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Australian incubator serves as role model to start-up clients

By Mary Jo Milillo

December 2008

The Darebin Enterprise Centre Ltd. accepted its first on-site client in January 1998, when the unemployment rate in Alphington, Victoria, Australia, was nearly 14 percent. One of Victoria’s first business incubators, DECL initially sought to create self-employment for people who needed jobs. As the unemployment rate dropped, it shifted its emphasis from individual enterprises to start-up companies looking to expand their businesses and employ more people.

Located at a spot once occupied by a dump and a quarry, DECL now resembles an industrial park complex with services and facilities for light manufacturing, service and horticultural clients. The incubator assists nearly 40 in-house clients in Alphington and 81 businesses at other locations, including more than 30 off-site indigenous businesses across Victoria, Tasmania and the Northern Territory.

DECL’s own growth and financial independence corresponds with the success of the small businesses it assists. As a nonprofit business sponsored by the city of Darebin, the incubator began operations with $500,000 of government funding.

After 15 months of operation, DECL became self-sufficient and has remained so with several revenue sources. On-site clients pay rent (license fees) and some incubator clients pay for services such as access to broadband, phone, copier, bookkeeping, administrative, marketing and business planning.

DECL also charges Aboriginal communities consultancy fees to identify business opportunities; undertake feasibility studies; develop business plans; and support business roll-out, development and growth through its incubation program. Additionally, DECL contracts with state and federal governments to provide services to indigenous businesses. Now the incubator even operates with a surplus; in fiscal year 2006-07, its total revenue was about US$1 million.

In recognition of these accomplishments, NBIA presented DECL with the 2008 Incubator of the Year award in the nontechnology category during the 22nd International Conference on Business Incubation in San Antonio. Read on to learn more about the program, which also received Australia’s Incubator of the Year award in 2001 and 2007.

Moving right along

From the beginning, DECL has shifted its focus when circumstances warrant. In the process, it has managed to adapt, expand, prosper and serve as a role model for the businesses it assists.

One shift involved a change in emphasis from Darebin’s declining manufacturing industry to creative arts, media, information technology and food businesses. In fact, the Centre plans to create a new kitchen incubator to provide facilities and advice to support the growing fields of food processing, handling and preparation.

Other expansion plans include a new 11,000-square-foot office building to replace an existing structure less than half that size. The new facility could house as many as 35 businesses, meeting space, training rooms, flexible common areas and the Centre’s staff.

When DECL opened in 1997, CEO Bob Waite was its only employee. Now, he says, the program needs more office space to house the 15 employees hired since then. “The current building has lived just about long enough, and further repairs can’t really be justified,” Waite says.

Providing business opportunities for indigenous entrepreneurs

For the last two years, DECL has worked to increase new business opportunities with the country’s indigenous population in areas such as pottery, forestry and tourism through its Indigenous Business Incubator initiative. In 2007, the Centre established three indigenous business hubs: in Darwin, Alice Springs and Katherine. Each hub operates independently, and indigenous people with diverse business and communication skills coordinate each site.

After a slow start, the hubs now serve about 30 clients total, and have introduced many more people in the intricacies of operating a business. Despite the distance between the Northern Territory hubs and the Alphington site, hub coordinators keep in close contact with the Centre’s staff. As clients succeed, they tell others of their positive experiences. This word-of-mouth advertising encourages more indigenous people to consider the possibility of business ownership.

Alice Springs’ hub coordinator Robbie Benson says the greatest lesson people in the program have learned is that they are capable of running a business and doing it well. “As people rely less on welfare, they realize their lives actually become simpler and more rewarding,” Benson says.

However, an obstacle facing many potential indigenous entrepreneurs is a lack of financial assets. To help alleviate funding issues, the National Australia Bank – with DECL as its agent – began a 12-month microenterprise loan pilot program for indigenous businesses connected with or supported by the hubs in 2007. The loan program was designed to arrange unsecured loans for 25 businesses for as much as $20,000 with low interest rates.

An environmental awareness

Another direction DECL is pursuing is involvement in the “green movement.” Besides implementing new measures to cut carbon emissions at its own site, the Centre is developing and promoting businesses dealing with environmental concerns.

Like people and organizations around the world, DECL is aware of the need to operate in a green fashion. Its board believes it is essential to implement sound environmental practices at its own facilities to attract new and recently developed environmental start-ups – an emerging market around the world.

To reduce its own carbon emissions, the Centre recycles paper and toner cartridges and monitors electricity and water use. “It would be a contradiction to encourage new businesses in environmental technology if we have businesses on site that don’t have sound environmental practices,” says Waite.

Three environmentally focused businesses became on-site clients so they could grow their companies. One of the businesses, Hydro-Terra, sells and rents equipment to pump, monitor or clean up contaminated groundwater or soil. Managing Director Richard Campbell says the company wants to develop new solutions to water conservation and hopes to apply for patents for its own inventions. The company’s move to DECL has allowed the firm to promote its business and grow from a staff of two people to seven.

Over the past 10 years, DECL has performed in a manner that clients can emulate. In the areas of financial self-sufficiency, staff and facilities’ growth, new market endeavors, and sound business practices, DECL is leading the way for its clients to share in its success.

Incubator of the Year, Nontechnology category

Darebin Enterprise Centre
2 Wingrove Street
Alphington, Victoria, Australia
www.decl.com.au

Year established: 1997

Size: 50,750 square feet, including office space and workshop/light industrial space

Focus: Darebin Enterprise Centre assists clients with business development and growth through its Small Business Incubator and consultancy services. DECL directs its business support and mentoring services to indigenous (Aboriginal) business development.

Incubator clients: 37 in-house clients; 81 remote/virtual indigenous incubator clients; 65 clients in small business mentoring programs

Incubator graduates: 57 Organizational structure: DECL is a nonprofit company sponsored by the city of Darebin.

Mission: To assist long-term economic growth of new and existing businesses as a way to increase sustainable employment in its region and beyond. With its Indigenous Business Incubator (www.indigenousbusinessincubator.com.au), DECL provides entrepreneurs in the Northern Territory, Tasmania and Victoria with business incubation services.

Goals: To add value to licensee (client) businesses; the local economy; and indigenous (Aboriginal) businesses.

Keywords: best practices, green entrepreneurship, international incubation, social entrepreneurship

Contact NBIA

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Fax: (740) 593-1996
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Athens, OH 45701-1565
info@nbia.org