DOUGLAS COUNTY INNOVATION CENTER
L. Gregory Henley, Ph.D. The Nexxt Entrepreneur, LLC June, 2019
Table of Contents
Executive Summary ...... 4 Introduction ...... 5 Purpose of this Study ...... 7 Description of Entrepreneurship Centers ...... 15 Business Incubators ...... 15 Business Accelerators ...... 17 Business Coworking Spaces ...... 19 Startup Hubs ...... 19 Economic Development Strategy ...... 21 Douglas County Market Area ...... 22 Economic Overview & Business Focus ...... 23 Douglas County Strategic Plan and Competitive Assessment ...... 25 Purpose of Douglas County Entrepreneurship Center ...... 26 Best Practices ...... 27 Executive Director and Staff ...... 27 Mission ...... 28 Planning ...... 29 Board of Directors ...... 31 Board of Advisors ...... 32 Other Stakeholders ...... 32 Selecting Clients ...... 34 Monitoring Client Progress ...... 36 Leveraging Innovation ...... 37 Client services ...... 38 Metrics ...... 41 Measuring Economic Impact ...... 42 Connecting to Universities ...... 45 Summary of Interviews ...... 45 Innovation Districts ...... 48 The Facility ...... 52 Use Existing Resources ...... 52 Buying an Existing Coworking Business ...... 54
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15,000 Square Foot Facility ...... 56 Financial Model ...... 58 45,000 Square Foot Facility ...... 62 Out-of-the-Box Alternative ...... 63 Potential Funding Sources ...... 65 Sponsor Organizations ...... 70 Recommendations ...... 71 Conclusion ...... 76 Appendix A - Glossary of Terms ...... 77 Appendix B- Potential Client Selection Criteria ...... 79 Appendix C - Staffing – Potential Responsibilities ...... 80 Appendix D - Metrics: Collecting Basic Data ...... 82 Appendix E – Additional Metrics ...... 83 Appendix F – Incubators ...... 84 Services Provided By Burson Center ...... 84 Sample Education Program: The Burson Center ...... 85 Sample Education Program: Advanced Technology Development Center ...... 86 ATDC Calendar of Events ...... 90 Opportunity Hub ...... 91 Appendix G – Business Accelerators ...... 93 The Farm ...... 93 Techstars ...... 93 Appendix H – Coworking Spaces ...... 96 Appendix – ROAM ...... 96 Meritage Centre ...... 98 Appendix I – Startup Hub ...... 99 Switchyards ...... 99 Appendix J – Technology Square at Georgia Tech ...... 101 Appendix K - List of Atlanta-based Entrepreneurial Organizations ...... 103 Appendix L - Data Center Community Grants Program ...... 106 Appendix M – Appalachian Regional Commission (ARC) Entrepreneurship and Business Development Program ...... 107 About the Author - L. Gregory Henley, Ph.D...... 108 REFERENCES ...... 109 Additional Addendum – 2010 Incubator Feasibility Study ...... 112 The Nexxt Entrepreneur, LLC 3
Executive Summary
This study was commissioned by the Douglas County Board of Commissioners on February 15, 2019 to provide insight on alternatives to enhance economic development focused on small businesses. Helping small businesses succeed represents a tremendous opportunity to invest in the business owners and citizens of Douglas County as individuals, but also to invest in the long-term economic health of the County. The impact of a successful small business permeates beyond the individual and has a multiplicative impact as dollars move throughout Douglas County. In addition, the atmosphere and environment that can be created will attract entrepreneurs to 1) move to Douglas County, 2) do business in Douglas County, and 3) stay in Douglas County.
In 2010, the author of this study performed a feasibility study for a business incubator in Douglas County. That study contained the following areas: 1. Purpose of study 2. Importance of Incubators and Accelerators 3. Purpose of Douglas County entity 4. Market Area 5. Economic Overview and Business Focus 6. Model Analysis 7. The Facility 8. Financial Analysis 9. Stakeholders and Governance
It concluded that Douglas County had the necessary ingredients for a successful business incubator.
Since 2010, several things have changed. The County (and the country) is no longer being strangled by The Great Recession. Employment has rebounded, and opportunities to start and do business are high. The County has a new set of Commissioners. It has also successfully generated significant investment from large organizations into the County.
Methods of helping small businesses have also evolved. Whereas, in 2010 business incubators were a predominant model, the incubator model has spawned additional models of entrepreneurship centers. When evaluating entrepreneurship centers, the analysis must now include business accelerators, coworking spaces and startup hubs, in addition to the traditional business incubators. Also, regions must consider whether either of those models or, a newer or hybrid model is best suited for their needs.
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Therefore, this study is a refresh of the 2010 study, but also focuses on educating the reader on the different types of entrepreneurship centers. Thus, the strengths and weaknesses of business accelerators, coworking spaces and startup hubs as compared to business incubators were analyzed. In addition, several alternatives that fit the needs of Douglas County are presented along with recommendations, and several steps required for implementation of the plan, including identifying potential partners.
Data was gathered from the previous study, the International Business Innovation Association, the National Business Innovation Association, the Brooking Institute, numerous miscellaneous articles, interviews of public officials, business owners, the President and CEO of the Chamber of Commerce, entrepreneurship center directors, and more.
Ultimately, a hybrid model utilizing elements of each may be the best match for the needs of Douglas County.
Introduction
Entrepreneurship is and has always been part of the fabric of what has made America great. We know that more than half of the workforce has started or works in a small business and that entrepreneurship is an engine that drives the economy. In addition, people want to learn how to effectively run businesses. In fact, business was the most popular field in in the U.S. in 2011-12. Reportedly, over one million MBA students were enrolled in 2013, with over 800,000 applications. Also, according to the Kauffman Foundation, roughly 530,000 new U. S. businesses were started each month in 2015. The SBA found almost 28 million firms with between zero and 19 employees. Tremendous demand for business ownership has also resulted in a proliferation of organizations - incubators, accelerators and coworking spaces – forming to help entrepreneurs increase their chances for success. Each of these types of entrepreneurship centers will be described in detail in a later section. There is significant fascination about startup ventures, and even successful TV shows pertaining to startup ventures such as ‘Shark Tank’, ‘Silicon Valley’, and ‘The Profit’.
Nevertheless, we have also seen statistics that more than half of startups fail.
Business incubators that are physical spaces consisting of multiple offices for multiple entrepreneurs, with education programs, have helped entrepreneurs by proving to be a safe and nurturing place for them to develop and grow. The first incubator was created in 1959 as a result of necessity. Joseph Mancuso had to fill an 850,000 square foot empty plant. Not being able to find a single tenant for the entire space, he rented space to multiple small businesses. When he realized that they needed help with bookkeeping, marketing, etc., he taught them – which
The Nexxt Entrepreneur, LLC 5 helped him keep the building full of tenants who stayed in business.1 His for-profit enterprise has evolved in many ways. Today, there are models that include, but may not be limited to:
-for-profit models that rely on rent and fees from services. These are frequently real estate investments.
-not-for-profit models that are often associated with government economic development and/or universities. One goal is to create jobs to generate tax revenue. Another is to commercialize technology created within a university.
-equity-based models that provide a return when they invest in a venture that experiences a liquidity event
-corporate models that seek ventures that are complementary to the corporation’s technology
-hybrid models that combine the characteristics of other models
It has been over the past 10 years that the landscape for incubators has changed the most. Ten years ago, the predominant entities were university-based entrepreneurship programs and public and private business incubators. Today, there are still university-based entrepreneurship programs, but the number of business incubators have declined. Business incubators now share the landscape with other forms of entrepreneurship entities, such as business accelerators, coworking spaces, startup hubs, and others that have grown. Collectively, we will use the term entrepreneurship center as a catchall to refer to these various types of entrepreneurship entities. We have described incubators, accelerators, coworking spaces and startup hubs in a subsequent section of this report. Also, definitions of these and other terms are included in a Glossary at the end of the report.
The following chart shows an approximate number of entrepreneurship centers in the U.S.2
1 A Comprehensive Guide to Business Incubation: Completely Revised 2nd Edition. (National Business Incubation Association, 2004). 2 Impact Index, International Business Innovation Association, 2018 The Nexxt Entrepreneur, LLC 6
Purpose of this Study
The purpose of this study is to provide information to assist in determining the best course of action for economic development with a focus on small business. That course of action must be an initiative that is unique to the needs of Douglas County, irrespective of how other counties are helping their small businesses. We will refresh the feasibility study conducted in 2010 that focused on creating an incubator. In 2010, my team considered that, by utilizing Douglas County’s unique resources, a model encompassing more than a traditional incubator could be created. In fact, we used the term ‘Center for Entrepreneurship Activity’ rather than incubator.
An important goal is to educate the reader about the different entrepreneurship center models that now exist as the environment has evolved and there is no longer a one size fits all model. That is, several models for helping small businesses have gained credibility and traction. Therefore, the refresh of the previous study must not only update it, but also expand on it by containing an analysis of alternative models of economic development. Most important, this is a document that educates and provides a working framework for Douglas County. The appropriate model must be a match with Douglas County’s needs and resources. An important lesson is the environment for helping small businesses will continue to evolve, so planners must expect the need to be flexible.
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This revised study will also focus on several steps required for implementation of the plan, including identifying potential partners, including but not limited to educational institutions, public, and private institutions. Its overriding objective is to support economic development in Douglas County. We will present several alternatives and a recommendation that is expected will spur economic activity throughout the region and as the businesses impacted by entrepreneurship center activities succeed and thrive, create jobs and increase the tax revenue. As stated by one incubator Executive Director, “Our numbers stand out in this community more than they might in a large city. In a metropolitan area they’d just be more noise.”3
An important organization when business incubators were the leading form of organization was the National Business Incubation Association. Reflecting the times, the NBIA no longer exists and is now the International Business Innovation Association (INBIA).
International Business Innovation Association The INBIA conducted an Impact Index study in 2016 of incubators, accelerators, coworking spaces and other entrepreneurship centers in the US. There were 248 respondents who revealed the following information about entrepreneurship centers. Please note: They are not a random sample, so don't necessarily represent the universe of entrepreneurship centers.
Types of Entrepreneurship Centers
Structure
3 Meredith Erlewin, Measuring Your Business Incubator’s Economic Impact: A Toolkit. (International Business Innovation Association, 2017): 20. The Nexxt Entrepreneur, LLC 8
Industry Segment (they were asked to select up to 3 categories)
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Total Annual Revenue
Revenue Sources
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Types of Government Funding
Facility Ownership
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Provision by Academic Institutions
Funding Provided by Academic Institution
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Entrepreneurship Center Goals
Types of Staff
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Composition of Advisory Board
Where Do Survey Respondents Get There Initial Funding From?
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Jobs Created
Description of Entrepreneurship Centers
Business Incubators Entrepreneurship is difficult and most, not just many, new businesses fail. There are many statistics that tell the story – one, according to the U.S. SBA is that only 44% make it past their 4th year.4 One of the initiatives to help entrepreneurs succeed is a business incubator that provides specialized services and personal mentoring.
Traditional incubators are physical facilities that charge monthly program fees or membership dues in exchange for office/desk space and access to program offerings, such as mentoring, education/training, informal learning opportunities, and events to provide networking. Frequently, both member companies and the local community are invited to attend the events. Member companies must apply for membership to ensure that they meet the incubator’s
4 Meredith Erlewin, Measuring Your Business Incubator’s Economic Impact: A Toolkit. (International Business Innovation Association, 2017). The Nexxt Entrepreneur, LLC 15 criteria or mission (industry, stage of company, founder demographics, etc.). Graduation policies are based on achievement of agreed-upon milestones, growth metrics or time and generally run from 1-3 years.5
Business incubators help ventures survive and grow during their early, formidable stage. They provide the nutrients needed to grow, similar to the way an embryo grows. This may be low cost space and professional services, including education and mentoring. Traditional incubators are less concerned with how quickly the company will grow (this is somewhat controversial as some incubators state that they will accelerate progress and those with physical space want companies to graduate) or how large it can scale than a business accelerator (business accelerators are described in the next section). However, the goal is to help the company grow so that it will graduate as a strong enough entity to survive without any support from the incubator.
Incubators want their companies to grow, create jobs and pay taxes. Success means helping a community enhance its entrepreneurial climate, retain businesses, growth of an industry, and diversify a local economy. Many incubators have been initiated and supported by governmental entities, such as states, counties and cities as an economic development initiative that will increase the governmental entity’s tax base. According to the National Business Incubator Association and the INBIA the number of incubators has grown from 12 in 1980 to 1,400 in 2016. However, the number of incubators has decreased dramatically since then6 and other forms of entrepreneurship centers have emerged.
Incubators have evolved over time. The author considers business accelerators and coworking spaces, as described below, to be one type of evolution. In addition, ‘virtual’ incubators were once popular as the assistance through education and mentorship has been deemed my some to be more valuable than the physical space. This is not universally accepted as the networking that occurs by physical proximity can be an integral part of the maturation and success of the small business.
Grant Thornton prepared a report for the Economic Development Administration (EDA) of the Department of Commerce in 2009 that found that incubators were the most effective way to create jobs. This was compared to commercial structures, roads, industrial parks and community infrastructure (sewer and water). Specific statistics were7:
5Operational Definitions: Entrepreneurship Centers, Version 2.0, (International Business Innovation Association, September, 2017). 6 In an interview with a long tenured incubator manager, the estimate was that approximately 800 may still exist in the U.S. as of March, 2019. 7 Construction Grants Program Impact Assessment Report. Speak Up! An Advocacy Toolkit for Business Incubators. (National Business Incubation Association, 2009), p. 42. The Nexxt Entrepreneur, LLC 16
-A $10,000 EDA investment in incubators produced between 44.3 and 69.4 jobs compared to the next highest, commercial structures, that produced between 9.6 and 13.4 jobs per $10,000 spent. Said differently, the federal cost per job was $144 to $216 for incubators versus $744 to $1,008 for commercial structures, which was next highest. Industrial park infrastructure and Commercial infrastructure were found to create the fewest jobs per dollar.
Here is additional information:
The data is indicative that incubators can be effective at creating jobs, even when compared to other job creation methods. A confidential study conducted by the Boston Consulting Group (BCG) on incubators used an estimated 70% growth in jobs, revenue and real estate of successful incubator graduates during their first 5 years after graduation and calculated 50% indirect jobs for every job created.
While the goal of many incubators is economic development, they often are not profitable. One example is the Burson Center in Carroll County. It is largely funded by Carroll County and the University of West Geogia.8
Business Accelerators More recently, business accelerators have gained in popularity and represent an evolution of the business incubator model. Accelerators provide optimal conditions to quickly speed up the progress of ventures rather than let them stay in a physical facility for years and, often, get them ‘investor ready’. In exchange for equity ownership in the venture, the accelerator will generally organize a focused program for a cohort of venture founders that is, often, three months long. Space is usually provided to companies for the duration of the program, although some accelerators run cohorts virtually with required attendance at educational or networking events. The program includes education, mentorship and sometimes seed financing to compress years of work into a fixed, short period of time to quicken a venture’s progress. Many also organize an investor day where the founders pitch to investors.
8 Interviews with Donna Armstrong-Lackey, Burson Center manager. The Nexxt Entrepreneur, LLC 17
The recognized leader and the first accelerator is Y Combinator that was founded in 2005. Techstars is another well-known accelerator and has grown internationally after starting in 2006. Techstars-Atlanta partners with Cox Enterprises to serve primarily technology ventures (See Appendix G). 2015 estimates of the number of accelerators ranges from 467 to almost 4,000. This disparity is indicative of there not being an accurate count.
Several advantages of accelerator programs include an emphasis on product and market validation and testing the product/market fit; getting to market quickly; understanding pricing; and even failing fast. Much of these activities and outcomes helps conserve capital and get to revenue rapidly.9 The program includes seminars, lunches, mentoring, coaching, meetings with investors, pitch practices, and a demo day spent pitching to investors. The educational seminars and workshops cover mistakes; market validation and customer discovery; business models; developing presentations, working with investors, etc. These are ‘Lean Start-up’ principles.
There is a clear distinction between the typical incubator model and the typical accelerator model – accelerators are ‘quick hit’ with respect to their touch points for ventures. After three months, they will turn their attention to obtaining the next cohort of entrepreneurs. Adopting this model means changing the way a typical incubator manager must think and act. However, unlike the proverbial horse-trading company that was put out of business by the automobile industry because they didn't realize that they were in the transportation industry, incubator managers may consider that they want to be the ‘go to’ source for entrepreneurs who seek help – and, adapt. After all, startups are often at different points in their maturity and some need different types of help than others. By understanding the accelerator model and utilizing some of its characteristics, the entrepreneurship center can serve more segments of the entrepreneurial market and can get more support from stakeholders. Certainly, there is merit to fast-paced or accelerated programming to get to market faster, conserve capital and, also, fail faster.
Sometimes, venture founders are reluctant to give equity to the accelerator program. The author interviewed one former accelerator entrepreneur who thought the program was good. However, he expressed that he needed direct introductions to potential customers and, since the program didn't do that, the equity he had to give up was excessive. That being said, helping entrepreneurs can be in form of exposing them to customers, just as exposing them to investors is a stated goal.
Pre-Accelerator Pre-Accelerators are similar to accelerators, except they typically do not provide equity funding. They may have grant funds available or access to a community-based evergreen fund. Pre-Accelerators have a competitive
9 Dinah Adkins, “How Business Incubators Have Adapted Accelerator-like Services to Woo New Clients and Serve More Entrepreneurs”, NBIA Review 27, no.2 (2011). The Nexxt Entrepreneur, LLC 18 application process, have mandatory attendance and include a culminating event at the end of the program. Pre- Accelerator participants are accepted into the 3-6 month program in a cohort that is very similar to seed accelerators.
Business Coworking Spaces Coworking spaces offer open collaborative community-based workspace for like-minded individuals or early-stage companies. Coworking spaces offer flexible work space in the form of hot desks, private (dedicated) desks or offices. Member companies pay for their space through rent or membership dues. Coworking spaces typically do not offer formal/required education or training, although they may have speakers, meetups or other optional, informal learning opportunities. Coworking spaces generally do not have established graduation criteria or competitive application processes. They are motivated to retain member companies as a sustainable revenue stream (versus graduating companies).10
Typically, entrepreneurs will rent a small office, but also have access to a large, open area where multiple occupants can work. This helps them network, collaborate and avoid the isolation that working at home creates. It was estimated that were almost 19,000 coworking spaces worldwide in 2018.11
Adding a coworking component to a traditional incubator can provide a service to those not being served by the incubator program, increase revenue, and allow managers to interact with future potential incubator companies. The Northeast Indiana Innovation Center generated $30,000 in 2010 with coworking. Because anybody can access the coworking space, value is provided to additional constituents. Coworking spaces help create a sense of community and partnerships with local organizations.12
WeWork is the largest and most well-known coworking company. It is a global organization that owns real estate to provide workspaces for businesses of all sizes.
Startup Hubs To Further illustrate the evolution described earlier, in doing the research for this study, a new organizational name was found – ‘Startup Hub.’ 13 Here is an excerpt of an interview of Michael Tavani, who founded Switchyards:
10Operational Definitions: Entrepreneurship Centers, Version 2.0, (International Business Innovation Association, September, 2017). 11 Statistica. (n.d.) Accessed on May 16, 2019. https://www.statista.com/statistics/554273/number-of-coworking-spaces- worldwide/ 12 Adkins, How Business Incubators Have Adapted Accelerator-like Services to Woo New Clients and Serve More Entrepreneurs. 13 Melanie Lasoff Levs, “Switchyards stakes a claim on downtown,” Atlanta Business Chronicle, March 15, 2019. https://www.bizjournals.com/atlanta/news/2019/03/15/switchyards-stakes-a-claim-on-downtown.html The Nexxt Entrepreneur, LLC 19
“There’s a big distinction between “coworking” and “startup hubs.” Startup hubs like Switchyards and Atlanta Tech Village are primarily focused on creating startup winners. Every ounce of energy is focused on that. The average company size at Switchyards is a couple of people. These are founders and members that are early in their journey trying to surround themselves with other founders working on the same type of startup.
[In contrast] Coworking is fractional office space. So, if you’re a real estate agent or a sales person or a CPA, you can now join a coworking space instead of signing a five-year lease or working from home/coffee shops. But, they are not about startups anymore. The big coworking players are going upstream fast; about half of their business is becoming enterprise, so the distinctions between coworking and startup hubs will become clear to most people soon. I believe there will be a consolidation of “coworking” spaces soon. The ones that have a strong focus, vision and tribe will thrive.”
Additional excerpts from the interview with Michael Tavani as well as a description of Switchyards (and Atlanta Tech Village) can be found in the Appendix I - Switchyards.
Included as Appendices are further descriptions of the following entrepreneurship centers:
-The Burson Center – located in Carroll County, the Burson Center opened in 2006 and is close to Douglas County. It is and has always been a pure incubator.
-The Atlanta Technology Development Center (ATDC) – located in midtown, Atlanta, the ATDC was initially formed as an incubator to take advantage of and commercialize technology from Georgia Tech. It was once recognized as a pre-eminent incubator, not only in Georgia, but also nationally. It boasts 170+ graduating ventures, 90% successful after five years and $12 billion in revenue generated by its ventures. ATDC has evolved to try to stay relevant as it offers more than just traditional incubator services.
-Opportunity Hub (OHUB) – located in downtown Atlanta, OHUB is a unique form of incubator that teaches youth technology, with an emphasis on coding.
-The Farm – located in the Comcast offices at The Battery, Suntrust Park in Cobb County, The Farm is a relatively new business accelerator. It enlists two cohorts per year.
-ROAM – located through the Atlanta-metro area, ROAM is a coworking space that offers offices and conferences to meet the needs of most businesses.
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-Meritage Centre – a coworking space located in Douglas County.
-Switchyards – located in downtown Atlanta, Switchyards considers itself to be Startup Hub.
Economic Development Strategy
Broadly speaking, small business is a major driver of a healthy economy. Along with large and mid-sized companies, small businesses should be a component of a diversified regional economy that is poised for growth and ca withstand unforeseen shocks. The outcome of entrepreneurship centers should be economic development for a region. Often, jobs are created that provide benefits to those employed by the client businesses as well as indirect benefits by creating additional jobs in the region.
While entrepreneurship centers focus on small businesses, research suggests that there are three dominant strategies for economic development. One is business attraction that uses tax breaks, grants, nonfinancial incentives such a customized training, site preparation, etc., and quality of life enhancements (e.g., climate, schools, workforce) to incent a company to move away from or open a new facility in the focal area.14 The second strategy is business retention that seeks to keep existing businesses in the focal area and may induce them to expand. Large firms are most frequently the targets of these strategies.
The third strategy is entrepreneurship assistance that helps entrepreneurs to start and grow ventures and/or helps existing businesses succeed. Entrepreneurship assistance has been the least used strategy as it takes time and persistence to succeed and is not always well understood by policy makers and the public. Business attraction, on the other hand, is highly visible and is short term.
All three strategies are important for the long-term health of a region.
The Ewing Marion Kauffman Foundation is a pre-eminent organization based in Kansas City, MO that does many things to promote entrepreneurship. It has highlighted the emphasis that mayors are putting on entrepreneurship as a ‘new form of economic development.’15 Rather than using tax breaks for attracting outside companies, mayors are helping homegrown and want to attract new small businesses. The money generated by small business owners tend to stay in the community and they hire within the community. The mayors understand that a vibrant small business
14 Tom Lyons, 2004. “Business Incubators Role in Local and Regional Economic Development,” Speak Up! An Advocacy Toolkit for Business Incubators. (National Business Incubation Association, 2004) 15 Barbara Pruitt, 2019, “ A Homegrown Economy Starts With Entrepreneurs,” Currents, 5/2/19. Accessed on 5/2/19, https://www.kauffman.org/currents/2019/05/a-homegrown-economy-starts-with- entrepreneurs?utm_source=newsletter&utm_medium=email&utm_campaign=iaw_05_02_2019 The Nexxt Entrepreneur, LLC 21 sector enhances their city’s reputation that, in turn, attracts more business. Behind the clout of mayors, cities are helping entrepreneurs gain access to large corporate customers, reduce the regulation needed to get started, insure new business development include affordable space for entrepreneurs, use large organizations and economic development experts to introduce small business owners to donors and customers, etc.
Douglas County Market Area
Douglas County is located in Western Metro Atlanta, and is bordered by Fulton, Cobb, Paulding, Carroll and Clayton. With an estimated 2017 population of 143,882, Douglas County’s 7-year growth rate (2010-2017) exceeds that of Georgia and the U.S.16
Area 2010 Estimated 2017 Estimated Estimated Population Population Population Change 2010-2017 Douglas County 132,403 143,882 8.7% Georgia 9,687,683 10,429,379 7.7% United States 309,326,085 325,147,121 5.1% Table 1: Population Growth for Douglas County, Georgia and United States: US Census Bureau It is estimated that by 2025, Douglas County’s population will surpass 170,000, which represents growth of an additional 18.5% over 2017.17 In addition to its high growth, Douglas County maintains a relatively diverse population, which is comprised of approximately 48% White, 47% Black, and the remaining 5% Hispanic, Asian, Native American and Pacific Islander. In addition to its diversity, Douglas County is less densely populated than Fulton and Cobb, at 661 Persons per Square Mile. Fulton and Cobb are 1748 and 2026 Persons per Square Mile, respectively.18 This, along with significantly lower median home prices, is expected to translate into a strong demand for people in those bordering areas to live and work in Douglas. It will also create additional opportunities for entrepreneurs.
The following table shows Department of Labor comparison data of employment data (January, 2019) between Douglas and 3 bordering counties. It shows that the economy is in much better shape than 10 or so years ago. Whereas high unemployment may cause business starts to increase, lower unemployment suggests that the businesses that start may be stronger and that the community would benefit from the business training and support provided by an entrepreneurship center. Such training helps provide an infrastructure for small business formation and success.
16 US Census Bureau Estimates 17 Douglas County Economic Development Authority Brochure on Labor Profile 18 US Census Bureau The Nexxt Entrepreneur, LLC 22
County Douglas Fulton Carroll Cobb Workforce 72,626 554,094 55,326 425,039 # Unemployed 3,250 24,940 2,471 16,357 Unemployment 4.5% 4.5% 4.5% 3.8%
Table 2: Weekly Average Wage and Unemployment Rate by County, January, 2019 – Dep’t of Labor
Economic Overview & Business Focus
Perhaps the most important overview statistic is in the table below showing the distribution of business sectors. It shows that, in 2016, a large portion of the local economy in Douglas County is built around Retail Trade. That segment makes up almost 17% of the companies in Douglas County and accounts for about 22% of the local workforce – which is an increase from 2010. Retail Trade, along with Educational Services, Healthcare & Social Assistance, and Accommodation & Food Services make up 47% of the local Douglas County workforce.19 This indicates the existence of a largely service-driven economy.
Business Sector Establishments % of Establishments Paid Employees % of Employees
Retail Trade 424 16.8% 8,409 22.2% Construction 295 11.7% 1,896 5.0
Healthcare and Social 281 11.2% 4,443 11.7% Assistance Professional, scientific and 230 9.1% 973 2.6 technical Accommodation and Food 225 8.9% 4,767 12.6% Services Other 1,064 42.2% 17,419 45% TOTAL 2,519 100% 37,907 100%
19 Labor Market Statistics, Quarterly Census of Employment and Wages Program; U.S. Census Bureau, American Fact Finder, 2016 County Business Patterns. Accessed March 25, 2019 from https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=BP_2016_00A3&prodType=table The Nexxt Entrepreneur, LLC 23
A similar story is shown when examining employment. Retail trade makes up approximately 15% of the companies in Douglas County and accounts for approximately 17% of the local workforce. Retail Trade, along with Accommodation and Food Services, Transportation and Warehousing, Health Care & Social Assistance and Manufacturing make up approximately 57.7% of the local Douglas County workforce20
Industry Employment Distribution
Professional, Scientific and Technical Services 1,131 Public Administration 1,755 Construction 1,984 Wholesale Trade 2,285 Administrative and Support and Waste Management 3,901 Manufacturing 4,177 Health Care and Social Assistance 4,357 Transportation and Warehousing 4,445 Accommodation and Food Services 5,081 Retail Trade 7,496
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
Table 3: Douglas County – 3Q2018 Industry Employment Distribution
This should be compared to the three industry clusters of focus from the Avalanche Study: Advanced Manufacturing, Professional Technology Services, and Media & Entertainment. Together, this points to a diverse workforce suggesting that if the goal is to service the widest range of existing constituents, the entrepreneurship center should be mixed-use to serve the needs of these organizations, while also encouraging the establishment and growth of complementary businesses. Significantly, there is no evidence of a technology-driven economy.
In addition, some key industry sectors and the employers in those sectors are21: Advanced Manufacturing SilverLine by Andersen Von Roll Austral Reflek ALP Lighting Parker Hannifin
Biotech and Life Sciences American Red Cross Medline Hoya Vision
20 Georgia Dept. of Labor, Workforce Statistics & Economic Research, Quarterly Census of Employment and Wages Program 21 Douglas County Economic Development Authority website. The Nexxt Entrepreneur, LLC 24
Food Processing and Distribution Keurig Dawn Foods Turano Baking Gordon Food Service
IT and Mission Critical Google AT&T Savvis Digital Realty Trust
Machine and Metal Fabrication Alum-a-lift SAF Seasons 4 MBCI
Douglas County should be commended for their success in attracting data centers for Google and Switch. Yet, another thing the data shows that must be pointed out about Douglas County’s business landscape is that over 70% of the local establishments are small businesses with 1-19 employees. That is, the vast majority of employers in Douglas are entrepreneurial businesses.22
Douglas County Strategic Plan and Competitive Assessment Avalanche Consulting conducted both a strategic plan and a competitive assessment of Douglas County. They identified three target cluster industry for Douglas County: Advanced Manufacturing, Professional Technology Services, and Media & Entertainment. Their reports also highlight the need and desire for small business and entrepreneurship support.
The survey found that the phrase that best describes Douglas County is ‘having an equal opportunity to start my business.’ This indicates that business ownership is a key concern of residents. However, the County received below average marks in a survey asking about its General Economy. Although Equal Opportunity was the highest rated item in the survey, it was still rated below average. Also, rated below average were the items Entrepreneurship, Career Opportunities and Business Growth.
When asked to name one specific thing leaders can do to make the County a better place to live, Supporting Small Business tied for first (with Improve Transportation & Invest in Infrastructure). Residents chose Entrepreneurs/Startups third when asked what should drive future economic growth. Other perceptions that County
22 U.S. Small Business Administration The Nexxt Entrepreneur, LLC 25 residents have and that may need to be addressed include Entrepreneur and Small Business Support Systems rated almost last for Business Operating Environment.
Avalanche found that the Atlanta metro area is rich in venture capital, but Douglas County may not be attracting enough entrepreneurs, especially those who have less than 10 employees. One of their conclusions is that residents would benefit from having a one stop shop for entrepreneurial resources and also a mentoring program for aspiring entrepreneurs. They stated that a manufacturing incubating space would be useful.
In terms of existing businesses, there are many new businesses with 27% of those surveyed being in business for 5 or fewer years. 21% had been in business 6-10 years; 25% had been in business for 11-20 years; and 27% more than 20 years.
Supporting what several interviewees expressed, the County is highly educated with almost 32% of those over age 25 and 38% of those between 25 and 44 having a bachelor’s or higher degree. Over the past 15 years, the population has increased as more young professionals have moved in. Douglas County has a very talented pool of residents, but many work elsewhere and talented young people leave for better opportunities.
In sum, 44% of survey respondents thought that Douglas County should make supporting startups and entrepreneurs a top economic priority. Doing so, according to Avalanche, would entail creating a centralized location for startups to learn, invest, and grow. They recommend conducting a feasibility study to determine the right mix of services and space. An important component is to cultivate innovative thinking in the County.
There are a number of incubators in the metro-Atlanta area, but no established incubators in Douglas County. In addition, we’ve not been able to identify any that encompass the vision that interviewees expressed. However, the Appendices include several examples of entrepreneurship centers in the Atlanta Metro area.
Purpose of Douglas County Entrepreneurship Center
Douglas County has the opportunity to develop an entrepreneurship center that uses innovative techniques to inspire, motivate and prepare entrepreneurs. The Douglas County Innovation Center (this name captures the vision of those interviewed, but is not the official name endorsed by Douglas County) will utilize entrepreneurship programs and events as a major driver of entrepreneurship activity. Should a dedicated facility be acquired, it will house ventures. The programs/events offered by Douglas County Innovation Center will attract entrepreneurs and service providers from not only Douglas County, but from the greater metro Atlanta area. As a result, some of these entrepreneurs may relocate their business to Douglas County.
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The programs will do more than teach basic (albeit necessary) skill sets. The Innovation Center will nurture an atmosphere that creates leaders of organizations. Instruction will be an important factor, but teaching one how to think big and strategically like a CEO will be the focus. The entrepreneurial mindset will be stressed rather than the typical focus on execution and operations. Member CEOs will be able to interact with like-minded CEO thinkers. Creating that growing company that has the potential to make an impact is a goal.
Importantly, the Innovation Center can be the central component of an entire Economic Development small business ecosystem that includes existing assets in Douglas County, such as the Chamber of Commerce, the City of Douglasville, Douglas County and the Development Authority. It can be a catalyst for community readiness and will empower people. However, marketing must be done to let everyone know it’s there and can help.
Another goal for the Innovation Center can be as a destination for small and large businesses that want to expand to the Atlanta area. Douglas County, GA is located about 20 minutes west of Atlanta, GA and about 15 minutes from the Hartsfield-Jackson Atlanta International Airport. Its location serves as a natural resource that can be leveraged to attract entrepreneurs and larger businesses. Marketing the County as a destination is a realistic objective given its proximity to Atlanta and the airport, its moderate cost of living, etc. and the great success it has had in attracting large corporations. Moreover, by showing the dedication to developing high-level leadership and business skills of its citizens, the County will be attractive to organizations seeking to locate or relocate to the Atlanta area. These firms will hire local residents.
Best Practices
The following set of best practices was determined from a study of incubators conducted by the National Business Incubator Association,23 current research and personal experience. However, each entrepreneurship center must develop a set of practices that are tied to their mission and goals as developed by their Board of Directors.
Executive Director and Staff The key to the success of an entrepreneurship center is the Executive Director and how she is able to manage her time. The client must come first, yet there will be multiple competing demands including facility management; securing funding; and managing the staff, the Board of Advisors, and volunteers. Some of the skills needed will be the ability to: be a champion to potential client companies, financial partners and other stakeholders; identify clients’ needs and effectively coach clients; work with the Board of Directors to execute the mission; and understand her weaknesses to bring on others to compensate.24
23 Corinne Colbert, Dinah Adkins, Chuck Wolfe, and Karl LaPan. Best Practices in Action: Guidelines for Implementing First- Class Business Incubation Programs Revised 2nd Edition, NBIA Publications (Saline, MI: McNaughton & Gunn, 2010) 24 Ibid The Nexxt Entrepreneur, LLC 27
Additional staff is necessary beyond the Executive Director and the number of staff varies significantly among programs. Years ago, in 2002, the average number of staff was 2.4 and their titles were not consistent. While more current numbers are not available, it is safe to say that the practice then of leveraging volunteers is still needed today. The most effective way to staff is to determine the tasks that need to be done, determine what volunteers and sponsors can do and fill the gap with staff. For example, if facilities management is needed, first determine whether this can be covered by a sponsoring organization, if any. If not, hiring a facilities manager is essential to relieve the Executive Director of facilities management, which allows her to focus on client services. Similarly, for some client training, perhaps, the SBDC, the Chamber and a university can provide assistance before hiring staff.25
Initially, some Executive Directors start the entrepreneurship center alone. There may be a startup phase before the entrepreneurship center is opened that is used to gather support, develop programs, identify staff, oversee building renovations, etc. The Executive Director may find student interns to assist, but is largely alone. At least an Executive Assistant should be in place upon launch.
A staffing plan utilized by one Executive Director consisted of adding staff incrementally using grants until new programs or resources were developed to cover their salaries. She was able to hire four professionals, an administrative assistant and student interns. Another Executive Director utilizes a staff of 10.26
A large part of the team for entrepreneurship centers is the high-quality part-time team and volunteers. In addition to an SBDC (helping clients also helps them achieve their goals), professionals provide free or low cost service that increase their visibility and help them obtain paid work.27 Many coaches and mentors like to be around entrepreneurs as they get a psychological benefit from helping others. Some may also be angel investors who can get a more intimate look at potential investment opportunities.
Mission The mission and vision statements are needed to be a point of reference for communicating to stakeholders and others what the entrepreneurship center’s purpose and goals are. It will help focus its activities, help resolve conflicts, inspire commitment, and help determine key criteria that the entrepreneurship center will be judged by. One example is: ‘To grow and diversify the economic base of [ ] and selected regional communities by utilizing the tools of business incubation, entrepreneurial development, and entrepreneurial education.’
25 Meredith Erlewine, In A Comprehensive Guide to Business Incubation, Completely Revised 2nd Edition (National Business Incubator Association, 2004). 26Bridget Lair. “Advice From the Trenches,” NBIA Review 28, no. 5 (2012). 27 Ibid The Nexxt Entrepreneur, LLC 28
The same incubator’s vision statement is: ‘to create a network of business incubators’
Other sample mission statements are: Our goal is to accelerate technology development and commercialization and to create high-paying, sustainable Pennsylvania jobs. (Ben Franklin Technology Partners)
Support technology entrepreneurship and emerging technologies by marshaling the resources of NC State University and the surrounding community, and teaching early-stage technology entrepreneurs how to succeed, grow, and thrive. (North Carolina State Technology Incubator at Centennial Campus)
Cultivate an eco-system of like-minded Entrepreneurs, Mentors, Investors and solution providers that establish Silicon Beach as the hottest hot bed of startups surpassing Silicon Valley. (Cal-Xelerator)
To diversify and strengthen the economy of northern Arizona by transforming local start-up companies into successful business ventures. (Northern Arizona Technology and Business Incubator )
Possible mission and vision statements for the Douglas County Innovation Center (they are very much the same ones as envisioned in the 2010 study):
Mission: The Douglas County Innovation Center’s mission is to spur economic activity in Douglas County by providing support to entrepreneurs and prospective entrepreneurs. It will fulfill its mission by creating thought leaders with the entrepreneurial mindset and by creating growth - oriented businesses that employ others.
Vision: To help Douglas County become a destination for talented individuals and innovative organizations. We will do this by creating an ecosystem of activities and organizations that work together.
Planning Strategic Plan: The planning process is important in order to make sure that the organization stays on track and develops goals for the next 1 to 3 years. However, rather than an extremely long report, I recommend using a tool such as the ‘Hambrick Diamond28’ as depicted below. Such a tool will allow stakeholders to see everything they need to on a single page. If they desire more, they can read the approximately 5-page write-up (one page per point) that should be prepared with it.
28 Donald C. Hambrick and James W. Fredrickson, “Are You Sure You Have a Strategy?” Academy of Management Executive, 15, no. 4 (2001). The Nexxt Entrepreneur, LLC 29
Business Plan: A primary goal of a strategic plan is to determine how to execute on the direction of an organization to achieve its goals given resource constraints and environmental opportunities and headwinds. In this context, a business plan is the tool used to determine and communicate how the entity will operate. Sometimes the two tools are combined into a single document. One outline for a business plan is:
-Executive Summary -Mission and Objectives -Client Focus -Organizational Structure -Legal Structure -Board Composition -Services and Programs -Marketing -Client Guidelines -Staffing -Facility -Financials
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Business plans are viewed by some as outdated and a new tool, the Business Model Canvas, has become popular. Since this tool may be the one recommended for clients, the entrepreneurship center may consider using it themselves. Here is a sample:
Board of Directors The Douglas County Innovation Center should be organized with a Board of Directors, a Management Team and an Advisory Board.
The organizing Board of Directors should be set up as soon as the project is approved. Their initial responsibility will be to gain the support of the entire community – public, private and civic - in Douglas County. Directors should be chosen from among the business community, the Chamber of Commerce, City officials, County officials, economic development agencies and others who will represent the Center well. It is important that they develop, understand and are committed to the mission and vision for the Innovation Center and have a demonstrated leadership track record. The Board should provide oversight; set the overall direction, strategy and policies; determine the appropriate management structure as well as recruit and review the performance of executive management; approve major investments; and importantly, garner ongoing stakeholder support.
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The board may consist of elected officials; community leaders; professionals with connections to investors and/or the business community; service providers and mentors; investors; successful entrepreneurs and program graduates.29
Board of Advisors A Board of Advisors is also a necessity. Unlike the directors, who provide fiduciary oversight, advisors should be active stakeholders who assist both the board and management team with their expertise and advice to run a world- class operation. Rather than have oversight responsibilities, advisory members may interact directly (e.g., mentor, teach) with client companies and/or help entrepreneurship center staff with business development by attracting new companies, thus, providing depth to the work done by the management team. Their help may be with their network, or specific marketing, finance, operation skills. They may be or have been an entrepreneur who has started and grown a venture, a business person who works for a large organization that has resources or connections, a professor, a professional service provider, a retired person, etc.
There are a wide-range of ways for an advisory board member to assist, including helping to evaluate companies, mentoring entrepreneurs, coaching teams, helping champion and providing credibility for the Innovation Center, providing access to resources, referring companies, etc. Each member may not provide everything listed, but should be valuable in some way.
Selecting Advisory Board members must be done very carefully. They need to be willing and able to spend time helping and also to have the needed skills, but there should be a specific agreement on what they will do.30 A critical factor for selection should be whether the prospective member can find the time to serve.
Advisory boards should be engaged on a regular basis, whether through periodic meetings, as part of events, or with direct contact via mentoring or coaching with client companies, as well as with phone calls when something is needed. It is the Innovation Center’s Executive Director who must take the initiative to reach out to engage her advisory board.
Other Stakeholders Entrepreneurship centers will also have numerous other stakeholders besides their Board of Directors and Board of Advisors. Stakeholders in the broad sense are those not employed by the entrepreneurship center, but who have a vested interest in its success. These may include financial sponsors, politicians, community leaders, entrepreneurs,
29 Corinne Colbert, Dinah Adkins, Chuck Wolfe, and Karl LaPan. Best Practices in Action: Guidelines for Implementing First- Class Business Incubation Programs Revised 2nd Edition, NBIA Publications (Saline, MI: McNaughton & Gunn, 2010) 30 Carol Lauffer. “Building Effective Incubator Advisory Boards,” NBIA Review 27, no. 2, (20110. The Nexxt Entrepreneur, LLC 32 universities, chambers of commerce, and economic development agencies. Stakeholders can assist an entrepreneurship center by spreading the word to entrepreneurs and others as well as directly helping to coach the client companies. It is important for the Executive Director to constantly engage stakeholders with one-on-one contact, giving presentations and providing the appropriate reports.
To maximize the chances of success, public-private collaboration and partnering are essential. Key constituents in Douglas County that should form the foundation of support include the County Commissioners, the City of Douglasville, the Douglas County Economic Development Authority, the Chamber of Commerce and local educational institutions. The Chamber of Commerce stands to benefit from The Center for Entrepreneurial Activity and vice-versa. One example of a partnership could entail automatically making incubator members becoming members of the Chamber and a fee would be paid to the Chamber.
There are numerous large businesses in Douglas County that must also be nurtured as they can play a huge part in the Douglas County Innovation Center’s success.
Volunteers and Interns: Another key part of the team are the volunteers and interns as they can provide needed services to help entrepreneurship center staff better service client companies.
Volunteers are usually professionals found in the community who may be consultants, accountants, attorneys, corporate executives, venture capitals, investment bankers, professors, but especially entrepreneurs who understand what it takes to succeed. These are the same pool of stakeholders who may be part of the Board of Advisors. While they may not run the program, they are needed for instruction, coaching and mentoring of the client companies. The Executive Director, while perhaps providing some teaching, coaching and mentoring has many other duties, including external relations and managing the program and facilities. Her role is that of a resource manager.
Finding qualified volunteers requires always being on the lookout for them and getting referrals. Internally, one of the roles of the Board of Directors and Advisors should be to help find volunteers using themselves, and their networks. Externally, the Executive Director must use her network and also be on the lookout at events she attends. Client companies will also be helpful at recommending qualified volunteers. Intown entities that can be good sources include universities, chambers, bar associations, trade organizations, businesses that have graduated from the program, etc.
Another source of low or no cost help is student interns. Accounting students can help with a client’s financial statements. Similarly, students can help with marketing, sales, finance, etc., as well as lower skill activities, such as answering the phone. They are also good at website design and updates.
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Service Providers:
Service providers are a key ingredient in an effective entrepreneurship center because they expand the range of expertise available. Professionals that can be part of the service provider network include, but are not limited to:
-Accountants -Attorneys -Marketing experts -Venture capitalists -Professors -Entrepreneurs -Technology specialists -HR professionals
There is a difference between volunteers who don't receive payment and service providers who get compensated for their services. Volunteers usually take time to mentor and/or coach. Service providers may be accountants or attorneys who provide their services for a fee. Compensation varies significantly. Some programs arrange for these professionals to provide their service for a fee (usually reduced), but many professionals will do pro bono with the hope of getting future work when the client leaves the incubator. A middle ground is for the service provider to provide a set number of hours or a set project for free and anything beyond that for pay.
Some entrepreneurship centers expect the client to pay all fees. Other times, some services are included in the membership fee. Executive Directors have also asked service providers to pay the incubator to make presentations to the incubator companies or, at least, to sponsor a breakfast or lunch.31
Evaluation System: It is important to have a system to evaluate how well the Entrepreneurship Center is doing compared to its mission and goals. This is described in further detail in the subsequent sections on Metrics and Measuring Economic Impact.
Selecting Clients In many ways, selecting the right clients are a key to the success of entrepreneurship centers. (This pertains to incubators and accelerators, but not coworking spaces.) Client companies should be those that will benefit most
31 Kathleen Cammarata and Sally Linder. “Managing a Network of Service Providers,” A Comprehensive Guide to Business Incubation, Completely Revised 2nd Edition (National Business Incubator Association, 2004). The Nexxt Entrepreneur, LLC 34 from what the entrepreneurship center decides it can offer, which is tied directly to its mission and goals. For example, the proverbial t-shirt company will likely not get admitted by the entrepreneurship center if one of the keys to success for the entrepreneurship center is the percentage of ventures that gets funded or to create jobs (unless the t-shirt venture has a visionary plan and the right entrepreneur to grow the business tremendously).
Therefore, specifying and following a written set of selection criteria from which to screen prospective client companies is critical.32 Frequently, companies that do not meet the criteria will not apply, but finding those that do can sometimes require a lot of effort. It is also the case that a venture that does not fit in one incubator/accelerator may be a good fit in another. The t-shirt business that is not a good fit for a technology incubator may be a good fit for an incubator in a distressed area with high unemployment even it only creates a job for the entrepreneur.
Because of the differences in missions, goals, locations, etc., the selection criteria will also differ among entities. Yet, a typical selection process entails obtaining a written application, weeding out unacceptable ventures, interviewing by top managers, etc. Some of the factors to look for in a company include its business focus, potential to create jobs or get external funding, its existing people, financial and other resources, a business plan and most important is the entrepreneur.
The interview is a critical component of the process as it allows for an assessment of the entrepreneur and the team. To obtain a proper assessment, there may be multiple rounds of interviews and by more than one stakeholder who may include current and/or former client companies, and committees from the Advisor Board and Board of Directors. Part of the assessment will include: Does the entrepreneur have prior experience, either as an entrepreneur or in the industry that the business is operating in? Does she have leadership experience? Can she build and manage the right team? The entrepreneur must be coachable although knowing this can be difficult to ascertain upfront. Often, the decision to admit will be a subjective one based on the entrepreneur. During the interview, providing the prospective client with a set of expectations also helps them gain a better insight into whether they are a good fit for the program.
There may also be an additional screening done by subject matter experts. For example, in the case of a cybersecurity venture, the Executive Director should find one or more cyber experts to vet the technology. At a basic level, the Executive Director may want to have an accountant look over the prospective client’s books to understand its financial standing.
32 Brian Walker, B. 2004. “Selecting Great Clients,” A Comprehensive Guide to Business Incubation, Completely Revised 2nd Edition (National Business Incubator Association, 2004). The Nexxt Entrepreneur, LLC 35
Some entities will develop a list of must haves and another list of wants (see Appendix B - Potential Client Selection Criteria for such a list). For example, a quality that is desirable may be a product or business plan that is already developed. Care does need to be taken to whether or to what extent competing client companies can be admitted. Again, this goes back to the entrepreneurship center’s mission. For example, a kitchen incubator may allow two bakers to utilize its services, or it may restrict admittance to one baker while allowing others that offer complementary services.33
In some cases, the best advice that can be given to those that aren’t a good fit is to respectfully direct them to other resources that might better meet their needs (or, carefully explain what they might do to improve their fit). This can help build goodwill that the entrepreneurship center really does want to help.
Monitoring Client Progress Most business accelerator programs have a specific period of time, usually 3 months, that the ventures are in the program. After that, the ventures leave and are on their own. Clients in incubator programs, on the other hand, tend to stay for several years and their progress in the program should be monitored periodically to make sure that they are meeting milestones and working toward graduating from the program. Three years is a typical time period for clients to stay in incubators.34 Tenants in coworking spaces are not part of a formal program and can stay indefinitely.
Some of the milestones that can be measured are a revenue level, number of employees, number of customers, amount of space needed, capital raised. The incubator is designed to nurture a company for it graduate and be successful on its own.
With respect to graduation, many incubators establish specific guidelines for graduation. Some guidelines are:
-time in incubator -space needs -number of employees -positive cash flow -public stock offering, merging or being acquired -Obtaining a certain funding level -less value being provided by incubator services
33 Corinne Colbert, Dinah Adkins, Chuck Wolfe, and Karl LaPan. Best Practices in Action: Guidelines for Implementing First- Class Business Incubation Programs Revised 2nd Edition, NBIA Publications (Saline, MI: McNaughton & Gunn, 2010) 34 Ibid The Nexxt Entrepreneur, LLC 36
-most important: is it sound enough to survive -not reaching a sufficient level of milestones
No matter what the program, clients should be tracked once they leave to provide data for measuring various metrics and economic impact (see section below for more detail about metrics and economic impact).
Leveraging Innovation Innovation is a key element to productivity improvement, job growth and economic growth. It encompasses not only new products, such as an iPhone, but also improved processes, such as those large businesses utilize in their everyday work. Many ventures and, therefore, clients of entrepreneurship centers seek to capitalize on innovation in several ways, including commercializing their intellectual property and converting innovation into business practices.35
Commercializing Intellectual Property The educational programs that entrepreneurship centers conduct greatly help engineers and other technical professionals understand business and entrepreneurship in a way that they are not usually exposed to. It helps them analyze and understand customers, marketing, sales, operations, finance and the value of a team. Many programs won’t allow admittance unless there is a team that includes the technical person with at least one business development person.
An example of how one program assists technology-based ventures is by:
-Identifying the attributes of the key person/potential entrepreneur -Analyzing the technology’s risk profile and venture opportunity -Assessing the business plan -Prioritizing commercialization strategies -Creating financial valuation models to assist with investor conversations
Once deemed ready, entrepreneurship centers can help ventures with access to capital. This can be in the form of grants such as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) or investment funds.
Converting innovation into business practices
35 Ibid
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Businesses grow and increase productivity by integrating innovations, including third party solutions, into their operations. Ventures are often the creator of the innovations that other businesses utilize. Examples include the Microsoft Office Suite, QuickBooks, and Facebook. Some entrepreneurship centers, such as Atlanta Tech Village provide support specifically for these types of businesses.
Entrepreneurship centers should stay up-to-speed with innovations that serve businesses and seek out ventures that develop those innovations as long as they fit into the entrepreneur center’s mission. Also, some of these innovative products and services, like high-speed Internet service and video teleconferencing, can be used by the entrepreneurship center and be made available to its clients.
Client services Deal flow – the number of potential clients that are seen, that, in turn, enter the program, and, ultimately, leave the program – is a key to a successful entrepreneurship center program. Of course, one of the important metrics is success after leaving the program and this will be discussed in a later section. Deal flow is a function of the services that the program provides to the client companies. Outstanding service will create a demand from potential clients.
Pre-Incubation or Pre-Acceleration: An example of pre-incubation services could be the Co-Starters program for aspiring entrepreneurs that Douglas County has implemented. Such programs can be enhanced to provide limited pre-program coaching and affiliate status. Pre-incubation programs are an excellent way to show participants what the entrepreneurship center has to offer and for its staff to pre-screen the participants.
Affiliate programs are limited access plans for clients who may not need everything an entrepreneurship center has to offer, for example, home based companies or those with an existing storefront. Usually, the affiliate client can receive limited access to the facility, whereas full members will receive office space and 24/7 access to the facility. Some affiliate programs will allow members to attend classes and workshops, as well. Affiliate programs may be a source of future clients, help raise the profile of the entrepreneurship center in the community and, importantly, are a source of additional revenue for the program.
Coaching and mentoring: Coaching and mentoring are distinct services within an entrepreneurship center that are different from education. While education can provide a foundation, coaching is with one person helping the client company (often only the entrepreneur, but can be the team).
The terms coaches and mentors are often used interchangeably, but for our purposes we’ll define a coach as one who can guide the client through the various phases of a venture – business planning, launch, going to market,
The Nexxt Entrepreneur, LLC 38 financing, etc. Coaches will help coordinate or show the client how to coordinate the various resources needed. They can also be a sounding board for the client company, but should not do specific tasks for them.
Mentors, on the other hand, do some of the same things, but tend to focus in a specific area and can be subject matter experts. Mentors give entrepreneurship programs a way to provide a breadth of knowledge and experiences that no one person can have. Frequently, mentors have had real-word entrepreneurial experience that clients like to rely on (this is not always the approach that the author of this study agrees with as having multiple perspectives is preferred). One thing for the Executive Director to stay on top of is that the mentor doesn't think he is directing the client’s business.
Entrepreneurship centers may also have Entrepreneurs-In-Residence (EIR) whose role is to help any client that seeks his or her help, rather than being assigned to any one company. The EIR is an experienced and often retired entrepreneur who stays in the facility for a set number of hours per week. He or she may be paid or get free office space.
Access to Capital: The number one problem entrepreneurs say they have is lack of access to capital (this is not always true, but it is what they say). One of the most important functions of entrepreneurship centers is to greatly assist client companies to become ready for a capital infusion. They can do this by helping them develop a sound plan, develop a market ready product or service, understand their market, create a sound management team and other factors. Included in this is intense training on how to prepare an investor presentation. Only then will entrepreneurship centers potentially introduce capital providers to the client company. Business accelerators generally have a program-ending event in which they bring in potential equity investors to hear pitches by their graduating ventures.
Capital can be in the form of equity, debt, grants or another form of capital infusion. While accelerator programs tend to have contacts with angel investors, venture capital firms and the like, non-accelerator entrepreneurship centers may have contacts with bankers, non-bank lenders, and understand how to apply for grants as well as equity providers. However, the best source of funding is revenue, so access to customers is what many entrepreneurs value.
Other Services: Client networking with fellow clients, coaches, mentors, speakers, etc. are key reasons that client companies want to be a part of an entrepreneurship center. Being able to interact, share psychological support and expertise, and, perhaps, garner key contacts are several of the benefits of networking in entrepreneurship centers. Most conduct events, classes, workshops, happy hours, etc. to encourage networking and their facilities are arranged to allow for interaction.
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Some programs offer marketing help in some form or another, such as helping to write press releases, advertising, video and more. These days, many need help navigating digital advertising. Entrepreneurship centers can find expertise, often from students at a university, with social media and graphic design as well as entire marketing campaigns.
Entrepreneurship centers can help client companies form an effective board of advisors. The center should be able to pull qualified advisors from their network, including the center’s advisory board. However, the client’s advisory board should be carefully chosen based upon the client’s needs. For example, if patents are important, then someone – either a patent attorney or a prolific patenter – should be part of that client’s advisory board.
Education: One of the main purposes of most incubators and accelerators is to properly train their entrepreneurs. A formal curriculum is usually part of the benefits they provide. There are standard classes that form a curriculum for the client companies, but they may also have one-off workshops. Workshops may focus on a specific topic that is of interest to clients and/or may be a topic that will attract outside business owners. For example, in today’s business environment, any class about social media is likely to cast a wide net of participants. These workshops can be used as a marketing tool to promote the entrepreneurship center to prospective clients and sponsors, stakeholders, as well as generate needed fee income. Workshops can be as little as one hour long. For some workshops, having a well known instructor can enhance attendance and draw more people to the workshop. Some of the workshops can be done as breakfast or lunch meetings.36
Creative marketing such as a ‘Boot Camp For Veterans’ can draw niche groups. Workshops can be done for those with disabilities, people who receive public assistance, etc. Certain workshops can be funded with grants or corporate sponsorships that provide business training to, for example, low income people.
Examples of workshops: -Developing the Right Business Plan -Finding Investors -Marketing -Cash is King -Hiring and Motivating Employees
-To Franchise, Buy a Business or Start a business -Developing Your Brand -Protecting Your Intellectual Property
36 H. Amey and Linda Knopp.“Basic Training,” NBIA Review 22, no. 4 (2006). The Nexxt Entrepreneur, LLC 40
-Finance for the Non-Financial Manager -Social Media in a Connected World
Several examples of Education Programs can the found in the appendices under Appendix F– Sample Education Program – The Burson Center and Sample Education Program – ATDC. Also included in the Appendices is Appendix F – ATDC Calendar that shows all their classes, workshops and events in March, 2019.
Metrics
Entrepreneur centers serve multiple stakeholders, some of whom provide financial support. These may be state, regional, or local government entities such as economic development organizations, legislators, city councils, universities, chambers of commerce, community members, etc. As a result, Executive Directors can be challenged to show the value of their work. Thus, they must be able to evaluate, monitor, or measure their results. With various stakeholders, each may value a different outcome.37 Therefore, it is important to clearly understand what is desirable to be measured. Some common requests include:
-Measurement/Monitoring: What are the desired outcomes of the program? How big are they?
-Program/Project Evaluation: What outcomes did the program cause? How are these outcomes related to the goals of the program?
-Impact Measurement: How is the effect of the program on the economy calculated?
Yet, the devil is in the details. If tying outcomes to activities is required, a more intense statistical study is needed to show causality.
Building an evaluation process begins with understanding the program’s mission, as previously discussed.
Metrics are important to help the Executive Director understand what actions, staff, partners, etc. are effective in helping produce the desired outcomes. Of course, metrics also help with requesting support, including from sponsors and with grant writing. The majority of the data collection and analysis can be done in-house, but an expert to design the evaluation research and/or econometric analyses (e.g., impact studies) is often needed when in- house staff doesn't have the expertise to do.
37 Catherine Renault, Metrics For Entrepreneurship Centers: A Guide For Practitioners (Orlando, FL: International Business Innovation Association) The Nexxt Entrepreneur, LLC 41
Some terminology and definitions that are important are:
Inputs: funding, staffing, facilities, volunteers, other partners
Outputs: number of clients served, events hosted, programs, etc.
Outcomes: jobs created, funding raised by clients, revenue, patents, etc.
Here’s an example for an accelerator38:
Reporting that may be prepared for stakeholders include successes, activities, projects, challenges that describe the ‘big-picture’ view of the entrepreneurship center.39
One tool that is often important to assess the usefulness of an entrepreneurship center program is Economic Impact that is described in the next section.
Measuring Economic Impact
38 Ibid 39 Danaline McPhail Bryant, “Tips for Creating Effective Stakeholder Reports,” Speak Up! An Advocacy Toolkit for Business Incubators. (National Business Incubation Association, 2004), 26. The Nexxt Entrepreneur, LLC 42
The goal of entrepreneurship centers is to help their clients succeed and thrive and to graduate from their programs. Many entrepreneurship centers, however, don't do a good job of measuring their impact in terms of their clients’ jobs created, salaries paid, revenues earned, and any other economic gains. Without metrics, it is difficult to make a case to government officials, potential clients, the public, potential funders, and others about the importance of the program.40
Tracking data is especially important for those funded by local or state governments or universities, many of which are publicly funded as the public wants to know where their money is going. Many entrepreneurship centers are funded annually, requiring annual approval and, thus, funding requests are constantly in front of the public. In contrast, tax incentives given to companies to locate in a town are one-time, even when the benefits may not accrue for several years and may be small on an annual basis. The payments for these large relocations may also be forgotten about by the public. Compare this to entrepreneurship centers’ subsidies that may be smaller in the aggregate than the one-time tax grant. Therefore, entrepreneurship centers must show their effectiveness constantly.
Here are two examples of the effectiveness of incubators. Keep in mind that the information reported is from before the Great Recession:
An incubator in Athens, Ohio that is in rural Appalachian County with 30% of the population below the poverty line did an economic impact study in 2006. It's six clients employed 217 people in Athens County, with wages of $10.1 million that resulted in $1.5 million of state and local taxes collected. The overall impact was estimated to be 344 jobs and $12.6 million in labor income. This incubator also graduated 9 companies that employed 194 people whose impact was not included in the above numbers.
Another incubator, this one in Greensboro, NC found that clients and graduates employed 655 people, in 2005, with another 562 jobs created through indirect and induced impacts. These 1,217 jobs created $46.4 million in labor income with an average salary of $38,169 that exceeded the median county income of $26,000.
In is important to understand this about impact data: that 100 jobs impact more than 100 people. Unfortunately, most incubator managers don't track data, so aggregate data is not available.
When determining what data to collect, it is important to have a clear set of goals. If the focus is on both serving existing low income entrepreneurs and also accelerating disruptive technology, the program may have unrealistic and conflicting expectations and measurement of results may be impossible.
40Meredith Erlewin, Measuring Your Business Incubator’s Economic Impact: A Toolkit. (International Business Innovation Association, 2017): 20.
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It is important to understand what the various stakeholders think is important and to track those things. Because some programs have multiple stakeholders, different factors may need to be tracked. Not only does the program have external stakeholders, but also internal stakeholders – client companies. It is important to talk to the entrepreneurs at the outset about the program’s expectations and the data they will be expected to provide during their time in the program and as well as once they leave. Knowing what data will be collected should help clients set up their books and records accordingly.
Some of the things to track include:
Number of Businesses That Graduate: Certainly, one data point should the absolute number of businesses that leave, but more information that is tied to goals and impact should be tracked and collected. For some programs, the metric may be survival rate, especially if it is important to compare it to the failure rates that are often quoted. But, jobs created and their impact may be equally important. For other programs, investment raised (over time) may be important, as may be whether the venture experienced a liquidity event.
A Baseline Set of Data: Using the examples of jobs and money raised, it is important to know how many people clients employed and the amount of money clients raised when they started the program. Then, over time, as these measures change, the impact of the program can be ascertained. For example, a venture that raised $1 million before it entered the program may have raised $5 million a year later; the program could have been responsible for helping raise the additional $4 million.
A major challenge can be keeping track of the graduating companies as they may move, or the personnel changes in the companies and also in the entrepreneurship center. Also, some graduates are reluctant to share information. It may be sufficient to stop tracking data five years after graduation.
Appendix D - Metrics: Collecting Basic Data provides a list of basic data that should be considered for collection. Appendix E – Additional Metrics provides examples of additional data that can be collected, including data by specialized programs.
Collecting basic data that is useful for reporting to stakeholders can be done via survey. However, a more in-depth impact study will usually be done by university, chamber of commerce, or another partner that has expertise in generally accepted modeling methodology. Some think that data should be collected quarterly as it is easier for the client to manage and it becomes more of a habit for the client. Others suggest twice a year or annually is sufficient,
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Connecting to Universities In 2013, the National Business Incubator Association (NBIA) published a paper that cited over half of their incubator members had an association with institutions of higher learning, although the type of relationships varied greatly. In some cases, the incubator is university-based whose purpose is often to nurture and/or commercialize university developed technology.41 The Advanced Technology Development Center (ATDC) based at Georgia Tech is a state funded incubator that started with the idea of developing Georgia Tech technology. Yet, it has morphed into admitting non-Georgia Tech technology ventures.
The incubator at University of South Florida was housed in the same building as the University’s Center for Entrepreneurship (when the lead author was a professor there). The ventures generally were not university based, but expected to benefit from being part of the university by having access to both business and engineering professors. This expectation was largely not met by engineering professors, although the professors in the Center for Entrepreneurship provided assistance. Rather than being university based, entrepreneurship centers may have an informal relationship with one or more universities. Each university may provide expert help in different areas.
One finding from the NBIA report was the prominence of student incubators to help them start businesses. The first known student incubator began at the John Pappajohn Entrepreneurial Center at the University of Northern Iowa. It is a physical incubator that accepts students every semester and requires students to show progress on the business in order for them to stay in the program. At Northern Iowa, the incubator is seen as an effective student recruiting tool, especially as more and more universities are emphasizing entrepreneurship programs.
The biggest challenge for student incubators is the lack of business experience and their companies tend to be at an earlier stage. Although real world education is an important goal, the real payoff is when students graduate from the program to run their own business. Of course, being students, some will start a different business than the one they started in the incubator or change their focus entirely.
While other universities had adopted student incubators, one local example that is not university based is Opportunity Hub (OHUB). Information about OHUB is provided in Appendix F – Opportunity Hub.
Summary of Interviews
A series of interviews was conducted with officials and business owners in Douglas County to better understand the needs of the County for small business development. The officials were the majority of the Board of Commissioners, a majority of the Douglasville City Council, and representatives of the Douglas County Board of
41 Dennis E. Powell, D.E. “The University-Incubation Connection: A Series,” NBIA Review 29, no. 2 (2013). The Nexxt Entrepreneur, LLC 45
Education. Some of the findings from talking to officials are that it is important to help both existing businesses and new businesses. This is important because many entrepreneurship centers focus only on new and younger businesses. Two other common themes emerged from the officials. First, there is significant cooperation among the government entities (and also with the business community) that needs to remain. The concept of One Douglas is a strength that creates synergy that will enhance this initiative.
The second common theme is that the initiative should be unique to the needs of Douglas County. What is best for Atlanta or Carroll County is not necessarily best for Douglas County. The term ‘thinking-outside-the box’ was used to make sure that the solution can be different and fit the need. Being innovative was stressed. The overriding goal is to make Douglas County a place that attracts bright and young minds to want to start businesses here (in fact, two interviewees think that it is important to develop programs that youth in Douglas County will embrace with a goal of creating an environment that they wouldn't want to leave or to come back to after college.) However, a point of departure was whether a dedicated facility is needed.
These common thoughts suggest that Douglas County seeks to create a unique identity for how it helps small businesses.
The existing business owners interviewed were at varying degrees of business stages. Nevertheless, the universal desires of entrepreneurs were also desired by those interviewed: connections and information. Connections are the lifeblood of entrepreneurs. Entrepreneurs, and those interviewed in Douglas County want, first and foremost a connection to prospective customers. They want to do business in Douglas County since they live here. One asked for introductions to decision-makers at large retail organizations that can buy his product. Another interviewee thought that the Convention Center would be an ideal client and wanted to be able to make a proposal. Connections to customers was also mentioned by a non-Douglas County, former business accelerator client who the author interviewed. He stated that finding customers was the toughest thing for a startup and the accelerator program would have provided maximum value by introducing him to potential customers – not investors.
Surprisingly, none emphasized the need for funding. However, an entrepreneurship center must be able to provide connections to funding sources, including banks, angel investors and alternative funders.
Virtually all agreed that some level of business education (i.e., information) was important, although several thought that business education was more important for others rather than themselves and the type of education they desired differed. Those who had a formal business education wanted a refresher or simply workshops (although everyone stated that they would benefit from workshops, such as social media, marketing). Those who saw the value of a formal education program stated so only after being prompted by the interviewer who explained the benefits. One
The Nexxt Entrepreneur, LLC 46 business owner first stated that she didn't need any help, but toward the end of the conversation, stated that a formal incubator and a formal education program would be ‘awesome.’ This suggests that communicating the benefits offered is critical.
The Small Business Development Center was used by one interviewee and his experience with them was fruitful. He stressed, however, that he had to take initiative to find them. Most interviewees are members of the Chamber of Commerce and thought the Chamber offered high-quality programs. One suggested that the Chamber be proactive in calling him periodically to find out what problems he may be having.
Most interviewees thought that having office space would have been useful when they first started. Several are working from home and don't need space. Another has and is utilizing coworking space – first in Atlanta, but now in Douglas County - and thinks it is important to be around other entrepreneurs. Having subsidized space was seen as a benefit for a startup and specialized space, specifically a kitchen, would be helpful. It is important to note that an interview was conducted of a business owner who owns a coworking space (this will be discussed again later) and he has had 95%+ occupancy for the past few years.
This suggests that not only connections and information are useful, but also a facility. And information can be delivered via workshops and seminars. This is consistent with what the author found from visits to incubators in Georgia and Florida. A formal education program is important, but would require the correct selling approach.
In talking to the directors of entrepreneurship centers, it was apparent that the incubator model had evolved. The Burson Center is a traditional incubator in that it has client companies go through its formal education model. However, it also obtains revenue from tenants that are not incubator clients. In addition, it recently added a Maker’s Space with prototyping capability to help inventors collaborate and develop concepts.
One common denominator is that each is funded in part, by an established entity, but has also taken steps to efficiently utilize their space by renting it out. One accelerator has sought tenants, even though they are using office space by one of the owners, Comcast. Most entrepreneurship centers receive funding from state or local governments, or nonprofit organizations.
It is apparent that the coworking model, whereby space (sometimes only a desk) is rented is working. Several entrepreneurship centers had high occupancy, including one with 40 out of 50 offices filled without implementing a formal education program.
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Innovation Districts
A common theme among those interviewed was the idea of ‘thinking outside the box’, ‘being innovative’, ‘creating our own model’. It was apparent that the desire was to create an entrepreneurship ecosystem that created an atmosphere for small businesses to thrive in. Inherent in this is 1) the desire to organize and coordinate assets, both new and existing, to support existing businesses succeed and grow, 2) to retain the talent that is cultivated in Douglas County, but may leave, and 3) to attract talent from the region by establishing Douglas County as a go-to destination for entrepreneurs.
Atlanta has created an effective entrepreneurship ecosystem of which several components can be replicated by Douglas County. In Atlanta, there are a plethora of accelerators, coworking spaces, along with an established incubator (the ATDC). There is substantial activity in the ecosystem that includes education programs, workshops, competitions, speaker series’, meetups, hackathons, and more.
Atlanta is considered to be an innovation district and Douglas County can create its own version of an innovation district. Innovation districts have gained traction since the Great Recession. They are often described as urban phenomena, rather than suburban like Silicon Valley. One definition is ‘geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators and accelerators. They are also physically compact, transit-accessible, and technically-wired and offer mixed use housing, office, and retail.’42
Irrespective of the pure urban concept, the point is that proximity of and access to the relevant assets helps spur creativity, ideas, knowledge, networking, collaboration that, in turn, are necessary for innovation. Further, the concept assumes that people desire more choices that include where and how to live, play and walkable neighborhoods that blend housing, work, and play. This is consistent with the plans that the City of Douglasville has outlined.43
On a worldwide base, Barcelona, Berlin, London and Toronto have been deemed cities that have innovation districts. In the U.S., Baltimore, Buffalo, Cambridge, and, yes, Atlanta are but a few of the cities identified as having innovations districts. Atlanta, and especially the midtown area around Georgia Tech, has a substantial
42 Bruce Katz and Julie Wagner. “The Rise of Innovation Districts: A New Geography of Innovation in America”. Accessed April 26, 2019. https://c24215cec6c97b637db6- 9c0895f07c3474f6636f95b6bf3db172.ssl.cf1.rackcdn.com/content/metro-innovation- districts/%7E/media/programs/metro/images/innovation/innovationdistricts2.pdf 43 Adam Williamson (Principal in charge). 2017. Douglasville. Downtown Master Plan & 10 Year Strategic Plan. The Nexxt Entrepreneur, LLC 48 ecosystem of entrepreneurship entities. Please see Appendix K – List of Atlanta-based Entrepreneurship Organizations for a partial list of:
-Entrepreneurship Organizations -Co-living/Clubs -Accelerators -Incubators -Angel Funding Sources -Non-Traditional Funding -Venture Capital -Funding Initiatives
In most cases, there is an anchor institution, like Georgia Tech in Atlanta or University of Georgia (UGA) in Athens. However, other areas, like Brooklyn, NY focus on developing underdeveloped areas that may transform low-and-moderate income neighborhoods. This often involves better utilizing older industrialized areas by reimaging how best to use them. Still others, such as the North Carolina Research Triangle will leverage existing science parks by creating ways to provide workers with urban-like, lively environments.
The goal is to create productive, inclusive and sustainable economic development for all citizens and types and sizes of businesses.
Despite Douglas County not having the wide-ranging resources of Atlanta, or UGA, it has (in the author’s opinion) what it takes to create its own, unique model of an innovation district. The common denominator of innovation districts is the coordination among the necessary economic, physical and networking assets. Working together, these assets can create the ecosystem required for an innovative environment. This is consistent with the concept of One Douglas, whereby the County, City of Douglasville, School Board and Development Authority work together for the citizens of the county.
Examples of economic assets are institutions, companies and organizations that help foster innovation. They can be categorized as:
Innovation Drivers: will be unique to each region, but can consist of universities and other research institutions, including medical and healthcare; and large and small companies, including the creative class.
Innovation Cultivators: organizations that support innovative entities, such as entrepreneurship centers; and community colleges training those for jobs with skills for innovative activities.
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Neighborhood-building Amenities: include physical assets such as grocery stores, coffee bars, local retail, open spaces that support residents and workers in the innovation district. Also included are the networks or relationships between people and between organizations to allow for collaboration that drives innovation.
There are three basic models for innovation districts, the first two of which are possible for Douglas County. And, the third may be possible using the call center expertise found in the County.
The first model is the anchor plus model where a major institution is flanked by innovative firms, startups, and spinoffs. An example is MIT in Cambridge, MA. Imagine a version whereby Douglas County’s Innovation Center is the major institution and it is flanked (around the County) by entrepreneurs in industries that Douglas County is strong in.
The re-imagined urban area that is found in areas that are undergoing a physical and economic transformation, such as historic waterfronts or the industrial or warehouse districts in South Boston and South Lake Union in Seattle. Imagine any area in Douglas County undergoing transformative economic development, including Downtown Douglasville and Lee Road.
The third model is the urbanized science park that has been an isolated park where innovation has occurred, but is now being re-engineered to create mass density areas that include housing and retail. The Research Triangle in Raleigh-Durham is the prime example. Imagine including an Innovation Center in any of the areas in Douglas County that are being developed with mixed use plans.
Research suggests that implementing an innovation district requires:
-a collaborative leadership network consisting of corporate, government and university leaders who meet regularly.
-setting a vision built on the strengths of the region
-pursuing talent and technology as they are the drivers of innovation by creating strategies to attract and retain and developing a platform for innovative firms.
-promoting inclusive growth by helping low-income residents through education, employment and opportunities
-enhancing access to capital for the various players in the district
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UGA has announced its intention to launch an innovation district in Athens. On September 6, 2018, their task force for an Innovation District recently delivered its recommendations to President Morehead. To create ‘an interconnected set of facilities offering a broad range of spaces and amenities to expand the university’s innovation ecosystem,’44 incubation and coworking spaces (emphasis added) are central to achieving their vision. Their plan includes (i) open “collision” space, programmed and curated to foster new idea generation; (ii) leased incubator or coworking space for new and young companies; (iii) leased space for mature companies; and (iv) limited space for Innovate-support activities.45
UGA’s intent is to create a collaborative region that will enhance economic growth by bringing together various partners and fostering an entrepreneurial network. The idea of a university that dominates a town leading the effort to create an entrepreneurial ecosystem is not new. The author conducted a previous study of University-based Entrepreneurship Centers and found that smaller cities, with only a single university, had a unique advantage because it could almost monopolize the entrepreneurship activity. They were able to create a hub with the university in the center because there was no competition and other entities wanted to partner with the central provider of entrepreneurship.
While a university that dominates a region is ideal, other entities can be the catalyst to spur innovation activities and support small businesses. The definition and description of an innovation district used here may not be exactly the way that Douglas County can approach economic development for small business, it can draw upon the concepts of innovation districts to creating its own entrepreneurship ecosystem. It is thought that the Douglas County Innovation Center can become that central hub of entrepreneurship activity in Douglas County.
One of the accomplishments of Douglas County is the establishment of an Opportunity Zone from the Georgia Department of Community Affairs. An innovation district is different from an Opportunity Zone in that an Opportunity Zone allows for businesses to obtain a tax credit for jobs created. This can be helpful to any business, including startups.46 Although the two are not mutually exclusive, it is not imperative for the location of an entrepreneurship center to be in an Opportunity Zone. Certainly, ventures can use any tax breaks or financial incentives they can get. However, it is useful to keep in mind that many ventures are not profitable at the earliest stages so a tax break is not their primary concern. Once they mature and/or become profitable, moving to an Opportunity Zone may be a good strategy.
44 President’s Innovation District Task Force Presents Recommendations, UGA Today, (September 6, 2018). Accessed April 9, 2019. https://news.uga.edu/innovation-district-task-force-recommendations/. 45 University of Georgia, Innovation District Task Force Report and Recommendations (July 1, 2018). 46 Jim Tankersley, “Treasury Issues Rules on Tax Breaks for Opportunity Zones,” New York Times, (2019), accessed April 17, 2019. https://www.nytimes.com/2019/04/17/business/economy/opportunity-zones-treasury-regulations.html? The Nexxt Entrepreneur, LLC 51
The Facility
The author drove by several facilities within a 3 mile radius of Downtown Douglasville that were identified by a commercial real estate search. He also drove by one facility in Tributary Village as well as up and down Lee Road. In addition, he met with the owner of Station Loft Works, a coworking space on Broad Street and drove by Meritage Centre, a coworking space on Chapel Hill Road. The intent was to observe some possible locations, not to choose any one.
One of the most important decisions about an entrepreneurship center is the facility. It is easy to confuse a physical facility with an entrepreneurship center. Yet, an entrepreneurship center is much more that just the facility. However, for many entrepreneurship centers, a physical location is important as it provides a focal point for activity, can enhance an image, helps provide an identity, can house client companies, and is a gathering spot for peer support, idea generation, sharing equipment such as meeting rooms, copy centers, and network sharing.47 The entrepreneurship center models described – Incubator, Accelerator, Coworking Space, Startup Hub – generally assume that there will be a dedicated space for the client companies. It is possible to run an accelerator program by using space on a part time basis and the concept of a ‘virtual’ incubator is not new.
There are so many variables and choices that can be made that it is not possible to explore them all. A final decision will likely be a variation of what can be presented here. The following alternatives are presented:
-Utilize existing facilities (i.e., not buying or renting a dedicated facility) -Buying an existing coworking space -renting a 15,000 square foot facility -renting a 45,000 square foot space
Use Existing Resources The existing resources that Douglas County can use to create an entrepreneurship center include rooms at the Chamber of Commerce of which there are several that can be utilized for classrooms and meeting rooms. Currently, there are two rooms that are not being fully utilized that can potentially be dedicated for an entrepreneurship center. It is also possible to rent rooms at other venues, such as the Convention Center.
Some programming has already been developed in Douglas County. Examples include the Co-starters program that helps those at the idea stage understand what it takes to turn their concepts into action; and the Small Business Sustainability Program that the Chamber runs to help those already in business create a plan for growth. It may be
47 Corinne Colbert, Dinah Adkins, Chuck Wolfe, and Karl LaPan. Best Practices in Action: Guidelines for Implementing First- Class Business Incubation Programs Revised 2nd Edition, NBIA Publications (Saline, MI: McNaughton & Gunn, 2010) The Nexxt Entrepreneur, LLC 52 possible to expand other existing programs, such as the NextGen Mentoring Program to include coaching and mentoring for entrepreneurs.
Douglas County is also fortunate to be home to both a West Georgia Technical College campus and a Mercer University Regional Academic Center from which to draw professional instructors and student interns from.
Importantly, education can also be delivered by the SBDC, the Burson Center, and also by professionals in the business community. The SBDC already works with the Chamber of Commerce. The Burson Center offers an affiliate program for $90 per month that allows for businesses that don't reside in their facility to participate in their programming. A big advantage in using the Burson Center’s affiliate program is that it is close to Douglas County. It is possible to craft entrepreneurship programming without a dedicated facility.
This option would require a fulltime manager to coordinate all the activities. It may require paying relatively minimal rent to the Chamber and other venues where meetings and classes take place.
However, there is a huge disadvantage, as well. If one of the goals is to create an entrepreneurship ecosystem that fosters innovation and attracts and retains the best and the brightest, having a dedicated facility makes a big, bold statement to everyone concerned that Douglas County has made a commitment to entrepreneurship and innovation. There exists tremendous talent and energy for small business development in Douglas County, but it’s not clear that there are dedicated resources. In fact, most regions that have dedicated entrepreneurship centers also have Chambers of Commerce, convention centers, etc.
Another disadvantage is that, if a goal is to have tenants who are clients, only a few could have office space due to the lack of space at the Chamber. Having multiple tenants can create an innovative atmosphere that can attract and retain talent – both at the client level and also to managers. However, creating this atmosphere requires more than the sum of the programs.
Using Avalanche Consulting’s work as an example, surveyed residents stated that ‘Supporting Small Business’ was what they want leaders to do to make the County a better place to live. Highlighting the point, residents also chose ‘Entrepreneurs/Startups’ as the third most important item when asked what should drive future economic growth.
Both the author of this study and Avalanche think that creating a centralized location for startups to learn, invest, and grow can best serve the needs of the County. A dedicated facility for entrepreneurship is a distinguishing asset.
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Physical Location
If the goal is to create an innovative district and ecosystem in Douglas County, it is important to consider obtaining a dedicated facility. It should be in an area that is easy to get to by the target clients, is attractive, and has a flexible layout. It will need common areas including conference rooms and a kitchen; a security system that allows flexible access (24 hours a day); adequate parking; and high-speed communications. Given the variety of businesses in Douglas County, the data collected on the market area, business trends, and the Avalanche Consulting study, a mixed-use model will be the most appropriate. However, there may be special needs (e.g., a lab, a kitchen or manufacturing) and in Douglas County, those can be handled by dedicated maker spaces.
Douglas County has many choices, including downtown Douglasville, where the city is undergoing development, the Tributary area, Lee Road, etc.
As described, entrepreneurship centers come in many different forms.
Should a dedicated facility be pursued, it must use a hybrid operating model. Based on the strong local focus on service businesses, the model will include ample space for offices suites, business education, training and supportive services. The facilities should be, at its core, a coworking space to generate rent from tenants who may not be entrepreneurs. It should be part incubator, so that the small businesses that need the education and support receive it while being housed in the facility. It should have an affiliate program so that small businesses that already have space – whether a home office or a store front or in an office park – can benefit from the education and programs that the incubator tenants receive. It can develop specialized programs, such as youth programs and accelerator-type programs. It should consider a location to be able to add a maker space for specific needs, such as a dedicated kitchen or light manufacturing.
In addition, the facility can also be utilized to host community-based business education and networking activities for existing businesses in the area. This not only allows for enhanced revenues via tapping into the current business community, but it also provides ongoing opportunities for tenants to network with established business owners who may utilize their services.
Thus, the facility can be flexible to meet the needs of multiple constituents that can change over time.
Buying an Existing Coworking Business During the study, one alternative that was available for purchase was a coworking space. Station Loft Works, located at 6790 W. Broad Street (also 12461 Veterans Memorial Hwy.) was founded in 2009 by Barry Oliver and is for sale with an asking price of $2.2 million. It is 14,000 square feet on two levels and is 98% leased. Mr. Oliver
The Nexxt Entrepreneur, LLC 54 has built the business over the past ten years and it deserves consideration as an anchor for an entrepreneurship center.
It is important to note that another, similar business exists in Douglas County. Meritage Centre, located at 3400 Chapel Hill Road, also leases offices to business on long and short-term bases. Although it is not known the occupancy rate, a drive-by revealed an almost full parking lot. The signage out front displayed the names: Caldwell Banker, Alliance Spine, First Finance, Steel Clad, Brand Mortgage, Farmers Insurance, Brookmont Public Accountants, Brain Core Neural Feedback, Liberty Software, Adhere2Case, Bottom Line Tax. This appears to be further evidence that there is a demand for coworking space in Douglas County. It is thought that Meritage Centre is located in a somewhat isolated area and away from I-20.
Advantages of Station Loft Works: a major benefit of buying a business compared to starting from scratch is that is has customers and revenue. Station Loft Works has a 98% occupancy rate (according to Mr. Oliver) and a wait list of potential tenants. For the past few years, the facility has been able to replace tenants who leave relatively quickly. A related advantage is that the business has a system and personnel in place to service its clients. The main floor and the basement are fully renovated and house clients. There is room for expansion in an upper floor and there is sufficient land for a build out. An additional structure exists to build out a maker space should there be a need for light manufacturing as an example (there may be zoning required).
The business also has a couple of intangibles: location and the ‘cool’ factor. It is located on Veterans Memorial Hwy. and is also within walking distance of the Chamber of Commerce. It is easy to get to and adequate parking is available. Just as important, the décor and design are cool, so it is attractive to prospective tenants and they like working there.
In sum, the business has customers, revenue, a good location, personnel, a track record, and the cool factor. It is important that it has extra space that can be used for future growth.
Disadvantages of Station Loft Works: Mr. Oliver, who has been the driving force will be leaving the business once he sells it. To his credit, he has developed a team that will stay, but he is the leader. A second disadvantage is that the existing tenants are largely established businesses and some are employees of large companies using the space as a satellite office. Several others often work at home and use Station Loft Works as an office when they want to get away. This is good because it provides a stable income, but they are not the entrepreneurial businesses that are the target of an entrepreneurship center. Also, the day that the author visited, very few people were using their offices, so there wasn't much human activity or atmosphere.
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Currently, there is no educational programming or connection to existing resources such as the Chamber of Commerce, the universities, corporations or the SBDC. The layout of the building is not designed for classes and workshops as there is no large conference room. In fact, there is no open space that is often found in entrepreneurship centers (because its core competence is not to cater to entrepreneurs).
At 98% occupancy, growth must come from 1) raising rental rates, which may be difficult; 2) physical expansion; 3) renovating an upstairs area; 4) renovating an outside structure and; 5) building on existing land. The latter four alternatives will require investment. It may be possible to grow by utilizing a different business model – one that rents rooms by the hour or day than by the month. For example, a coworking space in and around Atlanta that rents rooms by the hour is ROAM (See Appendix H – ROAM). It charges $55/hour for a room that rents for $375/month at Station Loft Works or the Burson Center.
The lack of entrepreneurial startups, educational programming, connection to existing resources, available space to expand are disadvantages to being an entrepreneurship center, but may represent an opportunity. However, there is a solid foundation of revenue and an existing customer base from which to build upon, rather than start from scratch. Nevertheless, the $2.2 million price is likely high.
15,000 Square Foot Facility There were numerous facilities available that the author found via a real estate listings search. Rather than focus on any one property, a generic 15,000 foot facility was assumed for purposes of analysis here. 15,000 to 20,000 square feet was assumed to be large enough to have a ‘presence’. Expansion can occur if and when the 15,000 square feet proves not to be large enough. Also, for reference, the Burson Center is about 24,000 square feet and Station Loft Works is about 14,000 square feet.
The financial analysis assumed that it would be rented, rather than purchased. There are numerous facilities available to purchase, if that is the desire. One advantage of purchasing is that renovations can be done without obtaining a landlord’s permission. This may be desired as needs change, such as the need to add space for a specialized reason like wanting to add a kitchen or light manufacturing capability.
The advantage of renting is that the renter can walk away once the lease term has expired. This may be important if the space is too small to handle the activity that is generated.
In operating this facility, The Douglas County Innovation Center would be unique from the Burson Center. The Burson Center is a pure incubator and helps client companies through its programming and housing. It has a capacity of approximately 20 in-house clients. As of March, 2019, it served approximately 9 in-house clients (they would normally have 13 in-house clients) and 12 affiliate clients. The Nexxt Entrepreneur, LLC 56
At 15,000 square feet, the Douglas County Innovation Center could combine elements from the Burson Center and coworking spaces Station Loft Works and Roam. It would allocate space for the entrepreneurship center that assists existing and new small businesses, as well as coworking and anchor tenants. For entrepreneurship center tenants, incubator educational programs can be obtained using the Burson Center’s affiliate program, supplemented with seminars and workshops from local experts. Examples of specific needs are ‘How to do Business in Douglas County’, ‘Getting Government Grants’, etc.
Coworking space would be used for long term (1 year or more) and short term (1 year and less) tenants. Anchor tenants would include service providers (attorneys, accountants, etc.) to the incubator clients as well as smaller businesses that desire office space, like those Station Loft Work has and government and large corporate tenants would also rent space.
Total allocated space for entrepreneurship center, coworking and anchor tenants will equal 10,500 square feet. Flexibility is important as the entrepreneurship center manager can rent space to any type of tenant as dictated by market demand. The financial model assumes that entrepreneurship center and coworking tenants will occupy 8,500 sq. ft. (of this, 500 square feet will be allocated for hourly office rentals), and anchor tenants will occupy 2,000 square feet.
500 square feet are assumed to be allocated to renting rooms on an hourly basis. This is the model that coworking spaces like Roam utilize. One advantage of this is that the space may be more efficiently utilized if there is enough demand. That is, many tenants who rent an office on a monthly basis aren’t physically there during most of the day. Their offices are there for them when needed, but frequently sit empty. In contrast, rooms that are available for hourly rent have the potential to be rented continuously, albeit by different people. Hourly rents at Roam for rooms that hold 5 to 8 people range from $40 to $55 per hour. This can be compared to the $375 per month that a similar sized room is rented to in-house tenants for.
If there is more demand than a 15,000 square foot facility can hold, a possible overflow facility for either classroom or tenant space is the Chamber of Commerce.
Several educational programs can be utilized including:
-the Burson Center affiliate program: for incubator clients, this existing program can be utilized for $90 per month. Customized programs can be developed, if needed
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-Co-starters for those who haven’t started a business, yet or who have just gotten started
-night and weekend accelerated programs for existing business owners. Perhaps, the Chamber of Commerce’s Sustainability Program can be used or added to satisfy this need.
-Specialty programs such as a ‘Technology for Youth’ program (there are several programs in Douglas County focusing on similar themes)
-periodic speaker series and specialized workshops
Financial Model Several assumptions were made for costs and revenues that are inputs for the 15,000 sq. ft. alternative. Should a larger facility be desired, these inputs can be adjusted.
-renovation – as part of the startup costs, the financial model assumes that the facility will need to be renovated to be built as desired. Renovation cost is estimated at $60 per square foot based on information provided by the Burson Center and corroborated by an experienced real estate professional. However, it is possible that actual renovation costs can be below $60 per square foot. Landlords often provide a tenant improvement allowance and, in 2010, a landlord provided a $60 per square foot tenant improvement allowance. To be conservative, we did not assume a tenant improvement allowance in this analysis. In addition, it is possible that existing space already has some of what is desired and costs will not be as much as $60 per square foot.
-Furniture, Fixtures and Equipment – this was estimated at $20 per square foot, the same as in the 2010 study.
-Entrepreneurship center manager - The executive director (i.e. entrepreneurship manager) will be hired 6 months before opening to coordinate renovation, develop policies and procedures, obtain a board of advisors and market the programs. For a reference point, according to a compensation study conducted by the NBIA in 2013, the median salary of incubator directors was $71,750; and the average salary was $76,492. However, the range was $30,000 to $178,905.48 This analysis used a salary of $150,000 in order to attract a high level manager.
Please note that the managers (Director and Senior Vice President) at the Burson Center are paid by the County and the University of West Georgia.
48 Linda Knopp. 2014. Incubation Industry Compensation Survey (Athens, OH: NBIA Publications) The Nexxt Entrepreneur, LLC 58
-Staff – a minimum staff of an executive assistant at $40,000 per years and part-time/intern help at $20,000 per year is assumed. An additional administrative assistant was added mid-year in the second year at a salary of $40,000. Please be aware that this assumes training, education, workshops will be largely done via outsourcing. No dedicated staff has been assumed for training and education. Also, given the aggressive level of business development assumed, additional help may be required.
-rental rate paid to landlord– a non-exact, but a reasonable rental rate in Douglasville was assumed to be $14 per square foot.
-rented space – there will be four types of tenants: 1) entrepreneurship center tenants paying monthly rent, 2) monthly coworking tenants and 3) hourly coworking tenants and 4) anchor tenants.
-space utilization – the space will be divided into open space, conference rooms, offices for entrepreneurship center clients, offices for coworking tenants, offices for hourly coworking tenants and offices for anchor tenants. For now, we assume that 70% (10,500 sq. ft.) will be rented to tenants, 13.3% (2,000 sq. ft.) will be allocated for open space, 13.3% (2,000 sq. ft.) for conference rooms, and 3.3% (500 sq. ft.) for administrative offices.
Of the 10,500 sq. ft. for tenants, 2,000 will be for anchor tenants (6 offices at $375 per month and 6 offices at $475 per month), 8,000 sq. ft. for tenants renting on a monthly basis (23 offices at $375 per month and 24 offices at $475 per month) and 500 sq. ft. (2 offices at $25 per hour and 1 office at $35 per hour) for tenants renting on an hourly basis. These allocations will change over time and as needed. For example, when rooms allocated for monthly tenants are vacant, they can be rented to those seeking hourly offices. Similarly, if management finds that there exists more demand for hourly rentals than monthly rentals, the allocation will change.
The assumption is of 85% occupancy in all years, although the first year is discounted by an additional 75% since it will take time to gain momentum.
Inherent in these assumptions is that entrepreneurship clients pay the same for rent that coworking space clients pay (i.e., $375 and $475 per month).
Based on room sizes at the Burson Center, Station Loft Works and the Meritage Centre, the assumptions contemplate two room sizes: 160 sq. ft. and 180 sq. ft.
Hourly rates for office rentals are set at $25 per hour for a 160 sq. ft. office and $35 per hour for a 180 sq. ft. office. This can be compared to $40 to $55 charged by ROAM in the Atlanta area. It is assumed that they will be rented
The Nexxt Entrepreneur, LLC 59 for 10 hours per week the first year and will increase by 5 hours per week for the next two years. This is an item that can grow revenue quickly if demand can be generated.
Renting of hourly offices can also be done within membership programs, such as 4 hours per month for $99. Membership programs are explained below.
-Conference rooms – we assume 3 conference rooms at 1,200 sq. ft., 500 square feet and 300 sq. ft. The assumed rental rates are $100, $75, and $50, each per 2-hour event. This can be compared to $125 per event at the Burson Center for the 2,000 square foot room and $75 per event for the smaller conference room. The Meritage Centre rents their conference room (called an Event Theater) starting at $125 per day and conference rooms starting at $75 per day. Year 1 assumes that each will be utilized for 6 hours per month and will increase by 10 hours per month in each of the next two years.
-Memberships – memberships are another way that creativity can result in revenue. The assumptions are for only two membership levels. The first is for those who may work at home, of which there are many in today’s society. It provides access for 4 hours of renting a normal sized room or 2 hours of a conference room per month for $99 per month. The estimate is that 10 people will opt for this membership in the first year, 20 in the second year and 40 in the third year.
A second type of membership is also forecasted that includes the first, but adds access to the educational programs offered by the entrepreneurship center. This was priced at $149 per month. Of the $149, $90 will go to the Burson Center for their affiliate program. The estimated is that 10 people will opt for this level in the first year, 15 in the second and 30 in the third.
These are examples of creative uses of the resources available and the pricing and number of participants is extremely uncertain. However, multiple types of memberships to suit different needs can be created to bring in additional revenue. Trial and error will be required to get to the appropriate mix.
-Workshops, Seminars, etc. – The workshops, seminars and other programs offered by the entrepreneurship will be open to those who are not tenants or members for a fee. These programs may be ‘how to use Quickbooks’, ‘improve your social media standing’, ‘tax strategies’, ‘what is the right entity to choose’, etc. It is estimated that 12 programs will be conducted the first year, 15 the second and 24 the third year. The number of non-members attending (in person and online) in each of the years is 25 per program (hopefully, some who attend regularly will convert to members), paying $35 per event.
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-Corporate Identity Program - Business owners want to project a professional image to impress clients, but may not need a permanent physical office. The corporate identity package will provide clients with a mailing address, meeting space as needed (only first four hours is free), telephone answering service, discounts to member events, etc. Multiple packages will be developed to meet different needs of the client. The projections assume a $200 per month rate and 10 clients in the first year, increasing by 10 in each of the next two years.
This can be compared to the Meritage Commons at Chapel Hill in Douglas County that charges from $75 to $325 per month for its corporate identity package.
-Other – Additional revenue sources are probable, including sponsorship and, likely, grants. Only a limited number of sponsorships have been included. For the first year, $50,000 with an additional $25,000 in each of the next two years. As a point of reference, the Douglas County Chamber of Commerce reported $24,000 of sponsorships in 2017.49
The Douglas County Innovation Center Pro-forma Cash Financial Statement
Year 0 Year 1 Year 2 Year 3
Sq. Ft. 15,000 Tenant Occupancy 85%
Startup up costs Renovation 60 900,000 FFE 20 300,000
Incubator Manager, incl benefits and OH 150,000 97,500 Marketing 25,000
Total 1,322,500
Income
Rent from Anchor Tenants 39,015 53,581 55,188 Rent from Monthly Tenants 153,191 210,383 216,694 Rent from Hourly Tenants 26,010 53,581 73,400 Rent for Large Conference Room 7,200 19,776 33,100 Rent for Medium sized Conference Room 5,400 14,832 24,825 Rent for Small sized Conference Room 3,600 9,888 16,550
49 IRS Form 990 The Nexxt Entrepreneur, LLC 61
Affiliate Membership - Limited Space Option 11,880 24,473 50,414 Affiliate Membership - Limited Space Option, plus Education 7,080 10,939 22,534 Non-members - Programs 10,500 13,125 21,000 Corporate Identity Program 18,000 37,080 57,289 Sponsorships 50,000 75,000 100,000
Total income 331,876 522,656 670,993
Rent, incl CAM 14 210,000 216,300 222,789 Insurance (@$.18 per sq. ft. in Yr. 1) 0.2 3,000 3,090 3,183 Taxes (@ $.92 per sq. ft. in Yr. 1) 1 15,000 15,450 15,914 Utilities (@1.50 per sq. ft. in Yr. 1) 1.5 22,500 23,175 23,870 Janitorial (@.70 per sq. ft. in year 1) 0.7 10,500 10,815 11,139
Total Occupancy Costs 261,000 268,830 276,895
Salaries and Benefits 247,000 280,410 288,822 Part-time/Interns 20,000 20,600 21,218 Marketing 25,000 25,000 25,000 Legal/Accounting 7,500 7,500 7,500 Travel 10,000 10,000 10,000 Internet/Telephone/Fax 10,000 10,000 10,000 Equipment 5,000 5,000 5,000 Misc. Services (copies, coffee, social media, scan and fax) 20,000 20,000 20,000
Total Operating Costs 344,500 378,510 387,540
TOTAL Costs 605,500 647,340 664,435
Income minus Expenses (273,624) (124,684) 6,558
This financial statement reflects projected cash coming in and cash going out. It must be read using the Assumptions that are part of the written study.
45,000 Square Foot Facility The previous incubator feasibility study done in 2010 assumed that a 45,000 square feet facility would be rented, so a repeat financial analysis hasn’t been done here. The report is attached for reference. However, the same creative thinking that was done then should be done now. That is, a hybrid model based on the needs of Douglas County should be considered.
Some of the highlights of the previous study included multiple sources of income, such as:
-Rent from Resident Members -Rent from Conference Rooms from non-members -Fees from Programs, Education and Training (from non-members)
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-Fees from Online Training -Fees from Corporate Identity Program -Fees from “The Deal Room” (this is the major difference in services between this 45,000 square foot alternative and the 15,000 sq. ft. alternative from the previous section.
The advantage of a 45,000 square foot facility compared to a 15,000 square foot facility include larger and more offices and conference rooms. This provides flexibility to meet the needs, not only of internal clients, but external clients who will rent the space for corporate and private needs. The author interviewed one coworking space manager in 2019 who had been approached for renting space for weddings (and this was a downtown location close to other attractive venues). Also, the day the author interviewed the manager at the Burson Center in 2019, a non- tenant corporation was renting its 2,000 foot conference room for periodic training. The availability of larger rooms are a key selling point for coworking spaces, such as ROAM.
Space was also allocated for a dedicated, private room dubbed ‘The Deal Room’ in the previous study, The “Deal Room” was patterned after the atmosphere and ambience that private clubs, such as the 191 Club in Atlanta project. It was to be a place of exclusive membership where business people can go to relax, but also to talk business in a private setting. It would have been positioned as ”the” place to go where business is done. Private clubs, such as The 191 Club and The Buckhead Club in Atlanta are extremely popular for entrepreneurs to network. Outside of metro-Atlanta, golf country clubs can offer similar amenities and ambience, but not every businessperson will utilize a country club. West of Atlanta, “The Deal Room” would have offered a unique experience.
Recently, in 2016 (i.e., since the previous study), The Gathering Spot opened in downtown Atlanta and is similar to what was envisioned for The Deal Room. It is a 22,000 square foot private club geared toward young professionals, entrepreneurs and creatives that desire a work environment comparable to traditional coworking spaces and country clubs, but with a modern twist.50 The club has the ‘cool’ factor.
The disadvantage of a 45,000 square foot facility is that it requires many tenants to get to capacity. It was assumed that 30,000 square feet would be available for tenants and anchor tenants, 8,500 for conference rooms and The Deal Room, 1,500 for administrative offices and the remainder as open space. If 25,000 square feet were allocated to non-anchor tenants and they, on average, required an office of 200 sq. ft., 125 tenants would fill the space. That is not insurmountable, but may be challenging.
Out-of-the-Box Alternative
50 Lala Martinez, “Ryan Wilson Opens $3M Private Club, The Gathering Spot,” Rolling Out, March 11, 2016. Accessed April 27, 2019. https://rollingout.com/2016/03/11/ryan-wilson-opens-3m-private-club-gathering-spot/ The Nexxt Entrepreneur, LLC 63
Given the directive to think out-of-the-box, another way to utilize existing resources is to house the Chamber of Commerce (and other tenants) in the same building as the Innovation Center so as to bundle resources.
Both the entrepreneurship center and the Chamber have similar goals of economic development via businesses. The Chamber already does a lot to assist small businesses. By combining efforts in the same building, resources are leveraged and there is no confusion in the business community about one entity versus the other.
There are multiple ways to do this. One way is to incorporate the entrepreneurship center within the Chamber. The author believes that this would diminish the influence of the entrepreneurship center and it would just become ‘another program’ of the Chamber. Few would make a distinction between the two if it were perceived to be part of the Chamber.
Another approach would be to ‘house’ the Chamber within the facility called the Innovation Center such that neither dominates the other (thus, the name ‘Innovation Center’ works well). This also helps solve the question of how the expenses of the facility will be paid.
There are several other advantages of combining the two entities into a central location for economic development activities for small (and large) businesses. In an area with limited resources, it helps support the atmosphere of an Innovation District. In many regions, the central point to entrepreneurship activities is a university that is located in a given city. Since Douglas County is not home to a major university it must be creative in order to emulate what a university can do to stimulate entrepreneurship activity. It must leverage the resources it has. Combining multiple resources is necessary.
To continue with the idea of thinking out of the box, another potential partner to locate within the facility is the library. Libraries are, like many brick and mortar facilities, diminishing in scope. Their main resource is information and much of that is now accessed via the Internet. As a result, the library must also be innovative in its business model. In fact, the Kaufman Foundation’s research suggests that libraries are the original coworking space. They have meeting rooms, internet access, and information resources.51 The author of this study found libraries to be a valued resource for information to help write a business plan together.
Since a major role of the Douglas County Innovation Center and Innovation Districts, in general, is to provide information, partnering with a library should be considered. For the Innovation Center, it is another way to leverage resources and to utilize (and rent) space effectively and efficiently.
51 Katey Stoetzel, Libraries are staking their claim as the original coworking space, Currents. Accessed May 2, 2019, https://www.kauffman.org/currents/2019/04/libraries-stake-claim-as-original-coworking- space?utm_source=newsletter&utm_medium=email&utm_campaign=iaw_05_02_2019 The Nexxt Entrepreneur, LLC 64
Potential Funding Sources
Interviews with entrepreneurship center managers reveal that entrepreneurship centers are frequently supported by a government entity or a university. This is supported by a survey conducted by the International Business Innovation Association (INBIA) of Entrepreneurship Centers. The results of their survey showed that the majority operate on less than $500,000 in annual revenue (See Table below)
Of the 11 organizations generating more than $3 million in revenue, 3 are in Maryland, two in Hawaii and two in Florida. None are in areas with a population less than 100,000. Of the 11, 5 are classified as economic development organizations, 3 are incubators, 1 is a pre-accelerator, 1 is a seed accelerator and 1 a superhub.
Multiple sources of revenue are the rule, with rent and membership fees leading the way, but they are not sufficient to pay entirely for operations. Other sources include programming, events, sponsorships, grants and more.
The table below indicates that government grants are the second most widespread source of funds, with 89 % of entrepreneurship centers receiving up to half of their funding from government sources. Of those receiving government funding, local sources provide almost all for 17% of respondents. Another group, representing 12% of respondents, receives almost all of their funding from Universities. But, half receive less than 10% from local
The Nexxt Entrepreneur, LLC 65 sources, 64% receive less than half from state sources and 73% receive less than half of their funding from federal sources.
Anchor Tenants
When an accelerator or incubator occupies a physical space, it must often find an anchor tenant that provides steady rent. An anchor tenant is usually an established business or government entity (e.g., a Small Business Development Center) that is not a client company. The anchor’s main purpose is to help shore up the cash flow, but can also provide other benefits, such as services, coaching, etc. to the client companies.52
The lease with the anchor tenant must be clear as to what is expected. This may include how much time it commits to spend helping the client companies, how much space it is allocated so they don't take more if they expand and the incubator turns away qualified clients; what renovations they are allowed to do. The length of the lease should take into consideration how fast client companies can be recruited if the intent is to use all or some of the anchors’ space
52 Corinne Colbert,“Well Anchored.” NBIA Review 22, no. 2 (2006). The Nexxt Entrepreneur, LLC 66 for new clients. Conversely, a clause could be inserted specifying conditions under which the anchor tenant’s space could be decreased (as well as increased). This would not be the case if the anchor was a big name that could draw stakeholder support, like Google. In most cases, the rental rate will be the market rate.
A few other benefits of anchor tenants are that they can help obtain additional clients, either because of their name, or they do business with small businesses. Some anchor tenants provide capital improvements (maybe in lieu of or for reduced rent) and others are an example to the client companies of success, especially those that have a recent history of starting out as small businesses and have achieved stability and growth.
Space can be bartered for, such as an SBDC that conducts education to offset the rent payment. Other examples are attorneys, accountants, the IT company, the social media or website expert, etc. An IT company that takes care of the facility’s and its clients IT needs may get reduced rent – and an excellent chance of becoming the graduating companies’ IT provider. However, anchor tenants are most valuable when they pay rent.
In addition to the possibility of getting a large firm as an anchor tenant, Ron Duggins, Ed.D. suggests that corporate affiliations are becoming a new trend. Several survey respondents receive tangible assets or in-kind resources for facilities or programs. In Atlanta, The Farm, an accelerator program, does not pay rent to Comcast, that is its corporate partner.53
Some entrepreneurship centers have had success with non-profit organizations as tenants. These include the YMCA, a radio station, the United Way, a local foundation, etc. An additional benefit of nonprofits is that they may host events and programs that further add to the attractiveness of the facility and ease some of the burden of developing programs away from the entrepreneurship center’s team.54
Grants
There are a few federal grants available today for incubator services and entrepreneurship activities. Three sources are the Economic Development Agency (EDA), the Appalachian Regional Commission (ARC) and a Community Black Grant (CBG) through HUD.
Economic Development Agency The Russell Center for Innovation and Entrepreneurship in Atlanta received an EDA grant. The EDA is part of the U. S. Department of Commerce. A description of the grant is55:
53 Ron Duggins, Ed.D., “IMPACT Index Survey: Funding Trends for Entrepreneurship Centers,” International Business Innovation Association. 54 University of Georgia, Innovation District Task Force Report and Recommendations (July 1, 2018). 55 https://www.grants.gov/web/grants/view-opportunity.html?oppId=312519 The Nexxt Entrepreneur, LLC 67
EDA’s Office of Innovation and Entrepreneurship (OIE) leads the Regional Innovation Strategies (RIS) Program. Under the RIS Program, the centerpiece of the Regional Innovation Program authorized under Section 27 of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. § 3722), EDA currently awards grants that build regional capacity to translate innovations into jobs (1) through proof-of-concept and commercialization assistance to innovators and entrepreneurs and (2) through operational support for organizations that provide essential early-stage risk capital to innovators and entrepreneurs.
FUNDING OPPORTUNITIES: • FY19 i6 Challenge is a leading national initiative designed to support the creation of centers for innovation and entrepreneurship that increase the rate at which innovations, ideas, intellectual property, and research are translated into products, services, viable companies, and jobs.
• FY19 Seed Fund Support Program provides funding for technical assistance to support the creation, launch, or expansion of equity-based, cluster-focused seed funds that invest regionally-managed risk capital in regionally-based startups with a potential for high growth.
Some specific criteria are:
Summary of Criteria Project Support and Cluster Connectivity Cluster Diversity and Engagement Project Economic, Job, and Innovation Impacts Cluster Assets and Infrastructure Project Sustainability and Adaptability Project Feasibility
The Regional Director in the Atlanta office is:
H. Philip Paradice, Jr., Regional Director 401 West Peachtree Street, NW Suite 1820 Atlanta, GA 30308-3510 P: 404-730-3002 F: 404-730-3025 E: [email protected]
Appalachian Regional Commission Another potential federal grant source is the Appalachian Regional Commission (ARC), from which the Burson Center received $250,000 to expand their existing facility with a maker space. The maker space, complete with equipment and tools for prototyping, was built to help inventors. The ARC is a regional economic development agency that partners with and invests to build community capacity in the 13 Appalachian states, of which Georgia is one. The Nexxt Entrepreneur, LLC 68
Grants are awarded to state and local agencies, governmental entities (e.g., economic development authorities), local governing boards (e.g., county councils), and non-profit organizations for projects that fall into one or more of these categories: -Economic Opportunities – investing in entrepreneurial and business development strategies* -Ready Workforce – improving education, knowledge, skills, and health -Critical Infrastructure – focus on broadband, transportation and water/wastewater systems -Natural and Cultural Assets – leverage natural and cultural heritage assets -Leadership and Community Capacity – of current and next generation to innovate, collaborate and advance community and economic development
Please see Appendix M – Appalachian Regional Commission (ARC) Entrepreneurship and Business Development for more information about this Program Area.
The two ARC program managers to contact for information are:
GEORGIA Annaka Woodruff, ARC Program Manager Georgia Department of Community Affairs 60 Executive Park South, NE Atlanta, GA 30329 404.679.4997 email: [email protected]
Brittany Pittman, ARC Program Manager Georgia Department of Community Affairs 60 Executive Park South, NE Atlanta, GA 30329 706.508.7381 email: [email protected]
Community Block Grants A Community Block Grant (CBG) should also be explored. Funded by the Department of HUD, the main goals of the program are to ensure decent affordable housing, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses. CDBG is an important tool for helping local governments tackle serious challenges facing their communities. Although a CBG has many restrictions, they describe the grant program as a flexible program that provides communities with resources to address a wide range of unique community development needs.
Sponsorships
Organizations that are civic minded and those that want exposure to entrepreneurs will sponsor organizations that are a good fit with their missions. Naming rights for events, rooms, etc. are one way to create tangible value for The Nexxt Entrepreneur, LLC 69 prospective partners. For example, Tech Alpharetta, an incubator, lists numerous sponsors for events and its offices/conference rooms including, but not limited to:
Premier Organizational Sponsors: The City of Alpharetta, Awesome Alpharetta, vLink Solutions
Silver Event Sponsors: SignStream.net, Jackson Healthcare, Onespring
Bronze Event Sponsors: Verizon, LexisNexis, VidReach.io
Incubator Center Sponsors: Priority Payment Systems (Board Room), Baker Donelson (Pitch Room); Vinings Bank (Startup Lounge)
Innovation Center Premier Sustaining Sponsor: UPS, Verint
In addition, finding a sponsor organization that the Innovation Center can be named after, similar to athletic stadiums, is the best use of a well-known sponsor.
Sponsor Organizations
It is very possible that innovative companies, such as Google or Switch, that have invested in Douglas County will provide a grant (or sponsorship) for the Innovation Center. Since 2011, Google has been active in Douglas County with activities such as Gravity Games and their work in the school system, such as their partnership focused on computer science. They have also awarded $8.4 million in grants to:56
• Douglas County Boys & Girls Club’s Teen Center Computer Lab • Douglas County Fire/EMS Department • Douglas County Public Library System • Georgia Tech Foundation, Inc. • Lithia Springs High School Robotics Team • Sweetwater Elementary School • Dorsett Shoals Elementary School • Douglas County High School Robotics Team • Douglas County School System Speech Language Impairment (SLI) program • Boys & Girls Club of Metro Atlanta (Douglas County)
Please see Appendix L - Data Center Community Grants Program for more information about their grant program.
Switch, in fact, has created several Innovation Centers (called Innevation Centers), some of which are located in close proximity to their data centers. The one in Las Vegas, NV was donated by Switch’s founder, Rob Roy and is a subsidiary of Switch. It is 65,000 square feet and is described as a community workspace and community event venue.57 Thus, Switch understands the importance of and has invested in small business development.
56 https://www.google.com/about/datacenters/inside/locations/douglas-county/community-outreach.html#tab=community- grants 57 https://www.innevation.com/about-us/. Accessed on May 24, 2019. The Nexxt Entrepreneur, LLC 70
Douglas County has already successfully recruited at least these two major corporations that actively help small businesses and who founders are entrepreneurs in the true sense. These larger enterprises can become foundational sources of funding for the Innovation Center.
Recommendations Recommendation 1 – Form Board of Directors: We recommend that the first order of business if the Douglas County Innovation Center is approved is to form a Board of Directors consisting of public and private professionals. Representatives from the County Commissioners, School Board, City of Douglasville (if located in Douglasville), the Economic Development Authority, public utilities, etc., as well as large businesses, such as Google and Switch, the banking community, small businessmen and clergy should be considered. In addition to Douglas County residents, it is recommended that talent from outside of Douglas County be included. Given the thriving ecosystem of entrepreneurship and innovation in the Atlanta metropolitan area, there are a plethora of professionals who can provide a wide-range of insight. It is important to understand trends, perspectives and best practices that are occurring outside of Douglas County and marry them with the needs of the County. These professionals and retired professionals may come from ventures, universities, angel investor groups and entrepreneurship centers.
We recommend that the Board:
-create an appropriate mission and vision for the Innovation Center.
-prepare initial governance documents, such as Bylaws.
-identify and secure funding for recurring/operational costs and initiate early discussions with select industry partners who may be willing to commit to leasing space serve as anchor tenants.
-identify incentives and responsibilities that help attract the right industry partners in the facility.
-designate a smaller, focused ‘task force’ to be the catalyst to move the approved initiative forward
Recommendation 2 – Public/Private Partnership: We recommend that The Douglas County Innovation Center be a Public/Private Partnership and fully utilize the ‘One Douglas’ way of doing things. The established business community must play a major role in the governance and operations of the Innovation Center. This should be in the form of serving on the Boards of Directors and Advisors, serving as volunteer mentors and instructors and with financial sponsorships.
Further, funding must be sought from Google and Switch and any other larger organization that supports small business development. We recommend that Douglas County convince the large firm funders to help provide direct
The Nexxt Entrepreneur, LLC 71 oversight of the Innovation Center. This can be in the form of a multi-year financial contribution, facility ownership, etc.
Recommendation 3 - Hire an Executive Director: We recommend that The Board of Directors hire an Executive Director at least six months prior to opening to:
-recruit an initial Board of Advisors -find a location for the facility, if not done so by the Board -generate relationships and be the primary champion within Douglas County and also the metro area. The majority of clients will be referrals from partner organizations. -create a strategic plan, that includes an operational plan -develop the Innovation Center’s programs -generate excitement and an initial marketing plan of action
She must be an effective connector who is comfortable initiating activities and creating value in the business community.
Recommendation 4 – Create Unique Innovation District: We recommend that Douglas County create its unique version of an Innovation District. This should utilize a dedicated facility that incorporates an incubator, coworking space, its version of an accelerator. A dedicated facility will emphasize the identity of innovation and be the unequivocal place to go for small businesses that need assistance. By combining the different types of entrepreneurship centers into one facility, the entity will have multiple sources of revenue and be adaptable to market trends. Inherent in utilizing a dedicated facility is the ability to service multiple types of clients, including anchor clients, monthly clients, hourly clients, along with incubator- type clients.
This recommendation is supported by talking to business owners who stated that they don't know where to go to get available resources, and one of the conclusions stated by Avalanche Consulting: Douglas County residents would benefit from having a centralized, one-stop shop for entrepreneurial resources. Right now, there are resources available, and, judging from the Avalanche study, conversations with the Board of Commissioners and business owners that the residents don't always know how to access the resources. Therefore, a centralized location that everyone knows about is imperative.
Importantly, there exists demand for coworking space in Douglas County as the author has identified three coworking facilities, so this trend can be used to the Douglas County Innovation Center’s advantage. Nevertheless,
The Nexxt Entrepreneur, LLC 72 it will be important to be adaptable to changing environments. That is, we have seen the models for entrepreneurship centers change over the past ten years to ones that may not have been predictable ten years ago. It is, therefore, likely that new models will emerge over the next ten years. As a result, leaders must remain flexible in their thinking.
Please note that several business owners already own coworking spaces and additional business owners are planning to introduce them.
The alternatives presented list several viable approaches. It is recommended that the facility be approximately 15,000 square feet, with the potential to expand. Expansion can consist of additional offices/conference rooms as well as dedicated space for specialized uses, such as a kitchen and manufacturing.
The facility should allow 24/7 access to its tenants and daily access to those not signing a lease.
Recommendation 5 – Combine Complementary Resources: We recommend that the Innovation Center be blended with as many complementary resources as possible. The examples previously given were to combine the Chamber of Commerce and the Library into the same facility as the Innovation Center. This will help share the costs of the building and provide a common source of information and assistance for businesses. Innovation Districts leverage related assets to make it easy for entrepreneurs to access those assets. Cities that are home to a major university can depend on that university to be a hub for entrepreneurship and innovation. Cities and counties that do not have such resources must be innovative in creating them.
Recommendation 6a – Educational Programs: We recommend the establishment of an educational program consisting of short-term classes and workshops. To satisfy one of the most important pieces of feedback from the business owners’ interviews, was the desire to have a roadmap that contains some basic elements of starting a business in Douglas County. In addition to core entrepreneurship classes and workshops and consistent with The Alpharetta Tech and the Beaver Street Enterprise Center, the majority of education can be delivered via a set of workshops that are specific to Douglas County small business owners. Examples include, but are not limited to:
-Doing business in Douglas County (in fact, the author couldn't figure out the appropriate steps to take after the contract for this study was signed) -Primer on Federal, State and Local taxes and fees due -Getting government grants
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-How to obtain a Minority Business Enterprise and Women Business Enterprise and Disadvantage Business Enterprise Designation -Protecting Your Intellectual Property -Developing the Right Business Plan -Finding Investors -Marketing -Cash is King -Hiring and Motivating Employees -To Franchise, Buy a Business or Start a business -Developing Your Brand -Finance for the Non-Financial Manager -Social Media in a Connected World -Veterans Boot Camp
The Douglas County Innovation Center must educate its small business owners utilizing programming that is diverse and flexible. Toward that end, webinars should be utilized in addition to in person instruction.
Recommendation 6b – Educational Programs: We recommend that, for a formal education program, the Douglas County Innovation Center utilize the Burson Center’s Affiliate Program to offer core entrepreneurship classes and workshops. The Affiliate Program is important at the beginning. It is an existing program that has been tested over the years. Importantly, no one needs to be hired to replicate this, thus, costs are variable. However, if sufficient demand emerges, the education provided by the Affiliate Program can be recreated as an in-house program.
Other programs that already exist and it is recommended be utilized are:
-An accelerator-type program: the existing Costarters program can be used for those considering starting a business. For more mature business the Small Business Sustainability Program developed by the Chamber can be used or modified.
-Youth programs – several youth programs have already been identified being involved in STEAM program for high school women.
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By utilizing existing resources and creating workshops, the Innovation Center becomes the hub of an entrepreneurship ecosystem that is critical for creating the innovative atmosphere that will help existing business, attract new businesses, and retain talent.
Recommendation 7 - Mentoring: We recommend that 2 types of mentoring capability be established. One is with the SBDC, whose mission is to help entrepreneurs. The SBDC should have an office at the Innovation Center. The other is to bring in an Entrepreneur-In-Residence. This is someone with entrepreneurship experience who has a heart to help other entrepreneurs. He or she can be given an office in exchange for a negotiated number of hours per month that are dedicated to the Innovation Center. These hours can be for speaking, conducting workshops and/or direct mentoring.
Recommendation 8 – Fill in Ecosystem: We recommend that, to further solidify the ecosystem, the Innovation Center create partnerships with funding institutions that include banks, angel networks and alternative funding organizations that can assist client companies. These can be done by nurturing the relationships in Douglas County, but importantly, we recommend reaching beyond Douglas County to the Atlanta entrepreneurship community.
Recommendation 9 – Create ‘Hub of Activities’: We recommend that the Douglas County Innovation Center become a ‘Hub of Activities’ (most of which will generate income). programs and activities are what will attract talented business people, including entrepreneurs and large company businessmen and women, partners and dollars. These programs must also extend to our youth, women’s organizations, etc. . A set of programs will include58:
-A monthly Speaker Series that brings in prominent entrepreneurs and business people, many of whom can be found locally. Business people from large organizations are important to startups, especially those who provide contacts for Douglas County entrepreneurs to connect with. Several entrepreneurs interviewed stated that connecting with potential customers was what they desired most.
-Hackathons and Meetups -Mini “Ted Talks” -STEAM camp: robotics camps, science fairs, science and arts festival
58 Some items were adopted from University of Georgia. 2018. Innovation District Task Force Report and Recommendations. July 1. The Nexxt Entrepreneur, LLC 75
-Pop-Up dinner: local chefs creating special dinners for participants that sign-up -Sponsored and curated regular happy-hours -Regular fitness events such as yoga -1 Million Cups program: Founded by the Kauffman Foundation, 1 Million Cups is a national program that connects local entrepreneurs. Based on the concept that entrepreneurs find solutions over a million cups of coffee, the monthly event allows startup entrepreneurs to present their companies and challenges to an audience of entrepreneurs and mentors. The presentations are followed by questions and answers.
-Initiate and host business plan competitions and similar competitions. These should be among entrepreneurs, as well as students, with prize money paid out.
-Similar to business plan competitions, Shark tank-like competitions can be held
-Robotics competitions
Recommendation 10 – Insure that Connections are Made The workshops, seminars, activities, etc. described above will create value for the small business owners as stand- alone events. However, additional value can be created with these vehicles by facilitating connections between the participants. As stated in the report, entrepreneurs seek to be connected with each other, with potential customers (including large organizations), with funding sources, etc. The Douglas County Innovation Center can provide time for networking, host specific networking events, and bring in speakers who either want to network with the entrepreneurs or who the entrepreneurs network with.
In addition, the Executive Director should facilitate introductions to connect relevant parties.
Recommendation 11 -Establish Regular Conversation Sessions: We recommend that the Innovation Center become a forum for ‘Conversations.’ Conversations should be monthly events that allow government officials to discuss their initiatives for the small business community. In addition to government officials, larger businesses can use Conversations as a way to make presentations to small business owners and can use the opportunity to discuss how the small business owners can do business with them.
Conclusion
Building off of the success in attracting significant large corporate economic development, the Douglas County Innovation Center represents a major initiative for Douglas County leadership to help existing small businesses, and new ventures. A truly diversified economic development effort includes assisting small businesses thrive as they represent a massive engine of growth. The Innovation Center can help create the innovative leadership and atmosphere that will be a model for the state and help attract and retain talent. Moreover, it will be another vehicle to bring together the business, government and educational organizations that have made Douglas County strong. The Nexxt Entrepreneur, LLC 76
Appendix A - Glossary of Terms59
Branded Third-party Entrepreneurship Program Branded third-party entrepreneurship programs include replicable or franchised programs such as One Million Cups, Startup Weekend and Startup Grind. These programs are meant to be non-competitive showcase or learning events to help promote entrepreneurship in a local community.
Coworking Space Coworking spaces offer open collaborative community-based workspace for like-minded individuals or early-stage companies. Coworking spaces offer flexible work space in the form of hot desks, private (dedicated) desks or offices. Member companies pay for their space through rent or membership dues. Coworking spaces typically do not offer formal/required programs (education or training), although they may have speakers, meetups or other optional, informal learning opportunities. Coworking spaces generally do not have established graduation criteria or competitive application processes. They are motivated to retain member companies as a sustainable revenue stream (versus graduating companies).
Economic Development Center or Organization Economic Development Centers and Organizations are responsible for creating, managing, and supervising programs and activities that promote, assist and enhance economic development. They focus their economic development efforts on the creation of jobs and new investment in a region. These centers typically do not offer space or formal programming for entrepreneurs and startups.
Incubator Incubators typically charge monthly program fees or membership dues in exchange for office/desk space and access to program offerings. Incubators offer programs to member companies that typically include mentoring, education/training, and informal learning opportunities. Incubators also host events to provide networking and learning opportunities for both member companies and the local community. Member companies are usually required to apply to ensure they meet the incubator’s criteria or mission (industry, stage of company, founder demographics, etc.). Incubators usually have graduation policies that are typically based on achievement of agreed-upon milestones, growth metrics or time-based stipulations. Typically companies join incubators on a rolling basis (non-cohort), and are able to reside in the incubator for 1-3 years.
Makerspace Makerspaces are non-program based community work spaces that provide equipment for specific sectors of manufacturing (e.g., technology, 3D printing, woodworking, food) and provide the tools, training, and specialized equipment necessary for creating and building physical products.
Pre-Accelerator Pre-Accelerators are similar to accelerators, except they typically do not have equity-based funding. However, they may have grant funds available or access to a community-based evergreen fund. Pre- Accelerators have a competitive application process, have mandatory attendance and include a culminating event at the end of the program. Pre-Accelerator participants are accepted into the 3-6 month program in a cohort that is very similar to seed accelerators.
SBDC Small Business Development Centers (SBDC) are cooperative service-based centers that are subsidized by the SBA (U.S. based), government agencies (international), higher education institutions, or economic development organizations. SBDCs provide learning opportunities and mentoring for small businesses in any industry. Small
59 Operational Definitions: Entrepreneurship Centers, Version 2.0, (International Business Innovation Association, September, 2017). The Nexxt Entrepreneur, LLC 77 businesses/entrepreneurs participate in SBDC programs on a rolling-basis (non-cohort based), have no graduation or participation criteria to meet, and are not charged for counseling services. There may be a fee to participate in SBDC training/educational programs. Some centers may have space available for rent, although most are walk-in counseling or training center configurations. The goal of a SBDC is to support small business growth and foster local and regional economic development.
Seed Accelerator Seed accelerators have a highly competitive application process, and will invest equity capital in selected companies. Accelerator programs are typically short-term ranging from 3-6 months. Accelerator programs accept companies in cohorts and provide learning opportunities and intense mentoring to each company, with a culminating graduation event at the end of the program where companies are able to pitch their concept or product in front of investors and other key stakeholders. Space is usually provided to companies for the duration of the program, although some seed accelerators run cohorts virtually with required attendance at educational or networking events.
Student Entrepreneurship Center Student entrepreneurship centers are programs offered by institutions of higher education (e.g., universities, colleges) and provide entrepreneurship learning opportunities and mentoring to foster entrepreneurship development among students. Some centers offer space while others do not. Participation is open to students enrolled in the institution and some centers have competitive application processes to participate in their programs or space.
Super Hub Super Hubs blend several models of entrepreneurial growth into a single location, supporting entrepreneurs with a wide range of critical services. These are often incubators that may also have accelerator programs, coworking spaces, robust mentor networks, private offices, and/or networking events. These are located in urban, rural and developing regions in every country, and are often the anchor hubs for urban innovation districts.
Technology Transfer or Commercialization Office Technology transfer and commercialization offices are focused on providing information, guidelines and resources to faculty, students or staff interested in commercializing research or intellectual property developed at the university through spin-out or technology startup companies. Technology transfer offices connect these companies with incubators, corporations, government agencies and investors. Some offer programs that include informal learning opportunities and mentoring. These offices typically do not have space available for rent, and do not have graduation criteria or culminating events.
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Appendix B- Potential Client Selection Criteria
New or emerging business
Capacity for managerial capacity
Have job creation potential
Demonstrate a need for the program
Be founded on sound technical and business principles
Have either a business plan or multiyear financial plan based on sound assumptions
Have a working prototype or a developed product
Demonstrate a need or niche market for their product or service
Have principals or a management team willing to participate fully in the program
Have principals or a management team willing to take personal risks and/or put up personal assets
Have adequate resources to pay rent, salaries, and overhead
Be a good fit for and not in direct competition with other incubator client companies
Pass a credit check
Have space needs that the facility can accommodate
Have plans to remain in the region upon graduation from the program
Have a business that meets the economic development goals of the region or a specific stakeholder
Have environmentally safe products or processes
Provide living wage jobs for people disadvantaged in the labor market
Demonstrate potential to increase the local tax base
Add diversity to the local economy
Be committed to going public or grooming themselves for acquisition by a third party
Demonstrate that they will be able to sell their product at a specified gross margin
Must have a team with skills in the area of core competence and a business development team member
Payment of an application fee
Must be full time
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Appendix C - Staffing – Potential Responsibilities
Serving Clients Technical Assistance Help clients write/refine business plans Help clients market products/ services to a targeted audience Counsel clients on business topics ranging from marketing to management teams Provide reception services and clerical support for clients Create work plans and benchmarks for clients; monitor client progress Assist clients in acquiring financing to grow their businesses Monitor client needs; adjust menu of services accordingly
Special Programs Instruct or provide on-site training programs (seminars on business plan development, marketing, taxes, financing, etc.) for clients and local entrepreneurial community Create and manage loan and microloan programs and serve on loan review committee(s) Manage operation of resource centers such as computer labs, multi-media rooms, libraries, etc.
Networking Activities Link clients with banks, angel investors, and venture capitalists (and maintain these relationships for the incubator)
Network for and with clients by managing working relationships with research offices of major state universities; key industry leaders in area/state; and trade, civic, and professional organizations
Recruit volunteers - Build a network of professionals to serve as a resource base for clients; develop client advisory boards; negotiate fee schedules and manage those relationships
Manage interns/assign projects
Client Attraction & Selection Seek out potential clients and market entrepreneurship center program Screen clients and assist selection committee Negotiate lease terms Track clients through admissions procedures
Incubator Program and Financial Management Financial Management Make major purchasing decisions Write grant proposals Raise funds for incubator Prepare and monitor annual budgets Manage entrepreneurship center’s finances Develop and implement a fee system for entrepreneurship center services Map a plan for self-sustainability
Program Management Write and refine business and strategic plans for entrepreneurship center program, including budgets, new initiatives, mission, goals, and cash flow projections (in cooperation with and by approval of the board of directors)
Implement ways to measure the program’s success (in cooperation with and by approval of the board of directors) The Nexxt Entrepreneur, LLC 80
Organize board meetings and retreats and serve as staff liaison to all board and committee activities Meet with board of directors and prepare monthly and quarterly reports for board of directors/ executive committee Handle personnel matters: hire, terminate, administer performance and compensation reviews, assign tasks, write job descriptions, and supervise staff Manage client disputes and complaints
Administrative Program/Support Administrative/Office Assistance
Calculate charges for clients’ rent and services used; prepare monthly client billing; collect payments and issue receipts Monitor delinquent payments Handle accounts receivable/payable Provide clerical support for incubator Generate internal announcements Process client lease agreements (track expirations, prepare renewals, etc.) Prepare bank deposits Maintain payroll records Develop and maintain databases (mailing lists, fax numbers, etc.) Sort and route mail; prepare bulk mailings Provide training on phone and computer systems, fax machine, copier, etc. Respond to public requests for information
Facilities Maintenance Maintain and repair major equipment and infrastructure: plumbing, heating, machinery, etc. Coordinate maintenance staff or outside maintenance contractors Perform janitorial duties Perform grounds maintenance: mowing, planting, etc. Develop security procedures for facility Prepare signage Oversee remodeling, construction, and expansion projects
Computer System Support Manage and troubleshoot computer systems Handle backup of important databases Tap community and client knowledge/skills for reduced-fee or pro-bono services Maintain Web site
Marketing/Public Relations Write copy for and design marketing brochures, advertisements, newsletters, press releases, and other materials Conceive marketing strategies for entrepreneurship center and its programs Prepare Web site content Plan special events/media opportunities Serve as entrepreneurship center’s public representative (give speeches, attend community events, etc.) Develop and maintain media contacts
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Appendix D - Metrics: Collecting Basic Data60
1. Number of current clients
2. Total number of graduates since program inception - Quantifying the number and performance of graduates is essential to demonstrating program success.
3. Number of graduate firms still in business or that have been merged or acquired - Graduate firms that remain in operation demonstrate program’s ability to produce successful companies that survive. Additionally, mergers and acquisitions are successful business outcomes; therefore, graduate firms that have executed these exit strategies should be tracked and included in your tallies of successful graduates.
4. Number of people currently employed full-time (at least 32 hours) by client and graduate firms -. If you collect current employment figures from both clients and graduates on a regular basis you will be able to show growth over time.
5. Number of people currently employed part-time (>32 hours) by client and graduate firms - Depending on the type of company, there may be significant part-time employment.
6. Current monthly salaries and wages paid by client and graduate firms - This information also will be easier to collect from your clients and graduates than annual figures.
7. Gross revenues for the most recent full year for client and graduate firms - For the company’s last full year, what is the total (gross) revenue amount shown on its income statement?
8. Dollar amount of debt capital raised in most recent full year by client and graduate firms (bank loans, loans from family and friends, revolving loan funds, or other loan sources) - How much money was borrowed in the last full year?
9. Dollar amount of equity capital raised in most recent full year by client and graduate firms (include investments from angel investors, venture capitalists, seed funds, or other equity capital sources) - Certain stakeholders are interested in the level of investment your clients and graduates attract. Additionally, touting these investments can help recruit clients.
10. Dollar amount of grant funds raised in most recent full year by client and graduate firms (SBIR, state grants, etc.) - Again, many stakeholders are interested in the ability of your clients and graduates to attract grant funds. Touting their success in attracting grant funding also can help you recruit clients.
60 Adopted from the ten basic metrics InBIA suggests you track. InBIA suggests that all incubators collect these basic data points on an annual basis for all clients, and annually for graduates for at least five years after they leave the program. The Nexxt Entrepreneur, LLC 82
Appendix E – Additional Metrics61 All Entrepreneurship Centers § Number of entrepreneurship center graduates remaining in the service area § Number of firms that either failed in the entrepreneurship center or that did not meet graduation criteria § Square footage of commercial space leased or owned by graduates in the community
Special-Focus Entrepreneurship Centers § Number of women employed by clients and graduates § Number of minorities employed by clients and graduates § Number of low-income residents employed by clients and graduates § Value of local goods and services purchased in the community by client companies and graduates
Technology or University-Affiliated Entrepreneurship Centers § Number of technologies commercialized into new products or services by client and graduate firms § Number of students, faculty, and staff-initiated businesses § Number of students employed by entrepreneurship center clients and graduates § Number of students securing internships at client and graduate firms § Number of university graduates permanently employed in client and graduate firms § Royalty and licensing revenues gained by sponsor from client and graduate firms § Equity investment returns gained by sponsor from client and graduate firms
61 Adopted from the Beyond the Basics metrics InBIA developed. If your program focuses on a particular type of client, you may choose to track additional measures. For example, technology incubators often track the number of technologies commercialized by clients and graduates. What you choose to add on to your base data collection effort will depend on your program’s mission, location, and other factors. The Nexxt Entrepreneur, LLC 83
Appendix F – Incubators
Services Provided By Burson Center
Facilities/Equipment § 24/7 Secure Access § Furnished Offices § Warehouse/Testing/Processing Space § Storage Facilities § Conference/Meeting Rooms § Audio/Visual Equipment § Reference Library § Break Room Services § Copier/Scanner/Fax Equipment § Color Laser Printer § Free Domestic Long Distance Calling § High Speed Internet & Wi-Fi Connectivity Financial Assistance § Financial Resource Referrals/Consulting § Financial Investment Counseling Support Services § Receptionist/Customer Service Assistance § Clerical Services § Legal Assistance/In-house Counsel § Accounting/Bookkeeping Assistance § Student Intern Assistance § Notary Public Services § Market Research Assistance § Government Contract Procurement Assistance § Industrial Process Management Assistance § Import/Export Assistance § Compliance & Labor Law Assistance § E-Verify & Immigration Assistance § Intellectual Property Guidance § Foreign Language Translation § Labor Recruitment Services Continuing Education / Training / Counseling § Business Plan Development § Marketing Strategy Development § Leadership Skills Training § Organizational Management § Government Contract Bidding § Legal and Taxation Procedures § Customer Service Training § Employee Skills Training § Financial Assistance Programs § Marketing/Web Design Assistance § Online Retargeting Assistance Internal & External Networking § Peer-to-Peer Support § Advertising/Promotional Opportunities § Chamber of Commerce Membership § Mentor Assistance The Nexxt Entrepreneur, LLC 84
§ Business Referrals § Government Relations Support § Expansion/Relocation Assistance
Start-up Members Entrepreneurs starting a business may access the resources and programs of the Center through the Start-up Membership. Start-up Members have access to all of the services and programs of the center but do not have an office located at the center. Some services may also be limited, please see the handbook for details. Start-up Members may reserve meeting facilities with a 24-hour notice, and have access to the small meeting rooms as needed when available. Start-up Members are welcome to maintain a business address at the Center and have business mail/packages directed to the Center. Start-up Members will be provided on-going correspondence of upcoming programs and information from the Center. Start-up Members may utilize the legal and accounting resources of the Center. They may also participate in all continuing education seminars, trainings, counseling, and management/technical assistance programs as available via the Center.
Affiliate Members Small business owners may access the resources and programs of the Center through the Affiliate Membership. Affiliate Members have access to meeting rooms A & B in addition to common areas and hot desk. Affiliate Members receive limited consulting, a business plan review, trainings, marketing, and more. Affiliates are welcome to maintain a business address at the Center and have business mail/packages directed to the Center. This membership is designed for businesses that need occasional assistance and would like to take advantage of many of the services offered at the Center.
Resource Members Although this membership is open to all small businesses equal to or less than five years of age, we recommend this membership for businesses between years 2-5. If you need occasional assistance with projects and wish to be associated with the center, the Resource Membership is for you. Resource Members receive on-going correspondence in regards to trainings, classes, seminars, etc. They also have access to our library, hot desk, and receive a discount towards special projects. Resource Members may also participate in a Business Plan Review.
Sample Education Program: The Burson Center
The Burson Center Training/Seminars: SBDC/UWG Programming Starting a Business (required) Marketing Plan: Overview Business Plan: Overview Entrepreneur Success Certification Targeting Customers Accounting 101 LinkedIn for Business QuickBooks Online Building Revenue Projections Investment Funding Succession Planning Import/Export Program Development Exit Strategy
In-house Staff/Partners Programming Setting SMART Goals Problem Solving The Nexxt Entrepreneur, LLC 85
Elevator Speech/Pitch Leadership Empowerment Building a Survey Market Research Website/Social Media Content Management Hiring Millennials
West Georgia Tech Programming Excel Basics Excel Intermediate Excel Advanced PowerPoint 101 Publisher 101 Management 101 Customer Service
Sample Education Program: Advanced Technology Development Center
CLASSES + WORKSHOPS Developed with the ever-evolving needs of startups in mind, the dynamic ATDC curriculum incorporates startup best practices and the collective experience of ATDC staff and industry experts from Georgia and beyond.
ATDC ENTREPRENEURS’ CURRICULUM (ATDC Educate members and Portfolio companies only)
Our Entrepreneurs’ Curriculum prepares first-time and seasoned entrepreneurs alike for the entrepreneurial journey. This progressive series consists of 10 modules. Start your journey with Customer Discovery. Move through the rest of the classes in the recommended order listed below. Registration is required for ALL CLASSES.
Badge Modules
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Non-Badge Modules
ADVANCED CURRICULUM
(for Portfolio companies only. Click here for application criteria)
We also offer advanced workshops and classes for startups in Advanced Manufacturing and FinTech specific industries as well as classes in advanced marketing.
Click here for more about our industry-specific programs.
BADGE PROGRAM CUSTOMER DISCOVERY BADGE
Our Customer Discovery module is your starting point at ATDC. It consists of Customer Discovery Theory, Customer Discovery Tools, and is followed by Customer Discovery Lab (min: seven sessions).
This badge is a prerequisite to attend both Financial Literacy and Investor Readiness.
Customer Discovery Theory (2-hour session) – Most concept-stage startups fail because they focus more on how to deliver a product than on the needs of people buying it. This course provides a concentrated overview of the Customer Development Process, Business Model Canvas and Minimal Viable Product. By understanding customers, startups reduce the risk of failure. This class is the first in the Customer Discovery Badge Program, and it should be followed with Customer Discovery Tools.
Customer Discovery Tools (2-hour session) – This is a follow-on class from Customer Discovery Theory. The purpose of this class is to work with the entrepreneurs to make sure they are ready to move forward with the discovery process—actually interviewing potential customers. We will review the entrepreneurs’ business hypothesis, initial set of interview questions, and tools to help build a persona of potential customers. This class should be followed by Customer Discovery Lab.
Customer Discovery Labs (7 – 10 weeks) – Customer Discovery Lab is designed for founders who wish to deeply explore their customer segment and value proposition. Customer Discovery Labs use a combination of teaching methodologies from Customer Discovery (get out of the building), Lean Startup
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(iterative loop of experimentation), Startup Engineering (disprove your assumptions), and the Business Model Canvas to uncover your compelling business model.
After this seven-to-10-week program, you will have identified the core of your business model – your customer segment and value proposition. You may discover there isn’t one and that’s fine. It’s better to find out you were wrong now than later – after spending years and possibly a fortune.
How does it work? 1. Multi-week intensive program. You should commit to attend every week. 2. Each week, make assumptions about what needs to be true about your business model to succeed. 3. Design tests to disprove each assumptions. 4. Collect data and interpret the results. 5. Update your business model canvas based on what you have learned. 6. Present your findings to the teaching team and get thoroughly thrashed. 7. Repeat.
You will be expected to talk to at least 10 potential customers each week.
A new program starts every third week, so classes overlap with latter and earlier stage teams.
FINANCIAL LITERACY BADGE
(Prerequisite: Customer Discovery Badge)
Through this four-session module, you will gain a thorough understanding of your business model and be able to articulate that model to an investor in financial terms.
Takeaways: 1. Learn the details and underlying assumptions of financial models. 2. Become familiar with the terminology investors expect you to know, understand, and use. Dive into your individual business’ financial model.
INVESTOR READINESS BADGE
(Prerequisites: Customer Discovery Badge and Financial Literacy Badge. Recommended: Telling Your Story)
Taught in partnership with Atlanta Technology Angels, this three-session workshop focuses on the final steps needed to prepare you for talks with potential investors.
Activities:
1. Understanding of the investment process.
Work one-on-one with angel investors to determine your readiness.
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TELLING YOUR STORY In this highly interactive three-session workshop, you will learn the three most important and often overlooked activities for early-stage startups:
1. Elevator pitch. 2. Executive summary. 3. Short pitch.
Angel investors, strategic partners, prospective co-founders, and others evaluate these presentations to make a decision on whether to partner with you.
HR 101 Corporate culture is incredibly important in hiring and retaining the brightest minds. In this workshop, we work through creating a mission, vision, and values for your business that will cultivate the culture that you desire.
SALES 101 Develop your sales skills in this two-session workshop. You didn’t start a company to become a salesperson, but the truth is startup CEOs typically close the first five or more sales deals. This workshop includes sessions on Selling Skills, Lead Qualification, and Closing Your First Five Customers.
MARKETING 101 Depending on location, attendees will either be participating in “Traffic Hacks” or “Building a Prospect List.” Check the calendar for details.
[Midtown] Traffic Hacks – This is not the field of dreams. Just because you build it does not mean they will come. In this interactive workshop, you will learn how to increase traffic to your website or app on a startup shoestring budget.
[Athens/Augusta/Peachtree Corners] Building a Prospect List – How to maximize your customer discovery process to build a pool of supporters for your startup.
PR 101 In this interactive session, we’ll help you craft a powerful PR program that includes messaging, media relations, content marketing, and social media. You’ll leave with a road map and best practices to land your dream headline, increase leads, and generate buzz.
HR 201 You’ve raised some money and acquired some early customers. It’s time to scale. This class focuses on recruiting, hiring, and managing talent.
SALES 201 You’ve got some early-adopter customers and have figured out how to sell. It’s time to scale sales. This class focuses on activities that you need to be focused on to scale: sales compensation, salesperson hiring/recruiting, managing sales people, and the tools you need to grow. The Nexxt Entrepreneur, LLC 89
ATDC Calendar of Events
Atlanta Technology Development Center – March Activity Calendar ch
Sun Mon Tue Wed Thu Fri Sat February February February February February 1 2
• Coffee with a Catalyst • Alpharetta Circle • Signature CEO Roundtable
3 4 5 6 7 8 9
• “What is SBIR?” Federal• US Bank/Elavon Office• Financial Literacy Part• Customer Discovery• Alpharetta Circle Funding Info Session Hours 1: Finance 101 Lab • Signature CEO Roundtable • DLA Piper Office • Frazier & Deeter Office• FDA Regulatory Hours Hours Workshop Continued • ATDC Info Session• Square 1 Bank Office • Troutman Sanders Hours Office Hours
10 11 12 13 14 15 16
• Bennett Thrasher • US Bank/Elavon Office• Retail Technology • Customer Discovery• Alpharetta Circle Office Hours Hours Meetup: Amazon Lab • Signature CEO Roundtable • Customer Discovery Effect • Georgia Tech Research Theory • Financial Literacy Part Corporation Office • Silicon Valley Bank 2: The Financial Model Hours Office Hours • AUGUSTA: Lunch and• Baker Donelson Office • Product Circle Learn: Winning the Hours • Miller Martin PLLC Entrepreneur’s Battle Presents: Anatomy of Between Urgent and a Deal Part 3 Important • Arrow Office Hours
17 18 19 20 21 22 23
• US Bank/Elavon Office• Financial Literacy Part• Customer Discovery• Alpharetta Circle Hours 3: Work Session Lab • Feedback Friday • Customer Discovery w/Mentors • Aprio Office Hours• Signature CEO Roundtable Tools • East West • Entrepreneurs’ Night • Nelson Mullins Office Manufacturing Office Hours Hours
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24 25 26 27 28 29 30
• IP Strategy for • US Bank/Elavon Office• Financial Literacy Par• t Customer Discovery• Alpharetta Circle Healthcare Companies Hours 4: Financial Model Lab • Signature CEO Roundtable • Sales Skills for Review w/Mentors• Kuck Immigration Entrepreneurs • Insperity Office Hours Office Hours • Silicon Valley Bank• MMM Investor Series: Office Hours Fireside Chat with Bain Capital Ventures
31
Opportunity Hub
DEIS
Welcome to the most inclusive innovation, entrepreneurship and investment ecosystem on the planet.
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Our model is simple. Aspiring innovation, entrepreneurs and investors apply for membership to OHUB to access our skills development programs, job opportunities, startup resources, funding and investment opportunity to build multi-generational wealth. Companies, foundations, municipalities, startup organizations, influencers and advocates desiring to increase their investment in authentic internal and external diversity, equity and inclusion fund and sponsor the programs, jobs and capital.
Opportunity Hub, co-founded in 2013 in Atlanta, GA by Rodney Sampson as a follow up to the highly successful Kingonomics’ conferences grew to become the largest multi-campus entrepreneurship center and technology hub in the United States specifically focused on diversity and inclusion as a business thesis for the development of high demand technical talent and high growth startup companies.
Today, OHUB as it is affectionately known has re-positioned herself as an inclusive innovation, entrepreneurship and investment ecosystem building platform focused on four proven methodologies as a definitive path to disrupting poverty and the racial wealth gap in socially disadvantaged communities and beyond. These four methodologies are early exposure, education & training, ecosystem building and capital formation. HBCU@SXSW is the company’s flagship event held every year in Austin, TX.
To scale its current work to date, opportunity hub is building a suite of collaborative and interconnected technology products, programs and experiences.
Our Story Opportunity Hub (OHUB) is the world's leading authority and platform for inclusive tech, startup and venture ecosystem building.
Programs like CodeStart, #YesWeCodeFund, #100BlackAngels and HBCU@SXSW were pioneered. Each year, over 15,000 people walked through Opportunity Hub’s doors to learn, engage, build and work.
In late 2015, Opportunity Hub merged its coworking operations with TechSquare Labs, a corporate innovation lab and venture fund that has invested in over 30 companies that have raised over $300 million in follow on capital, are valued at over $1 billion dollars, generate $75 million in annual reoccurring revenue and growing and employ nearly 1,000 people. During this time, Opportunity Hub continued to expand via its national programs and productize its programmatic success for the future.
Today, Opportunity Hub (OHUB) is the world’s leading inclusive innovation (tech), entrepreneurship (startup) and investment (wealth) ecosystem building platform. OHUB’s technology products, national programs and private equity investments ensure that socially and economically disadvantaged communities pursue and gain high demand tech skills and careers, launch and grow high growth startups and access and invest in exclusive investment opportunities traditionally reserved for the rich. This is the path to the middle class, multi- generational wealth creation and beyond.
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Appendix G – Business Accelerators
The Farm
The Farm ATL is a Comcast NBCUniversal innovation hub supporting startups, founders, and Atlanta’s entrepreneurial ecosystem. Housed in The Battery Atlanta next to the Atlanta Braves’ SunTrust Park — The Farm provides a startup accelerator (powered by Boomtown), premium startup incubator office space, a cutting-edge hardware prototyping lab, and coworking facilities. The Farm Accelerator program runs for twelve weeks, twice per year, and offers early stage startups a customized curriculum, company-building guidance, industry mentorship, and a network of startup community supporters.
Techstars Sign up to get Atlanta updates and exclusive Techstars news, announcements and more.
Techstars Atlanta, in partnership with Cox Enterprises Techstars Atlanta, in partnership with Cox Enterprises, is located in the epicenter of startup activity in the Southeast, providing entrepreneurs with the resources and network to build meaningful enterprise technology companies and enduring consumer brands. Atlanta shines as a model startup community, with active and exited entrepreneurs, as well as corporate giants, engaging with founders to help build the next set of disruptive technology companies.
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Applications Open Jan 7, 2019 Application Deadline Apr 7, 2019 Start of the Program Jul 15, 2019 Demo Day Oct 15, 2019 Location: Atlanta Techstars Atlanta Global Partners
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Appendix H – Coworking Spaces
Appendix – ROAM
Never Dread Mondays Again.
AT L A N TA C O W O R K I N G S PA C E We get it. Loud coffee shops and makeshift home offices just don’t cut it. That’s why Roam’s Atlanta coworking spaces are intentionally designed to accommodate an ecosystem of businesses—big corporations and small businesses, for profits and non- profits, millennials and baby boomers, creatives and CEOs. Our shared workplaces allow members to connect with others, work productively and grow their businesses. And because we believe your best work is accomplished in an environment where you can focus, learn, socialize and collaborate, we’ve crafted multi-functional workplaces that allow you to do just that.
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AT L A N TA M E E T I N G S PA C E
Who said meetings have to be boring? Roam has broken the mold of traditional conference rooms by providing unique and innovative solutions for hosting offsite meetings and breakout sessions. Our Atlanta meeting spaces are intentionally designed to stimulate creativity, energy and collaboration. This service-oriented, all- inclusive Roam meeting experience simplifies the planning process by providing everything from technology to catering, business class WiFi to coffee. Our aim is to serve you so that you and your team can get your best work done.
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Meritage Centre
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Appendix I – Startup Hub
Switchyards
Switchyards Downtown Club (Startup Hub) Excerpts from Interview with Michael Tavani (founder)62
On Ted Turner Drive, across from the Tabernacle and two blocks from Centennial Olympic Park, sits a sturdy brick 20,000-square-foot building, Switchyards Downtown Club. Michael Tavani, co-founder of Scoutmob, purchased the 90-year-old building and created Switchyards about five years ago as a startup hub for businesses, but also in part to “start up” more business in downtown Atlanta. Switchyards has drawn so many to the area that Central Atlanta Progress asked to use one of Tavani’s slogans on its company shirts: Downtown is for doers. “We’ve put [the slogan] on shirts and stickers,” Tavani said, “and everyone really smiles when they see it.”
What was your thought process when you decided to create Switchyards? Five years after co-founding Scoutmob, I began working on an idea I couldn’t stop thinking about: purchasing an old but interesting building and creating the first consumer- and design-focused startup hub in Atlanta. Nothing in the city was exclusively focused on creating a culture to help produce the next Airbnb or Warby Parker or Spotify. Those are consumer startups, and they have to have strong brand and design at the soul of the company. There’s a great quote by Paul Graham that says, “It’s hard to do a really good job on anything you don’t think about in the shower.” When it gets to that point, you have to go all in, so I left Scoutmob to create this place, a community, a hub where the future great brands of Atlanta will get started.
What makes Switchyards unique? There’s a big distinction between “coworking” and “startup hubs.” Startup hubs like Switchyards and Atlanta Tech Village are primarily focused on creating startup winners. Every ounce of energy is focused on that. The average company size at Switchyards is a couple of people. These are founders and members that are early in their journey trying to surround themselves with other founders working on the same type of startup.
Coworking is fractional office space. So, if you’re a real estate agent or a sales person or a CPA, you can now join a coworking space instead of signing a five-year lease or working from home/coffee shops. But, they are not about startups anymore. The big coworking players are going upstream fast; about half of their business is becoming enterprise, so the distinctions between coworking and startup hubs will become clear to most people soon. I believe there will be a consolidation of “coworking” spaces soon. The ones that have a strong focus, vision and tribe will thrive.
What was the response in the tech community when you came forward with this new initiative? We had 550 people at the launch event announcing Switchyards a year and a half before we even opened the doors. We had around 500 founding members and 140 people move into Switchyards the day it opened. Atlanta is craving homegrown and authentic stuff like Switchyards in the heart of the city, and also a community of emerging consumer- and design focused brands. We have a waitlist for offices and our tour is full twice a week.
Why did you want to be in downtown Atlanta? I originally looked at almost 60 buildings all over town before buying our building. I looked on the Westside, on the Beltline, in South Downtown, but ultimately our building was the best combination of what we were looking for: history, MARTA access, walkable restaurants, culture, grit and a great story.
62 Melanie Lasoff Levs, “Switchyards stakes a claim on downtown,” Atlanta Business Chronicle, March 15, 2019. https://www.bizjournals.com/atlanta/news/2019/03/15/switchyards-stakes-a-claim-on-downtown.html
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How have you seen the downtown area evolve since you opened there? We went under contract on our building in 2014. Since then, they’ve announced the Gulch, Mercedes-Benz Stadium opened, Atlanta United played their first game and took over Atlanta, and South Downtown [the land in the Gulch area] got purchased by Newport. I’ve been saying for five years that I think downtown will be the next great neighborhood in Atlanta. Even though it was the original neighborhood in Atlanta in 1836, some people used to laugh at that comment. Now, it’s looking better and better. Downtown has elements that no other place in the city has: a dense street grid and human-scale streets and buildings. Now, we just have to take a hard stance from the top down to eliminate poorly used surface parking lots (I’m OK with the more dense decks) and get serious about filling in downtown with people and residents and workers and retail in a well designed way.
What challenges come with running a company in downtown Atlanta? I grew up in Atlanta and the city is mostly past the outdated stereotypes of downtown, that it’s where you come exclusively for Hawks games and the Georgia Aquarium, etc. But because there aren’t many great local entrepreneurs downtown yet, we have to carry the torch. We need to give Atlantans more reasons to spend their days and nights downtown. Once people come down here, they love it. But most of the interesting stuff happening downtown at the moment is focused on out-of-towners. That’s changing but for me, it can’t change fast enough.
What would you like to see happen from an economic development standpoint in downtown Atlanta? I’d like to see more local entrepreneurs bringing their creative and culturally relevant ideas to downtown. Great, local restaurants, a brewery, more startup HQs, a great boutique hotel, a super creative retail experience, etc. I’d also love to see a flagship company like Mailchimp make a statement and move downtown.
What do you feel Switchyards has contributed to the downtown Atlanta market? I’d argue that Switchyards is the best free marketing tool downtown has. We show every day that it’s a destination for creative people and startups. We made our alley, Williams Street, one of the most popular destinations in the city for photographers and video shoots. It’s the home to one of the most photographed signs in Atlanta, our “Made With Soul In Atlanta” neon sign. We have two big events every month that are free and open to the public: The Consumer Show, a pitch event for the best consumer startups in the city, and Made in Atlanta, about great brands. We’re also the starting point for many tours looking at downtown. We’ve hosted well-known boutique hotels and well-known CEOs and mayors from other cities who are looking at downtown.
What are your future plans and goals for the company? We’re launching Switchyards Neighborhood Club in neighborhoods around Atlanta. It’s our next phase based on three years of studying our community. It’s part coworking space, part coffee shop, part country club with a modern twist. It’s a membership-based community of creatives.
What advice do you have for entrepreneurs who want to stake a claim on downtown Atlanta real estate? Hurry up because it’ll be too expensive soon!
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Appendix J – Technology Square at Georgia Tech
Technology Square Research Building at Georgia Tech
The Technology Square Research Building (TSRB) is a six-story building containing 200,000 square feet of research and community-oriented facilities (five research institutes, a 93-seat auditorium, two banquet halls, and an open space plaza) in addition to 8,000 square feet of dedicated retail space. TSRB is designed to fill multiple demands of key partners: The building integrates the State of Georgia’s demand for a “facility to develop broadband systems, devices, and chips” with the University’s demand for an applied research base directly adjacent to Centergy.
Finance Model
In partnership with TUFF (The University Financing Foundation, a mission-driven nonprofit finance organization that offers low-cost financing to universities for new facilities), Georgia Tech was able to start development of Tech Square in the early 2000s.
The finance models for the two major convergence centers were spearheaded with advice, leadership, and support from TUFF. Specifically, TUFF provided land acquisition capital to Georgia Tech and devised a workable financial structure for the construction of Centergy and the nearby TSRB building. TUFF also met with the Governor of Georgia to advocate for Georgia Tech’s vision and secure support for Tech Square as a state research, education, and economic development initiative.
Using tax-exempt municipal bonds, TUFF helped fund and initiate the development of the Centergy building in 2003. Today TUFF owns 5 of the 13 stories within the building and leases those floors to Georgia Tech at below- market rates. Once Georgia Tech fulfills the commitments within the master lease, the University will own the entire building. A similar structure funded the development of TSRB, which reduced the occupancy cost for both the University and the State.
Governance Model
Georgia Tech owns and operates Tech Square’s facilities partially through the leasing structure with TUFF described above. The Georgia Tech Enterprise Institute, situated within the Centergy building, plays a major role in business outreach for Georgia Tech; it is the strategic support and outreach office of the University and is central to the operation of Tech Square. The George Tech Enterprise Institute reports to the University’s executive vice president of research while providing public connections to Georgia Tech resources, including world-class research, state-of-the-art facilities, internationally recognized experts, and high-caliber students.
The Institute plays a major role in facilitating commercial leasing opportunities at Tech Square to technology entrepreneurs, investors, nonprofits, and Georgia Tech corporate strategic partners. The Georgia Tech Enterprise Institute also runs Tech Square’s incubation center within the Centergy building.
Opportunity/Strength
Tech Square benefits from its prime location within Midtown Atlanta and direct connection to the main Georgia Tech campus via the purpose-built Fifth Street Bridge and pedestrian plaza. With an embedded partnership liaison organization (Enterprise Institute) that facilitates direct cooperation between the public and private sector, Tech Square is well-positioned for convergence while providing students and faculty with unique opportunities to increase the visibility of their products and innovations. Tech Square also benefited from the mutually beneficial partnership with the developer and advisor TUFF. The financing structures made available by this partnership helped get Tech Square off the ground and contributed to its continued success.
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The multiple partnerships that enabled Tech Square’s development also resulted in related tenants—often nonprofits—being early office space users in the development. Many of the Georgia Tech affiliated nonprofit institutes and research centers have helped attract related industries, while the State has located the Georgia Minority Supplier Development Council which directly helps to develop small business not only around the state, but locally in the Tech Square neighborhood. The Georgia Minority Supplier Development Council is a natural addition to the space as they provide significant economic development programming; through its mission driven activities this nonprofit helps the Tech Square innovation district fulfill economic development objectives.
Key Lessons
• Finance: The leasing structure provided by TUFF to Georgia Tech has helped Tech Square remain successful and, more importantly, was essential in initially getting the project off the ground. Rather than own the buildings entirely from the start, TUFF created a leasing structure that enables Georgia Tech to lease portions of the buildings at below-market rates, with the ability to own the building outright once the university fulfills the terms of the lease agreement.
• Partnerships: The partnership between TUFF and Georgia Tech has been essential in getting the Tech Square project started. Equally if not more importantly, the Georgia Tech Enterprise Institute has been successful in securing corporate partnerships and sponsorship for Tech Square’s numerous innovation centers (AT&T, Coca-Cola, Home Depot, Panasonic, etc.). Many of the corporate sponsors are either headquartered in Downtown Atlanta or have a major presence in the city. This again points to Tech Square’s ability to leverage its location at the center of a major city as an asset and major contributor to its success.
• Activation Strategies: Tech Square is a mixed-use neighborhood that offers a variety of amenities to residents, students, workers, etc. It is not a standalone project that is solely focused on providing incubation space for students, faculty, and industry leaders to interact and co-create. Tech Square offers a complete lifestyle that is not limited to its institutional use as an anchor for Georgia Tech’s enterprise accelerator and corporate outreach arm. More importantly, the density of Tech Square facilitates the interaction between faculty, labs, students, startups, and corporations on a much larger scale. This density is made possible, once again, because of its prime location within Midtown Atlanta.
Source: Report conducted by HR&A Advisors in University of Georgia. 2018. Innovation District Task Force Report and Recommendations. July 1.
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Appendix K - List of Atlanta-based Entrepreneurial Organizations
Entrepreneurial Organizations
Name Website Focus
Entrepreneur's Organization (EO) eoatlanta.com Launchpad2X Launchpad2X.com Women MIT Enterprise Forum mitforumatlanta.org TiE Atlanta atlanta.tie.org Women Only Entrepreneurs (WOE) woeatl.com Women RitzGroup ritzgroup.org Atlanta Startup Battle atlantastartupbattle.com Quarterly Competition for funding and mentoring meetup.com/Atlanta-startup- Atlanta Startup Village Village Monthly Pitch RAISE Forum raiseforum.com Semi-annual pitch contest Venture Atlanta ventureatlanta.org Annual investor Showcase
Co-Living/Clubs
Name Website Focus
Tech Square ATL techsquareatl.com Tech Switchyards switchyards.com B2C The Gathering Spot thegatheringspot.club Private club for professionals Flatiron City flatironcity.com Diverse, but with Women incubator Industrious industriousoffice.com/city/atlanta Roam meetatroam.com 3411 Coworkorking 3411coworking.com Dowtown Chamblee Atlanta Tech Village atlantatechvillage.com Tech Russell Center for Innovation and Entrepreneurship rcie.org Minority Entrepreneurs Sandy Springs Innovation Center sandyspringstechcenter.com Perimeter Market Tech Square Labs techsquare.co Tech WeWork wework.com/l/atlanta--GA
Accelerators
Name Website Focus
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Ascend2020 ascend2020atl.com Tech, minority; Morehouse with JP Morgan Chase
Flashpoint @ Georgia Tech [email protected] Founder Institute fi.co/s/atlanta Idea-stage 3 years support for products that impact positive Greenhouse Accelerator green.org/greenhouse resource use NeuroLaunch neurolaunch.com Neuroscience techstars.com/programs/atlanta- Techstars Atlanta program Partner with Cox Joint Venture with Comcast and Boomtown The Farm ATL thefarmatl.com Ventures
Incubators
Name Website Focus
22 Tech Park 22techpark.com Tech Advanced Technology Development Center atdc.org Tech; at Ga Tech BIG Incubator digitalundivided.com/incubator Minority; 26 weeks bridge- Backed by large corps to foster collaboration; Bridge Community community.com/home.html FinTech, Retail, IoT Goodie Nation goodienation.org Social impact pre-accelerator Women's Entrepreneurship Initiative (WEI) weiatlanta.com Women
Angel Funding Sources
Name Website Focus
Atlanta Tech Angels angelatlanta.com Early stage tech Black Angel Tech Fund (BATF) blackangeltechfund.com Seed and early stage tech Gathering of Angels gatheringofagels.com Southeast Investor Network southeastinvestorgroup.com Tech Ritz Group ritzgroup.org TiE Atlanta Angels none listed Tech
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Non-Traditional Funding
Name Website Focus
Access to Capital for Entrepreneurs (ACE) aceloans.org Atlanta MBDA Business Center mbdabusinesscenter-atlanta.org MBE Atlanta Micro Fund (AMF) atlantamicrofund.org Up to $10,000 Invest Atlanta Small Business Loan Program investatlanta.com City of Atlanta; create jobs
Venture Capital
Name Website Focus
Alchemus Capital alchemistcapital.com Women and multicultural CTW Venture Partners ctwvp.com Companies changing the way the world operates Forte Ventures forteventures.com Diversified tech Fulcrum Equity Partners fulcrumep.com Healtcare, B2B, Saas, Tech enabled Mosley Ventures mosleyventures.com Tech Noro-Mosley Partners (NMP) noromosley.com RAISE Forum raiseforum.com Industry agnostic Seraph Ventures seraphgroup.net Early stage in high-growth sectors Stanley Ventures stanleyventures.com Stanley Black and Decker Venture Arm Tech Square Ventures techsquareventures.com Seed and early stage tech Tech Square Labs techsquare.co Tech
Funding Incentives
Name Website Focus
investatlanta.com/opportunities/ Startup Tax Exemption atlanta-startup-tax-exemption Tax exemption for tech businesses
georgia.org/wp- content/uploads/2014/03/Angel_ Angel Investor Tax Credit Investor_Tax_Credit.pdf State tax credit up to $50k for angel investors georgia.org/competitve- advantage/tax-credits/research- R&D Tax Credit and-development/ Eligible R&D expenditures investatlanta/business/bonds- Credit for businesses creating jobs with designated Opportunity Zones incentives/opportunity-zones/ areas
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Appendix L - Data Center Community Grants Program
The Data Center Community Grants Program supports eligible organizations and initiatives that directly impact in the immediate community surrounding a Google data center. Our application cycle is currently closed for the US, Chile, Taiwan and Singapore and will reopen in Q3-2019. Please check this site for updates regarding the next application cycle. During open application periods, please note the following before submitting your application:
• Review the program focus areas below. • Please complete this form only when the entire application is ready for submission. Responses in this form cannot be saved for later completion. • The information you provide in this form will be used in accordance with Google's Privacy Policy.
Focus Areas:
• Science, technology, engineering and math (STEM). We place a particular focus on computer science education and STEM initiatives for underrepresented groups (including girls) in math and science professions. • Efforts to bridge the digital divide. • Carbon reduction or green initiatives with regional impact. • Nonprofit organizations dedicated to strengthening the technology startup or entrepreneurial ecosystem. • Technology infrastructure for nonprofits, cultural institutions and schools that will use technology to broaden impact and reach audiences in new ways.
When evaluating proposals we consider: • Location and geographic impact in the immediate community surrounding one of our offices or data centers. • Measurable and demonstrable benefit to the community—the number of persons who will benefit and at how that impact will be quantified. • Organizational capacity that may include a track record of implementing programs. • Integration with other community resources within the focus area, such as other nonprofits and government entities with similar goals. • Innovative approaches that have potential for replication, if successful.
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Appendix M – Appalachian Regional Commission (ARC) Entrepreneurship and Business Development Program
Search ARC Go
Home: Program Areas: Entrepreneurship and Business Development Print this page Email this page
Entrepreneurship and Business Development
Goal One of ARC's Five-Year Strategic Plan for Capitalizing on About ARC Appalachia's Opportunities, 2016-2020 is to invest in HIGHLIGHTS Commission Leadership entrepreneurial and business development strategies that strengthen Appalachia's economy. This includes expanding Appalachian Region entrepreneurial ecosystems and support for start-ups and Program Areas existing businesses, enhancing the competitiveness of the Region's manufacturers, and promoting export strategies to Asset-Based Development connect startup and established businesses with external and Community Infrastructure global markets. ARC supports a variety of activities to promote entrepreneurship Distressed Counties and business development in the Appalachian Region, including:
Education and Training Giving entrepreneurs greater access to capital, including Energy support for microcredit programs, revolving loan funds, development venture capital funds and other creative Entrepreneurship and financing models. Business Development Educating and training entrepreneurs through youth Research Reports Additional Resources education programs and adult training initiatives. Examples of Projects Encouraging sector-based strategies to maximize the Entrepreneurial Ecosystems in economic strengths of local communities; and Appalachia Health Providing strategic support for business incubators, Entrepreneurial Ecosystems in Leadership Development and makerspaces, and other forms of technical assistance. Appalachia is a suite of research Capacity Building reports and resources to support ARC also sponsors in ongoing research to support the Region's entrepreneurial development in Telecommunications: entrepreneurial ecosystems. For instance, Entrepreneurial Appalachia, using both quantitative Information Age Appalachia Ecosystems in Appalachia is a suite of three research reports and qualitative analysis at both the Tourism Development and resources to support entrepreneurial development in macro and micro levels. Appalachia. This research, released in October 2018, includes Transportation and Highways three reports which outline core elements necessary for a robust Read Entrepreneurial Ecosystems (ADHS) entrepreneurial ecosystem, analyze community case studies to in Appalachia provide insight into the unique challenges faced by communities Grants and Funding in Appalachia, and offer recommendations to support future Find data and resources about Research, Maps, and Data economic development across the Region. A companion website Appalachia's entrepreneurial at www.arc.gov/ecosystems documents and compares ecosystems Newsroom entrepreneurial activity in each of Appalachia's 420 counties, and Publications includes a working inventory of over 1,000 support services Dynamism Dashboard available to entrepreneurs across the Region. Resources Inventory Read the Entrepreneurial Ecosystems in Appalachia report
Report Series 1. Literature Review (PDF: 1.6 MB) 2. Ecosystem Development Case Studies (PDF: 2.5 MB) 3. Building an Entrepreneurial Future: Ideas for Appalachia's Ecosystem Builders and Champions (PDF: 1.3 MB)
Read the Press Release.
Find data and resources about Appalachia's entrepreneurial ecosystems.
Entrepreneurship and Business Development Links Research Reports Additional Resources Examples of Projects
Site Map Contact ARC Web and Privacy Policy USA.gov Office of Inspector General
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About the Author - L. Gregory Henley, Ph.D. Dr. Henley is a business educator, an entrepreneur and an author with experience in the business world and in academia. He has held leadership positions of President of a bank, Chief Financial Officer, Treasurer and in academia, Director of Georgia State University's (GSU) Center for Entrepreneurship, where he was the Most Outstanding Instructor for one of his MBA classes. At GSU, his strategic plan included developing an incubator. However, his efforts stopped short when the nation entered The Great Recession and obtaining funding from the State of Georgia was not possible. Upon leaving GSU on a fulltime basis, he was recruited to help launch a business accelerator.
Common themes in Dr. Henley's life have been his lifelong obsession with entrepreneurship and leadership. This began while working in his Dad's businesses as a child, continued in college at MIT while surrounded by technology innovators, and, persisted while earning his MBA and Ph.D. at Columbia Business School.
Through research, real-world practice, consulting, and teaching, much effort has been spent understanding the entrepreneurial leader, both in ventures and established organizations. What fascinates him is learning the stories behind the leaders. Thus, Dr. Henley founded a television and film production company, Nexxt Productions, Inc., to tell the impactful stories of the ambitious and influential leaders behind American business. Also shaping his understanding was going on a 'road trip' to multiple states during which he interviewed over 30 entrepreneurs, from which he wrote a book, 'R U The Nexxt Entrepreneur?' that sheds an honest light on the path to successful entrepreneurship. In addition, drawing on his business and academic backgrounds, Dr. Henley created a rigorous workshop-based leadership program to fill the gap between what executive level women need to move upward and the training and advice they receive. The common denominator for his activities is business education.
Professionally, Dr. Henley teaches at Georgia Tech, has taught at the University of South Florida, the University of Tampa and the College of the Bahamas. In business, he acquired community banks in Alabama and Florida, worked for Fortune 500 companies, and was the CFO for a cyber security venture and a bank. Dr. Henley has been quoted in The NY Times, Wall Street Journal, Atlanta Journal Constitution, and the Atlanta Business Chronicle. Speaking engagements have included the keynote speaker at entrepreneurship conferences, and seminars at the Black Enterprise Entrepreneurship Conference, America's Mart Conference and the National Black MBA Association and youth organizations, such as the Atlanta After-School All-Stars, and Jack and Jill of America.
Community involvement is an important part of Dr. Henley's life. He is a member of St. James UMC, has served as a judge in business plan competitions for the National Black MBA Association's Entrepreneurial Institute, the Youth Entrepreneurs of Atlanta, and the Future Business Leaders of America. He recently served as the lead case competition coach for high school students in the Leaders of Tomorrow program, and a lead mentor for a venture at a business accelerator. The Nexxt Entrepreneur, LLC 108
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Stoetzel, K. (2019, April 18) Libraries Are Staking Their Claim As The Original Coworking Space. Currents. Retrieved May 2, 2019, from https://www.kauffman.org/currents/2019/04/libraries-stake-claim-as-original- coworking-space?utm_source=newsletter&utm_medium=email&utm_campaign=iaw_05_02_2019
Tankersley, J. (2019, April 17). Treasury Issues Rules on Tax Breaks for Opportunity Zones. New York Times. Retrieved April 17, 2019, from https://www.nytimes.com/2019/04/17/business/economy/opportunity-zones-treasury-regulations.html?
University of Georgia. (2018, July 1). Innovation District Task Force Report and Recommendations. Retrieved May 14, 2019, from https://president.uga.edu/_resources/documents/2018-uga-innovation-district-task-force.pdf.
U.S. Census Bureau. (n.d.) Retrieved May 14, 2019, from https://www.census.gov
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U.S. Census Bureau, American Fact Finder (n.d.) Labor Market Statistics, Quarterly Census of Employment and Wages Program;, 2016 County Business Patterns. Accessed March 25, 2019 from https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=BP_2016_00A3&prodType=table
U.S. Small Business Administration. (n.d.) Retrieved May 14, 2019, from https://www.sba.gov
Walker, B. (2004). Selecting Great Clients. In A Complete Guide to Business Incubation: Completely Revised 2nd Edition. National Business Incubation Association.
Williamson, A. (Principal in charge). (2017). Douglasville Downtown Master Plan & 10 Year Strategic Plan. Retrieved May 14, 2019, from https://www.douglasvillega.gov/DocumentCenter/View/7679/01052018- FINAL_web?bidId=.
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Additional Addendum – 2010 Incubator Feasibility Study
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West Georgia Center for Entrepreneurship Activity Feasibility Study & Analysis L. Gregory Henley, PhD & Carlton Burroughs, SPHR ISU Group, LLC
November 2010
Table of Contents
Introduction and Executive Summary ...... 3
Why Incubators Are Important ...... 5
Purpose of the Feasibility Study ...... 6
Purpose of the Douglas County Incubator ...... 7
Market Area ...... 9
Economic Overview & Business Focus ...... 10
Model Analysis ...... 13
The Facility ...... 15
Financial Analysis ...... 19
Stakeholders and Governance ...... 30
Conclusion……………………………………………………………………………………………………………………………....31
Appendix: Pro-forma Financial Statements
Attachment 1: Sample Incubator Programs Attachment 2: Sample Entrepreneurship Program/Event
Attachment 3: 2115 Fairburn Road Facility
Attachment 4: Sample Online Entrepreneurship Partner
Attachment 5: EDA Application Guidelines
Attachment 6: Biographies of Authors
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Introduction and Executive Summary
This study was commissioned by the Development Authority of Douglas County on October 29, 2010 and concluded on November 19, 2010 to determine the feasibility of a creating a business incubator. Since the proposed incubator would be a public/private partnership, we talked to numerous public and private individuals as well as existing incubator managers. There may be stakeholders who could not be contacted due to the available time to complete the study. We also utilized external research, much of which came from the National Business Incubators Association. Last, we incorporated our past and current knowledge as entrepreneurs and business analysts with previous incubator experience. Interviewees in both the public and private sectors shared their vision for how the proposed incubator could impact economic development in Douglas County. The study reflects that vision as close as is reasonably justifiable. The study focused on the following areas: Market Area. The West Georgia Center for Entrepreneurial Activity will draw members primarily from Douglas County and the surrounding counties of Fulton, Cobb, Paulding, Clayton and Carroll. Each of these counties has experienced robust population growth, but is suffering from high unemployment. We feel that many of the unemployed are ready to take action to reverse their fortunes by considering self-employment. Economic Overview and Business Focus. Douglas County has not been immune to the unprecedented economic decline. Its unemployment rate stands at close to 11% (as of the first quarter of 2010) and the incidence of home foreclosure is one of the highest in the state. However, its population growth rate, percentage of existing small businesses and pre-recession employment growth rates all bode well for business incubation. Moreover, Douglas County’s has a reasonable cost of living, easy access along I- 20 and is located near Atlanta and the airport. Thus, it is a very attractive location for entrepreneurs within the market area and for those wanting to locate to the greater Atlanta area. Model Analysis. There are numerous incubator models used and many incubators have a technology or manufacturing focus. In Douglas County, the data suggest that a specific focus for resident members such as technology or manufacturing is not supported. Instead the incubator should be a mixed-use facility that draws from multiple sectors with an emphasis on service businesses. The West Georgia Center for Entrepreneurial Activity has the opportunity to use best practices from other incubators and other organizations, such as business executive parks and private business clubs, to create a new model that generates income from: 1) rent and services, 2) entrepreneurial programs and events, and 3) virtual strategies. Facility Selection. Due to Douglas County’s location near Atlanta and the airport, it is ideally situated. The preferred location for The West Georgia Center for Entrepreneurial Activity will be close to Interstate 20 and on a well-traveled local road. Such a facility exists at 2115 Fairburn Road, Douglasville, GA 30135. This subject property is available for rent. Financial Analysis. The financial analysis must be understood in the context of very specific assumptions as detailed in the report. For the subject property start-up costs are forecasted to total $1 million which include furniture, fixtures and equipment; a person to oversee the process; and pre- opening marketing expenses.
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Incubator management must be innovative and use best practices for the incubator to become cash flow positive in year three. Potential sources for subsidizing the incubator prior to it becoming cash flow positive include the U.S. Department of Commerce’s Economic Development Agency, the City of Douglasville, and Douglas County. Local Support and Leadership. Successful incubators tend to require a community commitment that includes public, private and civic entities. There appears to be a deep commitment by many of those interviewed and a public/private collaboration seems strong. However, it is important that a Champion is identified to spearhead the project and take responsibility, and if the incubator is approved, a Board of Directors be appointed. Our research leads to the conclusion that Douglas County must be very entrepreneurial and innovative in its approach to operating the incubator by using best practices. Management must identify and generate multiple income streams by providing a wider range of services than the traditional incubator may provide. A comprehensive, though not exhaustive, set of income streams has been included as part of the pro-forma financials in this study. Implementation will require effective marketing, the right management team and support of the community. The study represents what can be feasible and is not a substitute for a full-fledged business plan.
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Why Incubators Are Important
Incubators are important to assist businesses when they are young and most susceptible to failure. There are about 1,200 business incubators in the U.S. and they are growing at 8% to 10% per year. They provide businesses with needed services and resources tailored to start-up ventures. Such support is frequently in the form of business education, contacts, networking, space, etc. at low or no cost. Their main goal is to help businesses grow, thus, creating jobs that enhance local community economic development. Due to their impact within the community, public operating subsidies to incubators are powerful long-term investments in local and regional economies. It is estimated that $1 of public subsidy leads to $30 in local tax revenue.1 Policymakers can be a catalyst to enhance local economic development by supporting incubators.
Business incubation appears to be a good investment in less robust economic times. According the Federal Reserve2, our economic downturn has adversely impacted existing business owners much more severely than in other recessions. The economic downturn has created a new reality for many people who have lost jobs, as it is not realistic to think that mid size and large companies will quickly replace jobs that were cut even when a recovery begins3. Many may opt to start businesses or work for existing small businesses as a viable career option. Furthermore, academics have correlated high levels of entrepreneurship with regional economic growth. The popular example is Silicon Valley, but high technology is not a requirement for this phenomena. Evidence suggests that although attracting large firms gains media attention, policy makers can better impact economic growth by investing in infrastructure that nurtures small, independent firms. Furthermore, good local universities (like we have in the Atlanta metropolitan area) can be important because they often have faculty members who are involved with local start-ups. In addition, universities teach students who start ventures or become employed by small business owners.4
The top two priorities that incubators have are to create jobs for the local community and to foster the entrepreneurial spirit. National Business Incubator Association (NBIA) data indicate that in 2006, the
1 Extrapolated from data in Business Incubation Works 2 Meeting with Dr. Henley and John Robertson, Ph.D. and Vice President of the Atlanta Federal Reserve on October 23, 2009. 3 Oliver, T. 2010. Workers are key to renewed growth. The Atlanta Journal-Constitution, April 4: D1. 4 Glaser, E. L. and Kerr, W. R. 2010. What makes a city entrepreneurial? Rappaport Institute for Greater Boston, Taubman Center for State and Local Government. Harvard Kennedy School, February: 1-4.
ISU Group, LLC 5 average number of incubator residents was 25 and the average aggregate FTEs in each incubator was 97 with 24 part-time employees.5
Purpose of this Feasibility Study
The feasibility study is designed to gather data, from secondary sources and interviews, to help determine whether a business incubator in Douglas County is feasible. Feasibility studies for incubators are frequently needed in order to secure funding for start-up and ongoing operating expenses since most incubators will not generate enough income to cover their costs of operation.
Specific reasons feasibility studies are conducted include:6
To gain support of the program among the community To survey sources of funds To define the most appropriate model for the incubator To analyze the market area for demand To analyze the correct size and location of a facility To help gain consensus and encourage stakeholders in the community to be involved in the planning process To highlight main points for the business plan
A feasibility study is not a business plan and will not include marketing or operational plans, or develop business strategies. It is the responsibility of the management team, board of directors and/or planning team to have a business plan completed. However, some examples of innovative and creative methods to increase the scope beyond the traditional incubator have been included in this study.
This feasibility study was prepared after discussion with public officials, entrepreneurs, and incubator operators. We also used supplemental material obtained from the National Business Incubator Association and secondary sources. The experience of the authors also influenced the work done.
5 Knopp, Linda. 2007. 2006 State of the Business Incubation Industry, NBIA Publications, Athens, Ohio. 6 Feasibility Study for the Incubator: http://www.idisc.net/en/Article.57.html
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Purpose of the Douglas County Incubator
The overriding objective of this proposed incubator is to support economic development of Douglas County. It is expected to spur economic activity throughout the region and as the businesses impacted by incubator activities succeed and thrive, will create jobs and increased tax revenue.
We think that the proposed incubator can be a pivotal initiative to improve the economic condition of Douglas County. A major issue in today’s economic environment is unemployment. Small businesses have accounted for more job growth than large firms over the past few decades. The unemployment rate in Douglas County is 10.8% and those in Fulton County (10.4%), Cobb County (9.6%), Carroll County (10.4%), Clayton County (12.2%), and Paulding County (10.2%) are at all time highs. People are motivated to take action. Some who are unemployed will seek to start their own business. Others who may not have previously considered self-employment will be inspired to start a business. The survival and growth of the incubated business will spur job creation.
According to the National Business Incubator Association, 40% of incubators served a multi-county area and a majority of incubator members serve markets outside of their local market.7 This suggests that the value provided by a specific incubator may be as important or more important than its location. The proposed incubator will target all of the surrounding counties to attract entrepreneurs, with the ultimate goal of increasing employment in Douglas County.
Douglas County has the opportunity to develop an entity that is more than the traditional business incubator, and to use innovative techniques to inspire, motivate and prepare entrepreneurs. The West Georgia Center for Entrepreneurship Activity (this name captures the vision of those interviewed, but is not the official name endorsed by Douglas County) will utilize entrepreneurship programs/events as a major driver of entrepreneurship activity in addition to housing and nurturing business ventures. The programs/events offered by The West Georgia Center for Entrepreneurial Activity will attract entrepreneurs and service providers from not only Douglas County, but from the greater metro Atlanta area. As a result, some of these entrepreneurs may relocate their business to Douglas County.
The programs will do more than teach basic (albeit necessary) skill sets. The Center for Entrepreneurship Activity will nurture an atmosphere that creates leaders of organizations. Instruction will be an important factor, but teaching one how to think big and strategically like a CEO will be the
7 Knopp, Linda. 2007. 2006 State of the Business Incubation Industry, NBIA Publications, Athens, Ohio.
ISU Group, LLC 7 focus. The entrepreneurial mindset will be stressed rather than the typical focus on execution and operations. Member CEOs will be able to interact with like-minded CEO thinkers. Creating that growing company that has the potential to make an impact is a goal.
Importantly, the West Georgia Center for Entrepreneurship Activity can be a key part of an entire Economic Development ecosystem that includes existing assets in Douglas County, such as the Chamber of Commerce, the City of Douglasville, Douglas County and the Development Authority. The West Georgia Center for Entrepreneurial Activity can be a catalyst for community readiness and will empower people. However, marketing must be done to let everyone know it’s there and can help.
By expanding the focus of a traditional incubator, The West Georgia Center for Entrepreneurial Activity can be a destination for the businesses that want to expand to Atlanta. Douglas County, GA is located about 20 minutes west of Atlanta, GA and about 15 minutes from the Hartsfield-Jackson Atlanta International Airport. It’s location serves as a natural resource that can be leveraged to attract entrepreneurs and larger businesses. Marketing the County as a destination is a realistic objective given its proximity to Atlanta and the airport, its moderate cost of living, etc. Moreover, by showing the dedication to developing high-level leadership and business skills of its citizens, the County will be attractive to both entrepreneurial companies and larger organizations seeking to locate or relocate to the Atlanta area. These firms will hire local residents.
It is also important to develop a mission statement to provide direction and common ground about why the incubator exists. A draft mission statement for the Douglas County incubator could be:
The West Georgia Center for Entrepreneurship Activity’s mission is to spur economic The West Georgia Center for Entrepreneurship Activity’s mission is activity into spur Douglas economic County activity by providingin Douglas supportCounty by to providing entrepreneurs support and to prospective entrepreneurs and prospective entrepreneurs. The Center For entrepreneurs. The Center For Economic Activity will fulfill is mission by creating leaders Economic Activity will fulfill is mission by creating leaders of of tomorrowtomorrow who who espouse espouse the theentrepreneurial entrepreneurial mindset mindset and and creating by creating growth oriented growth oriented businesses that provide employment to a multitude of businesses that provide employment to a [multitude] of others. others.
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Market Area
Douglas County is located in Western Metro Atlanta, and is bordered by Fulton, Cobb, Paulding, Carroll and Clayton. With an estimated 2009 population of 129,703, Douglas County’s 10-year growth rate (1999-2009) is more than twice that of Georgia and 4-times that of the U.S.8
Area 1999 Estimated 2009 Estimated Estimated Population Population Population Change 1999-2009 Douglas County 90,955 129,703 42.60% Georgia 8,045,965 9,829,211 22.16% United States 279,040,168 307,006,550 10.02% Table 1: Population Growth for Douglas County, Georgia and United States
It is estimated that by 2020, Douglas County’s population growth will surpass 186,000, which represents growth of an additional 43.73% over the next 10 years.9 In addition to its high growth, Douglas County maintains a relatively diverse population, which is comprised of approximately 57% White, 37% Black, and the remaining 6% Hispanic, Asian, Native American and Pacific Islander. By the year 2012, the Non-Hispanic population is projected to be 93.4, while the Hispanic/Latino population will grow to 6.6%. In addition to its diversity, Douglas County is less densely populated than Fulton and Cobb, at 648 Persons per Square Mile. Fulton and Cobb are 1963 and 2105 Persons per Square Mile, respectively.10 This, along with significantly lower median home prices, is expected to translate into a strong demand for people in those bordering areas to live and work in Douglas. It will also create additional opportunities for entrepreneurs.
In comparison to the surrounding counties, the average weekly wage for Douglas County is relatively low and the unemployment rate is slightly higher. The following table shows Department of Labor comparison data of weekly wages (1st Quarter 2010) between Douglas and the 5 bordering counties. Douglas County’s Average Weekly Wage for Q1 of 2010 is the lowest of each of the counties in the comparison, and the unemployment rate is the 2nd highest.11 This helps demonstrate that Douglas County has a comparatively low-cost workforce, with clear pockets of workforce availability. It also
8 US Census Bureau Estimates 9 GA Department of Labor, State Demographer Projections 10 US Census Bureau 11 GA Department of Labor, Labor and Wage Data
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suggests that the community would benefit from the business training and support provided by a Business Incubator. Business Incubation historically supports job growth through providing an infrastructure for small business formation and success.
County Douglas Fulton Paulding Carroll Cobb Clayton Weekly Wage $579 $1,259 $581 $677 $924 $760 Workforce 63,819 476,193 65,785 51,477 365,298 131,818 # Unemployed 6,910 49,652 6,741 5,363 35,051 16,111 Unemployment 10.8% 10.4% 10.2 10.4% 9.6% 12.2% Table 2: Weekly Average Wage and Unemployment Rate by County, 1Q2010
The fact that 69.3% of households in Douglas County have 2 or more cars suggests a very mobile workforce, and the relative close proximity to the airport makes Douglas an appealing location for commuters. Also, as of the last household census, the home-ownership rate in Douglas County was almost 11% higher than the rate for Georgia.12 By and large, this translates into a workforce that is inclined to keep roots in Douglas County, and contribute to the local and surrounding economy.
Economic Overview & Business Focus
A large portion of the local economy in Douglas County is built around the Retail Trade. That segment makes up a little over 16% of the companies in Douglas County and accounts for about 20% of the local workforce. Retail Trade, along with Educational Services, Healthcare & Social Assistance, and Accommodation & Food Services make up 54.7% of the local Douglas County workforce13 This seems to indicate the existence of a service-driven economy. A Business Incubator in this Region would need to serve the needs of these organizations, while also encouraging the establishment and growth of complementary businesses. Importantly, there is no evidence of a technology-driven economy.
12 US Census Bureau 13 Labor Market Statistics, Quarterly Census of Employment and Wages Program
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Table 3: Douglas County - 1st Quarter 2010 Industry Employment Distribution
Another thing that stands out about Douglas County’s business landscape is the fact that 79.7% of the local retail-based establishments are small businesses with 1-19 employees. When this analysis is widened to include all employer categories in Douglas County (over 2600 employers), 84.7 of those companies have between 1-19 employees. While there is a small number of large companies in the 501- 999 employee range (eg, very large retailers and/or healthcare institutions), the vast majority of employers in Douglas are entrepreneurial businesses.14 This, coupled with the fact that private non-farm business employment growth (2000-2007) for Douglas County was 28%, versus a 4.7% growth rate for Georgia during the same timeframe, indicates that Douglas County is fertile ground for Business Incubation. When this statistic is reviewed for the bordering counties, the respective employment growth rates are as follows for the same period: Carroll County - 14.1%, Clayton County – (13.1%), Cobb County – 3.6%, Fulton – (4.0%), Paulding – 73.3%.15 Based on this data, it is a reasonable expectation that a Business Incubator based in Douglas County would successfully serve as a core small business support facility not only for the strong local business growth rate, but would also serve the
14 U.S. Small Business Administration 15 US Census Bureau
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relatively strong growth in bordering counties such as Paulding and Carroll. The recent launch of an Incubator, The Burson Center, in Carroll County provides additional justification that this is a needed service for the area. While that Incubator may reach some of the same overlapping areas (Carroll, Paulding, Douglas), there is an opportunity to offer complementary services and enough differentiation in structure and layout to be successful.
The following table shows a summary of key statistics for Douglas County, as well as the bordering Counties. This demographic and statistical data gives an at-a-glance view of the population growth, business growth and other employment/business factors in the Regional area.16
County Douglas Fulton Paulding Carroll Cobb Clayton 2009 Population Estimate 129,703 1,033,756 136,655 114,778 714,692 275,772 2000-2009 Population Growth 40.6% 26.7% 67.4% 31.5% 17.6% 16.6% 2000-2007 Employment Growth 28.0% - 4.0% 73.3% 18.1% 3.6% - 13.1 2008 Federal Spending $423,227 $12.70M $284,307 $578,551 $4.74M $1.05M 2009 Building Permits 141 1529 317 76 550 93 2008 Median Household Income $57,926 $62,682 $64,598 $47,307 $69,728 $46,293 2002 Retail Sales Per Capita $17,205 $13,638 $6613 $8,671 $13,473 $11,000 2002 Women-Owned Firms 26.3% 31.7% 28.0% 29.9% 30.4% 34.9% 2002 Black-Owned Firms 14.4% 17.6% 4.8% 6.1% 11.7% 41.9% 2002 Hispanic-Owned Firms 2.1% 2.5% N/A N/A 4.5% 4.0% 2008 Persons Below Poverty Level 9.9% 14.9% 7.7% 15.9% 9.1% 14.7% 2000 Home Ownership Rate 74.8% 52.0% 86.6% 70.5% 68.2% 60.6% 2000 Median Home Value $102,700 $180,700 $106,100 $93,300 $147,600 $92,700 Table 4: Key Statistics At-A-Glance for Douglas and Surrounding Counties
When reviewed holistically, the data comes together to tell a comprehensive story about current and historical business activities in Douglas County. By looking across all the surrounding counties, the historical strength of the Retail Trade as an anchor industry in Douglas becomes clear. While the median income fell in the bottom half of the counties reviewed, the Per Capita Retail Sales were significantly higher as far back as 2002. In addition, Douglas County’s historical home-ownership rate is the 2nd highest among the reviewed counties in the Region. Based on the fact that Douglas County and Paulding County show the two highest 2000-2007 Non-Farm Business Employment Growth rates, as well as showing the highest 2000-2009 population growth rates among the reviewed counties, the
16 US Census Bureau
ISU Group, LLC 12 investment in a Business Incubator that will serve that area and the associated business growth seems very feasible.
Examples of the growth and business interest in the area include the migration of several operations to Douglas County. The following short list of projects represent a total of over 900 new jobs and over $110 Million in local investment since 200717:
Turano Banking Company
Alston & Bird Conflict Resolution Center
American Red Cross Southeastern Blood Processing Center and Headquarters
Dawn Food Products – Distribution
Excel Distribution Center
Mac Paper Distribution Center
Sweet Paper/ Lagassee
Model Analysis
Business Incubators come in many different forms. These facilities include incubators that focus on specialized industries like Technology, Professional Services or Manufacturing, or mixed-use incubators that focus on a number of different industries. In addition, the structure ranges from virtual incubators providing business services and no facility component, to hybrid incubators which offer a combination of rental space and support services. The data collected on the market area, business trends and growth rates in Douglas County, as well as surrounding counties, indicate that a Mixed-Use Incubator model will be the most appropriate. This model will include securing a location which is conveniently located (eg, Douglasville) and has easy access to major highways such as I-20. Based on the strong local focus
17 Excerpted from Development Authority of Douglas County website: http://www.developdouglas.com/communityProfile.php
ISU Group, LLC 13 on service businesses, the model will include ample space for offices suites, business education, training and supportive services. In addition to serving new start-ups and small businesses, the facility can also be utilized to host community-based business education and networking activities for tenured businesses in the area. This not only allows for enhanced revenues via tapping into the current business community, but it also provides ongoing opportunities for the local Incubator tenants to network with established business owners who may utilize their services.
Other incubators, such as the Advanced Technology Development Center (ATDC) associated with Georgia Tech and The Innovation Depot in Birmingham, AL have a distinct technology focus. Still others may have a manufacturing focus. There are a number of incubators in the metro-Atlanta area, but no established incubators in Douglas County. In addition, we’ve not been able to identify any that encompass the vision that interviewees expressed. However, there are three that we have used for reference in this report.
The Atlanta Technology Development Center (ATDC) is a technology incubator tied to Georgia Tech. It is a nationally acclaimed incubator that has been in service since 1980 and, therefore, needs to be considered when examining incubators. The ATDC has been a model for technology incubators and, therefore, is not a direct match for non-technology incubators, such as The Douglas County Center for Entrepreneurship. However, it is important to note that the ATDC often receives a significantly greater number of applicants than it can admit. Some of those not admitted may be good candidates for The West Georgia Center for Entrepreneurial Activity.
The Edge Connection is connected to Kennesaw State University, has been providing business services for entrepreneurs since the 1980s, but has recently increased its exposure and began providing physical space for member companies. It is considered a mixed-use incubator rather than a technology incubator.
The Burson Center is located in Carroll County and is not formally connected to a University (although it does have a relationship with the University of West Georgia). It is, perhaps, the incubator that best compares to The West Georgia Center for Entrepreneurial Activity due to its mixed-use type and its proximity. However, the vision for The West Georgia Center for Entrepreneurial Activity is distinct from that of The Burson Center. Nevertheless, many of the assumptions used for The West Georgia Center for Entrepreneurial Activity were used for this feasibility study. It is important to note that The Burson Center attracts members from all over the metro-Atlanta area.
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A more in-depth description of these incubators is provided in Attachment 1.
For future consideration, however, if Douglas County were to seek to focus, they may focus on specific niches that have future potential in Douglas County or the Atlanta metro area. For example, two niche sectors that are growing in the Atlanta metro area are energy and digital media. These could form focus niches in the future. Another possibility is to develop a kitchen incubator that provides for a full kitchen for use by members.
The Facility
Matching the facility to the needs of the market and the purpose of the incubator is critical factor that needs to be analyzed to determine the feasibility of an incubator. Importantly, is there a facility in the market area that is consistent with the goals of the incubator? Two important considerations are where will the facility be located and is it the right size to serve the proposed market.
Location
As with most real estate, the location of the incubator is a critical decision. To attract residents, outside program participants and the community, access must be easy.18 Douglas County has a natural advantage that should be capitalized on due to its location. Because it would be 20 minutes from the City of Atlanta and 15 minutes from the Atlanta Hartsfield Airport along Interstate 20, the West Georgia Center for Entrepreneurship Activity will attract entrepreneurs and others who wish to participate in their programs from the metro-Atlanta area so long as it is easily accessible. Therefore, locating it as close to I-20 as possible while staying close to well-traveled roads in Douglas County is recommended.
Size
According to NBIA publications, incubators often have difficulty covering their expenses with rent and service fees alone and must often rely on grants and other sources of income. The optimal size is related the number of businesses that will rent space in the facility. NBIA members have made many sizes
18 Knopp, Linda. Assessing Potential Incubator Facilities. What to Look For and When to Say, ‘No Thanks’. NBIA Review, Volume 21, No. 4., August 2005.
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work for them.19 Experts consider 30,000 square feet to be the minimum required to be financially feasible, although they size does depend on the economic circumstances and entrepreneurial ventures in the town.20
An important consideration is the rentable space. One expert looks for facilities in which 85% of the space is rentable.21 However, some modern incubators tend to be more than just real estate plays because services and programs not only assist member companies, but are revenue generators and community draws.
Modern Trends –Floor Plan
The development of the actual floor plan for the incubator is beyond the scope of this feasibility study, but the floor plan (along with the natural configuration of the space) will largely determine the rentable space, open areas, conference rooms, etc. The space should be configured to be consistent with the purpose and use of the incubator. To determine an optimal size facility for The West Georgia Center for Entrepreneurship Activity, we begin with an analysis of the features that other incubators have adopted.
Common characteristics of modern incubators include shared business assistance and administrative services, common areas for residents to come together to network, flexible resident areas and telecommunications capability for Internet services.22 Shared space often includes a single room for copiers and fax machines, a library, and a lunchroom so that residents can “run into” each other.
Where the West Georgia Center for Entrepreneurship Activity can be innovative is by creating a large space that can be used for multiple purposes beyond resident company offices. Most modern incubators have conference rooms to conduct meetings and educational workshops. Importantly, the trend is to have multiple conference rooms of different sizes. For example, a 40,000 square foot incubator in Madison, Indiana has multiple conference rooms, including an 8,000 square foot room that is used for education and training (and can be divided into smaller spaces as needed).23 Similarly, the 24,400
19 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio 20 Knopp, Linda. Assessing Potential Incubator Facilities. What to Look For and When to Say, ‘No Thanks’. NBIA Review, Volume 21, No. 4., August 2005. 21 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio. 22 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio 23 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio
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Burson Center in Carroll County, GA has multiple conference rooms, including a 2,000 square foot conference room.24
Douglas County should consider a facility floor plan that provides for 10% to 20% of its space for conference room(s). This would allow for the traditional meetings, educational and training seminars, but also extensive additional programming that has become popular in the Atlanta area. While not attempting to develop a complete program in this feasibility study, one example is the monthly seminar series put on by Entrepreneur Advisors (see Attachment 2). Their program includes monthly half-day seminars in which they bring in teams of entrepreneurs. They are able to attract both entrepreneurs and service providers who each pay $85 (if not a member) and are able to attract over 200 attendees.25 This is one example that management should consider. The lead author has attended and organized numerous breakfast, lunch and dinner entrepreneurship programs. Well-run programs are effective at attracting entrepreneurs and service providers (accountants, attorney and other consultants serving entrepreneurs) from all over the Atlanta metro area. Such programs can attract prospective members to the Center, spur entrepreneurship activity in Douglas County, generate additional revenue and bring people to Douglas County who might not otherwise travel to Douglas County.
Target Location
An ideal location for The West Georgia Center for Entrepreneurship Activity would include the following criteria:
-Easily accessible from I-20
-On a well traveled road for visibility
-Minimum of 30,000 square feet, but preferably 45,000 square feet to provide enough space for rentable offices, common areas and conference room for programs.
Eleven potential facilities in Douglas County were identified by CresaPartners26 (see Attachment 3 for detailed information on subject location). Due to its location on a well-traveled street and it’s ideal size
24 Conversation with Donna Lackey 11/12/10. 25 The lead author counted more than 200 attendees the day he attended 26 CresaPartners LLC is an international corporate real estate firm that exclusively represents tenants and specializes in the delivery of fully integrated real estate services. The company was formed in 1993 when leading regional tenant-representation
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(46,328 sq. ft.), one property at 2115 Fairburn Rd. Douglasville, GA 30135 stood out. It has the added benefit of having the potential to be expandable if our demand estimates are low. Another advantage of the proposed facility is that it is a single story facility. Horizontal facilities have the advantage of helping networking as people have a greater chance of seeing each other during their normal course of business.27
One characteristic is that it is available for lease, but not for sale. CresaPartners has communicated with the owner and has discussed very favorable lease rates.
The subject facility will be used hereafter in this feasibility study for reference and analysis. However, the Board of Directors and/or management team will decide on the most appropriate facility.
Build versus Renovate
The latest data from the NBIA suggest that more than half of existing business incubators reside in buildings that have been renovated. The major items that have the potential to be cost items in existing buildings include 1) making sure that required building codes are adhered to, 2) corridors that are too narrow or too wide, 3) environmental hazards, 4) floor loads for manufacturing and 4) handicapped access, 5) HVAC, 6) upgrading existing lighting systems, 7) installing new restrooms, 8) replacing roofs, 9) ability to handle telecommunications needs.28
Importantly, some funding entities, such as the U.S. Department of Commerce Economic Development Administration (EDA) expect requestors to first look to renovate existing buildings before constructing new ones.29
firms—averaging 20-year histories in their respective markets—joined forces to strengthen their capabilities and provide greater service scope for present and future clients. 27 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio. 28 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio. 29 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio.
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Financial Analysis
In this section, we identified the start-up costs needed to launch the incubator, the costs needed to operate the incubator on an ongoing basis and projected sources of revenue (see Appendix 1).
In projecting income and costs, it is important to understand that they are projections made with assumptions and are, thus, not an exact science. The assumptions are provided along with the information used to determine the estimates. This is done to allow the reader to understand how the estimates were determined and to also allow the reader to see the possible opportunities available. However, it is the responsibility of the Board of Directors and management to make the final decision on the best course of action to take. For each category, there is a ramp up period in the first five years to reach the terminal quantity after which the number of units remains constant. The expenses were assumed to increase each year by 3% annually.
Start-up costs
Four items comprise start-up costs: renovation of the facility, purchase and installation of furniture, fixtures and equipment, a person to steer and oversee the process (including finding and signing up clients) and pre-open marketing. Based on a conversation with CrestPartners, we estimated that it would take 6 months to renovate the facility.
Renovation - includes construction of offices, break rooms, conference rooms, restoration of restrooms, and other features pertaining to the structure. In addition, HVAC, security systems, Internet capability must be purchased or brought up to usable condition. The landlord in the subject property will provide a tenant improvement allowance of up to $60 per square foot. In return the rent charge will be $10 per square foot for the first year. Discussions with Cresapartners reveal that tenant improvements can range from approximately $50 per square foot up to $70 per square foot depending upon how elegant the renovations are. Glass, for example, is a high cost item.
It is our understanding that Douglas County does not intend to exceed the $60 per square foot cost for tenant improvements, therefore, the start-up costs assume that tenant improvements will stay within that budgeted amount. It is assumed that costs for Internet service must also stay within that budgeted amount. As a result, there will be no upfront cash required for tenant improvements.
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Furniture, Fixtures and Equipment (FFE) – FFE includes office furniture and fixtures and the office equipment needed to operate. Many incubators require flexible space to allow for their tenants to grow over time. In addition, clients sometimes decide to rent more space than they originally thought once they realize that valuable floor space is needed for items ranging from computer servers to waste cans. As a result, many incubators use modular walls that can be demounted gives incubators needed flexibility to change the size of space and to create private areas within suites.30 FF&E costs have been estimated at $20 per square foot.31
Income
Incubators tend to receive the majority of their income from the rents generated by incubator tenants. This income is a function of the percentage of space that can be leased which is a function of the facility and the floor plan. While this may lead to the temptation to maximize the rentable space, effective modern incubators must also allow for common areas that allow for tenants to interact with one another and also for classroom space (which includes conference rooms) for larger gatherings. Classroom space is important for workshops and seminars given to incubator tenants as well as to attract business, civic and government entities to have meetings.
The incubator must be run like a business to survive. Therefore, an additional assumption is that the incubator will take advantage of common trends in business and seek to generate multiple sources of revenue. An important aspect of effective space utilization is to fully utilize the conference room space than traditional incubators might by holding programs/events that generate revenue, rent the conference rooms to businesses and to create a private club called “The Deal Room”.
Over time, The West Georgia Center for Entrepreneurial Activity will seek to attract 5,000 clients both live and virtual. The management team and business plan will ultimately determine the range of services and products offered, however, the following have been included in the Pro-forma Financial Statement:
-Rent from Resident Members
-Telephone and Internet
30 Walker, Brian. Incubator Facilities 101. Consultants And Managers Share Advice For Designing Buildings That Work, NBIA Review, Volume 21, No. 1, February 2005. 31 Conversations with CresaPartners on 11/11/10 and 11/12/10.
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-Rent from Conference Rooms
-Fees from Programs, Education and Training (from both Members and non-members)
-Fees from Online Training
-Fees from Corporate Identity Program
-Fees from “The Deal Room”
A significant marketing and business development effort will be required to meet the projected revenue in the financial forecast and therefore, to maximize the potential of The West Georgia Center for Entrepreneurial Activity.
Also, maximizing the use of technology can create additional opportunities. There is a trend toward online learning. Incubators with the proper technology can increase their reach significantly by providing online programs in addition to their live programs.
Rent from Resident Members- The plan assumes resident members will pay rent that begins in Year 1 at $14 per square foot and increases by 3% per year. The forecast assumes that space will be filled by tenants with varying space requirements and that their requirements, in the aggregate, will grow over time as the companies grow. Revenues were calculated based upon the % of rentable space that was forecasted to be occupied. An acceptable benchmark for this is deemed The Burson Center in Carroll County due to its focus on similar types of members and its location, which is close to Douglas County, but further away from Atlanta. The Burson Center charges $12 per square foot, therefore $14 per square foot was deemed reasonable in Douglas County.32 In addition, the West Georgia Center for Entrepreneurial Activity is expected to attract members from all across the metro Atlanta area and beyond, so its closer proximity to Atlanta than The Burson Center is expected to result in a greater number of members over time.
32 As a check on rental rates, we found that Meritage Commons, an executive suites facility in Douglas County charges $560 for their smallest office, but they were not able to tell us the size of the office.
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Based on The Burson Center’s results, the percentage of occupancy expected for The West Georgia Center for Entrepreneurship Activity is forecasted at 50% in Year 1, 80% in Year 2, and 90% thereafter. This is further supported by knowledge the lead author has that the ATDC in Atlanta frequently has more applicants than it can admit, his personal contacts who have identified potential incubator members looking for space,33 and interviews with entrepreneurs who stated they will lease space as soon as incubator opens.34
Incubator resident members are typically early stage ventures within the first 2 years of operation, but with the ability to pay rent, willingness to take advice and the prospects for growth.35 It will be very important for management to determine specific criteria for admittance as an incubator tenant. It is recommended that consideration also be given to firms older than 2 years old that have the desire to grow. This provides stability given a more proven track record and the likelihood that these firms may be in a better position to hire sooner (i.e., Douglas County residents).
It is also recommended that management consider allocating space for anchor tenants. Anchor tenants are defined here as civic, education or government organizations that will rent space. For example, some incubators may rent space to a SCORE chapter or local economic development center.36 Potential anchor tenants for the West Georgia Center for Entrepreneurial Activity include local colleges, such as the University of West Georgia as well as Georgia State University and Mercer College who may want a presence west of Atlanta. Several colleges should be approached to rent space for a satellite office and also to hold courses in the classrooms. Anchor tenants are important because they are anticipated to be a source of stable rent above and beyond what the incubator receives for it’s core incubator residents.
The forecast assumes that of the total square feet (46,328), 6, 328 will be open area, 8,500 conference room(s), 1,500 for administration, 30,000 for resident members and anchor tenants.
33 Conversation with anonymous business contact on November 5, 2010. 34 These entrepreneurs were provided by Conquer Consulting, a Douglas County firm. 35http://www.nbia.org/resource_library/peer/benchmark/resource_library/selecting_clients.php as Adapted from Wolfe, Chuck, Dinah Adkins, and Hugh Sherman, Best Practices in Action – Guidelines for Implementing First-Class Business Incubation Programs, NBIA Publications, 2001, pp. 61-62. This publication also contains information on the screening processes of several model incubators. 36 Knopp, Linda. Assessing Potential Incubator Facilities. What to Look For and When to Say, ‘No Thanks’. NBIA Review, Volume 21, No. 4., August 2005. Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio
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Telephone and Internet
Clients will be charged $125 per month during the first year. This is equal to the rate The Burson Center charges. The rate will increase by $10 every three years. It is assumed that, given the size of the market (Douglas County and the surrounding counties), 50 members will reside in 5 years.
Conference Room Rental
It is expected that the conference rooms will be rented out during times that it is not used. Rental rates for the conference room at the Buckhead Club in Atlanta begin range from $35 per hour for a small conference room seating 10 people during business hours to $8,000 for a ballroom on a Saturday evening. The forecast assumes business rentals, and has not attempted to forecast ballroom type demand. Conference Room rental rates are forecasted at an average of $50 per hour with the assumption that space can be subdivided for up to 3 Conference rooms at a time. The rate will increase by $5 every three years. It is assumed that an average of 40 hours per week will be rented in 5 years.
Programs/events and Services
A big driver of members to the incubator will be the services offered. The two types of services offered will include the traditional services offered in incubators as well as entrepreneurship programs/events that are so successful in the Atlanta metro area at attracting entrepreneurs and service providers.
Successful incubators tend to be more than only real estate plays. The traditional services provided to incubator members not only differentiate incubators from business parks, executive office suites and the like, but they can provide the extra assistance to improve the prospects of the business.
Services can include:
Educational services – workshops, seminars, access to training, support, information Physical address Professional services such as Accounting/Attorney Networking among member companies Fully-furnished conference rooms Access to high-end audio and video presentation equipment Amphitheatre for sales training and presentations Fully-furnished Offices
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High-speed Internet Wi-Fi Access Color Laser Printers Receptionist/Clerical assistance Reference library Break Area
The programs/events are the area where The West Georgia Center for Entrepreneurial Activity has the best opportunity to differentiate itself and to provide the type of value that will drive activity and revenue. As previously described, one example of a program is the monthly seminar series put on by Entrepreneur Advisors (see Attachment 2). Their program includes monthly half-day seminars in which they bring in teams of entrepreneurs. They are able to attract both entrepreneurs and service providers who each pay $85 (if not a member) and are able to attract over 200 attendees.37 This is one example that management should consider.
The lead author has attended and organized numerous breakfast, lunch and dinner entrepreneurship programs and well run programs are effective in the Atlanta area. Such programs can attract prospective members to the Center, spur entrepreneurship activity in Douglas County, generate additional revenue and bring people to Douglas County who might not otherwise travel to Douglas County.
The goal of the programs/events are to attract addition members –both resident and non-resident - to the Center. As examples, both the ATDC in Atlanta, GA and The Burson Center in Carroll County, GA. serve a significantly greater number of non-resident clients than resident clients. The Burson Center has more than 250 clients that utilize their programs or services.38
The Douglas County incubator goal of reaching 500 clients, or double that of The Burson Center will depend upon many variables including the effectiveness of the marketing plan, the type and level of services offered, and the market area served. Having the incubator located close to I-20 will expand the market area served, especially for services, such as educational programs.
37 The lead author counted more than 200 attendees the day he attended 38 Conversation with Donna Lackey, The Burson Center 11/12/10
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Management will determine the actual pricing, services and types of programs. However, the forecast assumes that members will pay $500 per year and have access to the services provided, programs/events and limited space availability (for non-resident members). It is anticipated that non-members will also attend the programs/events and pay for them on an ala-carte basis.
Pulling from Douglas County and the surrounding counties, it is forecasted that both members and non- members will attend the programs/events. Our forecast includes reaching 500 members by year 5. Each member will pay a $500 membership fee that increases $50 every three years. By year 4, the forecast assumes 4 programs/events per month and that an average of 25 non-members will attend. Each non- member will pay $50 for each program/event that will increase $5 every three years.
Online Entrepreneurship Training and Education
The technology available today for businesses should be fully utilized to attract entrepreneurs and is the tool that will extend the reach of the West Georgia Center for Entrepreneurship Activity the greatest.
The educational training and programs also lend themselves to online delivery. Attracting entrepreneurs will be accomplished, in part, via partnerships with online firms such as Efactor.com (see Attachment 4). Efactor is an online entrepreneurship network that has a database of over 800,000 members that has services to help entrepreneurs find funding, customers, partners and attend live events. They have expressed an interest in working with Douglas County. Their 800,000 members were generated within 3 years and 2% to 3% of them a part of a paying service (such a to write business plans or mentoring). The founder thinks that services/training offered in the incubator can be duplicated in the online world and will attract thousands of users in a short period of time. His estimate, which he termed conservative, of users in 5 years is 5,000 users in the Atlanta metro area for a service offered from The West Georgia Center of Entrepreneurial Activity.39 On online service can significantly increase exposure and revenue. Our forecast has discounted his forecast to provide a more conservative estimate. It expects to reach 4,250 online customers by the fifth year. Online customers will pay an average of $120 per year in the first year that will increase by $10 every 3 years.
Corporate Identity Package
39 Conversation with Rodney Sampson, founder Efactor and serial entrepreneur, November 18, 2010.
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Business owners want to project a professional image to impress clients, but may not need a permanent physical office. The corporate identity package will provide clients with a mailing address, meeting space as needed, telephone answering service, discounts to member events, etc. Multiple packages will be developed to meet different needs of the client.
Meritage Commons at Chapel Hill in Douglas County charges from $75 to $325 per month for its corporate identity package. The forecast assumes an average price of $2,000 per year for the first year, increasing by $100 every three years. The number of clients is forecasted to reach 100 in 5 years.
The “Deal Room”
The “Deal Room” is patterned after the atmosphere and ambience that private clubs, such as the 191 Club in Atlanta project. It is a place of exclusive membership where business people can go to relax, but also to talk business in a private setting. It will be positioned as ”the” place to go where business is done. Private clubs, such as The 191 Club and The Buckhead Club in Atlanta are extremely popular for entrepreneurs to network. Outside of metro-Atlanta, golf country clubs can offer similar amenities and ambience, but not every businessperson will utilize a country club. West of Atlanta, “The Deal Room” will offer a unique experience.
The 191 Club in Atlanta has approximately 1,900 members and charges $800 per year. The Buckhead Club has approximately 1,300 members in Atlanta and charges between $150 and $200 per month. Each of these clubs has been around for many years, has brand recognition and is located in business areas in Atlanta. “The Deal Room” is forecasted to cost $100 per month in the first year and increase $25 every three years. The number of clients is forecasted to reach 100 in year 5.
Additional Sources of Income
Douglas County has significant resources to draw upon and the degree to which they are successful in doing so will determine how much miscellaneous income can be generated. For example, using the existing television studio video recording assets and capabilities can be used to produce high quality video content and increase the reach of the programs to draw members into the Center.
Other creative strategies can be developed by incubator management based on the needs of the community. One example is renting indoor storage to business owners – both members and non- members who have run out of space to store business documents. It is anticipated that incubator
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management will find potential sources of income based upon actual experience with the needs of the local community. These potential sources of income have not been included as they are anticipated to be small in relation to the categories listed above and more difficult to quantify. However, they serve as a contingency in the event that the revenue forecast falls short of expectations.
Costs
Occupancy Costs
Facility costs were obtained from the Real Estate firm CresaPartners. The include Rent ($11.26 including Common Area Maintenance charges) for the facility used for this feasibility study, and industry estimates for taxes ($.92 per sq. ft.), insurance ($.18 per sq. ft.), utilities ($1.50 per sq. ft.) and janitorial services ($.70 per sq. ft.).
Salary and Benefits
Some incubators have an organizational chart that includes staff members including a General Manager, Business Development Manager, Operations Manager, Facilities Manager, Administrative staff, and Venture Catalysts. The Venture Catalysts have the responsibility for providing direct support of the client companies.
The average number of staff members in 2006 was 1.8 FTE’s. Virtually all incubators use outside consultants and volunteers for programming. Many times, service providers, such as accountants, attorneys and consultants will conduct seminars, etc. for free in order to market themselves. Incubators often use students from local colleges who may get internship credit to help resident businesses.40 It is assumed that these creative sources of assistance will be fully utilized.
This forecast assumes an extensive number of revenue sources that goes beyond a typical incubator. It will take an extensive marketing effort and expertise required to implement. Therefore, it is recommended that the Board of Directors consider hiring the most qualified person or organization, which may involve outsourcing the function.
40 Knopp, Linda. 2007. 2006 State of the Business Incubation Industry, NBIA Publications, Athens, Ohio.
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The pro-forma financial statements assume salary of $75,000 for an Executive Director and $45,000 for highly qualified Executive Assistant. The Director’s job will be to coordinate client functions (e.g., recruitment, services, programs), marketing and facility operations.
Given the concentration on services and programs/events to attract members, 1 Venture Catalyst is forecasted to be hired at the middle of Year 1. The Venture Catalysts will have responsibilities that include business development, providing member services and developing and implementing the programs/events. The Venture Catalyst will be paid a starting salary of $ $100,000.
Benefits/OH is forecasted at 30% of salary.
In addition, in selecting the staff, especially those that have responsibility for client interaction and program development, there is an advantage to using a person or organization that understands the needs of the local community.
Programming/Events
Rather than include costs for fulltime employees, this forecast assumes that many of the programs/events can be performed by outside consultants as described above. Other programs will be conducted by third parties who either rent space or engage in a revenue sharing arrangement.
Marketing
To drive members to join The West Georgia Center for Entrepreneurial Activity, it is imperative that an effective marketing effort must supplement the programs/events that will be developed. If the vision is to create an entity that entrepreneurs within Douglas County and outside of Douglas County consider to be a destination, they must know about it. Effective marketing includes brand development and awareness building. The marketing budget includes $25,000 before the facility is opened and $25,000 per year.
Equipment
This expense includes maintenance, replacement and purchases of new office equipment. The forecast reflects our estimate.
Miscellaneous
Miscellaneous expenses include books, dues, postage, supplies, etc. The forecast reflects our estimate.
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Financial Analysis Summary
The financial analysis reveals that the estimated start-up costs total $1 million consisting of FF&E ($926,560), a person to oversee the project for 6 months ($48,750) and pre-opening marketing costs ($25,000).
As is consistent with most start-ups and other incubators, cash income does not cover cash expenses for the first two years. Income was projected to come from multiple sources that included rent and telephone/Internet, program and service fees; online training; a corporate identity program; and a private business club. No subsidy was projected from governmental sources and/or private contributions. However, subsidies are a normal source of funding for incubators.
Expenses include occupancy expenses for renting the building, utilities, insurance, janitorial, and taxes as well operating expenses, the largest of which are salary and benefits and marketing.
Under the utilized set of assumptions, cash income does exceed cash expenses in year 3. This is unusual for incubators and reflects the entrepreneurial approach envisioned by the interviewees. This approach uses best practices from other incubators and business entities that cater to entrepreneurs.
Potential Funding Sources
Most non-profit incubators do not cover operating expenses and, therefore, receive ongoing support from government and private sector sources. Incubators typically seek to become self-sustainable rather than self-sufficient. Self-sufficiency means that operational costs are covered by internal revenue sources. However, self-sustainability is a balance of revenue from multiple sources, including rents, fees and outside sources. 41
The typical incubator obtains 60% of the funds needed to operate from rents and fees. According to a NBIA survey conducted in 2006, only 6% are for profit incubators while over half report that economic development agencies or government agencies are their primary sponsor. Only 20% reported academic institutions are their sponsoring entity.42
41 Confidential feasibility study obtained by lead author. 42 Knopp, Linda. 2007. 2006 State of the Business Incubation Industry, NBIA Publications, Athens, Ohio.
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A primary source of funding for incubators is The U.S. Department of Commerce Economic Development Administration (EDA) because it provides grants for feasibility studies and construction/building renovations. Grants for renovations are matching grants that require the requestor to put up an amount equal to the amount of the grant requested. The EDA will grant up to $2 million for construction or renovation.43 An important factor the EDA looks at is how well capital requestors have put together the network of service providers and the services provided.44 See Attachment 5 for EDA Application Guidelines.
Douglas County should consider how the incubator will align with the EDA’s Investment Priorities. This includes areas such as Clean Energy/Technology, commercialization and bringing products to market, creating global/export capacity, or serving distressed communities
Another potential source of funding is The City of Douglasville. It is applying for Opportunity Zone Designation in the State of Georgia that will result in incentives for businesses to create jobs, and also the possibility for Community Block Grant Funding that could be used for the incubator.45
Frequently, capital campaigns are funded by the cities and counties that stand to benefit, State Departments of Commerce, State Economic Development Centers, major corporations, local Chambers of Commerce. Potential creative sources to fund an incubator include asking corporate partners to donate items such as paint, furniture, fixtures, etc.46
Stakeholders and Governance
A large majority of incubators (94%) are organized as non-profits,47 so it is expected that the Board of Directors will elect the non-profit organizational form. Like many entities, The West Georgia Center for Entrepreneurship Activity should be organized with a Board of Directors, a Management Team and an Advisory Board.
43 Conversation with EDA GA regional director, Jonathan Corso 44 Gerl, Ellen. 2000. Bricks and Mortar: Renovating or Building a Business Incubation Facility. NBIA Publications, National Business Incubation Association, Athens, Ohio. 45 Conversation with Jamie Gilbert, Executive Director, Douglasville Development Authority 46 Colbert, Corinne. Buildings With a Past. Incubators Nurture New Businesses in Old Buildings, NBIA Review, April 2007 47 Knopp, Linda. 2007. 2006 State of the Business Incubation Industry, NBIA Publications, Athens, Ohio.
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Directors should be chosen from among the business community, the Chamber of Commerce, City officials, County officials, economic development agencies and others who will represent the Center well. It is important that they understand and are committed to the vision for the Center for Economic Activity and have a demonstrated leadership track record. The Board should provide oversight; set the overall direction, strategy and policies; determine the appropriate management structure as well as recruit and review the performance of executive management; approve major investments; and importantly, garner ongoing stakeholder support.
A Board of Advisors is also recommended. Rather than have oversight responsibilities, advisory members interact directly (mentor, teach) with client companies and/or help with business development by attracting new companies. They will often have domain expertise or entrepreneurial experience.
The organizing Board of Directors should be set up as soon as the project is approved. Their initial responsibility will be to gain the support of the entire community –public, private and civic - in Douglas County.
To maximize the chances of success, public-private collaboration and partnering are essential. Key constituents in Douglas County that should form the foundation of support include the Development Authority, the County Commission, the City of Douglasville and the Douglasville Development Authority, the Chamber of Commerce and local educational institutions. The Chamber of Commerce stands to benefit from The Center for Entrepreneurial Activity and vice-versa. One example of a partnership could entail automatically making incubator members also being members of the Chamber and a fee would be paid to the Chamber.
Another critical element in the success of The West Georgia Center for Entrepreneurship is that someone or some entity needs to take on the role of Champion to shepherd the initial steps and ongoing efforts. The Champion will take the responsibility for the success of the incubator.
Conclusion
The West Georgia Center for Entrepreneurial Activity represents a major initiative for Douglas County that can elicit a far-reaching impact. It can be a catalyst for economic development in several ways. For entrepreneurship, it can help entrepreneurs who live in Douglas County, help prevent existing and prospective entrepreneurs from leaving Douglas County, and attract
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