From the February 1999 issue of Startups

When John Spomar III signed a lease for the photo studio of his dreams, located in a Chicago business incubator, the commercial photographer wasn't exactly sure what to expect.

"All I knew was, I was tired of working from my parents' house and telling clients that they couldn't come to my `studio,' because we would have been meeting in my bedroom," says Spomar. "I needed some respectability, and the price was right."

After signing the lease the day before his 24th birthday, Spomar could now access a studio to die for. The 1,600-square-foot office even included a real darkroom--a definite step up from developing pictures in his parents' laundry room.

That was five years ago. Today Spomar, 29, is three months shy of graduating from the Chicago Southland Enterprise Center. With incubator experience in his arsenal, he feels well-equipped to leave the nest--and find success in the commercial photography business.

"Thanks to the incubator, I've been able to completely devote the past five years to building my business, and it's really paid off," says Spomar, whose company, John Spomar Productions Inc., is making a name for itself in the Chicago area. "I've increased my sales by 20 percent each year. Without the incubator, I wouldn't have come this far."

Spomar is part of a growing number of young entrepreneurs taking advantage of the incubators sprouting up all over the country. In many ways, such establishments are similar to their namesake. Within a protected, safe environment, start-up entrepreneurs get a cost-effective place to nurse their fledgling businesses until they're mature enough to take flight on their own.

While incubating their businesses, tenants have access to a number of benefits, including such services as secretarial and receptionist help, business and technical expertise, and assistance seeking financing. They also enjoy perks not available to bigger businesses, including office space at below-market rates, flexible lease agreements and opportunities to network with a variety of start-up entrepreneurs.


Julie Bawden Davis (JulieBawdenDavis@daviscomms.com.) specializes in homebased and small-business issues. She wishes there were an incubator for freelance writers so she'd have someone besides her cat to talk to all day.

Multiplying Like Fruit Flies

Incubators aren't new by any means, but the concept has taken years to finally catch on. Although the first incubator opened in 1959 in New York, by 1980, only 12 existed.

Today those numbers have skyrocketed: "There are 600 incubators in North America alone, and it's estimated there are 2,500 in the world," says Dinah Adkins, executive director of the National Business Incubation Association (NBIA). "North American incubators have created nearly 19,000 companies still in business, and more than 245,000 jobs. It's a real positive, considering [large] corporations have been downsizing every year for the last 10 years."

Except for restaurant and retail operations, most start-up businesses are well-suited for an incubator, says Adkins. "The main areas [incubators] cover include research and development, manufacturing and service."

Entrepreneurs can find support in one of three main types of incubators. NBIA statistics show that most incubators are mixed-use, meaning they serve a variety of industries. Technology incubators, which target clients involved in creating and commercializing new technologies, are another major category. Generally, these two types of incubators aim to bring outside investments into a particular geographic area to expand the tax base.

The third type involves a smaller number of incubators (only 5 percent), but it appears to be a fast-growing segment. Known as empowerment incubators, these mixed-use facilities focus on clients considered underprivileged and underserved, such as minorities and women. Such empowerment incubators are often situated in economically distressed areas in hopes of revitalizing the regions.

Incubators provide a win-win situation for both the entrepreneur and the community, says Sandy Bourne, president of the Pasadena Enterprise Center in Pasadena, California, a mixed-use, private, nonprofit incubator. The center is located in an urban area targeted for revitalization and helps local minority- and women-owned businesses.

"Not only do incubators provide entrepreneurs with critical expert help during their start-up phase, they also tend to produce companies that survive," says Bourne. "NBIA statistics show that more than 87 percent of incubator businesses are still open five years [after leaving the incubator]. The supportive environment and accessible expert services really give [entrepreneurs] the edge needed to thrive."

Marisol Barrios-Jordan is a case in point. She feels she owes much of her rapid success to her incubator experience at the Pasadena Enterprise Center. In less than a year, the 26-year-old publisher of Latina Bride Magazine has built her publication's circulation to 50,000.

"The incubator experience has been invaluable for us," says Barrios-Jordan, who started the magazine in December 1997. She and her partner, Michelle Nordblom Hottya, also 26, came up with the idea after planning their own weddings and discovering a lack of wedding information for Latina brides.

"We've taken advantage of the many consultants available at the incubator, whose services we wouldn't be able to afford on our own," Barrios-Jordan says. "We were even able to connect with a printer, who extended us credit for the first and second issues of the magazine."

We Are Family

Perhaps one of the biggest benefits of incubators is being part of what is essentially an entire entrepreneurial community, says Joel Wiggins, assistant director for the Austin Technology Incubator in Austin, Texas. "There's a synergy that develops within incubators. Everyone celebrates when someone gets a contract."

Barrios-Jordan has found the camaraderie at her incubator priceless. "Being with other minority business owners is wonderful, because we feed off each other and help each other through similar experiences," she explains. "We have monthly roundtable meetings, and we've even formed our own informal board of directors. We meet once a month to brainstorm."

It's this type of "doorway consulting" that makes incubators so valuable, says Sam Pruett, executive director of the Genesis Technology Incubator in Fayetteville, Arkansas. "Our experience has been that there is a huge feeling of isolation for many start-up businesses," he says. "The incubator keeps them connected to other entrepreneurs in similar situations."

Too Much Of A Good Thing?

Although the drawbacks to incubator life are minimal, as you might have guessed, there are a few. Perhaps the biggest is that you're expected to participate in various communal incubator events, which, though helpful, will take you away from your business. You must also be willing to accept help.

"You can't go in thinking you just want reduced rent and you don't need any assistance," says Bourne at the Pasadena Enterprise Center. "Regular meetings [on technical assistance and business counseling] are generally required."

The acceptance policy varies among incubators, but in general, they're looking for business ideas with potential and entrepreneurs who can make their visions realities. This often includes writing a solid business plan and submitting a personal financial statement.

Most incubators require tenants to graduate and move out after a specified period of time, usually after four or five years. Being booted from the nest may seem harsh, but if you've used your time there to the fullest, your business will be more than ready to spread its wings and fly unassisted to even greater heights.

The Choice Is Yours

Just as no two entrepreneurs are the same, no two incubators are alike, either. To choose the right home for your budding business, get answers to these questions:

  • What is the incubator's mission? Is management interested in revitalizing a certain area of the community, or do they want more out-of-state and international action? If import/export is your business, the latter incubator would be your best bet.
  • What experiences have other tenants had? Talk to other tenants about what it's like in the incubator. Their stories will speak volumes.
  • What's the incubator's track record? Ask for statistics. How many jobs has the incubator created? How many companies have survived outside the incubator's walls, and how well have they done over the long haul?
  • What are its policies and procedures? Are some services free of charge? How long can you stay? Is there a graduated rent structure as your firm matures? Does the incubator take royalties on ownership rights? If your business goes belly-up, can you leave easily?
  • Do you like the facilities? Do the office suites and amenities meet your needs? Are there regular seminars and business training programs?

Smart Move

Speak your mind.

To get the most from your incubator experience, keep the following in mind:

  • Don't be afraid to admit your goofs.
  • Ask a lot of questions.
  • Network with other incubator clients.

Write Away

For information about incubators near you, send an SASE to the NBIA, 20 E. Circle Dr., #190, Athens, OH 45701, or visit http://www.nbia.org.

Contact Sources

Austin Technology Incubator, (512) 305-0000, http://www.utexas.edu/depts/ic2/c2e/ati

Genesis Technology Incubator, (501) 575-7227, http://genesis.uark.edu

John Spomar Productions Inc., 1655 Union Ave., Chicago Heights, IL 60411, (708) 755-5510

Latina Bride Magazine, (626) 296-1249, http://www.latinabride.com

Pasadena Enterprise Center, pasentctr@ earthlink.net, http://www.pec-sbi.org