Incubator Focuses on Low-Income Areas
CHARO Community Development Corp. provides career and business assistance to help generate economic development in low-income neighborhoods in Los Angeles County. Founded in 1967, the organization offers entrepreneur training, computer classes, child care and loan-processing assistance, among other programs. The group is now converting its temporary “incubator without walls” into a permanent business-nurturing program housed in a 36,000-square-foot facility on the Eastside. CHARO President and Chief Executive Richard Amador recently talked about the new program.
Question: How will the new incubator be different from the current program?
Answer: We have an incubator program but it doesn’t have a location. Many of the businesspeople that we help are graduates of our entrepreneur training center or receive services through our business assistance center or are small companies that we meet through our career center. We help them with things like how to bid for a contract, how to do their business plan, marketing and networking.
Now we’re going to bring them to one location to share services. They will be able to concentrate on their specific area without having to worry about office management, equipment and other things.
If you’re an architect or a plumber or whatever, and you’re going to start a business, you’re going to have to buy a computer, pay for telephone installation and other office equipment in addition to the tools of your trade. When you come to the incubator, the only thing you will need to have are the tools of your trade.
We will have a resource library that has information on preparing business plans, marketing strategies, how to do billable hours and so forth. We’ll also have information on different types of industries, employment data, economic data and import/export data. We’ll also have computers and copiers that you pay for as you use them. The individuals will be tenants and they will be graduates of an entrepreneur program, ours or somebody else’s.
They must also agree to go through certain work-related seminars, because 75% of all new businesses die within three years, and many die not because they’re not good at what they do. They die because they don’t know how to manage their business. In a business incubator, they are getting technical assistance and support, so that within three years they can hopefully move out on their own.
Last month we started renovation on a 36,000-square-foot building behind our office [430 E. Valley Blvd., East Los Angeles] to be the location of our incubator program. We’re hoping to be finished in September and bring in about 40 businesses in October.
Q: What distinguishes your incubator from others?
A: One advantage we have is our support services. We have the four major components that community economic development programs need to work: an entrepreneur training center, a career center, a business assistance center and a business incubator. Plus we’ve added a business financial center where we help people find loans. We also plan to open a contract procurement center in October. Most other incubators don’t have all those key services readily available to their tenants.
Q: Can businesses still apply for space in the incubator?
A: We won’t start taking applications until the later part of August. Priority is going to go to tbhe graduates of our entrepreneur program. The other priority will go to entrepreneurs in underserved areas such as South and Southeast Los Angeles and East Los Angeles.
When businesses are with us, they’ll receive about $5,000 to $7,000 in training services. When they leave, and if they set up business in our service area for at least five years, they won’t have to pay a dime of that back. If they locate outside our service area, they have to pay that back with interest. Our intent is not to collect the money. Our intent is to have these businesses set up shop in our underserved areas and create jobs.
Q: Specifically what services will you be providing tenant businesses?
A: You’ll have four walls, and we’ll put phone lines and computer lines in there for you. We’ll have a business office room where you can use a computer, a copier, a fax machine and other types of office equipment.
Let’s say you’re an architect. We’ll connect you to our telephone system, so when the phone rings you answer it, but when you’re gone, it’ll be answered for you as if it’s your actual office. If you want to have a meeting, there will be some conference rooms where you can go. So the only space you’ll be renting will be the space that you think you need to do your job.
Participants will have to pay rent for their space. They have to provide their own phone, but the line will already be installed. We’re also going to put businesses in touch with accountants and lawyers because we’ve found that too many small businesses sign agreements that they should never have signed. It’s important they have a relationship with a CPA and some legal counsel to review contracts. We’re also beginning some discussions with universities like USC and Cal State Los Angeles and we hope to establish a long-term relationship with one or two of them to provide continuing education for our tenants.
Q: How do you think this incubator will help the local economy?
A: I think it’s going to bring business contract opportunities to our community. For example, there are 10 hospitals within an eight-mile radius of us that buy more than $500 million a year in products and services. Very little of that comes from our community. Part of it is because of how contracts are issued.
For example, a bid goes out for tortillas and bread. That means that our tortilla companies can’t bid on it because they don’t make bread. Who gets the business? The big corporations and the brokers.
We’ve found that in some cases, brokers as far away as Anaheim are getting the contracts and subcontracting to the person that makes the tortillas. We want to change that around. We want to break the block bidding process. I think it’s doable because once we have all these incubator clients and graduates of our programs, we will help them collaborate on bidding for these jobs. So that’ll bring new business opportunities and create more jobs and help change our economy. We’re looking at the holistic approach to economic development.
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CHARO Community Development Corp. can be reached at (323) 269-0751 or charo@charocorp.com.
