Forget Industrial Parks--Hottest Nests for Start-Ups Now Are in ‘Incubators’
In the past, when it was time to move a fledgling business from the back bedroom or garage, the choices were mainly limited to an affordable but bare industrial park or perhaps a dreary office building in a marginal neighborhood.
Once settled, a feeling of loneliness or isolation often sets in. Adjacent businesses were established and not experiencing the same growing pains.
But now, savvy real estate developers, knowing that California has 1.4 million small businesses, are courting their owners in new ways.
“Most small businesses are relegated to the wooden office buildings on the fringe of town,” said Fred Ellsworth, chief executive of American Comm Centers, a real estate development firm. “Our buildings are marble and glass.”
Some developers, like American Comm Center, have built high-tech office centers divided into small suites. Others have turned abandoned factories into small business complexes that are now being called “incubators.” And, still another company built a small business venture park on the site of a defunct drive-in theater.
The key difference between most small business complexes and a true incubator is the amount of low-cost management services offered to tenants, according to the National Business Incubation Assn.
“Anybody can use the term incubator,” said Dinah Adkins, executive director of the Athens, Ohio group. “It’s a sexy term and right now many people are glomming on to it.”
To qualify for membership in the association, a business incubator must not only provide basic services such as telephone answering and a mail drop, but offer management and technical services to tenants. The services most frequently requested by tenants are business and financial planning, accounting, loan packaging, advertising, legal services, tax preparation and advice on international trade.
So far, there are about 330 member-incubators in the U.S. and Adkins projects that the number will jump to 1,000 by 1991. She said many incubators are operated by nonprofit agencies, while others are private, profit-making ventures.
Incubators are especially popular in the East, where a decline in heavy manufacturing created a glut of large factories and warehouses, ideal for renovation. Pennsylvania alone has 38 incubators, Adkins said.
In California, small business incubators are appearing all over the state, according to Oscar Wright, California’s small business advocate. “Eighty percent of new small businesses fail within the first five years,” said Wright. “But for companies located in incubators, there is an 80% success rate.”
Wright, who serves as a liaison between business owners, the governor and the state Legislature, said he has found thriving incubators in Santa Ana, San Diego, Redding, San Francisco, Chico, San Jose and San Pedro.
The San Pedro Venture Center on Gaffey Street is home to 18 businesses, ranging from a tile company to a hazardous waste disposal firm. The center was originally a drive-in theater. Faced with a lack of business, Pacific Theatres initially built a mini-storage building on the 13-acre site. When the mini-storage tenants begged to install telephones and desks in their storage rooms, the company decided to build the venture park, according to Frans Vershoor, project director.
The center, which opened in September, will ultimately include 11 buildings with space for retail stores to warehouses. The park also features a day-care center scheduled to be operated by a local YWCA.
Services include a fax machine, photocopying and secretarial services, a conference room, mail room and a staffed reception area. In the works are plans to offer marketing, accounting, tax, legal and business planning services, Vershoor said.
A more traditional business incubator opened four years ago in Chico, Calif. The former Chico-San noodle factory became available when H. J. Heinz bought the company and moved its operations. Heinz sold the building to a nonprofit organization for $150,000 and the Business Center was born. Four manufacturing companies and four nonprofit organizations are located there. Operating an incubator is “more than just being a friendly landlord,” said Audrey Taylor, executive director. “We need to be there when they feel that entrepreneurial terror.”
Small business owners seeking luxury and service are moving into two new centers operated by American Comm Centers. The Comm Centers, one in Richmond in the Bay Area, and the other in Ontario, Calif., cater to small, professional business owners such as realtors and insurance agents.
The Comm Center staff not only answers phones and greets visitors, but provides tenants with services such as 5,000 words of dictation and 500 free photocopies a month. The rent also covers utilities, janitorial service and parking.
“I feel so good, I can hardly wait to get to work in the morning,” said Terrie Marzetta, a realtor who recently moved into the Hilltop Comm Center in Richmond. “It’s warm, the coffee is made and someone has been answering my phone.” Ellsworth said the next Comm Center is scheduled to be built at the Fluor Corp. complex in Irvine.
Growing in Long Beach
The third annual Long Beach Minority and Women Business Development Conference is set for 7:30 a.m. to 1 p.m. Feb. 24 at the Ramada Renaissance Hotel, 111 E. Ocean Blvd. The city’s Community Development Department sponsors the gathering, which features exhibits and speakers on subjects including marketing and home-based business. For information call 213-590-6487.
Yellow Pages Lessons
Last year, American businesses spent $8 billion on Yellow Pages advertising. For many small businesses, it was their only form of advertising. Yet many business owners are unsure about how to get the most out of the Yellow Pages. To help them, Barry Maher, a former marketing representative for GTE Directories, has written a practical guide to Yellow Pages advertising.
“Getting the Most From Your Yellow Pages Advertising” is published by Amacom Books, a division of the American Management Assn. in New York. The book provides insights and advice for small business owners. It costs $14.95 and is available through Amacom, 135 W. 50th St., New York, N.Y. 10020.
Looking at 1992
The Los Angeles Venture Assn. is presenting Robert W. Nichols, president of RNC Capital Management Co., at its Feb. 14 breakfast meeting. Nichols, a registered investment adviser, will speak on “1992--A New World Trading Order Impacts the 1989 Economic Outlook.”
The meeting begins at 7:15 a.m. at the Bel Air Summit Hotel, 11461 Sunset Blvd. The cost is $35, including breakfast. For reservations and membership information, contact Christine Buteyn, executive director, L.A. Venture Assn., 213-450-9544.
