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The business incubator as an anchoring economic institution

by Dennis E. Powell

April/May 2014

In some communities, the local business incubator is such an institution that few local companies haven’t been aided by it in one way or another. Such a community is the western Colorado city of Grand Junction.

Located at the confluence of the Colorado and Gunnison rivers – the “junction” in the city’s name – the area has become the U.S. capital of mountain biking. Centered in an area of vast oil shale reserves, the region experienced a boom in the 1970s when geopolitics threatened to drive up the price of oil to the point where recovering petroleum from the shale would become economically feasible. But in 1982 Exxon, which owns oil shale rights in the region, decided to suspend its development operations, which were headquartered in Grand Junction. Having lost its primary economic engine, the community looked for more stable and diverse economic underpinnings. Tourism and agriculture came into sharper focus – as did the development of local businesses – which led to the development of a business incubator.

“Within Mesa County, very few people go into business without talking to us,” said Jon Maraschin, executive director of the Grand Junction Business Incubator, NBIA’s 2013 Dinah Adkins Incubator of the Year in the General and Special Focus category. Being chosen for the honor is a rare event. But in BIC’s case, it underlines the effect it has had on the city and its surrounding area – because this is the second time the incubator has won the award. Under the name “Western Colorado Business Development Center,” it was the 1996 NBIA Incubator of the Year.

When it won the earlier award, it was already a well-established program. “We began accepting clients in 1987,” said Maraschin. “It’s amazing looking back on it. It’s phenomenal.” The incubator is headquartered on a 46-acre campus, but its activities extend far beyond that site. Over its more than a quarter century, it has worked with hundreds of existing businesses, providing both long-term advice and emergency triage. In 2013, it opened a satellite office in the civic center in nearby Fruita, Colo.

With strong ties to local agricultural extension, the local and state health departments, and community leaders, as well as its own loan funds and an on-site SBDC, “we’re kind of a one-stop shop,” Maraschin noted. “For instance, we work with 70 to 80 percent of the food businesses here.” The program has a 2500-square-foot commercial kitchen, but works also with food service companies located away from the physical incubator.

“We do a lot for them,” said Maraschin. “I talk about the basic blocking and tackling – basic business strategy, business plan. I’m a recovering banker, so I talk to businesses about their financial situation.”

A would-be client is assigned a counselor with special knowledge of the kind of business the entrepreneur has or hopes to have. If the business could benefit from programs offered by outside agencies, these are explored. Some businesses are resident at BIC, while others take advantage of the incubator’s affiliate program.

Still others turn to the BIC in emergencies, as the specialty grocer who had plenty of customers but no money with which to stock the shelves. BIC helped arrange financing – and counseling – to help the grocer prevent a repetition of the crisis.

BIC has a core staff of 10 to serve a region that is home to about 150,000 people. “Everybody on our staff does counseling,” Maraschin said. “We have about 20 volunteer counselors or coaches as well.” The region has no shortage of people with the entrepreneurial urge, he says, so much of his program’s role is teaching. “Because we have loan funds,” he explained, “we’re in the position where if we loan businesses money, we can require them to take counseling and so on. Because of that, we have only 4 percent loses despite high risk. I think it’s a great practice.” A number of the staff members have more than 15 years of experience in business incubation.

In addition to business space and services and extensive business counseling services, BIC administers the Mesa County Enterprise Zone, which certifies donors as well as businesses opening up shop in the zone, for which tax advantages are available. Primarily through the on-site SBDC, it offers numerous classes in a range of business-related topics at little or no cost. The program holds special events to showcase client companies and their products, and provides promotional assistance to client companies.

Job creation and retention data are tracked through the associated SBDC, which also handles training activities, as well as tracking resident client job creation and revenue generation. In 2013, the latest year for which complete data were available, the SBCD provided more than 1,300 hours of business counseling to clients who created or retained 232 jobs, caused $11.8 million in capital formation, $900,000 in private contracts, and $1.6 million in prime Department of Defense contracts. Incubator resident clients employed 152 people and generated $7.5 million in revenue.

The main facility was given to the community by the Department of Energy. BIC pays $1 per year in rent for it. In addition to rent charged to incubator clients, the program is financed by its loan fund, from which it draws about a quarter of its revenue; income from training events; and about 10 percent from corporate funding – which largely comes from banks, CPA firms, and related industries. “They sponsor us proudly,” Maraschin said. The incubator also enjoys an SBDC grant that is matched by the City of Grand Junction and Mesa County.

Administered by the BIC, the Mesa County Loan Fund provides revolving loans to Mesa County businesses and might better be called a “loan funnel” – it has contracted with the county to handle the Office of Economic Development and International Trade, Community Development Block Grant funding, funds from the cities of Grand Junction and Fruita, as well as the incubator’s revolving loan funds, Colorado Women’s Foundation funding, and private donations. It has made about 390 loans totaling nearly $20 million.

Beyond that, BIC informally networks with other programs in the broader region. “We collaborate with others down to Santa Fe,” said Maraschin. “We’re familiar with everyone and they all step up to offer assistance and advice.” For instance, some other incubators have special expertise in intellectual property lacking in a more generalized, mixed-use incubator. Maraschin and some of his leadership team also often assist communities outside his immediate area in doing incubator feasibility studies.

The key to BIC’s success, says Maraschin, is strong partnerships, with everyone pulling in the same direction. “City and county leaders get together with us at least monthly,” he said. “The community is behind what we’re doing. We’re part of the fabric of the community. And everybody operates as all on the same team – it doesn’t matter who gets credit.

“We’ve been fortunate enough to have a board of directors who get it. They aren’t here to take credit, they are here to help the entrepreneurs.”

Business Incubator Center

Dinah Adkins Incubator of the Year, General and Special Focus

Business Incubator Center
2591 Legacy Way
Grand Junction, CO 81503

Year established: 1987

Incubator size: 60,000 square feet, 35,000 square feet leasable space

Incubator clients: 60 resident, many more affiliated or otherwise aided

Incubator graduates: 263

Organizational structure: Operated by the Western Colorado Business Development Corp., the Business Incubator Center brings together a consortium of Grand Junction and Mesa County officials, the local chamber, local business leaders and Colorado Mesa University. In 26 years of operation it has been an extremely stable program; its current executive director is only the fourth person to hold the post.

Mission statement: The Business Incubator Center is a results-driven provider of educational services and business tools in support of the launch, growth, stabilization and long-term success of business enterprises in Mesa County, Colo., and the surrounding region.

Clients of the Grand Junction Business Incubator in Grand Junction, Colo.

Keywords: Incubator management, NBIA programs, client services – general

Contact NBIA

Phone: (740) 593-4331
Fax: (740) 593-1996
PO Box 959
Athens, OH 45701-1565