Small Business Incubator Certification Program 2020 Annual Report Incubator Certification Program Overview Business incubators nurture the development of Oklahoma Business Incubator entrepreneurial companies, helping them survive Association and grow during the startup period, when they The Oklahoma Business Incubator Association are most vulnerable. These programs provide their (OkBIA) was formed more than 20 years ago. The client companies with business support services purpose of the OkBIA is to provide information, and resources tailored to young firms. The most networking, guidance and assistance to incubator common goals of incubation programs are creating operators, as well as to work with the Legislature jobs in a community, enhancing a community’s to promote and benefit business incubators and entrepreneurial climate, retaining businesses in a tenants. community, building or accelerating growth in a local industry, and diversifying local economies. Oklahoma Business Incubators Incubators vary in the way they deliver their In 1988, the Oklahoma Legislature passed the services, in their organizational structure and in Oklahoma Small Business Incubators Incentives the types of clients they serve. As they are highly Act. The Act enables the tenants of a certified adaptable, incubators have differing goals, including incubator facility to be exempt from state tax liability diversifying rural economies, providing employment on income earned as a result of occupancy for up for and increasing wealth of depressed inner cities, to five years. In 2001, the legislature amended the and transferring technology from universities and act to extend the tenant’s tax exemption from five major corporations. Incubator clients are often at to 10 years. The exemption remains in effect after the forefront of developing new and innovative the tenant has graduated from an incubator. For technologies – creating products and services that tax years starting before January 1, 2020, in order to improve the quality of our lives in communities qualify for the tax exemption from the sixth through around the world. the 10th year, the tenant must make at least 75 percent of its gross sales to out-of-state buyers, to The earliest incubation programs focused on buyers located within the state if the product or a variety of technology companies or on a service is resold to an out-of-state customer, or to combination of light industrial, technology and the federal government. service firms – today referred to as mixed-use incubators. However, in more recent years, new For tax years starting after January 1, 2020, the incubators have emerged targeting industries such requirement for the sixth through the 10th year is as food processing, medical technologies, space and not required. The exemption will be in effect for ceramics technologies, arts and crafts, and software ten years as long as the tenant graduates from a development. Incubator sponsors have also targeted certified incubator. programs to support microenterprise creation, the needs of women and minorities, environmental Since the inception of the Act, the State of endeavors and telecommunications. Oklahoma has benefited from increased revenues and increases in the number of start-up and A business incubator’s main goal is to produce expanding small businesses. These businesses have successful firms that will leave the program created jobs and enhanced economic activity in the financially viable and freestanding, usually in two Oklahoma communities in which they are located. to three years. These incubator graduates have the potential to create jobs, revitalize neighborhoods, commercialize new technologies, and strengthen Oklahoma Department of local and national economies. Typically, 30 percent Commerce and Incubators of incubator clients graduate each year. The role of the Oklahoma Department of Commerce in the incubator process is to certify the incubators pursuant to O.S. Title 74 Section 5071-79. It is the responsibility of the incubator owner to hire managers to manage and market their incubators and provide business services to their tenants. 2 NUMBER OF SMALL BUSINESSES LOCATED IN INCUBATORS Oklahoma Incubator 0 50 100 150 200 250 Program Growth 2020 31 certified small business incubators are operating in Oklahoma, with tenants ranging from small 2019 service companies to high-tech research and development operations and manufacturing entities. 2018 During 2020, Oklahoma incubator managers were 2017 asked to complete a questionnaire to document 2016 their activities for the current reporting period. Based on the information received from the responding 2015 incubator managers: 2014 2013 109 2012 small businesses 2011 are currently 1165 leasing space full-time jobs in Oklahoma’s are provided certified NUMBER OF JOBS CREATED BY INCUBATOR CLIENTS by incubator incubators tenants 0 250 500 750 1000 1250 2020 2019 NUMBER OF INCUBATORS 2018 0 10 20 30 40 50 2017 2020 2016 2019 2015 2018 2014 2017 2013 2016 2012 2015 2011 2014 2013 More than 1,000 small businesses have located in a small business incubator, throughout the life 2012 of Oklahoma’s Certified Small Business Incubator 2011 Program. More than 500 of those have graduated from the program or relocated to a larger facility. 1,373 people are currently employed by 259 of the graduated businesses that remained in the state. Incubator Standards for Success Characteristics of Model Two Core Principles That Business Incubation Programs Characterize Effective Business Incubation: Commit to business incubation’s two core principles consensus on a mission that defines Obtain The incubator the incubator’s role in the community, then aspires to have a develop a strategic plan containing quantifiable positive impact on objectives to achieve that mission its community’s economic health by maximizing 1 Structure the program for financial emerging companies’ sustainability by developing and implementing successes. a realistic business plan Recruit and appropriately compensate management capable of achieving the incubator’s mission and helping companies grow 2 The incubator itself is a dynamic model Build an effective board of directors of a sustainable, committed to the incubator’s mission and to efficient business maximizing management’s role in developing operation. successful companies The Best Incubators Provide: Prioritize management time to place the greatest emphasis on client assistance, Flexible space and leases including proactive advising and guidance that results in company success and wealth creation Office services and equipment Develop an incubator facility, resources, methods and tools that contribute to the An on-site incubator manager as a effective delivery of business assistance to resource for business advice client firms, as well as address each company’s developmental needs Exposure to a network of outside business and technical consultants, Develop stakeholder support, including a often providing accounting, marketing, resource network, that helps the incubation engineering and legal advice program’s client companies and supports the incubator’s mission and operations Assistance with financing Maintain a management information system and collect statistics and other Assistance with marketing information necessary for ongoing program evaluation, thus improving effectiveness and allowing the program to evolve with clients’ needs 4 Incubator Certification Program Overview Oklahoma’s incubators have many success stories. The examples below are just a few for 2020. Coast Audio Video Despite the pandemic, Coast is ahead of Center for Emerging Technology and schedule as 2020 winds down. When Coast Entrepreneurial Studies launched the company, he set a goal of Cameron University growing sales to $1 million annually with one Lawton, Okla. salesperson, four techs and one engineer by year five. In three years, he exceeded those Located in the heart of Lawton, CAV provides goals debt free by expanding the company’s services including designing, servicing and range of services and hiring nine employees. installing audio/visual products as well as In fact, CAV has already outgrown its first prolighting systems. Coast joined Cameron brick and mortar with the acquisition of the University’s Center for Emerging Technology new IT and computer services company. and Entrepreneurial Studies (CETES) business incubator in 2016. In early 2018, “We as a community are very blessed to CETES partnered with the Oklahoma Small have CETES/Oklahoma SBDC as amazing Business Development Center, and Coast partners to help grow the economy in began working with center director Dr. southwest Oklahoma through small Samantha Lankford. Coast took advantage business development,” said Coast. “We of the tools and resources provided by could not thrive without the support of the the partnership and blossomed by being Oklahoma SBDC and SBA.” actively involved in the community and surrounding himself with like-minded Platypus BJJ, Inc. entrepreneurs. At the end of 2018, Coast graduated from The Strategy Center – Tri County the incubator after moving to its own Technology Center brick-and-mortar location and received the Bartlesville, Okla. Business Partnership Excellence Award from Platypus BJJ provides beginning Ju-Jut-Su the Oklahoma State Regents for higher lessons. The company went from having Education. only a few clients a few nights per week to now being at maximum (CDC compliant) In spring of 2019, Coast expanded CAV capacity on a nightly basis. Owner Josh with