'Incubators' nurture a firm's growth

October 21, 1991|By Jane Applegate | Jane Applegate,Los Angeles Times Syndicate

Surrounded by acres of lush Iowa corn fields, the Golden Circle Business Center is home to 26 growing businesses.

On the campus of Des Moines Area Community College in Ankeny, the sprawling, utilitarian complex -- known as a business "incubator" -- provides space and support services for entrepreneurs making everything from sausage to electronic elbows.

Last year, the tenants collectively brought in $6 million in sales and employed 80 people, according to Executive Director Wayne Haines. The center is also home to Drake University's Small Business Development Center and a Small Business Administration contract procurement center.

Dan Truckenmiller moved his Test Inc. operations from his basement to the center in February 1990. Today, his growing business provides safety-training programs and a variety of services for the transportation industry.

"Someone at the Chamber of Commerce told me there was an incubator up at the college," Truckenmiller recalled. "I said, 'I don't know what the heck an incubator is.' "

Many small-business owners still don't know how much support can be provided by an incubator, a complex for small businesses that also provides support services. Unlike an office suite with a shared receptionist, a true incubator provides fledgling

business owners with affordable space, office support services, management and financial assistance. Tenants share meeting space and ideas.

Started in the early 1970s, there are now about 400 incubators in 41 states. By 1995, there may be double that amount, according to Dinah Adkins, executive director of the National Business Incubation Association in Athens, Ohio.

"Incubators are business-assistance programs," Adkins said. "They are not real estate deals."

All the ongoing support of an incubator definitely contributes to success. If you tracked a group of small-business start-ups after five years, Adkins said, 80 percent of the companies nurtured in incubators would still be around, compared to an 80 percent failure rate for small businesses in general.

Each month, about five new incubators open somewhere in the United States, according to Adkins.

California, Oklahoma, Texas, Indiana and Mississippi are experiencing the fastest growth rates.

As good as it sounds, life in an incubator is not for everyone. An incubator won't work if you are in the retail business and depend on foot traffic. And not all incubators flourish. One in San Pedro, Calif., located next to a self-storage facility, did not turn into the bustling success its managers hoped it would be, and its future is in jeopardy, Adkins said. That is because the incubator has not provided full support services for its tenants, she said.

Although most incubators attract a variety of businesses, Adkins said there is a trend toward specialized incubators set up to serve a particular kind of business. For example, she said, there are incubators for biotechnology companies and a handful established solely for women or minorities.

The National Business Incubation Association publishes a directo

ry of incubators. To find an incubator in your area, write to the association at One President St., Athens, Ohio 45701. Phone 614-593-4331.

Meanwhile, Truckenmiller said he can't think of a better place to run his business.

"I absolutely recommend beginning your business in an incubator," he said. "Here, you are not starting a business alone. You can learn lessons from other people who have fallen on their face and don't mind helping you out."

In addition to being able to wander down the hall and ask someone for help, the Golden Circle center offers secretarial services and rents space to business consultants who provide advice to tenants at a modest cost.

"We've had 57 businesses start in here since 1985," Executive Director Haines said. "Fifty-one of those are still alive."

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