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Your incubator and the local SBDC: soul mates? If the chemistry is right, you may find yourself in a long-term relationship

by Meredith Erlewine

December 1999

Business incubators, by definition, coordinate an arsenal of business assistance services for their clients. At least a portion of those resources come from outside the incubator's walls, and for good reason. An incubator manager's job list is too long as it is – why squander time and money duplicating existing services when, with a little courting, you may be able to arrange a marriage of convenience at its best?

It's little surprise that some U.S. incubators put their local SBDCs on the top of the phone list, since the centers' services fall right in step with the incubation model: training, counseling and information on small business management (if you're not familiar with the SBDC program, you may wish to see "The ABCs of SBDCs," below, before reading on). By mandate, the assistance is free, but that's not even the point. The advice clients can get there can be as good as gold. And that's just one benefit that can accrue to the incubator and its clients. Cooperative SBDC/incubator marketing often gets better results than individual efforts, co-location increases foot traffic and collaboration can reduce everyone's workload. SBDCs like the fact that incubators offer a feeder market to their programs and may even offer help for certain SBDC clients.

But while the subject of SBDC/incubator relationships is one incubator manager's favorite topic, some may roll their eyes. Why? The presence or success of a relationship between an incubator and its local SBDC relates most often to the people involved and their skills, personalities and dedication. Even though the relationship can be a lasting marriage for some, others have experienced an affair-turned-sour or simply never hit it off.

"There is an unbelievable variance in the quality of SBDC managers, which means there is a correlating variance in the quality of the technical assistance they provide," explains Hugh Sherman, assistant dean at Ohio University's College of Business in Athens, Ohio. That same quality variance applies to incubator programs and managers, too. "A top-notch SBDC will be less than impressed with an incubation program that doesn't embody our industry's best practices," says Dinah Adkins, NBIA executive director. But everyone agrees it's a relationship that should be cultivated – and that's the operative word. At first blush neither partner may be perfect, but that can change.

Background check

Sherman suggests first being certain the SBDC's offerings meet the needs of your incubator, and vice versa. SBDCs can differ from state to state and even across town, and an SBDC under the direction of one state or local director may be quite different with a changing of the guard.

Since all SBDCs are required to deliver a set of core services, all centers share some similarities. The Small Business Administration (SBA), which oversees the SBDC program, envisioned a network in which a budding entrepreneur in Manhattan can easily access the same core small business assistance as his or her counterpart on the Texas prairie. All SBDCs provide three core services:

  • Training via workshops and seminars. For example, the SBDC network in New York offered nearly 600 events in 1998 on topics such as business plan development, taxes, customer retention, marketing and human resources.
  • One-on-one counseling. "That really is the essential service of SBDCs everywhere," says Greg Higgins, state director of the Pennsylvania SBDC, headquartered at The Wharton School in Philadelphia.
  • Information provision on a short term basis for people who need answers to specific questions – a one-time customer who won't likely become a long-term consulting client. For example, at the SBDC of Southeast Ohio, about 40 percent of approximately 350 clients served last year were one-time inquiries of some sort. More than half of the center's clients were there for in-depth counseling.

"Also, we all operate under a set of standards that we establish," Higgins says. By law, all SBDCs must receive certification from the Association of Small Business Development Centers (ASBDC) by September of 2000. Each state program will be re-examined every four years, and must meet national standards such as educational level of staff, ability to do strategic planning and execution of a community needs assessment. "They [the certification committee members will] look not only at the lead center but at the subcenters, too, because that's an indication of how the state director is managing the program," says Johnnie Albertson, SBA associate administrator for the SBDC program in Washington, D.C. "It's a fairly rigorous set of standards."

According to many SBDC and incubation professionals alike, that's where the similarities among SBDCs end. "The personality [of the SBDC depends] on the clientele [it] is serving," Albertson says. She explains that all SBDCs must do a needs assessment of their state or region. After it is apparent what the needs of entrepreneurs are in that state or region, staff, training and resources are tailored to meet those needs. In turn, this affects hiring criteria for SBDC staff, which is perhaps the most critical factor in an incubator-SBDC relationship. The academic and business backgrounds of the staff – and how those skills complement the incubator staff's skill set – can make or break the relationship.

Qualifications for SBDC staff in each state are determined by the lead organization, the state director and local host or sponsors. For example, in a state with a large rural population that relies on farming and tourism dollars, an SBDC director's background may need to include expertise in agribusiness or hotel management. But in a state with a strong high-technology sector, the manager may come from a sophisticated technology background. To receive ASBDC certification, SBDC counselors must have a minimum of a bachelor's degree in business management or a related area, and it is preferred that they have advanced degrees and small business experience.

Bob Bernier, director of Nebraska's Business Development Center (the state's SBDC program), says that a state director's hiring practices and business philosophies can have a significant effect on the focus of the SBDCs in that state. "There are SBDCs that emphasize they want people with real small business experience, de-emphasizing the academic background." Bernier says. "I'm just the opposite – I prefer someone who has very solid professional credentials. I think that what the SBDC brings to the table, versus SCORE [the Service Corps of Retired Executives], for instance, is technical information such as statistical and financial analyses."

Many other factors, including funding, the goals of state and local sponsors, state directors' initiatives and community resources, will flavor an individual SBDC. Bernier says it's tough to analyze and compare SBDCs from state to state. In Nebraska, Bernier has chosen to emphasize consulting rather than training. "Other people in our state [can provide training] – community colleges, extension offices, etc. – but there aren't any other providers of direct one-on-one consulting," he says. "I decided to put our state's money where it's needed most, and that may be completely different in other areas of the country."

Bernier explains that in other states, such as Ohio, the state director may not have as much involvement in each center as he does. Whereas Bernier directly manages all of Nebraska's centers,

Ohio's SBDC network consists of centers created through a request for proposal (RFP) process. Each local host handles a large part of its individual center's program management, and Center directors report to both the local host and the state director.

Armed with the knowledge that SBDCs can differ so much, local due diligence is easy, Sherman says. First, talk to officials from the local chamber of commerce whose opinions you trust – see what they think of the SBDC's track record and the staff. "Then, of course, if you just have lunch with the [SBDC staff] person, you can get a good grasp of [his or her] understanding," he says.

Pat Hession, former manager of the Long Island High Technology Incubator and a member of NBIA's Board of Directors, suggests looking hard at what an SBDC has done for small businesses in its community. "Look at its track record and success." he says. "Ask yourself, 'Are they really friendly to small businesses or are they just bureaucrats? Are they there just because they can be funded or because they really have a mission to help small businesses and entrepreneurs?'"

Breaking the ice

You and your SBDC might already be old friends, but it's surprising how many incubators and SBDCs are not yet on a first-name basis. Ohio University's Innovation Center incubator in Athens and its College of Business-sponsored SBDC of Southeast Ohio were originally closely allied. For some years, however, they were located in the same building, just down the hall from each other and the SBDC director and incubator manager barely greeted each other in the hall, let alone worked together to help clients.

"At that time, the incubator was more technologically focused than it is now and the staff felt they had nothing to gain from the SBDC," says SBDC director Debra McBride. "Frankly, there's a perception that SBDCs only work with startups. But most SBDC staff nationwide have skills far beyond that and can and do work with existing businesses, too."

After the incubator went through some programmatic changes, current Director Linda Clark found herself in charge with no staff other than herself. Realizing that it wouldn't be possible to provide all of the services her clients needed, and not aware of the vicissitudes in relations between the incubator and the SBDC, Clark approached McBride for help.

"We just sat down and discussed each of our strengths, weaknesses and special skills," Clark says. The two agreed to refer clients to each other based on respective abilities. Now, when Clark shows a prospective client around the building, one of her first stops is the SBDC. "We decided it would be much more efficient to work together," she says.

If you see opportunities for collaboration with your local SBDC but aren't sure it can offer everything you're looking for, or if your clients are currently working with an SBDC but aren't getting everything they need, McBride suggests talking to the that center's director. "Most of the time, we can call in a colleague from another part of the state who has expertise in a particular area – even something as specialized as powder coat paint manufacturing processes," she says.

If incubator clients need high-octane help that goes beyond the SBDC's expertise, there's power in numbers. The incubator manager and SBDC director together could approach the state, county, city or other local sponsors to request more resources. "If you work together to make an approach, it shows a more united front and reduces fears of a duplication of efforts," McBride says.

Relationships that work

How, then, to arrange the marriage? Some incubators have rather intimate relationships with their local SBDCs – some even going so far as to move in together – while others carry on more informal relations. Regardless of the specifics, those incubators who do partner with their local SBDCs have leveraged a wide variety of resources.

In Lynn Haven, Fla., the Bay County Small Business Incubator (BCSBI) has been sharing space and staff with the Gulf Coast Community College SBDC since 1993. Both entities have their own budgets, and the SBDC is a tenant of BCSBI, a mixed-use facility with a focus on manufacturing and service companies. An SBDC on site means that one-on-one business assistance is readily available to incubator clients, and SBDC clients have hands-on exposure to the manufacturing industry.

Angela Partin, technology manager at the incubator and the SBDC, says one of the most recent benefits of the incubator-SBDC relationship came in the form of a grant from the SBA's Office of Veterans Affairs. The SBDC, in collaboration with the Florida Small Business Development Center Network, applied for and won one of four grants nationwide to develop a Veterans Business Outreach Center (VBOC). The VBOC, to be located in the incubator, will serve veterans in an eight-state region, providing a combination of online training and one-on-one counseling.

"Without the incubator's support, we wouldn't have been able to receive that grant," Partin says, explaining that the grant provides funds to develop and administer the program, but does not allow for the purchase of equipment, which the incubator will make available to the program. Partin says incubator clients naturally will benefit from having the VBOC on site. "We'll be developing online counseling and training, so there's going to be some new technology here," she says, in addition to the regional exposure the VBOC will bring to the SBDC and the incubator.

Sharing space and staff with the local SBDC made an incubation program in Sanford, Fla., possible. The Central Florida Business Incubation Center (CFBIC) hosts the Seminole Community College SBDC; they are soon to be joined by the new Seminole Technology Business Incubation Center. The incubator and SBDC share the same facilities and staff.

"The SBDC was the catalyst for the formation of these incubators," says Wayne Hardy, coordinator of small business development for Seminole Community College and director of the incubators and the SBDC. "If I couldn't have brought together funding from several different pots of money, [CFBIC] couldn't have existed because no single entity could provide the total subsidy required," he says. "Leveraging is the key word."

For Peggy Plont, manager of the Economic Development Center (EDC) of St. Charles County in St. Charles, Mo., the addition of an SBDC to the facility means that she can serve almost any entrepreneur who walks through the EDC's doors.

As manager of the EDC, Plont is responsible for the physical management of everything in the building – the EDC, the incubator and now the SBDC, each with its own staff. For incubator clients, she serves as a point of referral for technical assistance. "I used to have to refer my clients to outside sources," Plont says. "Never before have I been able to refer them to someone on site."

The person she refers them to is Mark Tiemann, project specialist with the Missouri SBDC. With a bachelor's degree in business, an associate's degree in computer science and eight years of experience as president and partner of an information systems consulting firm, Tiemann says he can offer "been there, done that advice" to incubator and SBDC clients. He handles questions relating to cash flow, general management, sales, marketing and computer science. When clients have questions about advertising or manufacturing, he refers them to one of two SBDC project specialists in other parts of the county who have deep experience in those areas. "That's when we do joint counseling," Tiemann says.

Co-habitation isn't necessary for a good relationship – many incubators call on their SBDCs on an as-needed basis, and vice versa. The Long Island High Technology Incubator has long looked to the local SBDC to provide technical assistance to clients.

During Hession's many years at the incubator, he worked closely with the SBDC at the State University of New York at Stony Brook. He says the incubator's relationship with the SBDC and its director, Judith McEvoy, was a success because both he and McEvoy were equally committed to doing everything they could to help their clients. Hession says SBDC staff were always well aware of all of the resources available in the area. When he sent a client to McEvoy for assistance, he knew that if she didn't have the answer, she would call on someone who did.

"This SBDC is particularly active on Long Island with other service providers, including the Long Island Software Network and the Long Island Forum for Technology," says McEvoy, who prides herself in keeping abreast of all small-business-related resources in the area. "We are the hub of a wheel. I don't think that there is anything that we've never heard of or a connection that we can't make."

Misconceptions

There has long been the assumption among some incubation professionals that SBDCs are only able to help with the very basics of starting a business. That sometimes may be the case, but some SBDCs can provide rather advanced technical assistance or link clients to outside experts – much like incubators often do.

An SBDC is probably not normally the place to send a biomedical company with $50 million in sales looking for an infusion of capital. But you might be surprised to know the size – both in employees and revenues – of firms that look to SBDCs for all kinds of assistance. Shoe brush manufacturer Premier Brush, a client of the Bay County Small Business Incubator and Gulf Coast Community College SBDC, has contracts with the U.S. Army and Air Force, Wal-Mart and Redwing Shoes and produces more than a million brushes a year. "I know the industry," says Premier Brush CEO and owner Al Stopka. "But we were computer illiterate, and [the SBDC staff was] our source." Already, SBDC staff has helped the company computerize its accounting department; the inventory and shipping departments are next. Additionally, with the help of the staff's desktop publishing skills, the company is producing its first catalog. "The computer help is very, very important, and they're very good at it," Stopka says.

Hardy notes that nationally there is a push for SBDCs to provide more in-depth service – in the form of long-term, complex counseling to clients. "I think that dovetails very nicely with incubation," he says. "What SBDCs are now about is spending a reasonable amount of time with clients and producing quantifiable results."

The perception that SBDCs simply must track how many people walk through their doors to maintain their funding is not the case. "As dollars shrink, we have to be able to tell our stories much better. We use public dollars, and we have to find out what the return is. The only way to do that is to look at the level of impact," says Karen Shauri, associate state director for the Ohio Small Business Development Center. In addition to measuring the total number and types of clients the centers serve each year, SBDCs track revenue growth, job creation, business starts and how many loans and government contracts clients obtain.

Other historical worries, such as fear of losing incubator clients to SBDCs or vice-versa, are unfounded, say parties from both sides of the fence. "There certainly seems to be more turf protection than there needs to be. With limited resources available to both, incubator managers and SBDC directors should be looking for opportunities for collaboration," says Dinah Adkins. "For instance, if a community's SBDC offers a business plan writing course, the incubator very likely could be referring its early-stage applicants there. The incubator should not be replicating programs already offered by SBDCs and other community resources. It should be building on those resources."

But sometimes the misconceptions are the reality. Not every SBDC will have what an incubator needs. When that is the case, says Jim Currie, vice president for Ohio State University's Science and Technology Campus in Columbus, Ohio, "be sure to understand and represent the type of service [clients] will receive, knowing the resources and limitations of that particular SBDC," he says. "The referrals you make are important to your client and to your credibility."

Currie also cautions against getting involved in an arrangement where you are required by funders to send clients to a partnering SBDC. "Sponsors or funders may perceive the SBDC as being capable of more than you know it to be capable of from practical experience," Currie says. He suggests approaching your local SBDC the same way you would any potential service provider – with your clients' best interests in mind.

Even if you don't see opportunities for partnerships with your local SBDC now, there are endless possibilities for the future; unlike many government programs, flexibility is inherent in the SBDC program's mission. "What normally happens when the federal government funds something is that they send a format out across the country for how the program must be carried out," Johnnie Albertson says. "What [the SBA does] is say [to each state director], 'Do this in the way it needs to be done in your state.' We encourage state directors to tie into the economic development agenda of the state."

With so many SBDCs and incubators located at universities, the two might sometimes have to fight their way through university politics and culture clashes, especially if the incubator resides with a different department than the SBDC. University departments don't usually have to coordinate their goals, funding, research and what not. They may be loathe to start doing so for the sake of an incubator-SBDC relationship. If the directors of the two programs regard working in tandem as valuable, though, they can approach their departments with the benefits and solutions of doing so.

"Sell them, as you would a sponsor or a corporate mentor you're trying to attract," Adkins says.

Hardy agrees that the presence of institutional rivalry or distrust between incubators and SBDCs is unnecessary and unfounded. "The programs blend very nicely. More and more, SBDCs are recognizing that they need to be involved with incubators," he says. "And why would an incubator manager walk away from all this free help?"

The ABCs of SBDCs

Through the Small Business Development Center (SBDC) program, the Small Business Administration (SBA) works to achieve its mission of providing management assistance to current and prospective small business owners in every part of the United States. In each state a lead organization manages the program, which is carried out at nearly 1,000 service locations in cooperation with the private sector, the educational community and local governments.

Educational institutions make up the majority of lead organizations. State SBDC programs that do not have an educational institution as their lead organization are required to make educational institutions their primary service providers. SBDC staff size varies, but can include a director, business counselors, volunteers and part-time personnel, with the makeup of the staff depending on funding and community needs.

SBDCs are mandated to provide information and assistance to any client who comes asking for information about starting or managing a small business. All SBDCs provide three core services: training, via workshops and seminars; one-on-one consulting; and information on a short-term basis. Through those core activities, SBDCs assist clients with business plan development, financial projections, loan applications, market research, recordkeeping, cash management, marketing, financial management, Small Business Innovation Research (SBIR) grant applications and more.

SBDCs operate on a walk-in basis, at least for the first point of contact. Clients range from people who need an answer to a one-time question, such as "What kind of license do I need to vend coffee?” to clients who return for scheduled sessions with SBDC counselors over a period of months or years.

Fifty percent or less of each state's SBDC program funding comes from the SBA, with one or more sponsors (such as legislatures, private sector foundations, state and local Chambers of Commerce, EDCs and universities) providing the rest. The federal funds are awarded on a population formula basis.

While an SBDC looks strikingly similar to an incubator without walls, there are some fundamental differences between SBDCs and incubators. SBDCs cannot screen their clients – it is their mission to help anyone who walks through their doors. And, while an incubator may choose to serve only one type of startup, such as software companies or specialty food manufacturers, SBDCs help all types of businesses.—M.E.

Keywords: business assistance provider, coaching clients, partnerships -- organizational/corporate, seminars and training programs, service provider network

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