Sharing the Sandbox: How SBDCs & business incubators can work together

1. Sharing the Sandbox:How SBDCs & business incubators can work together Association of Small Business Development Centers Annual Conference San Antonio, TX September 22, 2010 Presented by Harry Blecker and Sandra Cochrane, MI-SBTDC

2. Goals for today’s session • Understand what business incubation is, what it isn’t, and some industry best practices • Discover how to link local/state SBDCs with physical and virtual incubators/accelerators • Michigan Examples

3. Clarification • Incubator: the physical incubator facility and the programs it offers to its clients via the incubator management • Client company: the individual company being served, either by the incubator or by the SBDC • SBDCs should work with both the incubator (its management) as well as the companies inside the incubator. They are two different clients.

4. Business incubators are… • programs designed to accelerate the successful development of entrepreneurial companies • through an array of business support resources and services, • developed or orchestrated by incubator management, • and offered both in the incubator and through its network of contacts.

5. Business incubators do… Does your SBDC do these things? • Help with business basics • Networking activities • Marketing assistance • Help with financial management • Access to capital • Links to university/corporate partners • Business training programs • Mentoring and coaching Source: 2006 State of the Business Incubation Industry

6. Successful incubation programs • Integration into larger community • Part of overall community economic development plan • Community/sponsor support for mission and operations • An effective team • Professional management with adequate pay • Network of business advisors, mentors and consultants • Professionalism • Emphasizes client assistance • Models good business practices • Strives for financial sustainability • Measures effectiveness and impact regularly Source: NBIA Principles and Best Practices of Business Incubation

7. Typical incubation programs Source: 2006 State of the Business Incubation Industry

8. Incubation program sponsors…similar to SBDCs Source: 2006 State of the Business Incubation Industry

9. Typical Incubator Services • Regular coaching (improving leadership and “people” skills) • Regular counseling (addressing traditional business subjects like financing, marketing, etc.) • Entrepreneurial training • Service provider network • Mentoring services

10. Incubation Desired Outcomes • Tax base enhancement • Employment • Retain companies in communities • Access to financing • Graduation into community/state

11. Business incubation works…similar to SBDCs • Return on investment • $1 public investment in incubator = $30 in local tax revenue • Business retention • 84% of graduates stay in community • Increased likelihood of business success • 87% of incubator graduates stay in business Source: Business Incubation Works, 1997; 2006 State of the Business Incubation Industry

12. What is your experience with incubators?

13. Goals for today’s session • Understand what business incubation is, what it isn’t, and some industry best practices • Discover how to link local/state SBDCs with physical and virtual incubators/accelerators • Michigan Examples

14. Incubators and SBDCs • Small Business Development Center • By law, works with any small company that asks • Counselors typically have many clients in a revolving portfolio • Works with small businesses at any stage • Can maintain client relationship indefinitely • Business incubation program • Works with select, viable start-up and early-stage companies • Incubator manager has small number of client companies at one time • Offers targeted, specific business assistance services • Requires companies to graduate

15. Common incubator perceptions about SBDCs • SBDCs only work with start-ups • SBDCs can only help with business basics—they can’t dive deep • SBDCs don’t have the ability to work with high-tech companies • SBDCs will “steal” my client companies • SBDCs will make my clients wait too long for services • SBDCs only care about “making their numbers” • SBDCs expect me to pay them for serving my clients

16. SBDCs can provide incubator companies • Periodic coaching An additional coach to provide another point of view or to assist with a particular issue the entrepreneur is facing • Focused counseling An additional resource brought in on an as-needed basis (succession planning, marketing plan, investor pitch prep) • Entrepreneurial training Bringing standard SBDC training programs into the incubator (QuickBooks, business plan development, market research, marketing) • Market Research Provide information to assist company in its growth

17. SBDCs can provide incubators • Service provider network Help incubators expand their network by providing referrals to a broader range of consultants and support firms • Specialized SBDC services Tech Team, Growth Group, Technology Roadmapping, Incubation Liaison, Manufacturing Assistance Team • Additional support services Assist in business plan competition judging, admission screening panel, participation in quarterly client meetings

18. WIIFM…SBDCs? • Access to high potential, pre-screened client companies (greater economic impact) • Referral partner (rejected incubator applicants) • Larger community network • Stronger stakeholder support • Access to specialized expertise/resources • Possible revenue source (SMIC example to come later) • Can you think of other benefits….?

19. Common partnering activities • Co-location (anchor tenant, office hours, space available upon request) • Filling service gaps (import/export, government contracting, banking relationships) • Client sharing (cross-referrals, client quarterly meetings, regular conversations) • Co-marketing (co-sponsoring, co-promotion, co-branded materials)

20. Goals for today’s session • Understand what business incubation is, what it isn’t, and some industry best practices • Discover how to link local/state SBDCs with physical and virtual incubators/accelerators • Michigan Examples

21. Michigan examples • Incubator Liaison…Sandra • One Tech Consultant with extensive incubation experience • Treat incubators just like client companies (sign 641s) and counsel them (about 25% of time) • Serves on the Board of Directors of the National Business Incubation Association and the Michigan Business Incubator Association

22. Michigan examples • Southwest Michigan Innovation Center, Kalamazoo • Incubator just getting launched (limited staff) • Pfizer layoffs (2,000 R&D scientists) • 12 companies formed • Initial business plans for Pfizer start-ups • SBDC office in SMIC • Participation in all quarterly client meetings

23. Michigan examples • TechTown, Detroit • Devastation of the auto industry • Kauffman Foundation and New Economy Initiative for SE MI grants ($9.25M) • Goal: 1,200 new businesses in 3 years • FastTrac to the Future events (curbside consulting and session presentations) • FastTrac training programs (facilitators and guest speakers) • SBTDC office in TechTown staffed on scheduled days

24. Michigan examples • Automation Alley • Technology assessments of portfolio companies on a regular basis (snapshot in time) • SBTDC office in Automation Alley staffed on scheduled days • Kettering University-Tech Works/Oak Business Center • SBTDC Regional office assists campus-based tenants with traditional services. • Provides circuit rider to city-owned facility on PT basis

25. Michigan examples • Accelerating Michigan Entrepreneurs-AME…Harry • Virtual Incubator • State of Michigan, Michigan Economic Development Corporation funded • MI-SBTDC managed with one SBTDC consultant • Reach existing companies who by choice or necessity have accessibility issues/challenges • Provides traditional business consulting, new coaching services, and client data mgmt. with web portal

26. Michigan examples • Macomb County Incubator, Sterling Heights • SBTDC Assisted Incubator with • Feasibility assessment • Floorplan design • Financial model • EDA grant assistance

27. Examples from other states • Baton Rouge, LA: Louisiana Business & Technology Center became a regional SBTDC office • Grand Junction, CO: Business Incubator Center became a local SBDC office • Lynn Haven, FL: The director of the incubator is also the director of the Small Business Development Center • Carbondale, IL: SBDC co-locates within the Small Business Incubator • Green Bay, WI: SBDC co-locates within the Advance Business Center • Guyman, OK: Guymon Business Enterprise Center provides meeting rooms and hosts SBDC events • Birmingham, AL: Bessemer Business Incubation System partners with SBDC for training workshops

28. Getting involved with an incubator • Get to know the incubation program and determine if SBDC has a skill set to offer that the incubator could use (do market research) • Make sure SBDC really has the people and skills (walk the talk!) • Build a mutually beneficial relationship with the incubator (everybody wins) • Ask how you can help (offer to provide support to the incubator and/or training events for incubator clients—perhaps even tailored to them) • Be prepared to be in it for the long haul (if at first you don’t succeed….)

29. Thank you!Questions? Harry Blecker Director of AME MI-SBTDC bleckerh@gvsu.edu 810.347.2046 Sandra Cochrane Technology Business Consultant MI-SBTDC sandra_cochrane@gvsu.edu 269.267.5489