Why would we hesitate to incubate?
Published 8:25 am Saturday, February 28, 2009
With the constant downturn in the economy, closing of businesses, loss of jobs and growing unemployment rate, is it any surprise that we have recently experienced some of my busiest days since my arrival on the scene at the Franklin Business Incubator in Fall 2007? In fact, we are at an all-time high 95 percent occupancy rate at the FBI. We all know since the beginning of time, small businesses have been the backbone of the American economy. It seems reasonable that the backbone of our economy will also become the backbone of our economic recovery.
Are you aware that small companies represent 98 percent of all U.S. businesses and employ well over half of the American workforce? (These are figures released in recent data by the U.S. Census Bureau.) In an Automated Data Processing (ADP) Report printed for the last quarter in 2008, it was stated that “Over the last six months, large businesses have lost more than 170,000 jobs, while small businesses saw over 250,000 created during that same time frame.” New data shows a continuation of this trend — thankfully, because most of us have to work somewhere in order to meet the needs of day-to-day living!
With government agencies cutting back on investments — and corporate and foundation funds becoming more difficult to come by — it’s essential that we understand the value of business incubation, the innovations that are commercialized in business incubators, and the number of jobs that these businesses create. The message comes through loud and clear: Now is not the time to cut back on the nation’s foremost job creators.
A study conducted for the U.S. Department of Commerce Economic Development Administration in late 2008 concluded that “businesses incubation programs create far more jobs than other EDA-funded public works projects — and they do so at far less cost per job.” With a declining economy and talk of targeted investments in community infrastructure projects through the new economic stimulus package, it is vital that government officials at all levels recognize and embrace the value of investing in business incubation as a way to support emerging firms and to create new jobs. And, we must support and expand existing incubation programs.
We are aware of critics within our community who feel the Incubator is not necessary. One can understand these feelings … if one views this program as simply an office building that seems to be costing the taxpayers money; however, we have got to take a look at the whole picture and the economic impact that this facility has on Franklin and the surrounding areas. For example, recent closings of both a machine at our local paper mill and a small family-owned manufacturing company brought about the loss of jobs for a number of people. We are all saddened, and we have compassion for those families who have been the victims of these unfortunate closings. But, do you realize that if the Franklin Business Incubator did not exist, we would impact the jobs of more people than either of these other two closings? In fact, the Franklin Business Incubator currently has 24 tenants that create 64 full-time and 58 part-time jobs at an average annual salary of $39,242.48 for those full-time employees. To date, we have had two successful businesses to graduate and take their place in our local business community.
In a study conducted by the U. S. Department of Commerce Economic Development Administration, researchers found that business incubators are the most effective means of creating jobs — far more effective, in fact, than roads, bridges, industrial parks, commercial buildings, water and sewer projects.
“In fact, incubators provide up to 20 times more jobs than community infrastructure projects, at a cost of $144 to $216 per job as compared with $2,920 to $6,872 for the latter,” the report notes. While we understand it is imperative for localities to invest in community infrastructure improvements, business incubators are critical components of the nation’s entrepreneurial infrastructure and the only public works designed entirely as job generators. Another EDA-funded study in the mid 1990s found that nearly 88 percent of all firms that had graduated from National Business Incubator Association (NBIA) member incubators were still in business — and, about 84 percent of those success stories remained in the incubator’s community. “The jobs created by incubators aren’t one-time construction jobs,” explains Norma Adkins, president of the NBIA, “but enduring, high-paying positions that contribute to the quality of life for a community and to U.S. global competitiveness.”
Yes, the entrepreneurial spirit is indeed the adrenaline that fuels the American dream. By themselves, the goods, services and technology produced by American small businesses make up the world’s second largest economy — second only to the U.S. The small business community has sustained our economy when it has slowed down, and it is helping to put us back on track. Need more proof? Check out the U.S. Small Business Administration’s Web site at www.sba.gov or the National Business Incubator Association’s Web site at www.nbia.org. So, I ask you again … why would we hesitate to incubate?