Russ Steele
I was looking for an other document in my Library, when I can across a report purchased long ago and put on my library shelf: Business Incubation Works. From the stiffness of the pages, it looks like I never even read the report after buying it. It was published in 1997, and may have been on the shelf for a while.
From part of the Executive Summary:
Business incubators are helping build healthy, lasting businesses and they are doing it for low cost and with a good return on investment to supporters. A very high percentage of incubated companies remains in their communities, confirming the goal of business incubators to build the business base and potential for job creation in their regions. This study - the most comprehensive one on business incubation to date - was conducted under a grant from the Economic Development Administration by the University of Michigan, National Business Incubation Association, Ohio University, and Southern Technology Council. Using a combination of surveys, focus groups, stakeholder panels, and regional macroeconomic analysis, the study found that:
• Business incubation programs help companies create many new jobs. In 1996 incubators reported, on average, that their firms had created 468 direct and 702 total jobs.
• Business incubation programs create new jobs for a low subsidy cost and a substantial return on investment. The estimated public subsidy cost per job created was $1,109.
• Incubator companies experience very healthy growth. For example the average annual growth in sales per firm was $239,535.
• Business incubation programs produce graduate firms with high survival rates - a reported 87 percent of all graduates are still in business.
• Most firms that graduate from business incubators remain in their local communities - an average of 84 percent.
• Most incubator firms provide employee benefits.
• Incubation programs contribute to their client companies' success and expand community entrepreneurial resources.
• Business incubation programs improve local community image.
• EDA-funded incubators perform better than or equal to non-EDA funded counterparts.
Macroeconomic research revealed wider impacts - in terms of wages, direct and indirect jobs, and local tax revenues - that incubator clients and graduates can have on their communities. Although the number of companies used in this part of the analysis was relatively small, the data revealed that incubator firms studied returned considerably more dollars to a community than it costs to subsidize the business incubator program. [The rest of the summary deals with the conduct of the study]
Several cautions. This study was done in the go-go 90s and covered larger communities than we have in Western Nevada County. It would be good to read and study the whole report to see what lessons we can apply our local community.
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