Winning the Incubator of the Year Award is a fitting conclusion to a three-year revitalization project that has transformed the Toronto Business Development Centre (TBDC) into one of Canada’s leading entrepreneurial support programs.
Sponsored by Toronto’s Economic Development Corporation (TEDCO), the TBDC opened in a 34,000-square-foot facility in downtown Toronto in 1990. After experiencing initial growth, the program became stagnate during the late 1990s. Client companies were content to remain in the safe confines of the incubator, and few were graduating into the community. During the same time, several members of the center’s board of directors resigned, and the general manager retired. It was time for change.
After recruiting additional board members and hiring Ed Hobbs as the new manager, the board conducted a series of visioning sessions to brainstorm ways to transform the incubator into a model of business incubation success. Using the experiences of other NBIA members as a guide, the TBDC set out to develop a program that would help start-up businesses progress from subsistence to independence.
Soon after Hobbs became TBDC general manager, he attended NBIA’s 1999 conference in Chicago, where he learned from the successes and failures of other business incubation programs. "We didn’t try to reinvent the wheel," Hobbs says. "NBIA has developed a template of success that guided us. We just had to customize it to meet our particular goals and limitations."
Developing a three-year graduation policy was first on the agenda. By progressively increasing rent and service fees and carefully monitoring progress toward developmental milestones, the incubator reached its goal of having clients evenly distributed between the first, second and third year of occupancy by 2002. The TBDC grants six-month extensions to companies that need more time under special circumstances, but at above-market rates — providing added incentive for clients to graduate on time.
The new graduation policy has benefited both the community and the graduates. Every incubator graduate during the last three years — 28 in all—has located its business in Toronto upon graduation, keeping both jobs and tax revenue in the city. The 11 companies that graduated from the TBDC in 2002 created 25 full-time and 150 part-time jobs and generated $1.8 million in annual sales last year — up from $170,000 when they entered the incubator. Today, the TBDC houses 31 client companies.
Much of this success can be attributed to the support and guidance of the incubator’s staff. "From survival to growth, the TBDC played a major role in the success of our business," says John McLachlan, president and CEO of PUSH Inc., a graphic design firm and TBDC graduate. "What was first a great place for cheap rent soon became a resource that would save my business. If it wasn’t for the hard work, patience, insight and resources the TBDC provided, I would probably be working for a place like mine rather than owning it."
McLachlan opened his business as a sole proprietor in a shared office within the incubator. Faced with early cash flow problems, he considered closing the company several times. But with the guidance of the incubator’s staff — and the use of its multi-media equipment — McLachlan won an account to develop in-store marketing materials for one of Canada’s leading photographic retail chains. PUSH was on its way. With a staff of six full-time employees and a virtual organization of contract designers, the firm today is recognized for its creativity and operational excellence.
Although the TBDC incubator program has met with great success in recent years, its board and management realized early on that the overhead expenses of operating a downtown facility would prohibit the program from breaking even with incubation activities alone. During its 1999 visioning sessions, they proposed two additional programs to support Toronto’s entrepreneurial climate and ensure the financial stability of the TBDC: entrepreneurial training and community outreach.
Through these programs, the TBDC advises prospective non-client entrepreneurs during the research, planning and start-up phases of business development and helps other nonprofit organizations develop and deliver entrepreneurial training. For example, TBDC currently is running a pilot entrepreneurial training program for people with disabilities, the first of its kind in the province.
These activities provide a constant stream of prospective clients for the incubator, raise the program’s visibility in the community and generate additional funds to help subsidize its incubation activities.
As a testament to its recent success, TEDCO has asked the TBDC to help create additional incubator locations throughout Toronto over the next two years, which is an exciting prospect for those who enjoy promoting entrepreneurship. "It’s exciting to see incubation work, to see graduates going out into the community," Hobbs says. "We’re watching the growth of the entrepreneurial climate, a few entrepreneurs at a time. Some might fail, but they’re out there trying."
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