and improve commercial properties along the Lower Portland Avenue corridor, which is both a nexus for the business district and a passageway to the Port of Tacoma,” Strege says. During that time, the incubator facilitated several new construction projects, including a $2 million credit union building and a $3 million telecommunications center, by helping developers with land-use regulations, rezoning, utility connections and advocacy efforts – all in an attempt to spark neighborhood redevelopment.

With its location near the Puyallup Reservation, the incubator also facilitates meetings with the Puyallup Tribe regarding commercial development opportunities and contracting. The incubator has four Native American-owned businesses as clients.

But true to the incubator’s mission, the staff is committed to developing a program to help local entrepreneurs. Even its entrepreneurial development efforts have a community-outreach component, however. As part of their leases, all clients sign first-source hiring agreements in which they agree to consider unemployed neighborhood residents for available job openings.

These agreements, Barta says, create beneficial relationships between the businesses’ growth and the residents’ well-being. “The employment clause helps the incubator companies feel ownership in the east side because their businesses and their employees are here,” she says. “They want to increase the quality of life in the neighborhood, even after they graduate.” Several incubator graduates continue to operate their businesses in East Tacoma.

The first-source hiring agreements benefit both incubator clients, who receive human resources assistance from local public agencies who administer the program, and neighborhood residents, who might otherwise have few job options – or at least not such attractive employment opportunities. The incubator’s clients, which include many specialty trades contractors such as painters, roofers, landscapers, electricians and welders, pay their employees prevailing wages (averaging over $20 per hour).

Expanding its reach

NBIA isn’t the only organization to take note of the William Factory incubator’s accomplishments. Economic and community development professionals from across the United States and around the world have visited the incubator to see the award-winning program in action. In recent months alone, William Factory staff members have shared tips about starting and running a community-based incubation program with business and community leaders from Portland, Ore., and Seattle, Olympia, and Yakima, Wash.

In coming years, the William Factory program plans to develop an incubator campus with additional facilities to house start-up businesses in complementary industry clusters. The incubator has design plans and is considering financing options for a 21,000-square-foot phase II expansion now.

“We’re opening the door of the commercial marketplace new entrants, and in the process, we’re enlarging the overall economy,” Strege says. “Our current facility employs over 250 workers; an incubator campus could provide jobs for 1,000 workers or more.”

2005 Incubator of the Year

William M. Factory
Small Business Incubator

1423 East 29th St.
Tacoma, WA 98404

Year Established: 1986

Size: 20,000 square feet

Focus: Mixed-use

Current Number of Clients: 30

Number of Graduates: More than 200

Organizational Structure: 501(c)(3) nonprofit

Mission: To nurture carefully selected businesses through their formative years as a way to revitalize the local economy, promote job growth and create an expanded tax base in East Tacoma.

Goals:

1. To assist in the start-up and growth of locally owned companies and graduate them as self-sustaining firms in the surrounding community.

2. To employ local residents within incubator businesses.

3. To stimulate private commercial investments in East Tacoma, an area with high unemployment and poverty.

Keywords: best practices, social entrepreneurship

Contact NBIA

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