`Incubators' help nurture good ideas into profitable businesses. Entrepreneurs pay normal rent, but management advice is free
In August, Amy Bohl moved her business out of the office she had in her parents' home and into a building with seven other fledgling firms. There at Matternville Center in Port Matilda, Pa., near Pennsylvania State University, her soft-sculpture hat company, called Rowdy Sailors Hats, has ``expanded much more than it could have in my parents' basement,'' she says. Now, Ms. Bohl is talking about adding children's clothing and children's books.Skip to next paragraph
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Matternville Center, sponsored by the city's Industrial Development Corporation, is one of about 235 small-business ``incubators'' that have popped up in American cities over the past 15 years. These incubators are havens to a huge variety of entrepreneurs.
In California, the Santa Ana Business Enterprise Center, one of the first of its kind in that state, recently opened its doors to seven Orange County firms, ranging from a drain equipment company to a uniform manufacturer to a state-of-the-art communications firm, says manager Daniel Mejia.
While many business incubators are simply real estate developments, and others are extensions of a company's or university's research-and-development department, many others are nonprofit centers, set up to encourage the growth of small businesses and the creation of local jobs.
``There are a lot of people with really good ideas, but without a clue as to how to run a business,'' says Jack LeClaire, vice-president at the Center for Business Innovation in Kansas City, Mo.
Centers like his provide ambitious beginners with market-priced rent, but throw in a lot of things for no extra charge, like management and consulting help and access to phones, secretaries, computers, and copying machines. These resources are costly and often out of the reach of many new companies, says Edward Jepson, managing director of Matternville Center.
``[Matternville] certainly has made breaking into the market much easier,'' Bohl says. She has spent many hours with the center's consultants, using its resources, and talking with her ``hallmates'' about their similar struggles in launching a new business.
Often, incubators draw on the resources of the Service Corps of Retired Executives, a group of retired business executives and owners who give their time and expertise to new as well as experienced business owners. SCORE, sponsored by the United States Small Business Administration, has offices in most states.
Since a study by the Small Business Administration in 1985 showed that firms with one to 19 employees create most of the new jobs, small businesses have been seen as key players in competitiveness.
Many states are now working to stimulate this resource. In 1983, for example, the Missouri legislature created the Missouri Corporation for Science and Technology ``to bring in start-ups and promote technology,'' says Mr. LeClaire at the Center for Business Innovation, which is one of the four incubators created by this bill the following year. Also this year, the Texas Legislature established the Texas Small Business Incubator Fund.
Most centers are concentrated in Pennsylvania, Illinois, Michigan, and New York, says David Allen, assistant professor of business administration at the College of Business Administration at Pennsylvania State University, and a longtime researcher of national incubators. Pennsylvania alone has almost 40.