Small Business - A Special Advertising Supplement sponsored by Scotiabank - Monday, October 22, 2001
Where start-ups can find help
Monday, October 22, 2001
The word incubator conjures up images of fuzzy baby chicks basking under warm grow lights, or perhaps of a tiny baby in a plexiglas cocoon being nursed to greater strength and health.
The purpose is much the same with small-business incubators. These mentoring facilities and their advisers work together to nurture small and medium-sized businesses through the fledgling stage to become viable and successful companies, able to stand on their own in local and world marketplaces.
There are dozens of such facilities, not only in Canada but around the world. Next year, in early May, Canada will play host to the 16th Annual International Conference of the National Business Incubation Association (NBIA). It will be the first time the conference has been held outside the United States, and more than 1,000 people from 50 countries are expected to attend.
Ed Hobbs is among those in the forefront of planning for the event. He is general manager of the Toronto Business Development Centre.
"Business incubation got its start in the U.S., and it has been growing by leaps and bounds ever since," Hobbs says. "The Toronto Business Development Centre opened its doors in 1990 to act as an incubator for local small business."
Since its inception, the TBDC has assisted more than 2,000 entrepreneurs in various stages of new-venture development. Hobbs says that, on average, each recent graduating company from the business incubator has contributed at least five jobs to Toronto's economy.
The TBDC assists entrepreneurs through three operating divisions. First, the business incubator helps startups to develop into viable businesses by providing an environment that enables them to expand skills, knowledge and resources during the first few years of operation.
Second, the entrepreneurial-training program assists and advises entrepreneurs during the research, planning and startup phases of their businesses.
Third, community programs aid other community organizations in the not-for-profit sector with entrepreneurial training.
Hobbs says the key to success is "finding a good match" between the services of the incubator and the needs of the small business.
"To increase the chance of success for a small business, we provide tenants with flexible, short-term rental agreements, ongoing advisory services, access to formal training in business management and informal opportunities to network with others also in startup mode," Hobbs says. "We provide on-site services including reception, fax, meeting rooms and financial record-keeping."
From the tenant's perspective, there are a variety of reasons for renting space in a business incubator.
Daniel Litvack of DLI Database Solutions is one of the tenants using the Toronto Business Development Centre's incubator.
"There are the obvious benefits of shared equipment and on-site business advisers," he says, "but there are also psychological benefits. For example, a businessperson's mindset changes when they move from a home base to their first office location. There is a feeling that the business has become more legitimate and evolved."
Litvack says there also is value in being part of a community of entrepreneurs. "Even if everyone has different businesses, there is a common experience being shared," he says. "A business incubator can offer something few other office settings can -- the spirit of entrepreneurship."
Although the tenants at TBDC are varied in their business interests, other incubators deal with specific fields.
The Hamilton Technology Enterprise Centre is a business incubator set up to assist potential entrepreneurs in the fields of technology, telecommunications, medical technology, biotechnology and the environment.
Dr. Lawrence Hewick, the program mentor, says the centre currently has 18 clients using space on a daily basis.
He says 95 per cent of the clients are male, 42 per cent have doctorates and their average age is 42 years.
"We find that a number of those who take advantage of our incubator have spent a number of years in academia first, studying a variety of technologies," he says. "They range from robotics to advanced manufacturing."
The average stay in the 40,000-square-foot facility is three to five years. The fact that 84 per cent of graduates choose to stay and operate their businesses in the area is a boost to the local economy.
"The criteria we ask for is that each potential company must have a well-written business plan and already have some operational experience in their field," Hewick says. "They also must have a need and desire for business and management mentorship. I would say 99 per cent have the technical skills they need to succeed, but what they need to learn here is how to market that product or skill."
In addition to space and advice, Hewick and his team also put together monthly workshops on topics ranging from small-business financing to marketing methods.
On average, graduates of the Hamilton centre have $1-million in annual revenue and employ seven people. Because the length of stay is fairly long, there is a waiting list of eight to 10 companies at any given time that are seeking incubator experience and mentorship.
According to statistics from the National Business Incubation Association, there are more than 900 business incubators in North America. In 1980, only 12 business incubators were in operation on the continent.
Where to learn more
Toronto Business Development Centre
1071 King St. W., Suite 113
Toronto, M6K 3K2
Web site: http://www.tbdc.com
Hamilton Technology Enterprise Centre
Web site: http://www.ghtec.com
Economic Development Division,
City of Toronto
Toronto Fashion Incubator
Toronto Food/Kitchen Incubator
Contact: Paul Sandiford, 416-392-7571
Web site: http://www.city.toronto.on.ca