Description
Within this particular detailed description relating to what the needs of entrepreneurs and business.
Project Number: ES1-WPC4
Recommendations for a Creative Business Incubator
for the City of Worcester
An Interactive Qualifying Project Report
submitted to the Faculty
of the
WORCESTER POLYTECHNIC INSTITUTE
in partial fulfillment of the requirements for the
Degree of Bachelor of Science
by
____________________
Nicholas Holovnia
____________________
Yekaterina Moran
____________________
Kirk Lanciani
____________________
Mardelle Rosales
Date: December 18, 2008
_______________________________
Professor Eunmi Shim, Advisor
_______________________________
Professor Ingrid Shockey, Co-Advisor
_______________________________
Professor Robert Krueger, Co-Advisor
i
Abstract
The City of Worcester asked us to perform a feasibility study for a new business
incubator. Through interviews we have identified the major target groups for the incubator, small
businesses and creative industries, and assessed their needs. Through literature research and
visits to existing incubators we collected information about important incubator‘s practices,
building characteristics and funding strategies. Our recommendations also include working and
learning opportunities that students will have in the incubator.
ii
Authorship
The entire report was written and edited by all members of the group. Each member
wrote individual sections and then edited and made additions to the other members‘ sections.
Some interviews were conducted with all four team members, while others were conducted by
only two at a time. All team members participated in the visits to the existing incubators.
iii
Acknowledgements
We would like to thank everyone who helped with this project. We are thankful to
Professor Shim, Professor Shockey, and Professor Krueger for their help and guidance
throughout this project. We want to thank our liaisons with the City of Worcester, Timothy
McGourthy, Erin Williams, and Mark Bilotta for sponsoring this project and giving us their help
and support. Lastly, we want to thank everyone we interviewed for their cooperation in this
effort.
iv
Table of Contents
Abstract ............................................................................................................................................ i
Authorship....................................................................................................................................... ii
Acknowledgements ........................................................................................................................ iii
Table of Contents ........................................................................................................................... iv
List of Figures ............................................................................................................................... vii
List of Tables ............................................................................................................................... viii
Abbreviations ................................................................................................................................. ix
Executive Summary ........................................................................................................................ x
1. Introduction ................................................................................................................................. 1
2. Background ................................................................................................................................. 3
2.1 Worcester Economy .............................................................................................................. 3
2.1.1 Creative Industries in Worcester Economy ................................................................... 8
2.1.2 Summary ...................................................................................................................... 11
2.2 Business Incubators ............................................................................................................ 11
2.2.1 National Business Incubation Association Statistics on Incubators ............................ 14
2.2.2 General History of Business Incubators ...................................................................... 23
2.2.3 Good Business Incubation Practices ............................................................................ 24
2.3 Creative Industries .............................................................................................................. 25
2.4 Immigrants in Small Businesses ......................................................................................... 26
2.5 Relationships Between Worcester Businesses and Students .............................................. 27
2.6 Case Studies ............................................................................................................................ 27
3. Methodology ............................................................................................................................. 33
3.1 Interviews ............................................................................................................................ 33
3.2 Artistic and Cultural Organizations .................................................................................... 34
3.3 Business Owners and Incubator Professionals ................................................................... 35
3.4 Worcester Area College Students ....................................................................................... 36
3.5 Building, Staff and Other Logistics .................................................................................... 36
4. Findings and Discussion ........................................................................................................... 38
v
4.1 Building Logistics ............................................................................................................... 38
4.1.1 Location and Building.................................................................................................. 38
4.1.2 Appearance .................................................................................................................. 39
4.1.3 Square Footage............................................................................................................. 39
4.1.4 Common and Working Space ...................................................................................... 40
4.1.5 Safety ........................................................................................................................... 42
4.2 Incubation Practices ............................................................................................................ 43
4.2.1 Incubator Goal and Focus ............................................................................................ 43
4.2.2 Client Selection and Graduation .................................................................................. 45
4.2.3 Staffing the Incubator .................................................................................................. 47
4.2.4 Advertising ................................................................................................................... 48
4.2.5 Shared Resources ......................................................................................................... 50
4.2.6 Immigrants ................................................................................................................... 51
4.2.7 Established Companies ................................................................................................ 51
4.2.8 IncuTrack ..................................................................................................................... 52
4.2.9 Board of Directors........................................................................................................ 53
4.2.10 Outsourcing Resources .............................................................................................. 54
4.2.11 Networking ................................................................................................................ 55
4.2.12 Tech Support .............................................................................................................. 57
4.3 Cost Analysis and Possible Funding ................................................................................... 57
4.4 Students ............................................................................................................................... 59
4.4.1 Colleges and Universities ............................................................................................ 62
4.5 Summary ............................................................................................................................. 62
5. Summary and Recommendations ............................................................................................. 63
5.1 Goals and Targeted Groups ................................................................................................ 63
5.2 Building............................................................................................................................... 63
5.3 Obtaining Support and Funding .......................................................................................... 68
5.4 Running the Incubator......................................................................................................... 73
5.4.1 Client Selection ............................................................................................................ 73
5.4.2 Staffing ......................................................................................................................... 73
5.4.3 Board of Directors........................................................................................................ 74
vi
5.4.4 Services and Advising.................................................................................................. 75
5.4.6 Student Involvement .................................................................................................... 75
5.5 How to Advertise ................................................................................................................ 76
5.6 Future Impact and Conclusion ............................................................................................ 77
References ..................................................................................................................................... 78
Appendix A: List of Interviewees ................................................................................................. 81
Appendix B: Business Closing Hours in Downtown Worcester .................................................. 86
Appendix C: Salem Enterprise Center Income and Expenses ...................................................... 88
Appendix D: List of Possible Locations ....................................................................................... 91
Appendix E: Number of Creative Industries in Worcester in 2006 .............................................. 95
vii
List of Figures
Figure Page
Figure 1: Map of Worcester City, Massachusetts 4
Figure 2: Union Station 7
Figure 3: Defining creative economy 10
Figure 4: Incubator categories, based on structure and
funding
12
Figure 5: Business Incubator Focuses 14
Figure 6: Incubation program geographic area 17
Figure 7: Incubation program sponsoring entities 18
Figure 8: Incubation program revenue by source 19
Figure 9: Incubation program expenses by source 19
Figure 10: Incubator gross square footage 21
Figure 11: Number of outside providers that regularly
assisted clients
23
Figure 12: Staircase in Torpedo Factory Art Center 29
Figure 13: Martin Luther King, Jr. Business Empowerment
Center
31
Figure 14: Targeted Incubator Groups 33
Figure 15: Operational Costs of the Incubator 37
Figure 16: Springfield Business Incubator‘s single suite 40
Figure 17: A conference room in The Enterprise Center 41
Figure 18: Computer Lab at Springfield Business Incubator 50
Figure 19: Funding Sources 58
Figure 20: Student Business Incubator 61
Figure 21: Districts of Worcester 65
Figure 22: CitySquare 67
viii
List of Tables
Table Page
Table 1: Goals of the programs 15
Table 2: Types of business assistance services offered
through incubation programs
16
Table 3: Rank order of activities according to percentage of
time incubator manager and staff spend performing them
22
Table 4: IncuTrack Payment Plans 52
Table 5: Salem Enterprise Center costs 69
Table 6: : Salem Enterprise Center income 69
Table 7: Financing projections for first year, expenses 71
Table 8: Financing projections for fist year, income 71
Table 9: Full use of incubator without renovation fees,
expenses
72
Table 10: Full use of incubator without renovation fees,
income
72
Table 11: Financing projection for 10
th
year, costs 72
Table 12: Financing projection for 10
th
year, income 72
ix
Abbreviations
Advanced Technology Development Center ATDC
Georgia Center for Advanced Telecommunications Technologies GCATT
Massachusetts Biomedical Initiatives MBI
Quinsigamond Community College QCC
Service Corps of Retired Executives SCORE
Small Business Administration SBA
Small Business Development Center SBDC
Springfield Business Incubator SBI
Worcester Business Development Center WBDC
Worcester Polytechnic Institute WPI
x
Executive Summary
One of Worcester‘s most prominent features is its collection of prestigious colleges,
universities, and institutes which provides students with great opportunities. However,
Worcester‘s populations of promising students often seek employment elsewhere after
graduation, rather than staying in the community. Worcester has made strides to better connect
the students with the city, and is ready to take another step by helping to establish and maintain a
diverse array of creative businesses. The city wishes to encourage these businesses to set up in
the downtown area in order to demonstrate its varied and rich economy and culture. To this
effect, Worcester wants to look into the possibility of establishing a business incubator in the
downtown area that could incorporate a number of groups, such as small businesses, college
students, and creative industries.
The goal of this project was to conduct a feasibility study of a new business incubator in
downtown Worcester. To accomplish this goal, our group had three main objectives. First, we
studied previous and existing business incubators that have been established in Worcester and
the New England region. Second, we assessed the requirements of Worcester‘s community to see
how the incubator could be best used to help them. Finally, we used our collected data to make
recommendations for the city on how it should create and structure the proposed incubator.
Background
A business incubator is an organization that helps startup businesses during their first
years by providing a variety of services to them. An incubator typically provides rentable space
to businesses, management and organizational training for inexperienced business owners,
positive interaction between tenant businesses, common shared resources, and other services.
Incubators are usually utilized to help to improve the economic development of a region in
general or encourage growth in a particular area or industry.
Methodology
For this project, we gathered information on a wide variety of subjects. This included
how incubators operate, how they could be used to encourage development in downtown
Worcester, what the needs of entrepreneurs and business owners in Worcester are, how to attract
people to the incubator, and how the city could most effectively establish one that would
xi
accomplish their goals. We conducted a large number of interviews with various groups in
Worcester, including representatives of artistic and cultural organizations, small business
owners, employees of organizations that assist small businesses, college business professors and
students, and staff members of existing business incubators.
Recommendations
We analyzed the information gathered from these interviews by identifying recurring
issues that were brought up. We discussed our findings and proposed the following
recommendations for the incubator:
Incubator Goal and Client Focus
The incubator should be focused on helping the growth of a diverse array of businesses in
downtown Worcester.
The incubator should focus on creative industries and small businesses for its client base.
College students are eager to gain real world experience. The incubator can involve
Worcester college students in a number of ways:
o It can establish a student business entrepreneurship program. This program should
reserve special subsidized space for students to occupy at a low rate. It should be
designed as a learning experience in which students receive help in running their
own real business.
o The incubator and its businesses can provide internship and project opportunities.
o The incubator can host student business plan competitions.
o It can rent out space to colleges for classroom use.
Location and the Building
It is important that the incubator building be visually appealing on both the inside and
outside. It should convey a feeling of professionalism and safety.
The building should be easily accessible and ideally have its own parking.
The initial facility should consist of approximately 30,000 square feet of space. There
should also be space available for growth.
xii
Purchasing an older building with historical value offers the potential for receiving tax
credits.
We have identified several properties in downtown Worcester that have the required floor
space and might be good locations for the incubator:
o 40 Southbridge St., which features both office space and street level retail space.
o 340 Main St., the Commerce Building
o 90 Front St.
Support and Funding
The incubator will receive funding in two main ways, external sources from other
organizations, and rent and fees paid by its clients.
In order to obtain an incubator site, financial support for the purchase will depend on
external donations. Recommended sources for initial subsidizing include: bank loans,
community outreach programs, corporate foundations, family foundations, aid from local
colleges and universities, angel investors, and government funds.
Over time, the incubator should strive to become less dependent on outside funding by
expanding and taking in more clients, thus gaining more income from rent fees. These
fees are a combination of the rent for the space and costs of the incubator‘s services.
It is highly recommended that the proposed incubator collaborate with many of the other
already existing business assistance organizations in Worcester, such as the Small
Business Development Center (SBDC) and Service Corps of Retired Executives
(SCORE).
Running the Incubator
The incubator only needs a small staff when it starts, which usually consists of a
director/president and a receptionist. Additional staff can be hired later on a full-time or
part-time basis as the need arises for them.
The incubator needs a board of directors with a broad range of backgrounds, such as
lawyers, accountants, and business professionals.
It needs to be selective and accept companies that have a viable chance of success.
xiii
The incubator should provide helpful services to its clients to differentiate itself from a
typical office space. It should provide technology such as copiers and internet access, as
well as connections to separate business assistance organizations for its clients.
Most importantly, the incubator should provide its clients with some form of advisory
board. Each client company should be assigned an advisory board made up of several
experienced individuals from the board of director. This advisory board should meet on a
regular basis to discuss the status of the company and set milestones for them to achieve.
The incubator should also provide plenty of opportunities for its clients to interact and
share experiences with each other. This could include hosting social dinners or regular
peer-to-peer meetings.
Advertising
It can advertise through signs, local periodicals, radio stations, banks, internet sites such
as Facebook, existing business resources that interact with entrepreneurs, and others. It
can also hire a marketing consultant to arrange an ideal marketing strategy.
A good way to advertise itself is to become involved in the Worcester community
through local organizations and by hosting community programs.
Conclusion
Worcester has both a large student population and artistic community, and many very
helpful business resources, but it needs a central hub that would connect those groups. An
incubator can be that hub; it can serve as a catalyst for social networking and a place for social
interaction. It will also benefit the economy of Worcester, even in difficult economic times.
According to the Small Business Administration, only 40% of businesses startups still exist after
six years. For Springfield Business Incubator graduates that number is 94%. An incubator can
provide the structure where many clients can cooperate and build supportive networks;
entrepreneurs can also share resources and work with advisors that they might not be able to
afford otherwise. In doing so, the companies thrive. And so does the local economy.
1
1. Introduction
Establishing and maintaining a diverse array of creative businesses in a city gives it both
a rich economy and culture. The City of Worcester‘s officials want to encourage various
businesses to set up in the downtown area to advance its revitalization efforts. Starting a new
business can be an exciting endeavor. New entrepreneurs are constantly working to create the
next most successful company. The right type of business in the right place can become
successful and greatly beneficial to its community. However, starting a new business can be a
difficult feat, as there are many hurdles to overcome. Entrepreneurs may need training in
business skills, such as how to write and present their proposal, or help in accessing essential
business resources. They believe that creating a business incubator facility downtown will
greatly assist with this goal. A business incubator can be a great help to new businesses, assisting
them with resource acquisition, networking and other services, increasing their chances of
success.
The National Business Incubation Association (NBIA) is a non-profit organization that
has helped numerous companies to successfully emerge in the economy. NBIA is dedicated to
the more effective establishment and management of business incubators, which the
association‘s website (?Business incubation FAQ,? 2008) defines as follows:
Business incubators nurture the development of entrepreneurial companies, helping them
survive and grow during the start-up period, when they are most vulnerable. These
programs provide their client companies with business support services and resources
tailored to young firms. The most common goals of incubation programs are creating jobs
in a community, enhancing a community‘s entrepreneurial climate, retaining businesses
in a community, building or accelerating growth in a local industry, and diversifying
local economies. (¶ 1)
The City of Worcester strives at helping its range of creative enterprises become more
successful, and encourages the establishment of new businesses. It wants to create a more diverse
and vibrant environment that will attract the attention of the city‘s college students. Convincing
students to stay in the city after graduation is a major goal for the city, and the city officials
believe that increasing the number of interesting and creative job opportunities is a way to do
that. Creative industries are types of businesses that deal with artistic trades and businesses that
2
support artistic trades. They include five major categories: visual and literary arts, design,
knowledge workers, media and performance (The New England Council, 2000).
This project was provided to us by the Executive Office of Economic Development. The
goal of our project was to conduct a feasibility study for a business incubator for downtown
Worcester that helps to support creative industries and small businesses. This incubator is
intended to bring together various participant groups to assist and nurture such businesses.
This project encompassed three important objectives. The first was to examine case
studies of previous business incubators around the United States and learn about what
contributed to their successes and failures. The second objective was to assess the needs of the
communities and businesses that are intended to benefit from the incubator. The third and final
objective was to present recommendations of the possible options for how the city should
proceed.
To complete these objectives we used several research methods. We conducted
interviews with small businesses and other community members, such as representatives of artist
organizations, which have given us some insight into common business needs in Worcester. We
also spoke with people who are involved in existing business incubators to learn more about how
to organize and run them. Interviews were also conducted with representatives from art
associations, and student organizations to gain an understanding of how they would benefit from
the incubator.
This project will serve as a guide to show the city what are the best ways to proceed with
the establishment of its incubator. This report presents our findings and recommendations on
how to establish a successful business incubator downtown. The city will then use our findings in
whatever manner they see fit to continue this task and help Worcester achieve its great potential.
3
2. Background
To properly accomplish this project, it is important to have acquired an understanding of
all the pertinent background information. Worcester‘s economic and business standing is vital
because it will determine the best way to pursue the establishment of the incubator. Since this
project revolves around recommendations for a business incubator, it is necessary to properly
define what a business incubator is. It is also important to know about the recent history of
incubators and how they have been used. Other important issues concern the challenges that
Worcester‘s small businesses face, the relationship between the city and its students, and existing
business incubators also all play a part in this project.
2.1 Worcester Economy
Worcester is the second-largest city in Massachusetts and is located in the heart of the
Commonwealth, at the intersection of three interstate and five state highways (see Figure 1). It
has a great history and potential for development. Worcester is known to have the highest level
of biotechnology industry in the region, as well as nine colleges and universities with a total
population of twenty-five thousand students. The diversity in educational and cultural
backgrounds of the Worcester citizens makes the city vibrant and dynamic (Sasaki Associates,
ZHA, 2004). The city has over sixty various cultural organizations, and a number of artistic and
historical societies, galleries, restaurants and shops, all of which add depth and color to the life in
the city.
4
Figure 1: Map of Worcester City, Massachusetts. (U.S. Census Bureau, 2008)
The economy of Worcester is currently facing a challenging task of catering to the needs
of a fast-paced, constantly evolving society. One of the important factors that influence the
city‘s business growth and how an incubator would fare in the city is how investors and business
owners perceive the economy and opportunities in the city. In 2001, Worcester Polytechnic
Institute (WPI) students conducted research on the subject via surveys and interviews of 400 out
of 1400 registered businesses in the Worcester area. The purpose was for the business owners to
rate Worcester on seven parameters: economics, local government, quality of life, transportation,
location, technology, and labor market. The results indicated the areas where the city could
improve and the resources that could be better publicized. In general, the tax rate was perceived
as too high; local government as not very helpful. The state of the economy, cost of living,
quality of life, and labor in Worcester were viewed as average. Transportation was seen as
average, with good highways and a below-average airport. The technology level was considered
to be high and the location good. There were plenty of vacant buildings in the downtown, and
5
even though many were in disrepair, they still had good electrical and internet wiring that could
be fixed and used. According to this study, the city could attract more businesses by improving
assistance to them and lowering the tax rate (Furness et al., 2001).
Six years after the students‘ project, in 2007, the Research Bureau completed a study on
the economic development of Worcester. It also pointed out that the high tax rate, as well as
insufficient land for new development, is an important factor that can divert private investments
from going to Worcester (Benchmarking Economic Development in Worcester: 2007, 2007).
Currently, the commercial tax rate is $26.20 per thousand dollars, which is twice as high as
residential, $12.54 (?Property tax rates by town in Central Mass?, 2008).
Another important characteristic, identified by the Research Bureau report, was the
unemployment rate and the fields in which the majority of the population were working. The
unemployment rate in Worcester is currently 6.9%; it is in the top ten highest in Central
Massachusetts (?Can you spare me a dime??, 2008). This rate has been high in Worcester since
2003, but it is still lower than those of other big New England cities like Lowell, Springfield,
Hartford and Bridgeport. Interestingly, the majority of people in Worcester are employed in the
Education and Health Services (39.1 %). Employment in education is stable because of the
numerous schools and colleges in the Worcester area. Similarly, the health services employment
rate is expected to grow, and more so as the baby boom generation retires, creating demand for
more services (Benchmarking Economic Development in Worcester: 2007, 2007). Retirement of
the older population will also create job vacancies that need to be filled with professionals with
associate or higher degrees. These positions are hoped to be filled with graduates from local
colleges. Following Health and Education Professional are Trade, Transportation and Utilities
(13.3%), and Professional and Business Services (11.3%), followed by other jobs that target city
needs, i.e., Leisure and Hospitality, Construction, and so forth (Benchmarking Economic
Development in Worcester: 2007, 2007).
The availability of office space also makes a significant impact on where businesses
locate. A survey of the Worcester office occupancy rate, also conducted by the Research Bureau,
concluded that there is enough vacant office space available to support over 3,000 extra workers
in downtown Worcester alone, assuming that each worker needs an average of 200 square feet.
About half of the rental costs were revealed in the survey, and turned out to be between $5 and
6
$30 per square foot (Downtown Worcester office occupancy: 2007 survey, 2007). Another study
conducted by Basile Baumann Prost Cole & Associates, Inc. calculated the average lease cost to
be $18.36 in 2006, which is slightly higher than $16.42 in 2004, but still about $5-6 lower than
rent in Metropolitan Boston market (Basile Baumann Prost Cole & Associates, Inc., 2007).
The total amount of office space in Worcester is approximated as ten million square feet,
according to Basile Baumann Prost Cole & Associates, Inc. Almost 70 percent of the office
space is characterized as class B
1
, with the lease rate of $16.91. Office space vacancy rate went
down within two preceding years by almost three percent, leaving it at 9.7 percent in 2006. This
vacancy rate is still lower than the 11 percent in Metropolitan Boston region (Basile Baumann
Prost Cole & Associates, Inc., 2007). Bringing the vacant buildings back to life would ultimately
make the rest of the neighborhood attractive, because empty and decaying buildings with
abandoned parking lots create an impression of an unstable and unsuccessful neighborhood; such
an impression can divert new businesses from locating there (Downtown Worcester office
occupancy: 2007 survey, 2007). It is the responsibility of the buildings‘ owners, and the interest
of the city to renovate the vacant space. The Worcester Economic Development Action Agenda,
drafted with the assistance of both Sasaki Associates and ZHA in 2004, suggests that the city
continue to develop the downtown, making it even more of a mixed-use space, with banks, retail
stores, government offices and entertainment centers (Sasaki Associates, ZHA, 2004).
The studies on the city‘s economic situation have been helpful because they point out the
areas that need improvement; however, not all recommendations can be implemented in the
current economic circumstances. The city is accepting feedback, and has been actively
developing ways to improve conditions for existing businesses and attract new ones. There are a
number of initiatives completed, such as renovation of Union Station, shown in Figure 2, and the
installation of the Korean War Memorial. There are various projects going on now, for example,
1
According to Basile Baumann Prost Cole & Associates (2007), “Class A buildings generally command the highest rents or sales
prices compared to other buildings in the same market. High quality materials, efficient layouts, above-average maintenance and
management are hallmarks of this space class. Class B buildings typically command lower rents or sales prices than their Class A
counterparts in the same market. Space is utilitarian, and design is ordinary for newer buildings and may be good to excellent for
older buildings. Maintenance, management and tenants are average” (p. 33).
7
upgrading the Airport and redeveloping North Main Street and CitySquare (Basile Baumann
Prost Cole & Associates, Inc., 2007).
Figure 2: Union Station. (“Union Station”, 1999)
The city is striving to create a welcoming and supportive environment for businesses. Its
updated website is a great tool that provides guidance and advice to business owners, and lists
the important licensing agencies and organizations that provide business assistance.
Entrepreneurs can now find the ?Navigating through Regulations & Licensing Requirements: A
Guide to Worcester Entrepreneurs in 20 Business Types? published on the website that will
guide them through the important steps of starting a new business. In addition to encouraging
new ventures to start, the city is also willing to work closely with existing businesses that are
considering expansion or relocation in the city (Business Development, 2008).
Along with guidance and assistance, the website provides information about the state and
local governments‘ Economic Development Incentive Program (EDIP). The Program offers tax
incentives for businesses that create new jobs in Worcester and increase the property value
through new investments. Companies that are starting, expanding and relocating to Worcester
can use the EDIP to obtain a tax deduction, credit or relief. For example, tax deduction is given
to businesses that renovate and reuse a building that has been mostly vacant for two years, while
8
a 5% Investment Tax Credit is granted to businesses that renovate the buildings with a
depreciable life of four or more years. Local Property Tax Relief may be applied to the
increment generated by a private investment, as well as a special property tax assessment
schedule. Eligible small businesses, both new and existing, can also take advantage of fixed-
rate, low-interest loans. Businesses that are located on certain targeted streets can be eligible to
receive up to 50% reimbursement from the Storefront Improvement Grant Program for
revitalizing the storefronts. Similarly, a loan is available for renovating the facades of
commercial properties (Business Development, 2008).
2.1.1 Creative Industries in Worcester Economy
Assistance and incentives mentioned above are available for businesses of different sizes
and types, including creative industries that make the city attractive. Charles Landry (2000)
stated that ?competitiveness [of cities] no longer lies in immobile, physical resources like coal,
timber or gold but in highly mobile brain power and creativity? (p. 33). Indeed, in today‘s world
where evolving technology and means of transportation allow people to work at home or
commute longer distances easily, more and more people are becoming very selective in choosing
where they live. Having increased flexibility with the location of their jobs, the quality of life
becomes a significant factor, leading people to move into communities that fit their lifestyles. In
his book Who’s Your City?, Richard Florida (2008), an urban theorist, stated that ?finding the
right place to live is as important as–if not more significant than–finding the right job or partner
because it not only influences those choices but also determines how easy or hard it will be to
correct mistakes made along the way? (p. 5). He goes on to say that every place has its own
personality, and that it is the creative class that adds a lot to the vibrancy of a city‘s economy.
Florida named Worcester as among the top five best mid-size regions for young singles, families
with children and tolerance for the gay community (pp.238, 262, 279, 281).
The City of Worcester has recognized the importance of the creative class, and after a
series of open forums in April of 2005, it has set goals and objectives that would help the city to
become a ?prosperous creative city.? Part of the goal is to nurture diversity in both the
population and industry fields, and encourage creative economy in the city (City Initiatives,
2008).
New England Foundation for the Arts (NEFA, 2007) defined creative economy in The
Creative Economy: A new definition as ??cultural core‘ that includes occupations and industries
9
that focus of the production and distribution of cultural goods, services and intellectual property?
(p.10). There also exists a cultural periphery, a separate entity:
Categories in the peripheral group are not wholly representative of the cultural
component of the creative economy. Some of the subcategories of these industries and
occupations produce cultural goods and services, but they are combined with others that
do not. Since the main categories cannot be broken down to include only those
subcategories with 100% cultural production or distribution, researchers should not
employ aggregate data for those categories unless there are special local circumstances.
(p.12)
The relationship of the core and peripheral groups is illustrated in Figure 3. The cultural core is
placed within the circle of creative industries. The peripheral circle refers to industries that can
be counted towards either inner or outer circle, depending on local circumstances. Both cultural
core and peripheral industries include three major categories: cultural goods production, cultural
goods distribution and intellectual property production and distribution. A few examples of core
industries present in Worcester include periodical publishers, book stores, fine arts schools,
graphic design services, video tape and disc rental, vitreous china, fine earthenware and other
pottery manufacturing. Peripheral establishments incorporate quick printing; direct mail
advertising; gift, novelty and souvenir stores; glass product manufacturing made of purchased
glass; hobby, toy and game stores; promoters of performing arts, sports, and similar events
without facilities; and many other businesses.
10
Figure 3: Defining creative economy. (DeNatale, D. et al., 2007)
For Worcester specifically, the Culture Count database on the NEFA website has 204
records for cultural organizations or individuals (NEFA & Community Logic, Inc., 2008).
However, Christine Drew, a WPI librarian, stated that the information is not complete according
to her knowledge (personal communication, December 2, 2008). Therefore, we calculated the
number of creative organizations and businesses (see Appendix E), using the same North
American Industry Classification System (NAICS) codes that were used for the NEFA Creative
Economy report. We collected all data for Worcester zip codes using the appropriate NAICS
codes; data available for the city of Worcester was for establishments that employ one to over
1000 workers. There currently are 187 core and 66 peripheral organizations; in 2000, it was 184
and 57 respectively.
11
2.1.2 Summary
Given the current circumstances in and around the City of Worcester, there is great
potential for economic growth in the form of new businesses and enterprises, especially those in
creative field. There are plenty of laborers in search of work, as well as college students who
could be attracted to stay in the city (Benchmarking Economic Development in Worcester: 2007,
2007). There are also numerous cultural and artistic organizations and establishments that, if
provided with a common space and networking events, would thrive and benefit the economy
even more than they do now. Furthermore, there is substantial office space with access to city
infrastructure. Additionally, the city leadership is actively seeking to improve conditions for
businesses by conducting studies and responding to the results. All these factors are favorable for
economic growth and creation of new jobs but they need a catalyst, such as a business incubator,
to bring them together.
2.2 Business Incubators
The fundamentals of entrepreneurship begin when an idea is born and efforts are made to
mature that initiative into a successful business venture. Unfortunately, many entrepreneurs lack
the business skills required to launch a new company into success. A business incubator can help
these entrepreneurs in numerous ways, such as assisting them in the development of business
proposals or by aiding these clients toward finding the capital required for an initial investment
toward a new company. An incubator also typically offers rent space and provides shared
equipment, staff, and space among its clients in a flexible environment. By working with the
incubator and surrounding network, a client should ultimately graduate from the incubator and be
prepared for the general requirements of operating a successful business on his or her own.
Business incubators have the ability to bring creativity, resources, entrepreneurship and
workforce together, and thus cause the economy in the surrounding area to flourish. While
individual business incubators differ in many ways, they can be classified into five universal
categories: building type and location, tenant composition (target market), rent, fee and
graduation policies, and a range of support services (US Small Business Administration, 1986).
Each business incubator can be classified under one of four different divisions: Business
Innovation Centers, University Business Incubators, Independent Private Incubators, and
Corporate Private Incubators (see Figure 4). Based on their organizational structures and
12
funding, the first two divisions are public, while the latter two are private (Grimaldi & Grandi,
2003).
Figure 4: Incubator categories, based on structure and funding
Private incubators make profit in several ways, including charging service fees and taking
a percentage of revenues from incubated companies. A liquidity event can be another source of
income for the incubator which occurs when an incubated company is bought or goes public
resulting in the business incubator selling its stake of the company (Knopp, 2007). Corporate
Business Incubators are privately owned by large companies, which encourage and support new,
independent businesses. The parent company will often control each new venture by holding a
stake in the equity. On the other hand, Independent Private Incubators are led by an individual or
by multiple individuals who risk their own money to accelerate the success of small companies
or entrepreneurs. The investors allow the entrepreneurs to produce an idea for the company,
mediating during the development phase if necessary (Grimaldi R., Grandi A., 2003).
Public incubators, such as Business Innovation Centers, offer traditional services such as
office space, infrastructure, communication channels, and information about external financing
opportunities. Similarly, University Business Incubators are typically public, especially known
for their expertise with science and technology, as entrepreneurs work with universities. The
developing ideas between these two parties can lead to new discoveries and patentable
inventions (Marrifield, 1987).
Public
Business
Innovation
Centers
University
Business
Incubators
Private
Independent
Private
Incubators
Corporate
Private
Incubators
13
The most common business incubator support services include helping with basic
business services, marketing assistance, access to bank loans, and assistance with gaining
presentation skills (US Small Business Administration, 1986). Business incubators offer many
benefits for local economies, such as creating jobs and income, offering advice for entrepreneurs,
causing industry clusters to grow, encouraging minority entrepreneurship and revitalizing local
communities. Business incubators also offer financial guidance to their clients by assisting them
in various capital management techniques. Some of these assistances include helping the clients
apply for loans or connecting them to venture capitalists or angel investors, who are high-net-
worth investors (Knopp, 2007).
Incubators are typically located in economically weak, urban industrial environments, in
retail shopping outlets, industrial and science parks, small towns far removed from metropolitan
areas, or near universities and colleges. About 53 percent of business incubators operate in urban
areas, 28 percent operate in rural areas and about 19 percent operate in suburban areas (Knopp,
2007). The incubator facilities themselves are often based on previous manufacturing and
industrial plants which have been renovated to fit the needs of the business (US Small Business
Administration, 1986).
While many business incubators are situated in areas that contain business development
opportunities, they commonly serve clients through internet technology. According to the
National Business Incubation Association, in 2006 more than half of the surveyed incubation
programs had virtual clients that did not physically work inside the parenting building (Knopp,
2007). Whether a business is physically present or not, incubators must decide the variety of
companies it will allow as tenants. Mixed focus business incubators are the most common
overall, obtaining a total of 47% of the incubator market, while technology incubators represent
37% of the market. Manufacturing incubators occupy 7% of the market, service incubators 6%
and specialty incubators 3%, as shown in Figure 5 below. Another way of categorizing business
incubators is according to whether they are non-profit and for-profit organizations. Roughly 94
percent of business incubators in North America are non-profit organizations that focus on
economic development, while the remaining six percent of business incubators focus on creating
returns from investments.
14
Figure 5: Business Incubator Focuses (Linder, 2002)
Incubators are often sponsored by different types of organizations. Economic
development organizations sponsor approximately 31 percent of incubators in North America.
Both government entities and academic institutions each sponsor about 20 percent of these
incubators. ?Hybrid? incubators with multiple sponsors and incubators with no sponsors
represent 8 percent of these incubators (Knopp, 2007).
In the United States, it is estimated that over 27,000 companies were started with the
assistance of incubators, which ultimately created more than 100,000 full-time jobs. As a result,
the total revenues from incubator-affiliated companies have risen to over $17 billion (Knopp,
2007). As business incubators continue to grow throughout the United States, more industries
will be generated by enthusiastic entrepreneurs.
2.2.1 National Business Incubation Association Statistics on Incubators
Every four years the National Business Incubation Association surveys existing
incubators in the North America, and then publishes a report on the periodic state of the industry.
In 2006, 218 incubators responded, bringing the response rate to about 20%, the lowest in the
survey history. This section presents most relevant and helpful statistics from the 2006 State of
the Business Incubation Industry, for a better understanding of common practices.
Business Incubator Focuses
Mixed Use
Technology
Manufacturing
Service
Specialty
15
Incubation Goals and Services
The goals of the incubation programs differ depending on the specific circumstances in
the area, the needs of entrepreneurs, missions of the sponsoring organizations, and so on. Some
goals were priority to only a third or a quarter of respondents, as shown in Table 1. For example,
encouraging minority and women entrepreneurship was marked by 30% of respondents,
generating new income for incubator or sponsors by 28%, and indentifying potential spin-in/out
business opportunities by 25%. At the same time, broader economic development goals, such as
creating jobs and fostering the entrepreneurial climate within the community, are considered
very important by the majority of respondents.
Table 1: Goals of the programs (p. 20)
Goals of the Programs
Percent of incubators
where the goal is a
high priority
Creating jobs for local community 84%
Fostering community's entrepreneurial climate 77%
Commercializing technologies 54%
Diversifying local economies 48%
Building or accelerating growth of local industry 48%
Retaining businesses in community 45%
Encouraging minority or women entrepreneurship 30%
Generating new income for incubator or sponsoring organization/ founders/ investors 28%
Identifying potential spin-in or spin-out business opportunities 25%
Generating complementary benefits for sponsoring organization 19%
Revitalizing distress neighborhoods 18%
Moving people from welfare to work 8%
These goals, as well as the ways to achieve them, set the incubators apart from multi-
tenant real-estate entities with reduced rent. Value-added services (listed in Table 2) that the
16
incubators provide significantly increase the startup businesses‘ likelihood for success. For
example, almost all incubators educate their clients about basic business practices (such as the
concept of a business plan), encourage them to interact with each other and share knowledge and
positive and negative experiences, help them effectively reach the market and provide high-
speed internet. Most incubators also introduce the clients to the angel investors or venture
capitalists, or provide access to some form of loans. All that combined with less common but still
needed services, such as assistance with product design, manufacturing and distribution, equips
the entrepreneur with necessary tools and skills for a successful journey.
Table 2: Types of business assistance services offered through incubation programs (p. 26)
Service
Percent of Programs
that offer that service
Help with business basics 96%
Networking activities among incubation program clients 96%
Marketing assistance 90%
High-speed internet access 89%
Help with accounting or financial management 84%
Shared administrative or office services 81%
Help accessing commercial bank loans 79%
Help accessing specialized noncommercial loan funds/loan guarantee programs 78%
Help with presentation skills 77%
Linkages to higher education resources 73%
Linkages to strategic partners 71%
Access to angel investors or networks 69%
Comprehensive business training programs 68%
Access to venture capital investors 67%
Shadow advisory boards or mentors 65%
Specialized equipment or facilities 64%
Management team identification 64%
17
Help with business etiquette 64%
Technology commercialization assistance 62%
Help with regulatory compliance 57%
Federal procurement assistance 56%
Intellectual property management 55%
Assistance with e-commerce 54%
Business management process, customer assessment service, inventory management 54%
International trade assistance 49%
General legal services 46%
Human resources support or training 43%
Assistance with manufacturing practices, processes, and technology 38%
Economic literacy training 33%
Assistance with product design and development practices, processes, and technology 32%
Logistics/distribution support or training 31%
In-house investment funds 27%
Loaned executive to act in management capacity 17%
Geographic Area
The area of the incubator‘s location is very important to its mission, goals and necessary
services. For instance, most of the
focused incubators, especially
technology ones, are located in the
urban and suburban areas, while
rural communities have mostly
mixed-use incubators. That
difference can be explained by
factors such as the presence of
academic institutions and
Urban
52% Suburban
28%
Rural
20%
Geographic Area
Figure 6: Incubation program geographic area (p. 11)
18
technology or other specific industry clusters in the cities. Rural communities, on the other hand,
need the incubator to cater to their diversity. Over a half of the incubators that responded to the
survey are located in the urban area. Suburban and rural areas hosted 28 and 20 percent
respectively.
Sponsorship
While the ideal scenario for an incubator is to reach a point of total self-sustainability, not
many incubators are really able to do that. Every incubator‘s reasons are different, depending on
whom the incubator serves; however, one of the most common problems is that the rentable
space is either too small or too big for generating enough revenue to cover the expenses.
Therefore, the incubator needs a reliable source of income that covers the difference. About a
third of the incubators
indicated Economic
Development organizations
as their primary sponsors.
Next big group was
government organizations
and academic institutions,
each of which sponsored a
fifth of the incubators.
Two- and four-year
colleges and universities
see the incubators as a
place to encourage business
development of their
neighborhood, for students to obtain real-life experiences in different areas, and for professors
and faculty to further develop and market findings from the research labs. Other categories of
sponsorship, such as hybrid sponsoring, no sponsoring entity, or a different source of
sponsorship added up to eight percent per category. Lastly, four percent of the incubators receive
profit from client revenues.
Economic
Development
Organizations
31%
Government
21%
Academic
Institutions
20%
No
Sponsoring
Entity
8%
Hybrid
8%
For-profit
Entity
4%
Other
8%
Sponsorship
Figure 7: Incubation program sponsoring entities (p.6)
19
Revenues and Expenses
Only 98 respondents shared their yearly revenue; the reported revenues range from
$14,000 to $5,469,951 for different incubators per year. The average revenue is $597,083, which
is almost twice as much as
the median, $283,000. The
main source of revenue is
rent or fees that the clients
pay. The next biggest
revenue source, service
contracts or grants, covers
provision of certain
services, i.e., business
training or micro-loan
assistance.
Similarly to the revenues, expenses differ greatly from one incubator to another. Reported
values range from $7,000
to $5,359,931. The median
lies at $339,690, while the
average is $548,358. The
costs associated with the
building and the salary and
benefits for the employees
comprise the two biggest
expense categories, over a
third each. Average
incubators spend almost a
fifth of the money on
Rent and/or
fees
59%
Service
contracts
and/or grants
18%
Cash
operating
subsidies
15%
Other
8%
Percent Revenue by Source
Total payroll/
benefits
36%
Building costs
38%
Program
Expenses
19%
Other
7%
Expenses by Source
Figure 8: Incubation program revenue by source (p.33)
Figure 9: Incubation program expenses by source (p. 35)
20
programs run by the incubator. The last seven percent are used on unique incubator‘s needs.
The respondents were also asked to rate their ability to maintain operation and find an
alternative source of income if the main subsidy source ceased. Only 15% of incubators, the ones
that have been operating for a significant amount of time, would be able to continue their normal
operation; nearly a third of the incubators would be able to operate on minimal levels only. A
loss of the subsidy would lead to closing of about 23% of the incubators. Lastly, another third of
all respondents indicated that they do not receive any cash operating subsidies.
Client revenues
Even though the staff and facilities of incubators are declining, the programs still serve a
large number of clients: the number of manufacturing incubators is decreasing, while the number
of mixed-use and technology incubators is increasing – and their clients need less space than the
manufacturing firms, therefore smaller facilities can accommodate same or larger numbers of
clients. Currently, the average incubator has 24 clients, median has 18, and the range is one to
124. Respondents also indicated serving an average of 16 and median of 6 of affiliated or virtual
clients. The average and median numbers of months that the resident clients spend in the
incubator before graduating are 33 and 36 respectively. The combined client revenues for the
most recent fiscal year are, on average, $16,129,359. The median is almost a third of it,
$5,000,000, while the range is $2,000 to $220,000,000. Those numbers include both resident and
affiliate clients, and both sales and grant revenues. On average, the clients employ 97 full-time
(with the range of 1-944) and 24 part-time (range 1-220) workers; the medians are 60 and 10,
respectively.
21
Incubator Size
As seen on the chart below, incubators occupy different areas based on the needs of the
clientele they serve. The reported gross floor areas range from 1,600 to 215,000 square feet. The
median lies at 28,300, and the average is 37,086 square feet. The actual leased space is smaller
though because of the non-
leasable common space,
such as reception areas,
conference rooms, kitchens
and other facilities that
might be unique to the
incubator. The reported
range is also very spread
out, from 600 to 192,000
square feet. The average
leased space is 26,528, and
the median is 20,000
square feet. As far as
occupancy is concerned, on
average, 76% of the incubator‘s space is leased out (85% median, 5-100% range). Usually, the
incubator‘s coordinator would plan on 80% occupancy, in order to give the existing clientele
room to expand. An important tenant category is anchor tenants, defined by NBIA as follows:
Anchor tenants – businesses that are located within an incubator facility but do not
receive business assistance services – provide many incubation programs with a stable
source of supplements revenue and a good base of experienced mentors and business
service providers for their clients. (p.19)
About two thirds of respondents to the survey indicated that they had anchor tenants. The latter
occupy on average 10,479 square feet, with the median of 5,000, depending on the needs of the
company and the total space of the incubator. On average, there are three anchor tenants per
incubator; the median is two, and the range is one to twenty.
19%
17%
16%
9%
14%
5%
6%
4%
1%
3%
6%
Lowest - 9,999
10,000-19,999
20,000-29,999
30,000-39,999
40,000-49,999
50,000-59,999
60,000-69,999
70,000-79,999
80,999-89,999
90,000-99,999
100,000-highest
Incubator Gross Square Footage
Figure 10: Incubator gross square footage (p. 15)
22
Staff and Other Service Providers
There is a trend for more recent incubators to occupy smaller and newer facilities, which
means less maintenance and allows having more lean staff. Right now, the average for the
number of full-time staff is 1.8; it is higher than the reported 2.4 and 2.8 in 2002 and 1998
respectively. As shown in Table 3, managing the facility is the second-highest time-consuming
task for the incubator‘s staff, and having a low-maintenance building allows the staff to focus
more on serving clients, building networks and maintaining the program.
Table 3: Rank order of activities according to percentage of time incubator manager and staff spend
performing them
Activity
Rank from most frequent to
least frequent
Manager Staff
Delivery of business development services 1 1
Facility management 2 2
Building/managing business resources network 3 3
Client recruitment 4 5
Fundraising 5 7
Staff development/management 6 6
Other activities 7 4
23
On average, the incubator‘s manager devotes 32 hours a week to the program; the mean is 32
hours, while the range is one to 70 hours. The total amount of time that the staff works averages
to 73 hours a week, with the median of 58 hours, and the range of one to 535. Usually, the staff
relies on outside
professionals for help in
specific areas that are
outside of the staff
expertise; 97% respondents
indicated receiving such
regular assistance on a
regular basis (see Figure
11). Only eight percent of
the incubators have over 50
advisors; the rest of
respondents are almost
evenly spread out between
1-5, 6-10, 11-20 and 21-50
outside assistants.
2.2.2 General History of Business Incubators
It is important to understand the history of business incubators in order to properly
implement them. By researching the origins and history of incubators, we can study patterns and
strategies that proved effective, as well as those that were not able to withstand the varying
demands of the market and economy and therefore failed.
Sally Richards, a business advisor in Silicon Valley, states in her book Inside Business
Incubators & Corporate Ventures that the idea of a business incubator first originated in the
nineteenth century, but it was not until the late twentieth century that they began to take hold and
become more popular. Some of the incubators were used to increase economic development in
certain areas, but eventually they were accepted by large corporations that saw them as money-
making opportunities. As the role of the internet grew, many businesses began to operate as
internet corporations, such as the companies CarDirect.com and MyWay.com. Large
corporations, such as CMGI and idealab!, believed they could make large profits by providing
funding and resources to small starting companies, and then receive returns once the latter had
None
3%
1-5
24%
6-10
23%
11-20
22%
21-50
20%
Over 50
8%
Outside Service Providers:
mentors, volunteers, business
professionals, academics
Figure 11: Number of outside providers that regularly assisted clients (p. 40)
24
grown and prospered. However, many of these small companies eventually failed, partly because
the ?incubating? companies assumed that funding itself would be enough for a small company to
prosper without a thoroughly developed business plan (Richards, 2002).
Since business incubators have emerged relatively recently, it was difficult early on to
determine what was a good practice or strategy for an incubator. However, as time has passed
and numerous incubators have failed or succeeded in their endeavors, people have begun to learn
what features make a good incubator. For example, it is very important for incubators to create a
business plan and budget for themselves, not just their client companies. Another important
realization is that there is no definite golden rule for creating a successful incubator, since each
one serves different types of companies and will have different needs and challenges. As
Richards (2002) puts it,
Metaphorically speaking, you are practicing the ancient art of turning raw
materials into gold. Even when you think you have all of the right elements in
place, you have to keep in mind that it‘s a touch of alchemy and a bit of chemistry
that will see you through. You have to take the right money, have reasonable and
obtainable goals, align yourself with the right partners, take on the right
companies, and have the right people in your organization to support both you and
your startups through the milestones you will have to make. (p. 12)
2.2.3 Good Business Incubation Practices
After years of successes and failures, people have learned what makes a business
incubator successful or not. Although each incubator must develop a different formula depending
on its environment, certain common practices or traits are seen as necessary to a good incubator.
A very important feature of the incubator is the qualifications of the director. According to Jim
Robbins (2002), the person in charge of the incubator should both have business experience and
be well integrated in the community that the incubator will be serving. Having a history of
successful business experience is essential, because it means that the director of the program
knows what businesses need and how to run them. Being socially involved in the community is
also important, because that leads to an understanding of how to adapt the incubator to better
serve the needs of its area. It also means that the director has access to resources in the
community. Another crucial fact is that the incubator itself is a company. Although the
incubator‘s job is to help other businesses, it still has its own financial needs that must be
fulfilled. If the incubator cannot maintain itself, it will close, and then it cannot help any more
25
businesses. Regardless of whether or not it is non-profit or for-profit, the incubator must be able
to raise funds to support itself (Richards, 2002).
In order to sustain itself, an incubator should have a clear set of defined client screening
policies and graduation policies. An effective incubator should have a clear client screening
process for evaluating potential tenant companies. The incubator should examine the status of the
company, what its chances for success are, and its compatibility with the incubator and existing
tenant businesses to determine if the applying company is worth the incubator‘s time and effort.
Without this careful screening process, an incubator could accept a business that has no chance at
growing successfully or that would conflict with the incubator‘s other companies. This would
waste the incubator‘s resources and diminish its good reputation. An incubator should also have
well defined graduation policies. These concern what the criteria are for the client company to
graduate and have to move out of the incubator and how long the incubator can provide its
resources to the client company. These will vary based on the incubator‘s mission and
operations, but should be clearly presented so that a client understands them if they are accepted
into the incubator (Wolfe, Adkins, & Sherman, 2001).
2.3 Creative Industries
The creative industries are considered a major demographic that can be nurtured in this
business incubator. This group can be very broad and can include art, film, advertising, crafts,
designer fashion, interactive leisure software, performing arts, publishing, software and computer
services and many others. These industries have several specific issues to address with the help
of a business incubator. The crafts industry, for example, is typically a one- to two- person job,
and devoting time to management and promotion of the business can be challenging. Another
major problem is that most artistic people do not earn an income that reflects their training, skills
and long hours of labor. An incubator can provide craftspeople with business management skills,
which make the public aware of the artistic skill and time it takes to make each of the crafts, and
attracts prospective customers to expensive products.
Another creative industry that could benefit from an incubator environment is the
performing arts, including musical and theatrical production. The major problem with this
industry is that the older, more experienced and better-known companies have more sponsors
than the newer ones. Another key issue is that the audience for this industry is often comprised of
26
the older generations. One of the ways these issues can be addressed is by involving schools in
the performing arts, so that younger generations can be exposed and therefore be more attracted
to this creative industry. A response to the problem of sponsorship is to encourage investors to
support the experimental and innovative younger theatrical companies (Ministerial Creative
Industries Strategy Group, 2001).
Creative industries as a whole tend to have difficulty marketing outside of their region,
because of a lack of general business skills. They tend to rely on their local shops, publishers and
advertisers to find customers. Some artists even seek help from non-profit organizations, but
sometimes it is not enough to help them expand. And, similar to general businesses, the creative
industry requires capital, but since it is not able to promise rapid growth, not many sponsors are
interested in investing (Rosenfeld, 2003).
The development and nurturing of the creative economy helps not only the artists
themselves, but also the community in which they are located. Creative establishments can help
to revitalize communities, and help young people stay off the streets and out of trouble. Creative
support has helped in such places as the Bronx, a neighborhood better known for its crime, poor
housing, and underprivileged schools. Currently, a program called ?The Point? focuses on
identifying the talent and aspirations of local Bronx residents. It then assists them in developing
their skills in some creative industry, including music, dance, fashion, theater and many other
fields. In addition to helping the residents to discover and expand their talents, The Point, along
with other organizations, studies local issues, such as transportation, pollution, and
environmental concerns (Evans et al., 2006).
2.4 Immigrants in Small Businesses
In Worcester, immigrants compose a significant portion of the small business market, and
therefore are an important consideration for our incubator. Immigrants may have several unique
needs to which an incubator must be able to cater. For example, it can be much more difficult for
recent immigrants to obtain loans from banks because they may lack a formal credit history and
may not be proficient in English. Therefore, it is much more common for immigrants to use their
own savings and loans from friends and family as a starting capital. Also, while there are
commonalities between different ethnic groups, they usually have different preferences on how
to obtain their start-up money. A study of US immigrants in the late nineties found that the most
27
important source of funding for Korean and Japanese immigrant entrepreneurs was personal
savings, while Taiwanese immigrants relied the most on family loans (Kushnirovich &
Heilbrunn, 2008).
2.5 Relationships Between Worcester Businesses and Students
Since our project is expected to be a part of an overall effort to connect the city with its
students, it is important to understand the existing relationship between these groups. A study
was conducted in 2000 by WPI students to assess the relationship between the businesses and the
college students in Worcester, and how they perceived each other. In general, the researchers
found that businesses have a hard time reaching the student market for two primary reasons. The
first reason is that they do not understand the needs and lifestyles of students well enough. A
better understanding of students, their interests and means of transportation would assist the
businesses in marketing to the students. The second reason is that the businesses are unsure of
what types of advertising media are best for reaching the students. This research shows that
business owners have uninformed and generalized assumptions about the students, and as a result
develop inaccurate plans in advertising to them (Cormier, Goodwin, & Harley, 2000).
Alternatively, the project also studied the students‘ perceptions of the city and how to
remedy some of the businesses‘ issues. It found that students have an overall positive view of the
city, and are eager to develop a better relationship with the city and its businesses. Transportation
methods and gaining knowledge about the city‘s events and companies were the key obstacles
mentioned. Students also believed that the renovation of the downtown area of Worcester would
make it more appealing, instead of looking so industrial. It was suggested that a common email
or website describing the city‘s offerings every week could be one way to improve students‘
awareness (Cormier et al., 2000). Since then, Worcester has created several programs and
initiatives to help connect its students to the city, such as the Social Web website and the Woo
card system.
2.6 Case Studies
In this section, we present information about existing business incubators. With two
exceptions, these incubators are all located in Massachusetts. Gathering information on them was
an important part of this project because we needed to find specific information on how real
28
incubators operate in addition to the general information we have already presented. By directly
studying real incubators we learned about actual problems they have faced as well. We also
planned visits to several of these facilities to talk to their staff in person, which is explained more
in the next chapter, Methodology.
There are several buildings that provide space, but what makes an incubator different
from just providing space is that it provides business assistance resources, regular meetings on
the progress of the company, shared space, and sometimes community workshops. Some
buildings that only provide artisans and businesses with work space are Eastworks, an old
factory building located in Salem, and The Torpedo Factory Art Center, in Virginia. One of the
reasons why we looked into Eastworks, even though it‘s not an incubator, is because it is a
mixed use building. It leases space to a number of different businesses, such as The Apollo Grill,
Pioneer Valley Ballet, Laurel Mountain Gift Baskets and provides working and living space for
artisans. The wide array of business allows for no competition in between businesses. Another
reason for studying Eastworks is that the Registry of Motor Vehicles is one of the tenants, which
is a great way of ensuring that people come into the building and are exposed to the other
businesses (http://eastworks.com).
The Torpedo Factory is different from Eastworks in that its target market is artists. Since
this is one of the groups our proposed incubator is also targeting, we wanted to learn how other
facilities were helping them. This facility is home to 160 professional artists who work, display
and sell their art. This building includes 82 artists‘ studios, six galleries, three workshops, The
Art League School, and The Alexandria Archaeology Museum. The studios are open to the
public during certain hours a day, depending on the artists. Not only can you observe the artists
at work during their open hours, but they also sell some of their work in their studios. The Art
League School is non-accredited and open to members and non-members of the Art League.
Some of the classes offered to both children and adults are drawing, painting, pottery, and
jewelry. What sets this facility apart is not only the building‘s rich history as a torpedo
manufacturing factory, but also that it houses a museum on the third floor and its interior design
(http://www.torpedofactory.org). The proposed incubator for Worcester must be welcoming and
creative, and one way of achieving this is by creating a very unique interior like the Torpedo
Factory Art Center, which can be seen in Figure 12.
29
Figure 12: Staircase in Torpedo Factory Art Center (“Torpedo Factory”, 2008)
As said before incubators not only provide space, but also business resources to its
tenants. A good model of an incubator that we visited is The Enterprise Center located at Salem
State College in Massachusetts. It covers a wide range of interests, such as education,
advertisement, medical industry, fitness, music, and many others. This center offers shared
facilities, such as the use of conference and training rooms, and a kitchen. They also strive for
their tenants to have a painless adjustment period when they leave the incubator. They do this by
promoting independence and encouraging the tenants to choose their own banks, marketing firms
and accountants for their individual businesses. Another way is by having their rent above
market rate. The creative economy in the Enterprise Center is a fairly new idea that was formed
in 2003, and is being implemented now in 2008. They are currently conducting programs around
the community to make people aware of the different creative businesses that exist in the region.
The purpose of the Center is to provide a nurturing and growing environment for businesses that
benefit the city. Recently they created a sector in the facility for very new business, so that the
new entrepreneurs will be able to interact more, and help each other with the difficulties that may
arise (North Shore‘s Small Business Incubator and Growth Center, 2008).
30
Another successful local incubator is Massachusetts Biomedical Initiatives (MBI). This
incubator is located in the Gateway Park building complex in Worcester. Because of its close
proximity to our school, we were able to visit it early into the academic term to gather
information about it. We interviewed its president, Kevin O‘Sullivan. MBI is a business
incubator dedicated to life sciences and biotechnology companies. Because it is solely focused
on these industries, it is able to provide specific resources that biotech companies need, such as
special laboratory space and equipment for each client. Twenty-eight companies have graduated
from MBI since the year 2000, and twenty of those companies were still operating at the time of
our interview. MBI expected to have thirty-four of its thirty-five laboratories occupied by
January of 2009.
The Martin Luther King, Jr. Business Empowerment Center (MLK Jr. Center) is an
example of an incubator in Worcester that initially targeted its services to minorities
(http://www.mlkj-bec.org/). The Center used to be an envelope company before it was
remodeled into the MLK Jr. Center in 1998. It is located on one of the city‘s busiest streets and is
easily accessible by foot, car, or bus. The center has internet access, a business library and a
computer lab. The mission of the MLK Jr. Center is ?to help provide a better quality of life
through business development, culturally sensitive education and training in the minority
community.? Even though its mission is to assist minorities, it currently supports any person who
seeks assistance. These clients benefitted from the incubator by having access to job skills, office
space and business skills (see Figure 13). The staff keeps a job posting, offers assistance with
preparing a resume, and holds training workshops. The workshops, designed to assist people in
learning how to dress for a job, perform in an interview and many other business tips, are meant
for individuals who are registered with the Center, while the rest of the resources are available to
the general public. Another service offered is job placing assistance which is one of the unique
qualities seen only in the MLK Jr. Center that sets it apart from the other incubators we visited.
31
Figure 13: Martin Luther King, Jr. Business Empowerment Center
One group the proposed incubator targets are students. Most students would rather not
risk starting a business because of their lack of experience and money. One way of providing
students with that experience is by allowing them the opportunity to startup a business without
having to suffer the consequences of a failure. The Springfield Business Incubator has a separate
section in their building for students who wish to start their businesses; not only is support
provided to them, but they pay a subsidized fee for space within the incubator. This program is
both a learning experience and an opportunity for new businesses to form. Other unique features
of this Incubator are its board of directors and the large amount of business resources it provides,
which are explained in more detail in Chapter 4.
Advanced Technology Development Centre (ATDC) is another incubator that had its
roots in an educational facility like The Enterprise Center. This Facility was established by
Georgia‘s Institute of Technology in 1980. It commenced by focusing its services to provide
education in starting and managing high tech businesses for entrepreneurs, and domestic and
foreign technology companies. The ATDC is an example of a very successful incubator. After
seven years of being established it began setting up business incubators throughout the state.
Less than two decades after, the ATDC opened a new branch on a floor of the Georgia Centre for
32
Advanced Telecommunications Technologies (GCATT) building. This new branch expanded its
focus to include new companies in multimedia, software businesses.
The ATDC services its companies through three main programs: entrepreneurial service,
faculty research, and R&D. The entrepreneurial program admits small companies (that are less
than a year old) to become members. One in five applicants that submit a formal application is
accepted as a member. Member benefits include assistance with business planning, sales and
marketing strategies, development of financial services and access to the Incubator‘s and
Georgia Tech‘s facilities. The faculty research program offers assistance to faculty members
with project management, marketing, business planning and licensing. The last program provides
corporate R&D divisions with space and access to facilities within an incubator.
The ATDC has been very successful, and the occupancy rates of its facilities have
averaged 95%. In addition, from 1986 through 1995, 111 firms had been admitted to ATDC. The
average graduate firm had revenues of $ 8.7 million and about 66 employees. This incubator is
an illustration of a good model that attracted the right companies in order to expand its size. This
in turn augmented employment opportunities and helped more new businesses thrive (Culp &
Shapira, 1996).
The results of our background research have taught us about strategies used by different
business incubators and what methods they have employed to become successful. We have also
learned about other subjects that will affect the operations of proposed incubator, such as the
general economy of Worcester, models of other incubators and the target market of our
incubator.
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3. Methodology
At the request of the City of Worcester‘s Office of Economic and Neighborhood
Development Division we gathered data on the feasibility of a business incubator for creative
industries and small businesses in Worcester. The incubator will help bring more diversity to the
city‘s economy and educate students on opportunities for growth in it. There are many groups
that may be involved in the incubator, including small businesses, creative industries, college
students, established companies, Worcester‘s government, colleges and universities, as shown in
Figure 14. Artists, small businesses, and creative industries are the intended tenants of the
incubator. Students can be involved in a number of ways, as entrepreneurs who start businesses
in the incubator, as customers of the businesses in the incubator, or even as interns, which will
help the students gain real world experience while providing assistance to the incubator‘s tenant
companies.
Figure 14: Targeted Incubator Groups
3.1 Interviews
Some in-depth information cannot be easily obtained through surveys or reports, but it
can be gathered through interviews. They allow learning directly about someone‘s personal
thoughts and feelings on a subject. Interviews can be structured rigidly so that very specific
questions can be asked, or be made to adjust depending on how the conversation flows.
Interviews can also take the form of focus groups, which involve larger groups of people, usually
up to seven participants at once. In the course of our project we conducted 47 individual
Incubator
Groups
Small
Businesses
Creative
Industries
Students
City
Government
Colleges,
Universities
Established
Companies
34
interviews with representatives of specific groups to learn about their needs and concerns. The
interviews were structured so that we could obtain the information we needed from our
interviewees, but were flexible enough so that we could change or add questions if a new
concern presented itself during the interview. We have conducted three focus groups, two of
them with students from Assumption College, and one with artists. The following sections
explain the groups we interviewed.
3.2 Artistic and Cultural Organizations
Understanding the needs of the artist groups and individual artists of Worcester was one
of our primary objectives within this project, since they are potential tenants of the incubator. We
tried to find common themes that such a diverse population would find pertinent, because artists
and the cultural community they bring with themselves could become a major asset to the
development of the business incubator. We performed a series of interviews with individuals
from this particular group, to understand their needs. Our information came from the artists
groups in the city of Worcester such as:
? Joy of Music Program (http://www.jomp.org/): A non-profit community music school
dedicated to providing quality music lessons to younger children. The goal of this
school when it opened its doors was to provide a solid foundation of music to
preschoolers. It began with three classes of 12 students, and grew over the course of
three years to 75 students.
? Worcester Cultural Coalition (http://www.worcestermass.org/arts-culture-
entertainment/worcester-cultural-coalition): A cultural community comprised of
members from 60 art and cultural organizations in Worcester. Major Goal of this
Group was to create synergy and a common voice in between the members. Three
areas it covers are: promotion of arts and culture (e.g. Woo card), members service
the community, and advocate for economic development within the community.
We interviewed people from artists‘ organizations who were willing to offer their input
on how an incubator could benefit them, or the community they represent. These included Music
Worcester Inc., Worcester Center for Crafts, Mechanics Hall, and Hanover Theater. We also
interviewed college art professors as they could provide a more detailed view of how they
visualized the creative economy in the city, especially in terms of opportunities for their students.
35
The in-depth interviews allowed us to gain an understanding of what the incubator can do to
address artistic needs in the city, and how artists can be a part of the revitalization of Worcester.
Using these interviews, we also studied other initiatives similar to incubators started by cultural
and artistic organizations in the city, and evaluated their plans and techniques. We learned about
problems they faced, and how those problems were overcome or contributed to the failure of the
projects. This historical analysis also showed us how the city‘s artistic and cultural development
has changed over time; it was useful to learn what had and had not worked in Worcester, and
what could be done to meet the city‘s specific challenges.
3.3 Business Owners and Incubator Professionals
In order to make proper recommendations for the incubator, it was important that we
understand the types of issues that startup businesses and incubators face. To learn about these
topics, we conducted interviews with people who had started their own business, as well as with
people who had worked in business incubators.
The main purpose of a business incubator is to help prospective business owners start or
support their business. Thus, startup business owners are a vital focus for our project, and similar
to artists these people have specific problems that the proposed incubator must address. Our
strategy was to conduct interviews with people in Worcester who had started their own
companies from the ground up to learn about examples of problems they encountered with
creating and growing their business, as well as what type of help they received or wished they
had. The purpose was to find out what the incubator could do to best assist its clients.
Aside from startup businesses, it was also important to learn about the inner workings of
a business incubator. Case studies were an important foundation to our research development,
because every business incubator has a history that can be examined to better understand the
development of an incubator and its properties. Business incubators that we visited included the
Martin Luther King Jr. Business Empowerment Center in Worcester, The Enterprise Center at
Salem State College, Springfield Business Incubator and Massachusetts Biomedical Initiatives,
which is located at Gateway Park in Worcester. These incubators were different from each other
in several ways, so they provided us with several different models and perspectives. As with the
startup business owners, we conducted interviews with people who were actively involved with
the operations of those business incubators. These professionals knew from experience what
36
actually happens in an incubator. They gave us detailed information about what practices are
common in successful incubators, and how we could apply those practices to ours.
3.4 Worcester Area College Students
It was important to assess the needs of Worcester‘s college students when developing the
plan for a successful business incubator. The city wanted to involve them in the downtown
incubator in the hopes that the experience will reinforce their ties to Worcester and help to keep
students in the community after graduation. We wanted to investigate what career paths they
planned on pursuing after graduation, if they see themselves having a future in Worcester, and
why they were or were not interested in staying in the city. We also gathered information on how
to attract them to our proposed incubator as a possible source of employment, internship or
entrepreneurship.
To gather information from Worcester‘s college students, we used two main methods.
The first was to conduct interviews with business management professors because these
educators interact with college students on a daily basis, and know about the types of
opportunities for the students. In addition, it was easier for us to arrange meetings with
professors instead of organized groups of students because the professors had set office hours
when they were available and were easy to contact via email. Second, we conducted two focus
groups in classes of business students to gather direct information from them. We were able to
arrange those with the help of their professors.
For our discussions with the professors and students, we sought the same types of
information. We discussed how they may be interested in interacting with a business incubator,
such as using it to help them establish their own business or obtain real world experience by
working with startup businesses. The colleges that we looked into in our area included Worcester
Polytechnic Institute, Clark University, College of the Holy Cross, Worcester State College,
Assumption College, and Quinsigamond Community College. Representatives from those
schools allowed us to deduce the general trend among students of different colleges and apply it
to our project.
3.5 Building, Staff and Other Logistics
A major consideration for the proposed incubator is the characteristics of the building
itself. There are several important factors in this area that we have researched, which include the
37
location of the building, its appearance, the space available for use, common and working spaces,
and safety. These characteristics will be important to the success of the incubator and its
performance and functions.
A successful business incubator requires excellent staff, great consultants, a convenient
location, good technology, and many volunteers. However, in a world of scarce resources, the
cost of the incubator should be carefully considered and trade-offs be made if necessary, in
accordance with the incubator‘s mission. The initial cost of the incubator is comprised of the cost
of the building itself (renovation, rent and security deposit), equipment and supplies, the staff
salary and initial consultation fees. The operating costs include various services, rent, salaries,
and other expenses which depend on the type and specific needs of each incubator, as shown in
Figure 15. We gathered information on initial and operational costs of the incubators we visited,
as well as funds and resources that were used to start the incubator and keep it running.
Figure 15: Operational Costs of the Incubator
Major
Operational
Costs
Salary for
the Staff
Custodian
Rent and
Mortgage
Equipment
and
Supplies
Services Security
Advertising
Programs
Utilities
38
4. Findings and Discussion
The data we collected from our varying sources revealed a number of themes and issues
that are important for the successful establishment of an incubator in Worcester. We analyzed
these findings and grouped them together according to how they relate to each other. In this
chapter, they are organized into the following topics:
Building Logistics; characteristics of the incubator building, including location, parking,
available spaces inside, and other physical logistics.
Incubator Management; the internal management and organization of the incubator
facility.
Cost Analysis and Possible Funding; the ways the incubator can be funded and sources of
income.
Student Involvement; how students can be involved in the incubator.
Our findings represent the information we gathered about a possible structure of an
incubator. The ideas presented in this chapter will show how the incubator can be tailored to the
Worcester environment. In the next chapter, we present our recommendations for how the city
could proceed with the project. All of our information, including quotes, comes from our
interviews, which are listed in Appendix A.
4.1 Building Logistics
A major consideration for the proposed incubator is the characteristics of the building
itself. There are several important factors in this area that we have researched, which include the
location of the building, its appearance, the space available for use, common and working spaces,
and safety. These characteristics will be important to the success of the incubator and its
performance and functions.
4.1.1 Location and Building
Our interviews with people involved in artistic, cultural and business fields indicated that
Worcester has a need of a ?central location? that can bring together resources, refer people to
already existing organizations, and be a meeting place for networking events. While there were
various suggestions for location throughout Worcester, most respondents agreed that it should be
in the downtown area. The location of the incubator should be easily accessible to clients and
visitors; it should have enough parking spaces and have convenient access to public
39
transportation. Also, the building should be relatively easily subdividable into smaller office
spaces, unless it already has a suitable setup.
4.1.2 Appearance
The location and appearance of the incubator are considered important factors for its
growth, although there exist opposite opinions as to whether the building should be renovated
outside. Steven Rothschild, a Worcester entrepreneur and owner of an internet company, thinks
that a simple, basic building is enough for creative industries. Beate Becker, independent
consultant specializing in cultural economic development, informed us about a design incubator
that had been established in New York City. This incubator could not attract designers because
the building was too ?fancy? and the designers would have been happier if the money had been
spent on building community. The Printer‘s Building owner, Wyatt Wade, thinks that ?artists are
the least demanding, the most creative, most interesting population?, in a sense that ?they don‘t
demand high-end space, so there is no need to invest a huge amount in infrastructure.? Professors
Steven Taylor from WPI and Joanna Ziegler from College of the Holy Cross, on the other hand,
emphasized that the appearance is very important, especially to artists. We concluded that a
modernized building would attract clients and customers, be an advertisement in itself and
contribute to creating a more vibrant downtown.
4.1.3 Square Footage
Based on NBIA literature and our interviews with staff at the incubators we visited, we
found that the building should be able to accommodate 30,000 square feet when first starting,
which includes individual client space as well as shared space. Having a smaller area could make
the process of becoming self-sustainable harder for the incubator, since the rent paid by clients is
a significant portion of the incubator‘s income. By having a smaller area, the incubator has less
space that can be leased to clients to raise income. A much bigger area, on the other hand, would
most likely have a low occupancy rate in the early years, which in turn would bring losses for the
incubator that still has to pay for the area that is not rented out. However, the possibility of
expansion should be considered while choosing a location, because if growth is impossible
within the same building, it might be necessary to duplicate many services and equipment
elsewhere. In this case, the new location will need its own set of administrative support, such as a
receptionist, copy and fax machines, a separate phone system, possibly even a kitchen, common
rooms, security and manager, especially if the building is more than a block away.
40
Salem Enterprise Center‘s building just expanded to 53,000 square feet; their suites range
from 200 to 6,000 square feet. Springfield incubator has a total of 37,000 square feet, but only
12,000 are rentable to clients; single suites are 375 square feet (shown in Figure 16), and as the
client company grows, it can move into a double suite.
Figure 16: Springfield Business Incubator’s single suite
4.1.4 Common and Working Space
Similar to any other facility, an incubator needs to have an interior layout that is
appropriate for the overall purpose of the building. The Enterprise Center in Salem provides
private offices and space for each business that is accepted into the facility. These spaces vary in
size depending on the magnitude of the business and its equipment. The Enterprise Center has a
section of the building dedicated to growth of the youngest businesses within the incubator.
Grouping starting businesses together allows them to easily share experiences with one another.
During the three years that the young businesses are allowed to spend in the incubator, they build
a strong network with similarly sized businesses. The cooperation and enthusiasm of the starting
entrepreneurs help their success and growth within the incubator. The facility also provides
shared space which is used among all clients; it includes conference rooms, a kitchen,
bathrooms, and a lounge area. The conference rooms have moveable walls which can alter the
size of the rooms and help create a flexible environment that better meets the needs of the
businesses (shown in Figure 17). Common areas help create synergy and facilitate peer
interaction between clients, as well as cut down expenses of each individual client by sharing
41
that space. Interaction in the common areas helps entrepreneurs to learn from each other‘s
mistakes and successes, thus educating them on good business strategies.
Figure 17: A conference room in The Enterprise Center
Fundamental networking space is a way to encourage positive interaction between
tenants, and a business incubator can provide the environment for it. Artists and other clients of
the building should be united in a way that allows discussions and suggestions to be held. The
lounge area in the Enterprise Center is an example of how shared space can be used to unite
people. It provides seating for people as well as a gallery for students from Salem State to
display their artwork. This acts as free advertising for the artists, which is imperative considering
their common need for marketing and business skills. While the Enterprise Center does not focus
specifically on artistic and creative industries, it is a good example of an incubator that takes full
advantage of common space between clients.
Massachusetts Biomedical Initiatives (MBI) applies a somewhat opposing technique,
minimizing the common space between clients for the main purpose of maximizing the amount
of space rented out to clients. Every extra foot spent on shared space results in less space that can
be charged for rent. By having a smaller percentage of shared space (33%, compared to the
NBIA average of 55%), the incubator can house more businesses and charge less per client to
cover the same costs of running the facility. The Enterprise Center and Massachusetts
Biomedical Initiatives use different techniques for their shared space, but their focuses are also
42
different, which allows both methods to be successful. Client businesses at the Enterprise Center
need more space for presentations and meetings, but businesses in the biotech industries at MBI
often need specific equipment for their individual work which limits the use of shared space.
Compared to the Enterprise Center, MBI has notably less available common space.
4.1.5 Safety
People, especially younger population, are naturally attracted to the exciting night life
that a city can offer. Cities like Boston and Providence not only provide tourist attractions and
exciting scenes to visit, but they make accessing these sites easy. Walking through these cities to
witness the local businesses and attractions for personal enjoyment is considered to be common
practice. When we asked students from Assumption College and College of the Holy Cross
about which city was a more desirable travel destination, Boston was consistently chosen over
Worcester. While Worcester does have its own attractions, it is not necessarily well-advertised
and user-friendly to people traveling by foot, and they also believe that Boston has more to offer
than Worcester does.
By researching the operating hours of businesses downtown (see Appendix B), we have
found that many local businesses in Worcester close early, and by 7:00 pm downtown Worcester
is virtually shut down. With work over for the day and businesses closed, Worcester quickly
becomes abandoned at night. Interviews with local Worcester college students revealed a
common perception that the city lacks safety and comfort among people walking along the
streets at night. We learned from our interviews that poor lighting in many locations and a lack
of excitement in the center of Worcester discourage people from walking around at night.
The thought of walking down a vacant, unlit street while alone at night is unpleasant for
many people who are looking for something to do in Worcester. One Holy Cross student
mentioned that while they and their friends visit bars nearby their college campus, they take a
taxi to arrive at their destination. They went further to say that they did not pay much attention to
their surroundings while in the cab, and once they exited the cab, they walked straight into the
bar. Because the streets were not adequately lit or just not attractive enough in general, the
students reacted by ignoring the surroundings altogether.
43
All visitors to Worcester face the same issue of walking through uninteresting and unsafe
streets. This includes local employees who travel to and from their car and the building they
work at every day. The proposed incubator should have enough parking spaces for the clients,
staff, customers, investors and guests of the incubator. A close-by, well-lit, secure parking lot
will help create a feeling of safety while outside. This is especially important for entrepreneurs,
who tend to work long, non-traditional hours.
The businesses themselves can help improve safety by lighting up the streets nearby their
businesses. Appealing and well-lit signs for tenant companies in the incubator will help
illuminate the surrounding streets as well as create a reason to travel to that location in the first
place. A security guard for the incubator would also contribute to the promotion of safety around
the incubator, and would further encourage people to comfortably walk near it. As an advocate
for business and safety, the business incubator can be a trend setter for surrounding businesses
and the local economy of Worcester.
4.2 Incubation Practices
During our information collection period, we spent considerable time researching
business incubators, especially how they are run. We visited existing incubators and people who
had been involved in incubators. These included Massachusetts Biomedical Initiatives (MBI),
which runs a life sciences incubator in the Gateway Park building in Worcester, the Enterprise
Center, which is an incubator that operates on the Campus of Salem State College, the Martin
Luther King Jr. Business Empowerment Center in Worcester, and the Springfield Business
Incubator at Springfield Technical Community College. We learned a great deal about the
internal workings of business incubators and how we could apply those to our proposed
incubator.
4.2.1 Incubator Goal and Focus
Having a clear focus is one of the most important elements in starting this incubator. It is
important to decide on the purpose of the incubator before its establishment begins, so that the
founders can have a definite vision of how to proceed. Focus applies to both the ultimate goal of
the incubator and the types of industry it targets.
The goal is the incubator‘s mission statement, which describes what the incubator is
trying to achieve. This can be anything, including enhancing the economy in the local
44
community or simply trying to raise a profit from starting businesses. A clear goal will keep the
incubator on track and growing in the right direction. For this, it is vital that there is a vision for
the incubator and a plan to pursue the goal. The goal of the proposed incubator was already
partly decided: helping to revitalize downtown Worcester and making it more attractive to
college students. However, the specifics of achieving those goals have to be considered. One
advisable strategy is to use the incubator to help in the establishment of diverse and interesting
businesses which would make downtown Worcester a more attractive place.
As part of its goal, an incubator‘s target client base should also be defined. The incubator
can be general, taking in any viable client business, but it can also be more selective by only
accepting client businesses of a particular industry. This decision will greatly affect how the
incubator will operate and whether or not it will succeed.
The staff at MBI advocated that having an incubator dedicated to a particular industry can
allow it to better serve the needs of the clients. For example, MBI is an incubator dedicated to
biotechnology and life sciences businesses. The biotechnology industry is a field that requires
very expensive and specific equipment and space, and it would be difficult for a general purpose
incubator to provide the required specializations that biotech companies need. Because MBI
focuses on biotech industries, it was specifically built to give its client companies those
resources. Having a clear focus from the beginning will both allow the incubator to suit its
clients better and save the incubator from unforeseen difficulties that arise from dealing with an
industry whose needs they did not anticipate. However, when focusing an incubator on a
particular industry, it is important that there are enough of those types of businesses in the region
to move into the incubator; otherwise the incubator will not have enough clients to survive.
A general purpose incubator accepts most businesses types regardless of their industry,
and thus is designed to provide general resources that are common to most businesses, but not
necessarily what would be needed by a specific industry. General purpose incubators can be as
successful as dedicated industry incubators, as shown by the Enterprise Center in Salem. This
facility has been incubating businesses from a variety of industries since its establishment,
approximately ten years ago. It is currently at its maximum client occupation limit, with several
businesses on a waitlist. Incubated businesses include graphic arts, manufacturing, lab equipment
refurbishment and many others. The Enterprise Center typically provides the same types of space
45
and resources to all of its businesses, regardless of industry. Therefore, while having the
incubator specialize in a certain type of business can make the incubation process easier, it is
quite possible for an incubator to succeed without doing so.
An ideal industry focus for ours would be creative industries, because Worcester has such
a lively artistic community. On the other hand, we have learned that having a variety of different
businesses in an area can be better for making it more attractive and economically stable. A wide
range of businesses in an area means that there are many reasons why people would visit it. It
also means that if the economy becomes unfavorable for one type of business, the whole area
would not suffer. Creative industry is a very diverse sector, however, and would still be a safe
focus for us.
4.2.2 Client Selection and Graduation
When the incubator is established, it will start accepting client companies. As we learned
from our interviews at the incubators, an incubator needs to be selective about which clients it
accepts. Having an incubator that lets in anyone might seem like it would make everyone happy,
but would inevitably lead to problems for the incubator and the business later on. A business
should have a reasonable chance of succeeding in order to be worth the incubator‘s time, money,
and effort. Failing businesses can harm an incubator‘s reputation and financial stability. We
learned that if a business is constantly struggling to maintain its finances, it cannot properly
concentrate on its trade and grow. This is counter to the purpose of the incubator, which is to
help the business expand. While the incubator is supposed to provide assistance in management
and organization, it cannot do all the work for the client company. Therefore, a company must
still be able to stand on its own to some degree; otherwise, it will just weigh the incubator down.
Another consideration is how open a client is with the incubator and how willing he or
she is to share issues and problems with the incubator‘s advisors. We found that the Springfield
Business Incubator in their contract with client has a requirement for the entrepreneur to openly
discuss his or her problems and financial issues with advisors. One of the most important
services an incubator can provide is counseling sessions with a team of advisors who offer
advice to tenant companies. If a client is not willing to share their business problems, however, it
makes helping them very difficult and wastes the incubator‘s resources. The incubator needs to
stay apprised of the business situations that its clients face. Thus, it is important to ensure that
46
incoming clients are willing to accept help and talk freely with incubator representatives about
their company.
Each incubator should have its own policies for acceptance. The Enterprise Center
accepts businesses that have operated out of home for a few years and are in need for assistance
or better space. Applicants that need help with writing their business plan or with other elements
of starting a business are referred to the Small Business Development Center (SBDC), which is
also housed within the building. The SBDC is an establishment designed to help entrepreneurs
with the first steps of starting the business. Because Worcester also has its own SBDC on the
Clark University campus and a Service Corps of Retired Executives (SCORE) branch
downtown, a similar arrangement could be made in Worcester with those organizations. The
proposed incubator could refer entrepreneurs to the SBDC or SCORE for help with the first steps
of starting a business. When the entrepreneur has an official business plan and enough capital to
pay the rent, the incubator can consider accepting him or her as a client.
Michael Holbrook, who works in Worcester‘s SBDC, said that the SBDC would be
interested in helping with the incubator‘s client selection process. The Springfield Business
Incubator houses SBDC, SCORE, and Small Business Administration (SBA) offices, which
makes all their services easily accessible to incubator staff and clients. It would be ideal to have
some business assistance organization offices inside the proposed Worcester incubator as well.
Another factor to keep in mind when selecting clients is the variety of businesses already
accepted into the incubator. For example, having two similar businesses in the incubator could
lead to conflict and competition. Incubator tenants are supposed to interact and support one
another, but if they are business rivals, it is not likely to happen. Depending on the focus, our
proposed incubator will have to choose clients carefully, so that it does not create internal
conflicts and stays loyal to the industries it intends to serve. Another possible aspect of the
selection was suggested by Small Business and Entrepreneurship Class: students said that there
is a danger of businesses using the services of the incubator and moving to a different town after
graduation. To prevent that, the incubator can have a requirement in the contract for the business
to stay in Worcester for a certain number of years after it leaves the incubator. An alternative to
that would be to have special tax, property or other incentives for the businesses to stay in the
city.
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Along with the client selection, it is necessary that the incubator has a graduation policy
in place. Graduation is a certain milestone in the company history when it is asked to leave the
incubator. It can happen once the company‘s revenue exceeds some set limit, once the company
outgrows the space or after a certain time period. Time is one of the most popular factors; the
average reported by the NBIA is three years. Springfield incubator started with the policy of
graduating businesses after three years of being in the incubator; however, they soon realized
that often companies start expanding and hiring more employees at three years, and they still
need assistance and advice. Based on that observation, the incubator extended the allowed time
to five years. Unlike the Springfield incubator, Salem Enterprise Center does not have any
graduation requirements; they currently have 46 clients, and only 12 have graduated since the
establishment of the program.
4.2.3 Staffing the Incubator
With the wide array of services provided and the large number of businesses it has to
interact with, it might appear that a business incubator would need a very large staff. However,
we discovered that the business incubators we studied employed a very small number of people.
The incubators keep costs down by a having a lean staff; it can include full-time and part-time
employees. At MBI, the staff consists of the company president, an operations manager, a
facilities manager, a health and safety manager, and an accountant. The president handles the
leadership of the incubator and meets with outside organizations, representing the incubator. The
operations manager handles the inside organization of the incubator and its clients. The facilities
manager takes care of the building itself. The health and safety manager works one day a week in
the incubator, and the accountant works twenty hours a week. Both the Springfield Business
Incubator and the Enterprise Center have a director and an operations manager or administrative
assistant. Springfield Business Incubator also has a separate staff member who runs the student
entrepreneurship program in the facility. Both incubators also employ other people on a part-time
basis like MBI. These other employees vary depending on what the specific needs of the
incubator are. The SBI‘s staff is actually paid by the nearby Springfield Technical Community
College.
Incubators usually start off with a manager and a receptionist, and then expand when
necessary. The qualifications for the incubator employees vary depending on what the
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employee‘s role is, but in general the staff must have a desire to work with and help the
businesses housed in the incubator. The head of the incubator must also be in tune with the
incubator‘s mission and dedicated to leading the incubator according to its goal. Other
characteristics which are critical for the incubator‘s staff include good problem-solving,
managerial and interpersonal skills, a diverse background, and the ability to multitask and
concentrate on details. They need to understand the needs of the clients they serve, be flexible as
those needs evolve, and in general have a vision and enthusiasm for their job. Running an
incubator can be a challenging task that consumes time and energy, but it is also highly
rewarding, as it provides people without access to necessary resources and skills with an
opportunity to reach their dream of opening their own business.
4.2.4 Advertising
Any business or organization must advertise its services so that it can attract new
businesses and clients. Many businesses advertise through emails, ads on the internet, fliers,
posters, billboards, newspapers, commercials and many other ways. All interviewees agreed that
although advertising is important, it is one of the greatest expenses of a startup company.
Advertising focuses on trying to attract potential customers or consumers, and also planning how
to promote the company by using a quick catch phrase, a unique logo, marketing video or photo.
As mentioned above, advertising is not only costly but must be planned very carefully.
Advertising in a newspaper over time embeds the message into the minds of the people who read
it. It does not create an instant customer base. Instead, it reminds customers of the services the
business provides. Sometimes businesses do not need flashy signs or enormous amounts of
advertisement. An example of a simple advertising method was used when the Enterprise Center
at Salem first opened its doors to businesses; it only advertised with a sandwich board and
acquired a total of 15 companies. Their current forms of advertisement are through mailing lists,
the newspaper and pamphlets, but what places them on the map is the many workshops they hold
for the community.
On the other hand, owners of creative businesses around the city such as C. C. Lowell do
not advertise much, but use different methods to acquire customers. Bill Cavanagh, who owns C.
C. Lowell, said the company‘s primary target market is students, so they try to speak with art
professors in universities and the instructors at the Worcester Art Museum. Another form of
advertising they had been using for five years was a billboard sign. They also distribute
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approximately 30,000 holiday fliers a year and have a website to sell their products. Another
establishment, Joy of Music, a nonprofit organization that teaches music, theater, and dance to
younger children, used an even simpler form of advertisement than what the Enterprise Center
used. Rich Ardizzone, the associate director of Joy of Music, and many others that we
interviewed agreed that ?the cost of advertising is ridiculous,? which is why their preferred form
of advertising is through word of mouth. Most parents of young children will ask their friends
where their kids take music lessons, and eventually they will call the facility to learn more about
the programs that are available. The organization also advertised in magazines for parents and by
holding recitals. Bill Cavanagh agreed with the Enterprise Center that a good way of advertising
is by reaching out to the community or just becoming more involved in it. As an example, he is
in the steering committee for Worcester Local First, an organization that works to strengthen the
small business community.
Jamie Rotman, a young entrepreneur who owns a small jewelry and handmade gift store,
advertises through mail and emails. She also hired an internet company to market her
establishment. Another interviewee, Tuan Vo who owns a computer software company,
suggested that the incubator could be advertised through the Chamber of Commerce.
During a focus group we conducted with students at Assumption College, the students
gave opinions on how the incubator or its companies could advertise themselves. One of their
recommendations was through an exclusive Worcester career-fair, in which companies from the
incubator and around Worcester could set up tables to attract students. This would be one way to
solve the problem of why students do not stay in Worcester. They also mentioned that it would
be helpful if the public were given information about businesses being accepted into or
graduating from the incubator. This information could include the information about the
businesses along with their new addresses if they are graduating, and could be featured in local
newspapers or business publications. Advertising could be also done through websites like
Facebook or on a social board that people visit frequently. The major idea was that businesses
need to have a better connection with the college students of the city. In conclusion, starting
businesses need help with advertising, because it will allow the entrepreneur to concentrate more
on the business itself. Therefore, the incubator should provide its clients with marketing help.
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4.2.5 Shared Resources
During our visits to the Enterprise Center, Springfield Incubator and MBI, we learned
about how incubators handle common services for their clients. It is a regular practice for an
incubator to provide several services and resources that are shared by all of its clients. For
example, the Enterprise Center employs a full time receptionist/administrator who performs the
secretarial duties for all of the incubator‘s clients. At MBI, all of the client companies have
access to a single ice-making machine. Tenants of the Springfield Incubator have a computer
room that they can use (shown in Figure 18). By providing a single resource for all the clients to
share, the incubator is able to help keep its costs down. Our proposed incubator should provide
common resources such as these. Basic resources such as a shared receptionist, copy machine,
fax machine, and break rooms would be good for almost any type of client, but depending on the
focus of the incubator, there could also be more specific shared resources, such as MBI‘s ice
machine. Another advantage of these shared services is that the clients can split the cost among
them, saving money. However, it is important to consider how the resources will be shared
among the client companies. If there are too many businesses, they might not be able to share a
single machine or a lone receptionist might not be able to keep up with them. This would not be
a problem in the early stages of the incubator‘s life, but it is important to keep in mind as the
incubator grows so that they can be expanded as needed.
Figure 18: Computer Lab at Springfield Business Incubator
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4.2.6 Immigrants
In the course of our research, we found that there are many ethnic associations in
Worcester that can help immigrants integrate into American business culture. For example, there
are the Southeast Asian Center, African Community Development Corporation, Centro Las
Americas and other organizations that are tailored to specific cultures. While some incubators,
such as the Martin Luther King Jr. Business Empowerment Center, offer culture-sensitive
training, it would be better if the proposed incubator referred the client to an established
organization that has experience with culture-specific issues. Since those resources are already
available, the incubator does not have to double them.
4.2.7 Established Companies
Established companies can be involved in the incubator by sponsoring incubator‘s events
and being anchor tenants. Anchor tenants are companies in the incubator that are no longer
considered starting businesses. Although these companies do not necessarily need business help,
they still benefit from the incubator environment‘s resources, and provide the incubator with a
reliable, stable source of income because they are not as likely to suddenly fail. In the Enterprise
Center, for example, large companies participate in sponsoring events, such as the Business Plan
Competition. About 50 percent of the Center‘s tenants are established companies; one of them is
a Taco Bell office that oversees 14 restaurants. On the other hand, Springfield Business
Incubator limits its number of anchor tenants to one because it wants to keep the majority of its
space available for younger businesses.
According to Tuan Vo, a software company owner, some businesses start as spin-offs of
a larger company. When a company discovers a potential field to expand to, but does not have
the budget or space to develop it, sometimes it is willing to pay overtime to a worker who would
be eager to start a business and work on the new idea. The new business can receive a space
inside an incubator and help from both the sponsoring company and the incubator. The
sponsoring corporation can supply monetary support, and might also help with the business side
of the startup, thus allowing the incubator manager to concentrate more on other businesses.
Another way for established companies to get involved in the incubator was suggested by
Andrea Ajemian. She said that it would be very helpful for starting businesses to receive a
?coupon book? from established companies with significant discounts for necessary equipment
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or services, such as high-quality or oversized printing. In her opinion, it would help new
businesses immensely, and they would become faithful clients of the established companies and
build a network with the latter.
4.2.8 IncuTrack
IncuTrack is an online system created by Cybergroup that is specifically directed towards
business incubators and technology centers. Cybergroup itself is a graduate from the University
of Maryland Baltimore County Business Incubator Program. The purpose of IncuTrack is to
track a client‘s progress and save time, money, and effort for tenants and faculty members in the
process. Some examples of this include working with a company's lease, insurance, investments,
business reviews, and milestones. Tenants may communicate with one another and share
information through the use of IncuTrack‘s website which stores their files in a secure network.
The following chart shows the optional payment packages of IncuTrack for incubators and other
clients interested in using its software:
Table 4: IncuTrack Payment Plans
Package Monthly Rate Clients Included Additional Clients
Incutrack-
Developing
$50 5 $15
IncuTrack-10 $120 10 $11
IncuTrack-20 $200 20 $8
IncuTrack-30 $250 30 $6
IncuTrack-
Unlimited
$300 unlimited n/a
Using IncuTrack enables the Springfield Incubator to work more efficiently. Deborah
King says, ?Instead of me e-mailing clients for their information and putting it into a
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spreadsheet, they upload it.? According to King, the Salem Business Incubator pays $120 per
month for a total of 10 clients to use IncuTrack, as well as a $150 annual security certificate fee.
Springfield Incubator also paid an initial fee of $600 for training involved with IncuTrack. The
Enterprise Center in Salem does not use IncuTrack, since it does not monitor their clients that
closely, and most businesses are established and have operated for a significant amount of time.
4.2.9 Board of Directors
Board of directors is another important component of the incubator. Jean McLean,
assistant professor of Business Administration and coordinator of the Business Administration
Related Programs in Quinsigamond Community College, stated that ?a good advisory board is
crucial?. Advisory board members can be a great resource to the incubated companies because of
their expertise and networks. Board members of Springfield Business Incubator include lawyers,
accountants, bankers, and other people with expertise in small business help. Currently, there are
39 people on the Springfield Incubator‘s board; they started with 10 people. The board of Salem
Enterprise Center consists of 11 people. It has two government representatives on board, the
Mayor and the City Planner, who help maintain the connection between the city and the
incubator and ensure that both are headed in the same direction. Communication between the
two parties can be very valuable for both, because the city‘s endorsement can open doors for the
incubator, while the latter can help the city achieve its economic growth objectives.
The board of directors can also act as advisors to clients. In the Springfield Incubator
each client is assigned four or five board members as advisors. They meet once in a quarter to
discuss financial matters and issues that the client might be facing, and to set milestones for the
following quarter, which helps the client to keep focused and revisit his or her goals and
objectives. The total time commitment from board members is eight hours per year; however,
many board members volunteer to meet with the client more often. Advisors‘ help is very
valuable for starting businesses. Jamie Rotman said that she wishes she had an advisory board
that includes people with expertise in various fields. Such a board would have helped her avoid
trivial mistakes and would have given her important feedback and counsel. Carrie Johnson, the
director of Center for Women and Enterprise, agreed with the importance of counseling and
financial accountability, and said that, from her personal experience, entrepreneurs often become
so busy with their product that they do not manage the company well. Tuan Vo stated that this
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first challenge as an entrepreneur was to find a good advisor, preferably in the same field. A
?serial entrepreneur?—a person who starts a business, sells it once it is established and needs
more capital investments to grow, and starts another business—would be a perfect advisor,
according to Tuan Vo. Steven Rothschild added that ?the entrepreneur‘s skill set is never
complete? and advice is always needed in different areas. The board can mentor clients, thus
enabling the manager to focus on other important tasks, such as obtaining funding and planning
community outreach programs.
While the incubator will indubitably benefit from a good board of directors, the board
members, according to Professor McLean, can in return receive recognition. The
acknowledgement can come in form of a dinner in their honor, a plaque, a press release and a
hall of fame in the incubator. Aside from the recognition, the board members are typically not
paid. At the Springfield Business Incubator, we learned that some lawyers may be required to do
pro bono work for the community, which means they must volunteer their professional skills to
help. Being on the board for an incubator is one good way to do this, and it provides the
incubator with free legal skills and help. The Springfield Business Incubator‘s board members,
according to Deb King, enjoy working with the incubator and its clients, and as a result, the
board is full. There is even a waiting list with more people who are eager to join.
4.2.10 Outsourcing Resources
The incubator can greatly benefit from existing organizations that provide small
businesses with help or are focused on one specific group. The incubator does not have to create
already existing resources and compete with these organizations. Instead, it may be more
effective or feasible to bring these resources together through the incubator. The organizations
that help entrepreneurs and starting businesses include the Small Business Development Center
(SBDC) in Clark University, the Center for Women and Enterprise (CWE), ArtistLINK and the
Service Corps of Retired Executives (SCORE), as well as others which are linked through the
websites of these organizations. SBDC in Clark would be willing to help with the selection of
businesses that are accepted into the incubator. The mission of the SBDC is to help entrepreneurs
by meeting with them on a one-on-one basis to guide them through the entire process of starting
a business, including shaping the entrepreneur‘s vision, obtaining a loan, and helping with
marketing. They are willing to assist incubator applicants with business skills. CWE is another
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group that guides entrepreneurs through the process of developing a business by offering
education, training, technical assistance and access to debt and equity capital. This resource is
primarily focused on helping women entrepreneurs, unlike SBDC that offers help to everyone.
SCORE is similar to SBDC in that it offers help to anyone in need of business
counseling. SCORE covers many aspects of business entrepreneurship, including one-on-one
business counseling, team business counseling, business plan development, cost-effective
marketing suggestions, succession planning, business growth mentoring, and strategy
development. There are 389 chapters of SCORE, one of which is currently located in the
Worcester Regional Chamber of Commerce. This local SCORE chapter includes 32 business
executives with a total of over 700 years of experience in the business field. We met with Joe
Patten and Scott Rossiter, who are members of the Worcester SCORE chapter, during our
interviews. Joe Patten said that ?More than half of the clients who come to SCORE are looking
to start their own business.? They went further to say that SCORE would be interested in
working collaboratively with the proposed incubator in downtown Worcester.
Along with entrepreneurs and small businesses, the proposed incubator will also serve
the artist community. An existing group that helps artists is ArtistLINK; it provides three key
resources to artists and artist organizations. It helps locate, create and preserve affordable
working space, living space, rehearsal space, community centers for artists, and supplies artists
with connections to funding and to legal services. The last key resource it provides is policy
work to encourage arts and district zoning.
Another resource that the incubator can use is volunteers. Committed volunteers can help
with organizational details, bring new ideas, and even give valuable advice if they are
professionals. Volunteers can stretch the incubator‘s resources a long way by performing simple
tasks such as answering calls, filing paperwork, shopping for supplies, sorting mail, and so on.
The staff needs to make sure that the assignments are clearly defined and communicated, and
that volunteers receive recognition and encouragement that keep them motivated. Important
considerations include how the incubator can be advertised and attract volunteers, as well as in
which areas volunteer help is appropriate and necessary.
4.2.11 Networking
Businesses need a support network to draw ideas, knowledge, and valuable relationships
from. It can include peer-to-peer, clientele, or marketing networks. According to Geoffrey Long,
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the Communications Director at GAMBIT, a program at the Massachusetts Institute of
Technology (MIT) that focuses on exploring new directions for the video game industry,
There is definitely a value in having a space for everyone to get together in a shared
environment like an incubator... If you have the community of the company itself but
then also the community of neighboring companies, so that those people could sit down
and compare notes once a week, either in like a coffee shop on the first floor or in some
special organized function or even in something like a message board, basically a
communication system setup specifically for those needs. Another thing that you could
possibly use…is an information resource for all the companies that are part of the
incubator, so that there would be a database of known and reliable lawyers or like
affordable marketing companies.
By creating a database of legal services, not only do the lawyers and marketing firms
benefit from the advertisement, but it also serves as a way for starting businesses to acquire
affordable services. Incubators not only promote synergy among tenants, as George Gendron,
founder and director of Clarks University‘s Entrepreneurships‘ Program, said that the proposed
creative business incubator could be more of a center where people from different backgrounds
gather, such as business professionals, students, CEO‘s and basically anyone from the
community. The incubator can thus become ?a trading post of ideas where people hang out.?
This would allow that both incubated and non-incubated small businesses acquire clients, and
knowledge on business issues they may be facing.
In order to gather knowledge about actual existing incubators, as said earlier in this
chapter, one of the incubators we visited was the Springfield Business Incubator. During that
visit we were able to speak with the only anchor tenant in the building, which allowed us to
gather the perspective of an incubator tenant. Peter Ellis, who is the co-owner of Digital Imaging
Firm (DIF) design, said that that one of the greatest benefits of being a tenant in the incubator is
the networking opportunities his company has with businesses and professionals at the facility.
Deb King, Director of Springfield Business Incubator, said that one of the reasons DIF became
an anchor business was because they service 75% of the building: ?a lot of tenants use them for
marketing design.? Peter Ellis also made note that for three years his company has not done any
marketing for their business, since all their clients have been advertised to by word of mouth.
Networking has not only occurred among companies, but also through the advisory board, which
Peter Ellis said has given DIF a couple of jobs.
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Jon Weaver, a young project manager in the WBDC, indicated a need of a young
entrepreneur network in Worcester. In his opinion, such a network can be a support group, where
young entrepreneurs can ?share business plans, receive feedback and confidence.? Incubator
would be a perfect place to host once-a-month social events for students and young
entrepreneurs, something that is already in practice at Clark University.
4.2.12 Tech Support
Computer technology has become an essential portion of any modern business.
Regardless of its trade, almost any business will rely on computers in some fashion. Some new
business owners may not be familiar with the necessary skills required, so the incubator can
provide technology assistance for them. Carrie Johnson, who works at the Center for Women in
Enterprise, said that many entrepreneurs need help with computer skills such as website creation
and online marketing. Some of our other interviewees such as Jaime Rotman and Andrea
Ajemian agree that technology help is extremely valuable to business owners. The incubator
should have a way to provide this, perhaps by hosting technology workshops or employing
someone to help the clients.
4.3 Cost Analysis and Possible Funding
There are five major grant categories (see Figure 19) that typically help to pay the
starting expenses of incubators, including federal government and various foundations. However,
once established, the incubator is expected to be able to obtain its own source of funding, such as
charging its occupants for rent. The financial plan for the incubator has to include strategies that
will enable it to meet its operational costs. We have obtained the operational costs of the Salem
incubator (see Appendix C), including the facility expenses, salary to people on staff and
custodians, cost of equipment, utilities, services and programs. Appendix C also lists income
received from clients, such as rent payments, utility and other fees. The proposed incubator must
decide on how much to charge for these fees by balancing the costs of the services with what is a
reasonable amount to expect the client companies to be able to pay.
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Figure 19: Funding Sources.
The importance of affordable office space was emphasized by number of Worcester
entrepreneurs, including Andrea Ajemian, Tuan Vo and Steve Rothschild, and people who work
with starting businesses, such as Wyatt Wade. David Forsberg, president of WBDC, suggested
that the incubator will require a subsidy to offer more affordable space. Therefore, he said, the
incubator should be a product of a partnership between two or three different groups that seek
?not a maximum dollar amount, but a maximum positive impact on economy.? Such a
partnership, in his opinion, will create a more reasonably priced organization.
Another way to deal with the issue of self-sustainability is charging rent that is higher
than market, such as the Salem Enterprise Center does. Tenants in that incubator are willing to
pay $18.50 per square foot they occupy because of the opportunities and services they receive as
a client. The incubator is almost self-sustaining, but they still receive one-time grants for various
needs, such as buying cameras in order to record workshops and make them available online.
Springfield incubator, on the other hand, cannot function on rent payments only because
of a relatively small area occupied by tenants (12,000 square feet). Rent is $650 per 375 square
feet (the smallest suites available); that price is comparable to market and includes a portion of
common space. Specific information on the incubator‘s finances is not available to public.
However, it is known that in addition to rent income of $175,000 a year, the incubator‘s staff is
paid by the Springfield Technical Community College. There is also a ?Hall of Fame?
fundraising dinner every year, at which five or six local entrepreneurs are inducted into the
Massachusetts hall of fame; all 500 tickets to the event usually sell out for $150, plus guests
Grants
Community
Foundations
Corporate
Foundations
Federal
Government
Family
Foundations
Operating
Foundations
Colleges and
Universities
59
donate generously. The incubator also receives one million (recently cut down to half a million)
dollars a year from state funding, as well as some donations from local businesses.
We have interviewed Gail Carberry, current president of Quinsigamond Community
College, who was part of the Springfield developing team. According to her, it took two and a
half years to bring the program to life. Initial program cost for the incubator and adjacent
industrial part was $3.9 million, $1 million of which was obtained through the US economic
administration, another $250,000 through Northeast Utilities, $50,000 through Western Mass
Community Foundation and the rest came from private campaigns. Most of that money was used
for bricks and mortar.
4.4 Students
We have conducted interviews and focus groups with entrepreneurial and business
students and professors, as well as students who started their ventures. In the course of our
research, we found that the majority of respondents believe that in general students are not ready
to start a business right after graduation from college. Several of the most often mentioned
reasons are the lack of capital, business skills, and knowledge. For instance, one student at
Assumption College said that her desire is to open a restaurant, but she would do it when she
gains enough experience in five or ten years. However, despite the popular opinion, the SBDC at
Clark University does have several students each year that ask for assistance with starting a
business. Most of the interviewed professors also mentioned that they know a couple of students
that started their businesses and seemed to be successful. One of the entrepreneurs we
interviewed, Tuan Vo, started his business while he was a junior in a university, and his software
company has successfully existed for almost twenty years now. Nevertheless, because the
number of the student entrepreneurs is low, we suggest that the incubator be advertised to
students, but not count on them as major stakeholders.
Another reason for advertising the incubator to students is that even though many
graduates tend to seek employment with established companies in big cities, young people often
move back when they reach their late twenties. Many do so either because they start a family and
want to settle down, or they had worked for several companies and decided that they would
prefer to work for themselves. Many people in our interviews have also said that the cost of
living in Worcester is less than in Boston. In any case, people tend to move to middle-size cities,
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where they can have good quality of life as opportunities to grow. According to George
Gendron, the founder and director of the Innovation and Entrepreneurship Program at Clark
University, ?the need [for entrepreneurs] is enormous; the opportunities are huge? in Worcester.
Worcester has a rich culture and easy access to many amenities, including camp grounds,
beaches, mountains for skiing and hiking, restaurants, museums, galleries, cultural organizations
and other recreational facilities to accommodate people with different lifestyles.
In addition to being a client company in the incubator, students can be involved in the
incubator via internships, work studies or for-credit projects. For example, Small
Entrepreneurship class students at Assumption College currently have to write a theoretical
business plan for their class and during our interview they expressed a strong interest in
partnering with a ?struggling young business? to improve existing business plans. This practice
is used in the Salem Enterprise Center. Marketing and business students from Salem State
College have opportunities to do for-credit projects related to developing a marketing plan for
one of the incubated companies. Some of the other professors and students we interviewed
agreed with that idea, and added that the students would be very interested in even unpaid
internships, because of the practical business experience and accomplishments that can be
presented to a future employer, such as a website students designed or a business plan they
wrote. Different levels of education would be welcome, because help is needed at various stages,
such as book setup, simple accounting and so on.
Involvement of students from various backgrounds is equally important. Students with
computer and web skills could be of tremendous help with setting up and troubleshooting
computers and networks, training the clients to use software, and even running workshops on
related topics. One of the young entrepreneurs, Jaime Rotman, noted that she is in the process of
posting her products on her website, and that an intern with some web knowledge would be
greatly appreciated. Finally, students of any majors could perform simple yet time-consuming
tasks, such as sorting the mail, filing paperwork, running errands for businesses, even
brainstorming programs and helping to organize them.
There is a special program at the Springfield Business Incubator, called the Student
Business Incubator. This is a space in the facility that is reserved for students looking for real
world experience in business ownership. Students who enroll rent their own cubicle office (see
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Figure 20) at a subsidized rate of $50 per month. There are a total of nine cubicles available for
rent. From there, the students create, operate, and manage their own real business and receive
help from the incubator. They are encouraged not to worry about success or failure, because it is
a learning experience that benefits them regardless of the outcome. Students of all ages
participate in the program, and one student we talked to at the incubator said that he loves being
there. Because college students are very eager to gain real world experience, a program similar to
this would serve the proposed Worcester incubator very well in getting college students
involved.
Figure 20: Student Business Incubator
In conclusion, there are many roles that students would be able and willing to play in the
incubator if it is advertised enough to them. Worcester is unique because of the big student
population, and it is a clear advantage to the incubator. Having students do various tasks would
be very beneficial for the staff, and would provide invaluable real life experience for students.
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4.4.1 Colleges and Universities
Colleges and universities can play an important role in the incubator. They can adjust the
coursework to provide students with opportunities to work in the incubator for course credit or as
an internship. Educational institutions can also become anchor tenants of the incubator by renting
space for classes. Jean McLean, a business professor at Quinsigamond Community College
stated that the college currently is in great need of space, and expanding several classes into the
downtown of Worcester would be a great way to solve the problem. Also, as a real-life
environment, the incubator will encourage students to consider starting their own businesses. If
they do, Professor McLean believes that the school would be willing to subsidize the space that
students will need. George Gendron said that the Clark University is also considering starting an
incubation program. However, they would prefer to do it on campus or right next to campus, so
that it is easily accessible to students, faculty and SBDC. As students at Assumption College
pointed out, involvement in an incubator can be a great selling point of the college to the
prospective students.
However, there were five professors from different schools, including WPI, Worcester
State College, Clark University and Assumption College, that stated that they would not be able
to make a commitment to the incubator because of time constraints that their job places on them.
Professor Carol Harvey from Assumption College suggested that the incubator should invite
students to be involved in it, even as clients and they should be mentored by experienced
entrepreneurs, not professors.
4.5 Summary
In the course of our interviews, we found that there is a need in Worcester of a common
space that will bring together the city‘s various cultural, artistic, business and student
communities. From our visits to existing incubators we learned how the incubator should be
organized, managed, and how it can serve the existing communities. We have also learned about
resources already available in the city to assist small businesses and creative industries. In the
next chapter we will present in greater detail how the city should proceed with bringing the
incubator to life.
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5. Summary and Recommendations
At the end of our research, we analyzed the data collected from literature and interviews.
This chapter is a brief summary of the important results, as well as our recommendations on how
the city should proceed with establishing the incubator.
5.1 Goals and Targeted Groups
A business incubator is a great tool that can assist the city with its current goals and
objectives, such as revitalizing downtown and bringing together Worcester‘s numerous
entrepreneurs, creative individuals and business assistance resources. The incubator can help the
city become more attractive to residents and visitors and add to its economic stability. It can do
so by serving a diverse range of small businesses and creative individuals instead of a single
industry, according to several business owners we interviewed.
5.2 Building
The characteristics of the building that will house the incubator are very important to its
performance and success. While there were different opinions as to whether the building should
appear modern and attractive, most respondents agreed that it would make the facility appear
safer, more professional and will be an advertisement in itself. The building should also be easily
accessible by car, foot, or public transportation, and preferably have its own parking lot, as
mentioned by our interviewees. The incubator professionals and literature we consulted
recommended that the incubator facility should start with about 30,000 square feet of floor space
in order to properly support itself on client rent. There should be a possibility for growth though,
and we recommend that the building expand to 40,000 – 50,000 square feet by its tenth year
anniversary.
A good model for the proposed incubator is located in Springfield, MA. Based on the
characteristics of that facility, as well as the information we obtained in the course of our
research, we recommend that the incubator occupy a multi-story building (or several stories of a
bigger building). The main floor should feature the front desk and receptionist‘s area, along with
a big conference room, which would serve as a gallery space for creative industry clients and a
room for workshops and networking events. Any business assistance organizations that move
into the building would also be located on the main floor, so that they are accessible to visitors
while keeping the traffic to the main floor, thus ensuring clients‘ safety and quiet working
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environment. It would also be good to have one or more small retail stores for the clients that
make tangible artwork and other products. Other clients can use the store as another way of
advertising, by placing their business cards and information sheets there. The upper floors would
contain the clients‘ office suites or other space utilized mostly by clients.
Salem Enterprise Center is a good model in terms of community outreach: it hosts
workshops, conferences and other social events that are open to public. Since many professors,
young entrepreneurs and artists we interviewed expressed a strong interest in networking events,
we recommend that the incubator advertise itself as a center for social interaction. It can host art
shows and sales, student and young entrepreneur dinners, workshops and seminars and other
events. The conference room should always have displays of the clients‘ work as a way of
advertising to the general public. Finally, a good anchor tenant could be a restaurant or a coffee
shop because it would bring people in and could serve as a ?common area? for the clients.
The proposed business incubator will require a facility that meets the needs of its tenants,
which includes both individual and private space. The incubator is expected to have about 55%
of its total area dedicated to common space for everyone in the facility to share. The remaining
45% of the building would be used as rental space for tenants. Our team contacted several
people, including Paul Morano, Erika Hall and Richard Trifero, for the purpose of better
understanding a potential location for the incubator. The results showed that Worcester has many
buildings that offer space for lease, while there are fewer opportunities for owning a building.
Our team compared three specific locations (see Appendix D) that are currently available for
lease (as of 12/12/08) which are all located in downtown Worcester (see Figure 21).
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Figure 21: Districts of Worcester (Sasaki Associates, ZHA, 2004)
At 40 Southbridge St., there are 27,000 square feet available of office space with a listed
price of $12.50 per square foot. At this size, the building would barely qualify for housing a new
business incubator. However, since the incubator is not expected to run at 100% occupancy when
it opens, 40 Southbridge St. would be capable of housing the incubator during its initial years of
establishment but would not offer room for growth unless more space became available. The
advantage of the building is that the space for parking is available, in the form of 2.1 parking
spots per 1,000 square feet of space leased which would result in 56 potential parking spaces.
Another option, the Commerce Building was constructed in 1896 and is located at 340
Main St. The building comprises of 27,778 square feet of space per floor and offers up to 93,481
square feet of total available office space, charged at $15.50 per square foot. In this case, the
proposed incubator could initially lease one floor for its opening debut and acquire additional
space on other floors as needed. The Commerce Building also offers parking in the form of 1.4
parking spots per 1,000 square feet of space leased. If the business incubator maintained one
floor of the building, it could potentially receive about 38 parking spots for staff and tenants.
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There are also 80,000 square feet of office space available at 90 Front St., where the
average floor size is 48,907 square feet and lease costs are labeled as ?negotiable.? Similar to the
Commerce Building, this location contains enough space for the incubator to grow. Additionally,
the building is located within the proposed CitySquare project boundaries, which may likely
become the premier location of downtown Worcester when the project is completed. Assuming
that the cost of leasing is affordable, the incubator should have potential long-term success if
located at this site.
The CitySquare project is a $564 million project that involves transforming 20.2 acres of
downtown Worcester into a new community with mixed-use space. From the total cost, $470
million will be privately funded by Berkeley Investments Inc., while the remaining $94 million
will be publicly funded. CitySquare development will include commercial, retail, entertainment,
residential, and potential hotel space when complete. It will also provide a new parking garage
with 1,025 spaces. Additionally, there will be four new streets and new pedestrian walkway with
friendly sidewalks and plazas which will all contribute to a new vibrancy in downtown
Worcester.
CitySquare will consist of numerous buildings with different purposes and will be
constructed at different stages of the project. According to Richard Trifero, Building H will act
as a trigger for phase 1A (see Figure 22) when it secures 135,000 square feet of space from
locked-in tenants. Phase 1A will be the first major step towards physically implementing the
CitySquare project. In this phase, the Worcester Common Outlet Mall will be demolished while
Front St. will be extended. Mercantile St. will be constructed along with Public Plaza Area and
an underground parking garage. When complete, CitySquare may ultimately become the greatest
attraction for the city of Worcester.
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Figure 22: CitySquare (Berkeley Investments, Inc., 2008)
The founders of the proposed business incubator may want to consider locating the
facility within office space offered through CitySquare. This will allow the incubator to be
situated at the center of Worcester, which will help it better interact with the surrounding
community. In this case, there would also be easy access to parking for any faculty or tenant
members of the incubator. However, the offices located in CitySquare may cause some
inflexibility for space obtained by the incubator. A tenant inside the incubator may have
difficulty working in the building if their business requires an unusual space, not available in the
offices. The founders of the incubator should contact Berkeley Investments Inc. to further
discuss any potential connections between the incubator and one of the buildings affiliated with
the CitySquare project.
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5.3 Obtaining Support and Funding
The proposed business incubator in Worcester will require funding for acquiring and
preparing the facility, as well as maintaining the facility once the program has been established.
As with the other incubators we studied, funding for the incubator is expected to come from
numerous resources that fall into two general categories: rent fees and external donors. When the
incubator building is obtained, financial support for the purchase will depend solely on external
donations since there will not be any revenue from rent yet. These grants will most likely come
from multiple sources in order to cover the expensive costs of ownership. Recommended general
sources for initial subsidizing include aid from local colleges, angel investors, various grants and
bank loans. Grants can be subdivided into five smaller foundation groups based on their source:
community, operating, corporate, federal government and family foundations.
Worcester is widely known for having aged industrial and manufacturing buildings that
may or may not be in use. Purchasing and renovating an older building offers the potential of
receiving tax credits. The National Park Service, Internal Revenue Service, and State Historic
Preservation collaboratively run an operating fund that offers a 20% tax credit toward restoring
certified historical structures, such as abandoned factories or warehouses. To qualify for the tax
credit, the building must be used for business purposes, be listed on the National Register of
Historic Places, and have been built before 1936. After the incubator has been established and
has tenants, three additional sources of income can be attained from within the incubator: royalty
agreements, equity agreements, rent fees.
Revenues from rent and fees charged to tenants within the incubator should be able to
cover a minimum of 40% of the total maintenance costs of running the incubator. However, it is
recommended that rent covers closer to 60% or higher. Rent fees should remain close to the
market rate, but not necessarily match it. For example, during an interview at the Enterprise
Center in Salem, MA, Catherine Julien noted that the incubator charged $18.50 per square foot
which is slightly higher than market rate. Rent fees that are reasonably over the average market
rate are justified through the business expertise that is offered through the incubator. An
incubator may also charge a set late fee if a tenant does not pay the rent in time. The following
chart is a general depiction of the annual income and expenditures for the Enterprise Center in
Salem. A more detailed table can be found in Appendix C.
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Table 5: Salem Enterprise Center costs
Cost Categories July ‘07 – June ‘08
Staff Salary and Part Time Pay Roll $244,710.85
Faculty Expenses and Utilities $138,113.21
Depreciation Expense $137,400
Mortgage and Real Estate Taxes $72,583.17
Programs $68,880.98
Administrative Expenses $38,113.21
Professional Services $12,678.25
Table 6: Salem Enterprise Center income
Income Category July ‘07 – June ‘08
Total Rent Income $498,395.55
Grants and Other Income $147,211.39
According to the NBIA, 46% of business incubators have some type of equity ownership
agreement with tenant companies. An equity investment occurs when an incubator obtains a
stake in one of its tenant companies and then sells that stake later if the tenant graduates and is
bought by another company. For example, the Enterprise Center in Johnson County, Kansas,
held a 2% stake in a tenant company that was going to be purchased for $30,000,000. As a result
the incubator would have received $600,000 in return, but after two months, both firms had gone
out of business. Four years later, the Enterprise Center still had not gained any returns on equity
investments. Equity investments are precarious and should only be considered for particular
tenants (specifically technology) that clearly show a great potential for growth. According to
Bonnie Herron, who is the executive director at Intelligent Systems Incubator in Norcross,
Georgia, even very successful companies will take four to seven years to reach a point where
equity can potentially become profitable (?Securing grant funding for your incubator?, 2004).
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Royalty agreements are more feasible for business incubators than equity investments
because they can be can be used when a tenant is only mildly successful, which is critical
considering the limitations of new businesses. Through a royalty agreement, an incubator may
take a percentage of revenue earned by the tenant. While royalties are a more reliable source of
income than equities, they still harm the tenant company‘s chances for successful growth.
Tenants of an incubator need every dollar they can acquire during their early stages of
development. It is recommended that the proposed business incubator in Worcester not rely on
equity or royalty agreements, unless income from rent and outside funding is insufficient to keep
the facility running profitably.
According to Michael Lanava, the Business Resource Manager at Worcester Chamber of
Commerce, there is potential to receive assistance from the Chamber of Commerce with
acquiring funding for the proposed incubator. The staff for the proposed incubator will need to
spend time looking for grant suppliers. For example, the Appalachian Center for Economic
Networks in Ohio requires its staff members to spend 5% of each week solely dedicated to
locating potential funding sources (?Securing grant funding for your incubator?, 2004).
During the first year of the incubator‘s operation, there will be a heavy reliance on
subsidized income. As compensation for the renovation process is eliminated, the incubator‘s
dependency on subsidies will immediately decline. During the following years, the incubator
should expect to grow as additional companies move in. The following tables show cost
projections for the first year of establishment while running at 85% capacity, which includes the
cost of renovating 30,000 square feet for the incubator site. According to NBIA professionals, on
average, only 45% of the space can be leased to the clients; the rest is common space. In this
case, the incubator is housed in a leased building that it does not own. The lease rate was
determined by averaging the labeled costs of two potential locations. The purchase of furniture
for the incubator is included in the cost of renovating.
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Table 7: Financing projections for first year, expenses
Expenditure Sources Actual Costs
Cost of Housing
Cost of renovation ($50 psf) $1,500,000.00
Cost of leasing ($14 psf) $420,000.00
Total $1,920,000.00
Salary for Staff
Executive Director $75,000.00
Operations Manager $50,000.00
Clerical Salary $32,000.00
Janitor Services $20,000.00
Total $177,000.00
Cost of Utilities (85%)
Natural Gas $7,395.00
Electricity $25,925.00
Internet Services $1,827.50
Office Supplies $2,975.00
Total $39,750.00
Total Expenses $2,135,122.50
Table 8: Financing projections for fist year, income
Income Sources (85% Capacity) Actual Income
Tenant Rent ($17 psf) $195,075.00
Subsidized Income $1,940,047.50
Rent is expected to cover estimated 10% of the total costs leading up to the first year of
operation. Prior to the third year of operation, the incubator should not consider filling its total
available space with occupants. If the building were to immediately reach full capacity, it would
cause all the tenants to graduate simultaneously. The acceptance of clients should be carefully
organized so that the graduation of tenants is evenly dispersed to maintain economic stability for
the incubator. During the initial years of operating with full occupancy, rent earnings are
expected to cover 35.6% of the incubator‘s total operational costs.
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Table 9: Full use of incubator without renovation fees, expenses
Maintenance Costs Actual Costs
Cost of Housing $420,000.00
Salary for Staff $177,000.00
Cost of Utilities (100%) $46,765.00
Total Expenses $643,765.00
Table 10: Full use of incubator without renovation fees, income
Income (100% Capacity) Actual Income
Tenant Rent ($17psf) $229500.00
Subsidized Income $414265.00
The proposed business incubator should establish a ten-year goal for itself, which would
be a realistic depiction of the facility‘s capabilities based on the success of its initial years of
operation. It is recommended that the incubator aim for a general size of 40,000-50,000 square
feet by the time it reaches the ten-year mark. The following charts show the operational costs and
revenues that would likely exist if the incubator grew to 45,000 square feet and had no increase
in staff or lease charges. Under these circumstances, the original common space would be
sufficient enough to remain the same, while rented space would grow from 13,500 square feet to
28,500 square feet.
Table 11: Financing projection for 10
th
year, costs
Maintenance Costs Actual Costs
Cost of Housing $630,000.00
Salary for Staff $177,000.00
Cost of Utilities (100%) $70,147.00
Total Expenses $877,147.00
Table 12: Financing projection for 10
th
year, income
Income Source (100% Capacity) Actual Income
Tenant Rent ($17psf) $484,500.00
Subsidized Income $392,647.00
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After 10 years, the incubator will obtain a 55.2% stake in its revenues through rented
space to its clients while its need for grants would be reduced to 44.8%. The results show the
increase in the incubator‘s financial stability as it reaches 10 years of operation. This cost
analysis demonstrates three potential stages of the proposed incubator in which it continues to
gain financial independence. While the incubator will heavily depend on subsidized income for
the preliminary stages of its founding, by the tenth years it should be in a position where the rent
to subsidy ratio is well within the recommended assessment of 40-60%. The proposed incubator
could have even greater financial success if the lease fee of $14 per square foot was lowered to a
more affordable rate. If the incubator were to own the building, it would cost more to take
ownership in the building initially, but eliminate the expenses of leasing space in the long run.
Therefore, it is recommended that the incubator should purchase its own site, if funding can
allow it.
5.4 Running the Incubator
Depending on the mission of the incubator and the needs of its clients, there are different
practices that incubators could follow. The following recommendations address how the
proposed incubator should operate in order to best serve its purpose.
5.4.1 Client Selection
According to directors of the other incubators, such as Kevin O‘Sullivan at MBI, the
proposed incubator needs to be careful in screening prospective clients. The clients must have a
valid and feasible business plan and be able to afford the cost of rent in the incubator.
Entrepreneurs also need to be willing to interact positively with other tenants and share their
business‘s status and financial information with their advisors, because the latter are one of the
most valuable features that incubators can offer, as shown by the Enterprise Center and
Springfield Business Incubator. The city or the incubator director must also decide how many
anchor tenants will be allowed in the incubator. We recommend that the number be kept to a
minimum, to allow more space for starting businesses; however, anchor tenants provide stable
income, therefore the number should depend on financial stability of the incubator.
5.4.2 Staffing
Incubators that we have studied operate with a relatively small number of staff, especially
at the launch of the program. Depending on what the city of Worcester chooses to do, the
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incubator may have different staff needs. Regardless of the program, it will most certainly need a
director, who will lead the incubator and manage it. This position demands good organizational
skills, experience with business and financing, desire to work with and help new businesses, and
a proper understanding and dedication to the incubator‘s mission statement. The director at
Salem‘s Enterprise Center was paid approximately $77,000 from July 2007 to June 2008. The
next important position is the operations manager. The operations manager controls interactions
that take place inside the incubator, and works closely with the tenant companies. Similarly to
the director, this position requires good organizational skills and a passion for helping the client
companies grow. At the Enterprise Center, the operations manager was paid approximately
$53,000 from July 2007 to June 2008. Other job positions in the incubator can include a
receptionist, facilities manager, safety manager, accountant, or others depending on the actual
setup of the incubator. Since an incubator keeps its costs low by not having more staff than it
needs, if an employee is not needed full-time, such as an accountant, they should only be
employed on a part-time basis.
5.4.3 Board of Directors
Another consideration is the incubator‘s board of directors. Springfield Incubator‘s board
is an example of an excellent board: the board members come from a variety of backgrounds,
such as lawyers, accountants, businessmen and other people with expertise in small business
help. This ensures that the incubator has a wealth of necessary knowledge guiding it. Similarly to
Springfield, we recommend that the incubator assigns four or five board members as advisors to
each client company. They discuss the issues the young business is facing, offer advice and help,
and set milestones for the business to accomplish. The board members need not be paid, but they
should be rewarded and recognized for their time and effort, possibly through a ?hall of fame,?
appreciation dinners, newspaper articles and other means of acknowledgement. According to
Gail Carberry, the size of the Worcester city should allow the board assembling process to be
relatively easy, since many professionals have networks with other people in their fields, so the
word about the program will spread quickly. Since being an advisor is a rewarding job, where
people can see the results of their effort, the program is expected to generate interest among
professionals.
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5.4.4 Services and Advising
It is vital that the incubator provides valuable services to its clients. This is what
differentiates an incubator from an ordinary building with available office space and justifies a
higher rent rate than normal market rates. We recommend that the incubator provide shared
resources, including copy machines, fax machines, computer technology and a receptionist. This
saves the client companies money by allowing them to split the costs of these resources. The
incubator should also provide access to business and other forms of assistance by linking clients
to other organizations, which could be housed in the incubator or at an outside location.
The most important service the incubator can provide to its clients, however, is the
opportunity to interact with others and share ideas. One topic that continually came up in our
interviews was that new entrepreneurs greatly benefit from the advice of knowledgeable
professionals and from sharing experiences with other new business owners. From our
interviews, we found that there are two very good ways to provide this. One is through regular
meetings with a team of experienced advisors, as mentioned in the section above. The other way
for business owners to gather knowledge is by interacting with each other. The Enterprise Center
in Salem hosts regular events where their tenant businesses are grouped together according to
how long they have been running. The business owners share experiences with one another and
offer help. Enterprise Center also has an open door policy, where the business owners are
encouraged to come to each other‘s offices if they have questions or need help. Giving the
business owners the chance to work together with professionals and other entrepreneurs provides
invaluable knowledge and can be a positive experience. Being a business owner can be lonely,
according to the entrepreneurs we interviewed and Deb King, and it is a relief to relate with
similar people. We recommend that the incubator provide the opportunities for these types of
interactions.
5.4.6 Student Involvement
We found that college students are eager to gain real world experience, and would
appreciate the chance to work in the incubator. There are several advisable ways to involve
students in the proposed incubator. One of the ways is to have a student entrepreneurship
program similar to the Springfield Business Incubator‘s Entrepreneurial program. Students from
any of the Worcester colleges could rent out space set aside for them at a special subsidized rate,
where they could operate their own business and receive assistance from the incubator. The
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program should encourage learning experience, regardless of success or failure. Jean McLean
said that Quinsigamond Community College expressed a very strong interest in renting out space
for a student business program or classroom space, so involving colleges is a very viable
possibility. Another way to involve them is through projects and internships. The incubator can
make arrangements with colleges so that students can intern at the incubator‘s client businesses
or do projects to help the businesses. This interaction with real companies is very attractive to
students, as the business students at Assumption College indicated. Business plan competitions
for students can also be a valid way to involve them.
5.5 How to Advertise
According to most of our interviewees, marketing any kind of business is very costly, but
it is also very important for gaining clients. One of the best advertising practices we have
discovered in our interviews is hiring a marketing consultant to plan out advertising for the
business. However, it is also one of the most costly solutions. A good alternative, as all
interviewees agreed, is becoming well involved in the community; it is a great way to spread
knowledge about the incubator. It could be done through programs, such as festivals similar to
the concept of the ?Water Fire? festivals at Providence Rhode Island, as mentioned by Catherine
Wilcox-Titus, an assistant professor of art history at Worcester State College (WSC). The
incubator could include lecture series on business-related themes, marketing, or legal issues and
permits. These lecture series could be performed by business professionals from corporations or
older businesses, discussing what kinds of services they consulted when they first began as
entrepreneurs.
Advertising through banks is another valid option, because many entrepreneurs will apply
for loans through banks when they are starting their business. This is one of the marketing
strategies used by the Springfield Business Incubator to attract clients. It is essential that an
incubator have a good reputation, in order to acquire support network groups. A great asset that
both the Springfield incubator and the Salem Enterprise Center have is business assistance
organizations such as the SBDC, SCORE and others. If the city can relocate one of these
organizations into the incubator, many people from the community will become aware of the
resources and benefits the incubator has to offer.
A great way to attract student entrepreneurs is by advertising to the colleges, not just
local ones but perhaps also in the surrounding areas. Another way to advertise is through the
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alumni groups and the entrepreneurial programs at the different colleges. Eitan Gilnert, the
founder of Fire Hose Games, who just started his company less than five months ago, said that if
we were trying to recruit his company as a client we ?would have had to go through the alumni
association of MIT.? Advertising through known organizations, such as colleges, entrepreneurs,
banks and investors is a great way to promote the incubator even more without spending a
fortune on advertising.
5.6 Future Impact and Conclusion
From this point on, the city of Worcester will decide how to proceed with this project.
They will need to decide exactly what form of structure they want the incubator to have and
devise a mission statement for it. The city will then need to gather funding and support and select
a location for the facility. We have provided them with our recommendations, so now they must
choose exactly what they want the incubator to be and implement it.
Worcester has both a large student population and artistic community, and many very
helpful business resources, but it needs a central hub that would connect those groups. An
incubator can be that hub; it can serve as a catalyst for social networking and a place for social
interaction. It will also benefit the economy of Worcester, even in difficult economic times.
According to the Small Business Administration, only 40% of businesses startups still exist after
six years. For Springfield Business Incubator graduates that number is 94%. An incubator can
provide the structure where many clients can cooperate and build supportive networks;
entrepreneurs can also share resources and work with advisors that they might not be able to
afford otherwise. In doing so, the companies thrive. And so does the local economy.
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81
Appendix A: List of Interviewees
These interviews all took place between Nov. 1, 2008 and Dec. 17, 2008 with the exception of
one interview conducted September 30, 2008.
Business Owners
Interviewee Date Position/Affiliation What we learned from
the interview
Ajemian, Andrea November 21 Video entrepreneur and
owner of Artigo/Ajemian
Films
Film industry
entrepreneurship, and
financing
Cavanagh, Bill November 24 Owner of CC Lowell Creative businesses,
and advertisement
Gilnert, Eitan December 7 Founder of Fire Hose
Games
Video games industry
Rothschild, Steve November 21 Owner of Bulbs.com Entrepreneurship in
Worcester
Rotman, Jamie November 20 Founder of
DesignCenters.com
Entrepreneurship in
Worcester
Vo, Tuan November 25 Compex Software
owner/founder
Entrepreneurship and
owning a business
Business Assistance Organizations
Interviewee Date Position/Affiliation What we learned from
the interview
Holbrook, Michael November 12
Small Business
Development Center in
Clark University
The involvement of
SBDC with proposed
incubator, and its
current assistance
towards entrepreneurs
Johnson, Carrie November 19 Director of the Center for
Women and Enterprise
What CWE does in the
city and possible
interactions with the
incubator
Patten, Joe December 3
December 9
Chairman of SCORE Possible roles for
SCORE in an incubator,
and business practices
Rossiter, Scott December 9 Member of SCORE Possible roles for
SCORE in an incubator,
and business practices
82
Creative Industry Organizations
Interviewee Date Position/Affiliation What we learned from
the interview
Ardizzone, Rich November 19 Joy of Music Non-profit music
organization
Dunlap, Ellen September 30 American Antiquarian
Society and Worcester
Cultural Coalition
Cultural organizations
in Worcester
Gagne, Kathleen November 14 Mechanics Hall Music industry in
Worcester
Hovenesian, Stasia November 19 Music Worcester, Inc. Music organization
Patrick, Meghan November 21 Hanover Theatre
Production Manager
The music industry in
Worcester
Schupbach, Jason November 26
Boston
Creative Economy
Industry Director at
Massachusetts
Department of Business
Development
For-profit creative
industries
Walzer, Barbara November 11 Executive Director of
Worcester Center for
Crafts
Artistic organizations in
Worcester
College Professors
Interviewee Date Position/Affiliation What we learned from
the interview
Banks, Macrae November 11 Professor of
Management at WPI
College student
Entrepreneurship
Buswick, Ted November 11
Visiting Faculty MBA
for Clark University
References of people
involved in creative
industries
Gendron, George November 12
Founder/Director of
Innovation and
Entrepreneurship
Program at Clark
University
Learned how students
could get involved, and
how other cities are
revitalizing
Harvey, Carol November 19 Assumption College
business professor
College student
entrepreneurship
Hunter, Jeff November 19 Assumption College
business professor
College student
entrepreneurship
McLean, Jean November 24 Head of business
program at
Quinsigamond
Possible ways to
involve students in an
incubator
83
Community College
Taylor, Steve November 19 Associate Professor of
Management at WPI
Artist who gave us
comments on the
building‘s exterior
aspect
Wilcox-Titus,
Catherine
November 5 Assistant Professor of
Art History at WSC
Artistic organizations
and events in Worcester
and college art students
Ziegler, Joanna November 13 Professor and Chair of
visual arts at The College
of Holy Cross
View of college student
involvement, and
comparison of
Providence, RI
Focus Groups
Interviewee Date Position/Affiliation What we learned from
the interview
Various Artists at
ArtSpeak
November 20 Event hosted at CC
Lowell
Small focus group with
artists
Carol Harvey‘s
Students
November 19 Small Business and
Entrepreneurship Class
Possible ways to
involve students in an
incubator
Jeff Hunter‘s Students November 20 Marketing Management
Class
Possible ways to
involve students in an
incubator
Incubator Professionals
Interviewee Date Position/Affiliation What we learned from
the interview
Carberry, Gail December 11 President of
Quinsigamond
Community College and
helped start the
Springfield Business
Incubator
How she helped gather
resources and set up
SBI
Julien, Catherine November 18 Operations Manager at
Enterprise Center in
Salem
How Enterprise Center
began and how it
operates
King, Deborah December 8 Director of Springfield
Business Incubator
How SBI began and
how it operates
O‘Sullivan, Kevin November12 President of How MBI began and
84
Massachusetts
Biomedical Initiatives at
Gateway Park
how it operates
Sabato, Diane December 8 Director of
Entrepreneurship
Institute and the Student
Business Incubator at the
Springfield Business
Incubator
Student involvement in
SBI‘s Student Incubator
Program
Other Professionals
Interviewee Date Position/Affiliation What we learned from
the interview
Becker, Beate December 2 Independent consultant
specializing in cultural
economic development
Conducted a
symposium on design
incubators
Bilotta, Mark November 19 CEO of consortium and
one of our sponsors
How to talk with
college business
professors and convince
them to support the
incubator
Crane, Stephen December 25 Special Projects
Coordinator
City of Worcester
Economic Development
Division
Memorial Auditorium
tour
Drew, Christine December 2 WPI Librarian How to calculate
statistics on creative
industries in Worcester
Forsberg, David November 10 President of Worcester
Business Development
Center
WBDC‘s involvement
in Gateway Park Project
Hall, Erika S. October 31 Real estate agent Potential incubator
locations
Holstrom, Julie November 10 WBDC Project Manager Entrepreneurship in
Worcester
Lanava, Michael S. December 17 Business Resource
Manager, Worcester
Regional Chamber of
Commerce
Possible funding and
statistical data on small
businesses in Worcester
Long, Geoffrey December 4 Communications
Director at MIT
GAMBIT labs
Video games industry
85
Morano, Paul D. Jr. December 12 Director of Business
Assistance, Economic
Development Division
Potential incubator
locations
Trifero, Richard December 10 Construction Manager
for the city of Worcester
CitySquare project
information
Wade, Wyatt November 21 Printers Building Owner
and President of Davis
Publications
Artistic businesses and
the Printer‘s Building
Weaver, Jon November 10 WBDC Project Manager Entrepreneurship in
Worcester
Individual Students
Interviewee Date Position/Affiliation What we learned from
the interview
Hopkins, Sarah November 20 Student at Holy Cross Business plan for a
company that would
sell affordable building
materials
Kassenbaum, Paul November 21 WPI Grad Student and
founder of Genius!
Student
entrepreneurship
Kimberley, Ian December 13 Student at Worcester
State
Works in Worcester for
Irish Times, perspective
of downtown at night
86
Appendix B: Business Closing Hours in Downtown Worcester
Times taken from businesses that displayed working hours as of 12/13/08
Businesses located on Main St, Front St, and Franklin St
Businesses Sunday Monday Tuesday Wednes. Thursday Friday Saturday
Armsby Abbey unknown unknown unknown unknown 2:00am 2:00am 2:00am
A's Barber Shop closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm 6:00pm
Bank of America closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Bay State Savings
Bank
closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm closed
Beauty Supply closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm
Commerce Bank closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm closed
CVS 6:00pm 7:00pm 7:00pm 7:00pm 7:00pm 7:00pm 6:00pm
Dunkin Donuts 5:30pm 7:00pm 7:00pm 7:00pm 7:00pm 7:00pm 6:00pm
Elwood Adams
Hardware
closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm closed
EverGreens closed 7:00pm 7:00pm 7:00pm 7:00pm 7:00pm closed
Fashion Express closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 5:30pm
FedEx Kinkos closed 7:30pm 7:30pm 7:30pm 7:30pm 7:30pm 3:00pm
Flagship Bank closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Garden Fresh
Courthouse Café
closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm 2:00pm
Honey Dew Donuts 6:00pm 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm 6:00pm
House of Men's Hair
Styling
closed closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm
Irish Times unknown unknown unknown unknown 2:00am 2:00am 2:00am
Java Joe's closed 3:00pm 3:00pm 3:00pm 3:00pm 3:00pm closed
Little Kitchen closed 4:30pm 4:30pm 4:30pm 4:30pm 4:30pm closed
Main Beauty
Supplies
closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm
Markos Jewelers closed closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm
Neighborhood Café closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm closed
New York Jewelers closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Owl Shop closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm
Plastic Energy 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm
Red Baron unknown unknown unknown unknown 2:00am 2:00am 2:00am
Shavarsh 4:00pm 4:00pm 6:00pm 7:00pm 6:00pm 6:00pm 4:00pm
Spoodles Deli closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm 3:00pm
Star Nails closed 6:30pm 6:30pm 6:30pm 6:30pm 6:30pm 6:00pm
State Opticians closed 5:00pm 5:00pm 7:00pm 5:00pm 5:00pm 2:00pm
Super Variety closed 5:30pm 5:30pm 5:30pm 5:30pm 5:30pm 5:00pm
87
Sylvia's 5:00pm 5:30pm 5:30pm 5:30pm 5:30pm 5:30pm 5:30pm
TD Bank North closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm 12:00pm
The Hooka Hot Spot 12:00am 12:00am 12:00am 12:00am 2:00am 2:00am 4:00am
The Money Stop closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 5:00pm
The News Room
Hallmark
closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm unknown
Worcester Credit
Union
closed 4:30pm 4:30pm 4:30pm 4:30pm 4:30pm closed
Worcester Family
Dental
closed 7:30pm 7:30pm 7:30pm 7:30pm 7:30pm 3:00pm
Worcester Family
Eyecare
closed closed 2:00pm 4:30pm 4:30pm 4:30pm unknown
WRTA closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Z Café closed 3:00pm 3:00pm 3:00pm 3:00pm 3:00pm closed
88
Appendix C: Salem Enterprise Center Income and Expenses
Results taken from July 2007 – June 2008
Jul '07 - Jun 08
Ordinary Income/Expense
Income
DBT Grant Income 7,998.98
Rental Income
Rent - Building 3 498,395.55
Total Rental Income 498,395.55
Other Income
2008 Mott Grant 10,710.00
Other Income 6,500.00
Other Income 2008 150.00
Business Seminars 4,027.84
CEO Groups 10,725.00
Sponsorships 2008 35,500.00
Conference Room Income 5,619.24
AV Equipment Rental 25.00
Electricity Charges 26,099.94
Natural Gas Charges 3,693.10
Interest & Dividend Income 4,131.27
Other Income - Other 40,030.00
Total Other Income 147,211.39
Total Income 653,605.92
Gross Profit 653,605.92
Expense
66900 · Reconciliation Discrepancies 1.00
DBT Grant Expense 8,173.98
Miscellaneous 500.00
Administrative
Bank charges & merchant fees 326.27
Catering Services 6,485.77
Conferences & Training 1,036.00
Dues & Subscriptions 4,717.00
Comp & Equip repairs & mtce. 11,442.37
Internet Services 3,825.27
Mileage 747.71
Office Supplies and Expenses 6,166.76
Software 1,455.59
Telephone 1,016.44
Travel & Expenses 894.03
89
Total Administrative 38,113.21
Bad Debt Expense 6,484.94
Interest/Taxes/Contributions
Mortgage Interest 20,010.78
Mortgage Interest - Buildout 52,134.20
Late charges 51.07
Contributions 150.00
Real Estate Taxes 237.12
Total Interest/Taxes/Contributions 72,583.17
Facility Expenses
Insurance 268.05
Building Improvements 4,037.27
Building Supplies 4,023.42
Electricity 51,120.08
Janitorial Services 20,341.34
Natural Gas 26,890.55
Repairs and Maintenance 18,910.17
Security Services 3,563.68
Tenant Fit Up 4,479.77
Trash Collection 4,165.85
Total Facility Expenses 137,800.18
6560 · Payroll Expenses
Assisant Director 5,230.80
Contract/Temp Labor 3,470.00
Operations Manager 53,192.99
Clerical Salary 31,938.90
Ex. Director Salary 77,489.91
Maintenance Salary 23,581.64
Intern 1,950.00
Employee Benefits 21,613.82
Outsourced Human Resources 10,449.74
Insurance - Workers Comp 1,799.82
Payroll taxes 13,993.23
Total 6560 · Payroll Expenses 244,710.85
Professional Services
Architect Fees 975.00
Audit Costs 5,375.75
Bookkeeping Costs 4,940.00
Legal Costs 1,387.50
Total Professional Services 12,678.25
Programs
2008 BPC expense 14,237.00
90
Chamber Flyer insert or labels 1,409.00
Advertising 270.72
Contract facilitators/speakers 5,800.00
Design Costs 10,327.00
List purchases 2,233.90
Mailing House Costs 1,643.00
Postage,Shipping & Delivery 21,476.60
Printing 11,483.76
Total Programs 68,880.98
Total Expense 589,926.56
Net Ordinary Income 63,679.36
Other Income/Expense
Other Expense
Depreciation Expense 137,400.00
Total Other Expense 137,400.00
Net Other Income -137,400.00
Net
Income
-73,720.64
91
Appendix D: List of Possible Locations
As of December 12, 2008.
92
93
94
95
Appendix E: Number of Creative Industries in Worcester in 2006
Data taken fromhttp://www.census.gov/epcd/cbp/download/06_data/index.html
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
Core Cultural Industries
Group 1 Cultural Goods Production
323110 Commercial Lithographic Printing
01603 2 0 1 0 0 1 0 0 0 0
01604 3 1 1 0 0 0 1 0 0 0
01605 3 2 0 0 1 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
Subtotal 10 4 3 0 1 1 1 0 0 0
323111 Commercial Gravure Printing
323112 Commercial Flexographic Printing
323113 Commercial Screen Printing
01603 1 0 0 0 1 0 0 0 0 0
01605 1 0 1 0 0 0 0 0 0 0
01610 1 0 0 1 0 0 0 0 0 0
Subtotal 3 0 1 1 1 0 0 0 0 0
323115 Digital Printing
01608 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
323117 Books Printing
323119 Other Commercial Printing
01604 1 0 1 0 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 3 2 1 0 0 0 0 0 0 0
323121 Tradebinding and Related Work
323122 Prepress Services
01604 1 0 0 0 1 0 0 0 0 0
01606 2 1 1 0 0 0 0 0 0 0
Subtotal 3 1 1 0 1 0 0 0 0 0
325992 Photographic Film, Paper, Plate, and Chemical Manufacturing
327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing
01602 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
327212 Other Pressed and Blown Glass and Glassware Manufacturing
01604 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
332323 Ornamental and Architectural Metal Work Manufacturing
333293 Printing Machinery and Equipment Manufacturing
334310 Audio and Video Equipment Manufacturing
334612 Prerecorded Compact Disc (except Software), Tape, and Record Reproducing
337212 Custom Architectural Woodwork and Millwork Manufacturing
01604 2 1 0 1 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01607 1 0 0 0 1 0 0 0 0 0
Subtotal 4 1 1 1 1 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
96
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
339911 Jewelry (except Costume) Manufacturing
01604 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
339912 Silverware and Hollowware Manufacturing
339913 Jewelers‘ Material and Lapidary Work Manufacturing
339914 Costume Jewelry and Novelty Manufacturing
339942 Lead Pencil and Art Good Manufacturing
339992 Musical Instrument Manufacturing
Group Total 27 11 7 3 4 1 1 0 0 0
Group 2 Cultural Goods Distribution
423410 Photographic Equipment and Supplies Merchant Wholesalers
423940 Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
424110 Printing and Writing Paper Merchant Wholesalers
01606 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
424920 Book, Periodical, and Newspaper Merchant Wholesalers
01605 1 1 0 0 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01607 1 0 0 0 0 0 0 1 0 0
Subtotal 3 1 1 0 0 0 0 1 0 0
443112 Radio, Television, and Other Electronics Stores
01603 2 1 0 1 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01606 5 1 2 1 0 0 1 0 0 0
01608 2 2 0 0 0 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
01610 3 2 1 0 0 0 0 0 0 0
Subtotal 15 7 4 3 0 0 1 0 0 0
443130 Camera and Photographic Supplies Stores
01606 1 0 1 0 0 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
Subtotal 2 0 2 0 0 0 0 0 0 0
448310 Jewelry Stores
01603 1 1 0 0 0 0 0 0 0 0
01604 2 2 0 0 0 0 0 0 0 0
01606 5 1 2 2 0 0 0 0 0 0
01608 5 4 0 1 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 14 9 2 3 0 0 0 0 0 0
451130 Sewing, Needlework, and Piece Goods Stores
01605 1 0 0 0 1 0 0 0 0 0
Subtotal 1 0 0 0 1 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
97
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
451140 Musical Instrument and Supplies Stores
01605 1 0 1 0 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01608 1 0 0 1 0 0 0 0 0 0
Subtotal 3 0 2 1 0 0 0 0 0 0
451211 Book Stores
01602 2 0 1 1 0 0 0 0 0 0
01605 2 1 0 0 1 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01609 2 1 0 1 0 0 0 0 0 0
01610 1 0 0 1 0 0 0 0 0 0
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 9 3 2 3 1 0 0 0 0 0
451220 Prerecorded Tape, Compact Disc, and Record Stores
01603 1 0 1 0 0 0 0 0 0 0
01604 1 1 0 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
01609 2 2 0 0 0 0 0 0 0 0
01610 1 0 1 0 0 0 0 0 0 0
Subtotal 6 3 2 0 1 0 0 0 0 0
453920 Art Dealers
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
712110 Museums
01604 1 0 0 0 0 1 0 0 0 0
01606 1 0 0 0 1 0 0 0 0 0
01609 3 1 0 1 0 0 1 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 6 2 0 1 1 1 1 0 0 0
812921 Photofinishing Laboratories (except One-Hour)
01602 1 1 0 0 0 0 0 0 0 0
01603 2 2 0 0 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 4 0 1 0 0 0 0 0 0
812922 One-Hour Photofinishing
01602 1 1 0 0 0 0 0 0 0 0
01606 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
Group Total 69 33 15 13 4 1 2 1 0 0
Group 3 Intellectual Property Production & Distribution
511110 Newspaper Publishers
01604 1 0 0 0 0 1 0 0 0 0
01605 1 0 0 1 0 0 0 0 0 0
01608 1 0 0 0 0 0 0 0 1 0
Subtotal 3 0 0 1 0 1 0 0 1 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
98
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
511120 Periodical Publishers
01602 1 1 0 0 0 0 0 0 0 0
01604 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
511130 Book Publishers
01608 1 0 0 0 1 0 0 0 0 0
01609 1 0 0 0 1 0 0 0 0 0
Subtotal 2 0 0 0 2 0 0 0 0 0
511191 Greeting Card Publishers
511199 All Other Publishers
512110 Motion Picture and Video Production
01606 1 1 0 0 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
01609 1 0 0 1 0 0 0 0 0 0
Subtotal 3 2 0 1 0 0 0 0 0 0
512120 Motion Picture and Video Distribution
512131 Motion Picture Theaters (except Drive-Ins)
01606 1 0 0 0 0 1 0 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 2 1 0 0 0 1 0 0 0 0
512132 Drive-In Motion Picture Theaters
512191 Teleproduction and Other Postproduction Services
01606 1 0 1 0 0 0 0 0 0 0
Subtotal 1 0 1 0 0 0 0 0 0 0
512199 Other Motion Picture and Video Industries
512210 Record Production
512220 Integrated Record Production/Distribution
512230 Music Publishers
512240 Sound Recording Studios
512290 Other Sound Recording Industries
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
515111 Radio Networks
515112 Radio Stations
01603 1 0 1 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
01612 4 2 0 1 1 0 0 0 0 0
Subtotal 8 3 2 1 2 0 0 0 0 0
515120 Television Broadcasting
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
515210 Cable and Other Subscription Programming
516110 Internet Publishing and Broadcasting
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
99
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
517510 Cable and Other Program Distribution
01605 1 0 0 1 0 0 0 0 0 0
01606 3 2 0 0 0 0 1 0 0 0
01607 1 0 0 0 1 0 0 0 0 0
Subtotal 5 2 0 1 1 0 1 0 0 0
519110 News Syndicates
519120 Libraries and Archives
01609 1 0 0 0 0 1 0 0 0 0
Subtotal 1 0 0 0 0 1 0 0 0 0
532230 Video Tape and Disc Rental
01602 1 0 1 0 0 0 0 0 0 0
01603 2 0 0 2 0 0 0 0 0 0
01604 1 0 1 0 0 0 0 0 0 0
01605 1 0 0 1 0 0 0 0 0 0
01610 1 0 1 0 0 0 0 0 0 0
Subtotal 6 0 3 3 0 0 0 0 0 0
541310 Architectural Services
01603 1 1 0 0 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01605 1 0 1 0 0 0 0 0 0 0
01608 4 3 1 0 0 0 0 0 0 0
01609 2 1 0 1 0 0 0 0 0 0
Subtotal 9 5 2 2 0 0 0 0 0 0
541320 Landscape Architectural Services
541340 Drafting Services
01606 1 1 0 0 0 0 0 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
541410 Interior Design Services
01605 1 1 0 0 0 0 0 0 0 0
01607 1 0 1 0 0 0 0 0 0 0
01611 1 0 0 1 0 0 0 0 0 0
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 4 2 1 1 0 0 0 0 0 0
541420 Industrial Design Services
01603 2 0 2 0 0 0 0 0 0 0
01606 1 0 0 1 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 4 1 2 1 0 0 0 0 0 0
541430 Graphic Design Services
01602 1 1 0 0 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01606 2 2 0 0 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 5 0 0 0 0 0 0 0 0
541490 Other Specialized Design Services
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
100
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
541810 Advertising Agencies
01603 1 0 1 0 0 0 0 0 0 0
01605 2 1 0 1 0 0 0 0 0 0
01608 2 0 0 1 1 0 0 0 0 0
Subtotal 5 1 1 2 1 0 0 0 0 0
541830 Media Buying Agencies
541840 Media Representatives
01603 1 1 0 0 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
541850 Display Advertising
541921 Photography Studios, Portrait
01603 1 1 0 0 0 0 0 0 0 0
01605 2 0 1 1 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
Subtotal 5 2 2 1 0 0 0 0 0 0
541922 Commercial Photography
01605 1 1 0 0 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
611610 Fine Arts Schools
01602 1 0 0 0 1 0 0 0 0 0
01603 1 0 0 1 0 0 0 0 0 0
01604 2 0 1 1 0 0 0 0 0 0
01605 2 0 0 0 1 1 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
01610 3 2 0 1 0 0 0 0 0 0
Subtotal 10 3 1 3 2 1 0 0 0 0
711110 Theater Companies and Dinner Theaters
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
711120 Dance Companies
01614 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
711130 Musical Groups and Artists
01602 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
711190 Other Performing Arts Companies
711510 Independent Artists, Writers, and Performers
01602 1 1 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01608 2 2 0 0 0 0 0 0 0 0
01612 1 0 0 1 0 0 0 0 0 0
Subtotal 5 4 0 1 0 0 0 0 0 0
712120 Historical Sites
712130 Zoos and Botanical Gardens
712190 Nature Parks and Other Similar Institutions
Group Total 91 44 15 18 8 4 1 0 1 0
Core Industry Total 187 88 37 34 16 6 4 1 1 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
101
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
Peripheral Industries
Group 1 Cultural Goods Production
323114 Quick Printing
01602 2 2 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01604 2 1 1 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
Subtotal 6 4 1 0 1 0 0 0 0 0
325910 Printing Ink Manufacturing
01610 1 0 1 0 0 0 0 0 0 0
Subtotal 1 0 1 0 0 0 0 0 0 0
327215 Glass Product Manufacturing Made of Purchased Glass
01604 1 0 0 0 1 0 0 0 0 0
Subtotal 1 0 0 0 1 0 0 0 0 0
327420 Gypsum Product Manufacturing
327991 Cut Stone and Stone Product Manufacturing
01605 1 0 1 0 0 0 0 0 0 0
Subtotal 1 0 1 0 0 0 0 0 0 0
327999 All Other Miscellaneous Nonmetallic Mineral Product Manufacturing
333315 Photographic and Photocopying Equipment Manufacturing
334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing
01604 1 0 0 0 0 0 0 1 0 0
Subtotal 1 0 0 0 0 0 0 1 0 0
334613 Magnetic and Optical Recording Media Manufacturing
336612 Boat Building
Group Total 10 4 3 0 2 0 0 1 0 0
Group 2 Cultural Goods Distribution
423620 Electrical and Electronic Appliance, Television, and Radio Set Merchant Wholesalers
423920 Toy and Hobby Goods and Supplies Merchant Wholesalers
424990 Other Miscellaneous Nondurable Goods Merchant Wholesalers
01602 1 1 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 3 1 1 0 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
102
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
451120 Hobby, Toy, and Game Stores
01602 1 1 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01604 1 0 1 0 0 0 0 0 0 0
01605 1 0 0 0 1 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 3 1 0 1 0 0 0 0 0
451212 News Dealers and Newsstands
01608 2 2 0 0 0 0 0 0 0 0
01609 1 0 0 1 0 0 0 0 0 0
Subtotal 3 2 0 1 0 0 0 0 0 0
453220 Gift, Novelty, and Souvenir Stores
01602 1 1 0 0 0 0 0 0 0 0
01603 1 0 0 1 0 0 0 0 0 0
01604 1 1 0 0 0 0 0 0 0 0
01605 1 0 1 0 0 0 0 0 0 0
01606 2 2 0 0 0 0 0 0 0 0
01608 3 3 0 0 0 0 0 0 0 0
01614 1 1 0 0 0 0 0 0 0 0
01655 1 0 0 1 0 0 0 0 0 0
Subtotal 11 8 1 2 0 0 0 0 0 0
453998 All Other Miscellaneous Store Retailers (except Tobacco Stores)
01601 1 0 1 0 0 0 0 0 0 0
01602 2 2 0 0 0 0 0 0 0 0
01603 2 1 1 0 0 0 0 0 0 0
01604 4 3 1 0 0 0 0 0 0 0
01605 2 2 0 0 0 0 0 0 0 0
01608 2 0 1 1 0 0 0 0 0 0
01609 4 2 2 0 0 0 0 0 0 0
01612 1 0 1 0 0 0 0 0 0 0
Subtotal 18 10 7 1 0 0 0 0 0 0
Group Total 42 26 10 5 1 0 0 0 0 0
Group 3 Intellectual Property Production & Distribution
511210 Software Publishers
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
532220 Formal Wear and Costume Rental
01609 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
532299 All Other Consumer Goods Rental
01605 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
103
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
541820 Public Relations Agencies
541860 Direct Mail Advertising
01603 1 1 0 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
Subtotal 2 1 0 0 1 0 0 0 0 0
541890 Other Services Related to Advertising
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
611519 Other Technical and Trade Schools
01604 1 0 0 1 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01609 1 0 0 0 0 0 0 0 0 1
Subtotal 3 1 0 1 0 0 0 0 0 1
711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities
01608 3 0 1 0 1 0 0 1 0 0
Subtotal 3 0 1 0 1 0 0 1 0 0
711320 Promoters of Performing Arts, Sports, and Similar Events without Facilities
01603 1 1 0 0 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
711410 Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures
Group Total 14 6 1 3 2 0 0 1 0 1
Peripheral Total 66 36 14 8 5 0 0 2 0 1
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
doc_712703222.pdf
Within this particular detailed description relating to what the needs of entrepreneurs and business.
Project Number: ES1-WPC4
Recommendations for a Creative Business Incubator
for the City of Worcester
An Interactive Qualifying Project Report
submitted to the Faculty
of the
WORCESTER POLYTECHNIC INSTITUTE
in partial fulfillment of the requirements for the
Degree of Bachelor of Science
by
____________________
Nicholas Holovnia
____________________
Yekaterina Moran
____________________
Kirk Lanciani
____________________
Mardelle Rosales
Date: December 18, 2008
_______________________________
Professor Eunmi Shim, Advisor
_______________________________
Professor Ingrid Shockey, Co-Advisor
_______________________________
Professor Robert Krueger, Co-Advisor
i
Abstract
The City of Worcester asked us to perform a feasibility study for a new business
incubator. Through interviews we have identified the major target groups for the incubator, small
businesses and creative industries, and assessed their needs. Through literature research and
visits to existing incubators we collected information about important incubator‘s practices,
building characteristics and funding strategies. Our recommendations also include working and
learning opportunities that students will have in the incubator.
ii
Authorship
The entire report was written and edited by all members of the group. Each member
wrote individual sections and then edited and made additions to the other members‘ sections.
Some interviews were conducted with all four team members, while others were conducted by
only two at a time. All team members participated in the visits to the existing incubators.
iii
Acknowledgements
We would like to thank everyone who helped with this project. We are thankful to
Professor Shim, Professor Shockey, and Professor Krueger for their help and guidance
throughout this project. We want to thank our liaisons with the City of Worcester, Timothy
McGourthy, Erin Williams, and Mark Bilotta for sponsoring this project and giving us their help
and support. Lastly, we want to thank everyone we interviewed for their cooperation in this
effort.
iv
Table of Contents
Abstract ............................................................................................................................................ i
Authorship....................................................................................................................................... ii
Acknowledgements ........................................................................................................................ iii
Table of Contents ........................................................................................................................... iv
List of Figures ............................................................................................................................... vii
List of Tables ............................................................................................................................... viii
Abbreviations ................................................................................................................................. ix
Executive Summary ........................................................................................................................ x
1. Introduction ................................................................................................................................. 1
2. Background ................................................................................................................................. 3
2.1 Worcester Economy .............................................................................................................. 3
2.1.1 Creative Industries in Worcester Economy ................................................................... 8
2.1.2 Summary ...................................................................................................................... 11
2.2 Business Incubators ............................................................................................................ 11
2.2.1 National Business Incubation Association Statistics on Incubators ............................ 14
2.2.2 General History of Business Incubators ...................................................................... 23
2.2.3 Good Business Incubation Practices ............................................................................ 24
2.3 Creative Industries .............................................................................................................. 25
2.4 Immigrants in Small Businesses ......................................................................................... 26
2.5 Relationships Between Worcester Businesses and Students .............................................. 27
2.6 Case Studies ............................................................................................................................ 27
3. Methodology ............................................................................................................................. 33
3.1 Interviews ............................................................................................................................ 33
3.2 Artistic and Cultural Organizations .................................................................................... 34
3.3 Business Owners and Incubator Professionals ................................................................... 35
3.4 Worcester Area College Students ....................................................................................... 36
3.5 Building, Staff and Other Logistics .................................................................................... 36
4. Findings and Discussion ........................................................................................................... 38
v
4.1 Building Logistics ............................................................................................................... 38
4.1.1 Location and Building.................................................................................................. 38
4.1.2 Appearance .................................................................................................................. 39
4.1.3 Square Footage............................................................................................................. 39
4.1.4 Common and Working Space ...................................................................................... 40
4.1.5 Safety ........................................................................................................................... 42
4.2 Incubation Practices ............................................................................................................ 43
4.2.1 Incubator Goal and Focus ............................................................................................ 43
4.2.2 Client Selection and Graduation .................................................................................. 45
4.2.3 Staffing the Incubator .................................................................................................. 47
4.2.4 Advertising ................................................................................................................... 48
4.2.5 Shared Resources ......................................................................................................... 50
4.2.6 Immigrants ................................................................................................................... 51
4.2.7 Established Companies ................................................................................................ 51
4.2.8 IncuTrack ..................................................................................................................... 52
4.2.9 Board of Directors........................................................................................................ 53
4.2.10 Outsourcing Resources .............................................................................................. 54
4.2.11 Networking ................................................................................................................ 55
4.2.12 Tech Support .............................................................................................................. 57
4.3 Cost Analysis and Possible Funding ................................................................................... 57
4.4 Students ............................................................................................................................... 59
4.4.1 Colleges and Universities ............................................................................................ 62
4.5 Summary ............................................................................................................................. 62
5. Summary and Recommendations ............................................................................................. 63
5.1 Goals and Targeted Groups ................................................................................................ 63
5.2 Building............................................................................................................................... 63
5.3 Obtaining Support and Funding .......................................................................................... 68
5.4 Running the Incubator......................................................................................................... 73
5.4.1 Client Selection ............................................................................................................ 73
5.4.2 Staffing ......................................................................................................................... 73
5.4.3 Board of Directors........................................................................................................ 74
vi
5.4.4 Services and Advising.................................................................................................. 75
5.4.6 Student Involvement .................................................................................................... 75
5.5 How to Advertise ................................................................................................................ 76
5.6 Future Impact and Conclusion ............................................................................................ 77
References ..................................................................................................................................... 78
Appendix A: List of Interviewees ................................................................................................. 81
Appendix B: Business Closing Hours in Downtown Worcester .................................................. 86
Appendix C: Salem Enterprise Center Income and Expenses ...................................................... 88
Appendix D: List of Possible Locations ....................................................................................... 91
Appendix E: Number of Creative Industries in Worcester in 2006 .............................................. 95
vii
List of Figures
Figure Page
Figure 1: Map of Worcester City, Massachusetts 4
Figure 2: Union Station 7
Figure 3: Defining creative economy 10
Figure 4: Incubator categories, based on structure and
funding
12
Figure 5: Business Incubator Focuses 14
Figure 6: Incubation program geographic area 17
Figure 7: Incubation program sponsoring entities 18
Figure 8: Incubation program revenue by source 19
Figure 9: Incubation program expenses by source 19
Figure 10: Incubator gross square footage 21
Figure 11: Number of outside providers that regularly
assisted clients
23
Figure 12: Staircase in Torpedo Factory Art Center 29
Figure 13: Martin Luther King, Jr. Business Empowerment
Center
31
Figure 14: Targeted Incubator Groups 33
Figure 15: Operational Costs of the Incubator 37
Figure 16: Springfield Business Incubator‘s single suite 40
Figure 17: A conference room in The Enterprise Center 41
Figure 18: Computer Lab at Springfield Business Incubator 50
Figure 19: Funding Sources 58
Figure 20: Student Business Incubator 61
Figure 21: Districts of Worcester 65
Figure 22: CitySquare 67
viii
List of Tables
Table Page
Table 1: Goals of the programs 15
Table 2: Types of business assistance services offered
through incubation programs
16
Table 3: Rank order of activities according to percentage of
time incubator manager and staff spend performing them
22
Table 4: IncuTrack Payment Plans 52
Table 5: Salem Enterprise Center costs 69
Table 6: : Salem Enterprise Center income 69
Table 7: Financing projections for first year, expenses 71
Table 8: Financing projections for fist year, income 71
Table 9: Full use of incubator without renovation fees,
expenses
72
Table 10: Full use of incubator without renovation fees,
income
72
Table 11: Financing projection for 10
th
year, costs 72
Table 12: Financing projection for 10
th
year, income 72
ix
Abbreviations
Advanced Technology Development Center ATDC
Georgia Center for Advanced Telecommunications Technologies GCATT
Massachusetts Biomedical Initiatives MBI
Quinsigamond Community College QCC
Service Corps of Retired Executives SCORE
Small Business Administration SBA
Small Business Development Center SBDC
Springfield Business Incubator SBI
Worcester Business Development Center WBDC
Worcester Polytechnic Institute WPI
x
Executive Summary
One of Worcester‘s most prominent features is its collection of prestigious colleges,
universities, and institutes which provides students with great opportunities. However,
Worcester‘s populations of promising students often seek employment elsewhere after
graduation, rather than staying in the community. Worcester has made strides to better connect
the students with the city, and is ready to take another step by helping to establish and maintain a
diverse array of creative businesses. The city wishes to encourage these businesses to set up in
the downtown area in order to demonstrate its varied and rich economy and culture. To this
effect, Worcester wants to look into the possibility of establishing a business incubator in the
downtown area that could incorporate a number of groups, such as small businesses, college
students, and creative industries.
The goal of this project was to conduct a feasibility study of a new business incubator in
downtown Worcester. To accomplish this goal, our group had three main objectives. First, we
studied previous and existing business incubators that have been established in Worcester and
the New England region. Second, we assessed the requirements of Worcester‘s community to see
how the incubator could be best used to help them. Finally, we used our collected data to make
recommendations for the city on how it should create and structure the proposed incubator.
Background
A business incubator is an organization that helps startup businesses during their first
years by providing a variety of services to them. An incubator typically provides rentable space
to businesses, management and organizational training for inexperienced business owners,
positive interaction between tenant businesses, common shared resources, and other services.
Incubators are usually utilized to help to improve the economic development of a region in
general or encourage growth in a particular area or industry.
Methodology
For this project, we gathered information on a wide variety of subjects. This included
how incubators operate, how they could be used to encourage development in downtown
Worcester, what the needs of entrepreneurs and business owners in Worcester are, how to attract
people to the incubator, and how the city could most effectively establish one that would
xi
accomplish their goals. We conducted a large number of interviews with various groups in
Worcester, including representatives of artistic and cultural organizations, small business
owners, employees of organizations that assist small businesses, college business professors and
students, and staff members of existing business incubators.
Recommendations
We analyzed the information gathered from these interviews by identifying recurring
issues that were brought up. We discussed our findings and proposed the following
recommendations for the incubator:
Incubator Goal and Client Focus
The incubator should be focused on helping the growth of a diverse array of businesses in
downtown Worcester.
The incubator should focus on creative industries and small businesses for its client base.
College students are eager to gain real world experience. The incubator can involve
Worcester college students in a number of ways:
o It can establish a student business entrepreneurship program. This program should
reserve special subsidized space for students to occupy at a low rate. It should be
designed as a learning experience in which students receive help in running their
own real business.
o The incubator and its businesses can provide internship and project opportunities.
o The incubator can host student business plan competitions.
o It can rent out space to colleges for classroom use.
Location and the Building
It is important that the incubator building be visually appealing on both the inside and
outside. It should convey a feeling of professionalism and safety.
The building should be easily accessible and ideally have its own parking.
The initial facility should consist of approximately 30,000 square feet of space. There
should also be space available for growth.
xii
Purchasing an older building with historical value offers the potential for receiving tax
credits.
We have identified several properties in downtown Worcester that have the required floor
space and might be good locations for the incubator:
o 40 Southbridge St., which features both office space and street level retail space.
o 340 Main St., the Commerce Building
o 90 Front St.
Support and Funding
The incubator will receive funding in two main ways, external sources from other
organizations, and rent and fees paid by its clients.
In order to obtain an incubator site, financial support for the purchase will depend on
external donations. Recommended sources for initial subsidizing include: bank loans,
community outreach programs, corporate foundations, family foundations, aid from local
colleges and universities, angel investors, and government funds.
Over time, the incubator should strive to become less dependent on outside funding by
expanding and taking in more clients, thus gaining more income from rent fees. These
fees are a combination of the rent for the space and costs of the incubator‘s services.
It is highly recommended that the proposed incubator collaborate with many of the other
already existing business assistance organizations in Worcester, such as the Small
Business Development Center (SBDC) and Service Corps of Retired Executives
(SCORE).
Running the Incubator
The incubator only needs a small staff when it starts, which usually consists of a
director/president and a receptionist. Additional staff can be hired later on a full-time or
part-time basis as the need arises for them.
The incubator needs a board of directors with a broad range of backgrounds, such as
lawyers, accountants, and business professionals.
It needs to be selective and accept companies that have a viable chance of success.
xiii
The incubator should provide helpful services to its clients to differentiate itself from a
typical office space. It should provide technology such as copiers and internet access, as
well as connections to separate business assistance organizations for its clients.
Most importantly, the incubator should provide its clients with some form of advisory
board. Each client company should be assigned an advisory board made up of several
experienced individuals from the board of director. This advisory board should meet on a
regular basis to discuss the status of the company and set milestones for them to achieve.
The incubator should also provide plenty of opportunities for its clients to interact and
share experiences with each other. This could include hosting social dinners or regular
peer-to-peer meetings.
Advertising
It can advertise through signs, local periodicals, radio stations, banks, internet sites such
as Facebook, existing business resources that interact with entrepreneurs, and others. It
can also hire a marketing consultant to arrange an ideal marketing strategy.
A good way to advertise itself is to become involved in the Worcester community
through local organizations and by hosting community programs.
Conclusion
Worcester has both a large student population and artistic community, and many very
helpful business resources, but it needs a central hub that would connect those groups. An
incubator can be that hub; it can serve as a catalyst for social networking and a place for social
interaction. It will also benefit the economy of Worcester, even in difficult economic times.
According to the Small Business Administration, only 40% of businesses startups still exist after
six years. For Springfield Business Incubator graduates that number is 94%. An incubator can
provide the structure where many clients can cooperate and build supportive networks;
entrepreneurs can also share resources and work with advisors that they might not be able to
afford otherwise. In doing so, the companies thrive. And so does the local economy.
1
1. Introduction
Establishing and maintaining a diverse array of creative businesses in a city gives it both
a rich economy and culture. The City of Worcester‘s officials want to encourage various
businesses to set up in the downtown area to advance its revitalization efforts. Starting a new
business can be an exciting endeavor. New entrepreneurs are constantly working to create the
next most successful company. The right type of business in the right place can become
successful and greatly beneficial to its community. However, starting a new business can be a
difficult feat, as there are many hurdles to overcome. Entrepreneurs may need training in
business skills, such as how to write and present their proposal, or help in accessing essential
business resources. They believe that creating a business incubator facility downtown will
greatly assist with this goal. A business incubator can be a great help to new businesses, assisting
them with resource acquisition, networking and other services, increasing their chances of
success.
The National Business Incubation Association (NBIA) is a non-profit organization that
has helped numerous companies to successfully emerge in the economy. NBIA is dedicated to
the more effective establishment and management of business incubators, which the
association‘s website (?Business incubation FAQ,? 2008) defines as follows:
Business incubators nurture the development of entrepreneurial companies, helping them
survive and grow during the start-up period, when they are most vulnerable. These
programs provide their client companies with business support services and resources
tailored to young firms. The most common goals of incubation programs are creating jobs
in a community, enhancing a community‘s entrepreneurial climate, retaining businesses
in a community, building or accelerating growth in a local industry, and diversifying
local economies. (¶ 1)
The City of Worcester strives at helping its range of creative enterprises become more
successful, and encourages the establishment of new businesses. It wants to create a more diverse
and vibrant environment that will attract the attention of the city‘s college students. Convincing
students to stay in the city after graduation is a major goal for the city, and the city officials
believe that increasing the number of interesting and creative job opportunities is a way to do
that. Creative industries are types of businesses that deal with artistic trades and businesses that
2
support artistic trades. They include five major categories: visual and literary arts, design,
knowledge workers, media and performance (The New England Council, 2000).
This project was provided to us by the Executive Office of Economic Development. The
goal of our project was to conduct a feasibility study for a business incubator for downtown
Worcester that helps to support creative industries and small businesses. This incubator is
intended to bring together various participant groups to assist and nurture such businesses.
This project encompassed three important objectives. The first was to examine case
studies of previous business incubators around the United States and learn about what
contributed to their successes and failures. The second objective was to assess the needs of the
communities and businesses that are intended to benefit from the incubator. The third and final
objective was to present recommendations of the possible options for how the city should
proceed.
To complete these objectives we used several research methods. We conducted
interviews with small businesses and other community members, such as representatives of artist
organizations, which have given us some insight into common business needs in Worcester. We
also spoke with people who are involved in existing business incubators to learn more about how
to organize and run them. Interviews were also conducted with representatives from art
associations, and student organizations to gain an understanding of how they would benefit from
the incubator.
This project will serve as a guide to show the city what are the best ways to proceed with
the establishment of its incubator. This report presents our findings and recommendations on
how to establish a successful business incubator downtown. The city will then use our findings in
whatever manner they see fit to continue this task and help Worcester achieve its great potential.
3
2. Background
To properly accomplish this project, it is important to have acquired an understanding of
all the pertinent background information. Worcester‘s economic and business standing is vital
because it will determine the best way to pursue the establishment of the incubator. Since this
project revolves around recommendations for a business incubator, it is necessary to properly
define what a business incubator is. It is also important to know about the recent history of
incubators and how they have been used. Other important issues concern the challenges that
Worcester‘s small businesses face, the relationship between the city and its students, and existing
business incubators also all play a part in this project.
2.1 Worcester Economy
Worcester is the second-largest city in Massachusetts and is located in the heart of the
Commonwealth, at the intersection of three interstate and five state highways (see Figure 1). It
has a great history and potential for development. Worcester is known to have the highest level
of biotechnology industry in the region, as well as nine colleges and universities with a total
population of twenty-five thousand students. The diversity in educational and cultural
backgrounds of the Worcester citizens makes the city vibrant and dynamic (Sasaki Associates,
ZHA, 2004). The city has over sixty various cultural organizations, and a number of artistic and
historical societies, galleries, restaurants and shops, all of which add depth and color to the life in
the city.
4
Figure 1: Map of Worcester City, Massachusetts. (U.S. Census Bureau, 2008)
The economy of Worcester is currently facing a challenging task of catering to the needs
of a fast-paced, constantly evolving society. One of the important factors that influence the
city‘s business growth and how an incubator would fare in the city is how investors and business
owners perceive the economy and opportunities in the city. In 2001, Worcester Polytechnic
Institute (WPI) students conducted research on the subject via surveys and interviews of 400 out
of 1400 registered businesses in the Worcester area. The purpose was for the business owners to
rate Worcester on seven parameters: economics, local government, quality of life, transportation,
location, technology, and labor market. The results indicated the areas where the city could
improve and the resources that could be better publicized. In general, the tax rate was perceived
as too high; local government as not very helpful. The state of the economy, cost of living,
quality of life, and labor in Worcester were viewed as average. Transportation was seen as
average, with good highways and a below-average airport. The technology level was considered
to be high and the location good. There were plenty of vacant buildings in the downtown, and
5
even though many were in disrepair, they still had good electrical and internet wiring that could
be fixed and used. According to this study, the city could attract more businesses by improving
assistance to them and lowering the tax rate (Furness et al., 2001).
Six years after the students‘ project, in 2007, the Research Bureau completed a study on
the economic development of Worcester. It also pointed out that the high tax rate, as well as
insufficient land for new development, is an important factor that can divert private investments
from going to Worcester (Benchmarking Economic Development in Worcester: 2007, 2007).
Currently, the commercial tax rate is $26.20 per thousand dollars, which is twice as high as
residential, $12.54 (?Property tax rates by town in Central Mass?, 2008).
Another important characteristic, identified by the Research Bureau report, was the
unemployment rate and the fields in which the majority of the population were working. The
unemployment rate in Worcester is currently 6.9%; it is in the top ten highest in Central
Massachusetts (?Can you spare me a dime??, 2008). This rate has been high in Worcester since
2003, but it is still lower than those of other big New England cities like Lowell, Springfield,
Hartford and Bridgeport. Interestingly, the majority of people in Worcester are employed in the
Education and Health Services (39.1 %). Employment in education is stable because of the
numerous schools and colleges in the Worcester area. Similarly, the health services employment
rate is expected to grow, and more so as the baby boom generation retires, creating demand for
more services (Benchmarking Economic Development in Worcester: 2007, 2007). Retirement of
the older population will also create job vacancies that need to be filled with professionals with
associate or higher degrees. These positions are hoped to be filled with graduates from local
colleges. Following Health and Education Professional are Trade, Transportation and Utilities
(13.3%), and Professional and Business Services (11.3%), followed by other jobs that target city
needs, i.e., Leisure and Hospitality, Construction, and so forth (Benchmarking Economic
Development in Worcester: 2007, 2007).
The availability of office space also makes a significant impact on where businesses
locate. A survey of the Worcester office occupancy rate, also conducted by the Research Bureau,
concluded that there is enough vacant office space available to support over 3,000 extra workers
in downtown Worcester alone, assuming that each worker needs an average of 200 square feet.
About half of the rental costs were revealed in the survey, and turned out to be between $5 and
6
$30 per square foot (Downtown Worcester office occupancy: 2007 survey, 2007). Another study
conducted by Basile Baumann Prost Cole & Associates, Inc. calculated the average lease cost to
be $18.36 in 2006, which is slightly higher than $16.42 in 2004, but still about $5-6 lower than
rent in Metropolitan Boston market (Basile Baumann Prost Cole & Associates, Inc., 2007).
The total amount of office space in Worcester is approximated as ten million square feet,
according to Basile Baumann Prost Cole & Associates, Inc. Almost 70 percent of the office
space is characterized as class B
1
, with the lease rate of $16.91. Office space vacancy rate went
down within two preceding years by almost three percent, leaving it at 9.7 percent in 2006. This
vacancy rate is still lower than the 11 percent in Metropolitan Boston region (Basile Baumann
Prost Cole & Associates, Inc., 2007). Bringing the vacant buildings back to life would ultimately
make the rest of the neighborhood attractive, because empty and decaying buildings with
abandoned parking lots create an impression of an unstable and unsuccessful neighborhood; such
an impression can divert new businesses from locating there (Downtown Worcester office
occupancy: 2007 survey, 2007). It is the responsibility of the buildings‘ owners, and the interest
of the city to renovate the vacant space. The Worcester Economic Development Action Agenda,
drafted with the assistance of both Sasaki Associates and ZHA in 2004, suggests that the city
continue to develop the downtown, making it even more of a mixed-use space, with banks, retail
stores, government offices and entertainment centers (Sasaki Associates, ZHA, 2004).
The studies on the city‘s economic situation have been helpful because they point out the
areas that need improvement; however, not all recommendations can be implemented in the
current economic circumstances. The city is accepting feedback, and has been actively
developing ways to improve conditions for existing businesses and attract new ones. There are a
number of initiatives completed, such as renovation of Union Station, shown in Figure 2, and the
installation of the Korean War Memorial. There are various projects going on now, for example,
1
According to Basile Baumann Prost Cole & Associates (2007), “Class A buildings generally command the highest rents or sales
prices compared to other buildings in the same market. High quality materials, efficient layouts, above-average maintenance and
management are hallmarks of this space class. Class B buildings typically command lower rents or sales prices than their Class A
counterparts in the same market. Space is utilitarian, and design is ordinary for newer buildings and may be good to excellent for
older buildings. Maintenance, management and tenants are average” (p. 33).
7
upgrading the Airport and redeveloping North Main Street and CitySquare (Basile Baumann
Prost Cole & Associates, Inc., 2007).
Figure 2: Union Station. (“Union Station”, 1999)
The city is striving to create a welcoming and supportive environment for businesses. Its
updated website is a great tool that provides guidance and advice to business owners, and lists
the important licensing agencies and organizations that provide business assistance.
Entrepreneurs can now find the ?Navigating through Regulations & Licensing Requirements: A
Guide to Worcester Entrepreneurs in 20 Business Types? published on the website that will
guide them through the important steps of starting a new business. In addition to encouraging
new ventures to start, the city is also willing to work closely with existing businesses that are
considering expansion or relocation in the city (Business Development, 2008).
Along with guidance and assistance, the website provides information about the state and
local governments‘ Economic Development Incentive Program (EDIP). The Program offers tax
incentives for businesses that create new jobs in Worcester and increase the property value
through new investments. Companies that are starting, expanding and relocating to Worcester
can use the EDIP to obtain a tax deduction, credit or relief. For example, tax deduction is given
to businesses that renovate and reuse a building that has been mostly vacant for two years, while
8
a 5% Investment Tax Credit is granted to businesses that renovate the buildings with a
depreciable life of four or more years. Local Property Tax Relief may be applied to the
increment generated by a private investment, as well as a special property tax assessment
schedule. Eligible small businesses, both new and existing, can also take advantage of fixed-
rate, low-interest loans. Businesses that are located on certain targeted streets can be eligible to
receive up to 50% reimbursement from the Storefront Improvement Grant Program for
revitalizing the storefronts. Similarly, a loan is available for renovating the facades of
commercial properties (Business Development, 2008).
2.1.1 Creative Industries in Worcester Economy
Assistance and incentives mentioned above are available for businesses of different sizes
and types, including creative industries that make the city attractive. Charles Landry (2000)
stated that ?competitiveness [of cities] no longer lies in immobile, physical resources like coal,
timber or gold but in highly mobile brain power and creativity? (p. 33). Indeed, in today‘s world
where evolving technology and means of transportation allow people to work at home or
commute longer distances easily, more and more people are becoming very selective in choosing
where they live. Having increased flexibility with the location of their jobs, the quality of life
becomes a significant factor, leading people to move into communities that fit their lifestyles. In
his book Who’s Your City?, Richard Florida (2008), an urban theorist, stated that ?finding the
right place to live is as important as–if not more significant than–finding the right job or partner
because it not only influences those choices but also determines how easy or hard it will be to
correct mistakes made along the way? (p. 5). He goes on to say that every place has its own
personality, and that it is the creative class that adds a lot to the vibrancy of a city‘s economy.
Florida named Worcester as among the top five best mid-size regions for young singles, families
with children and tolerance for the gay community (pp.238, 262, 279, 281).
The City of Worcester has recognized the importance of the creative class, and after a
series of open forums in April of 2005, it has set goals and objectives that would help the city to
become a ?prosperous creative city.? Part of the goal is to nurture diversity in both the
population and industry fields, and encourage creative economy in the city (City Initiatives,
2008).
New England Foundation for the Arts (NEFA, 2007) defined creative economy in The
Creative Economy: A new definition as ??cultural core‘ that includes occupations and industries
9
that focus of the production and distribution of cultural goods, services and intellectual property?
(p.10). There also exists a cultural periphery, a separate entity:
Categories in the peripheral group are not wholly representative of the cultural
component of the creative economy. Some of the subcategories of these industries and
occupations produce cultural goods and services, but they are combined with others that
do not. Since the main categories cannot be broken down to include only those
subcategories with 100% cultural production or distribution, researchers should not
employ aggregate data for those categories unless there are special local circumstances.
(p.12)
The relationship of the core and peripheral groups is illustrated in Figure 3. The cultural core is
placed within the circle of creative industries. The peripheral circle refers to industries that can
be counted towards either inner or outer circle, depending on local circumstances. Both cultural
core and peripheral industries include three major categories: cultural goods production, cultural
goods distribution and intellectual property production and distribution. A few examples of core
industries present in Worcester include periodical publishers, book stores, fine arts schools,
graphic design services, video tape and disc rental, vitreous china, fine earthenware and other
pottery manufacturing. Peripheral establishments incorporate quick printing; direct mail
advertising; gift, novelty and souvenir stores; glass product manufacturing made of purchased
glass; hobby, toy and game stores; promoters of performing arts, sports, and similar events
without facilities; and many other businesses.
10
Figure 3: Defining creative economy. (DeNatale, D. et al., 2007)
For Worcester specifically, the Culture Count database on the NEFA website has 204
records for cultural organizations or individuals (NEFA & Community Logic, Inc., 2008).
However, Christine Drew, a WPI librarian, stated that the information is not complete according
to her knowledge (personal communication, December 2, 2008). Therefore, we calculated the
number of creative organizations and businesses (see Appendix E), using the same North
American Industry Classification System (NAICS) codes that were used for the NEFA Creative
Economy report. We collected all data for Worcester zip codes using the appropriate NAICS
codes; data available for the city of Worcester was for establishments that employ one to over
1000 workers. There currently are 187 core and 66 peripheral organizations; in 2000, it was 184
and 57 respectively.
11
2.1.2 Summary
Given the current circumstances in and around the City of Worcester, there is great
potential for economic growth in the form of new businesses and enterprises, especially those in
creative field. There are plenty of laborers in search of work, as well as college students who
could be attracted to stay in the city (Benchmarking Economic Development in Worcester: 2007,
2007). There are also numerous cultural and artistic organizations and establishments that, if
provided with a common space and networking events, would thrive and benefit the economy
even more than they do now. Furthermore, there is substantial office space with access to city
infrastructure. Additionally, the city leadership is actively seeking to improve conditions for
businesses by conducting studies and responding to the results. All these factors are favorable for
economic growth and creation of new jobs but they need a catalyst, such as a business incubator,
to bring them together.
2.2 Business Incubators
The fundamentals of entrepreneurship begin when an idea is born and efforts are made to
mature that initiative into a successful business venture. Unfortunately, many entrepreneurs lack
the business skills required to launch a new company into success. A business incubator can help
these entrepreneurs in numerous ways, such as assisting them in the development of business
proposals or by aiding these clients toward finding the capital required for an initial investment
toward a new company. An incubator also typically offers rent space and provides shared
equipment, staff, and space among its clients in a flexible environment. By working with the
incubator and surrounding network, a client should ultimately graduate from the incubator and be
prepared for the general requirements of operating a successful business on his or her own.
Business incubators have the ability to bring creativity, resources, entrepreneurship and
workforce together, and thus cause the economy in the surrounding area to flourish. While
individual business incubators differ in many ways, they can be classified into five universal
categories: building type and location, tenant composition (target market), rent, fee and
graduation policies, and a range of support services (US Small Business Administration, 1986).
Each business incubator can be classified under one of four different divisions: Business
Innovation Centers, University Business Incubators, Independent Private Incubators, and
Corporate Private Incubators (see Figure 4). Based on their organizational structures and
12
funding, the first two divisions are public, while the latter two are private (Grimaldi & Grandi,
2003).
Figure 4: Incubator categories, based on structure and funding
Private incubators make profit in several ways, including charging service fees and taking
a percentage of revenues from incubated companies. A liquidity event can be another source of
income for the incubator which occurs when an incubated company is bought or goes public
resulting in the business incubator selling its stake of the company (Knopp, 2007). Corporate
Business Incubators are privately owned by large companies, which encourage and support new,
independent businesses. The parent company will often control each new venture by holding a
stake in the equity. On the other hand, Independent Private Incubators are led by an individual or
by multiple individuals who risk their own money to accelerate the success of small companies
or entrepreneurs. The investors allow the entrepreneurs to produce an idea for the company,
mediating during the development phase if necessary (Grimaldi R., Grandi A., 2003).
Public incubators, such as Business Innovation Centers, offer traditional services such as
office space, infrastructure, communication channels, and information about external financing
opportunities. Similarly, University Business Incubators are typically public, especially known
for their expertise with science and technology, as entrepreneurs work with universities. The
developing ideas between these two parties can lead to new discoveries and patentable
inventions (Marrifield, 1987).
Public
Business
Innovation
Centers
University
Business
Incubators
Private
Independent
Private
Incubators
Corporate
Private
Incubators
13
The most common business incubator support services include helping with basic
business services, marketing assistance, access to bank loans, and assistance with gaining
presentation skills (US Small Business Administration, 1986). Business incubators offer many
benefits for local economies, such as creating jobs and income, offering advice for entrepreneurs,
causing industry clusters to grow, encouraging minority entrepreneurship and revitalizing local
communities. Business incubators also offer financial guidance to their clients by assisting them
in various capital management techniques. Some of these assistances include helping the clients
apply for loans or connecting them to venture capitalists or angel investors, who are high-net-
worth investors (Knopp, 2007).
Incubators are typically located in economically weak, urban industrial environments, in
retail shopping outlets, industrial and science parks, small towns far removed from metropolitan
areas, or near universities and colleges. About 53 percent of business incubators operate in urban
areas, 28 percent operate in rural areas and about 19 percent operate in suburban areas (Knopp,
2007). The incubator facilities themselves are often based on previous manufacturing and
industrial plants which have been renovated to fit the needs of the business (US Small Business
Administration, 1986).
While many business incubators are situated in areas that contain business development
opportunities, they commonly serve clients through internet technology. According to the
National Business Incubation Association, in 2006 more than half of the surveyed incubation
programs had virtual clients that did not physically work inside the parenting building (Knopp,
2007). Whether a business is physically present or not, incubators must decide the variety of
companies it will allow as tenants. Mixed focus business incubators are the most common
overall, obtaining a total of 47% of the incubator market, while technology incubators represent
37% of the market. Manufacturing incubators occupy 7% of the market, service incubators 6%
and specialty incubators 3%, as shown in Figure 5 below. Another way of categorizing business
incubators is according to whether they are non-profit and for-profit organizations. Roughly 94
percent of business incubators in North America are non-profit organizations that focus on
economic development, while the remaining six percent of business incubators focus on creating
returns from investments.
14
Figure 5: Business Incubator Focuses (Linder, 2002)
Incubators are often sponsored by different types of organizations. Economic
development organizations sponsor approximately 31 percent of incubators in North America.
Both government entities and academic institutions each sponsor about 20 percent of these
incubators. ?Hybrid? incubators with multiple sponsors and incubators with no sponsors
represent 8 percent of these incubators (Knopp, 2007).
In the United States, it is estimated that over 27,000 companies were started with the
assistance of incubators, which ultimately created more than 100,000 full-time jobs. As a result,
the total revenues from incubator-affiliated companies have risen to over $17 billion (Knopp,
2007). As business incubators continue to grow throughout the United States, more industries
will be generated by enthusiastic entrepreneurs.
2.2.1 National Business Incubation Association Statistics on Incubators
Every four years the National Business Incubation Association surveys existing
incubators in the North America, and then publishes a report on the periodic state of the industry.
In 2006, 218 incubators responded, bringing the response rate to about 20%, the lowest in the
survey history. This section presents most relevant and helpful statistics from the 2006 State of
the Business Incubation Industry, for a better understanding of common practices.
Business Incubator Focuses
Mixed Use
Technology
Manufacturing
Service
Specialty
15
Incubation Goals and Services
The goals of the incubation programs differ depending on the specific circumstances in
the area, the needs of entrepreneurs, missions of the sponsoring organizations, and so on. Some
goals were priority to only a third or a quarter of respondents, as shown in Table 1. For example,
encouraging minority and women entrepreneurship was marked by 30% of respondents,
generating new income for incubator or sponsors by 28%, and indentifying potential spin-in/out
business opportunities by 25%. At the same time, broader economic development goals, such as
creating jobs and fostering the entrepreneurial climate within the community, are considered
very important by the majority of respondents.
Table 1: Goals of the programs (p. 20)
Goals of the Programs
Percent of incubators
where the goal is a
high priority
Creating jobs for local community 84%
Fostering community's entrepreneurial climate 77%
Commercializing technologies 54%
Diversifying local economies 48%
Building or accelerating growth of local industry 48%
Retaining businesses in community 45%
Encouraging minority or women entrepreneurship 30%
Generating new income for incubator or sponsoring organization/ founders/ investors 28%
Identifying potential spin-in or spin-out business opportunities 25%
Generating complementary benefits for sponsoring organization 19%
Revitalizing distress neighborhoods 18%
Moving people from welfare to work 8%
These goals, as well as the ways to achieve them, set the incubators apart from multi-
tenant real-estate entities with reduced rent. Value-added services (listed in Table 2) that the
16
incubators provide significantly increase the startup businesses‘ likelihood for success. For
example, almost all incubators educate their clients about basic business practices (such as the
concept of a business plan), encourage them to interact with each other and share knowledge and
positive and negative experiences, help them effectively reach the market and provide high-
speed internet. Most incubators also introduce the clients to the angel investors or venture
capitalists, or provide access to some form of loans. All that combined with less common but still
needed services, such as assistance with product design, manufacturing and distribution, equips
the entrepreneur with necessary tools and skills for a successful journey.
Table 2: Types of business assistance services offered through incubation programs (p. 26)
Service
Percent of Programs
that offer that service
Help with business basics 96%
Networking activities among incubation program clients 96%
Marketing assistance 90%
High-speed internet access 89%
Help with accounting or financial management 84%
Shared administrative or office services 81%
Help accessing commercial bank loans 79%
Help accessing specialized noncommercial loan funds/loan guarantee programs 78%
Help with presentation skills 77%
Linkages to higher education resources 73%
Linkages to strategic partners 71%
Access to angel investors or networks 69%
Comprehensive business training programs 68%
Access to venture capital investors 67%
Shadow advisory boards or mentors 65%
Specialized equipment or facilities 64%
Management team identification 64%
17
Help with business etiquette 64%
Technology commercialization assistance 62%
Help with regulatory compliance 57%
Federal procurement assistance 56%
Intellectual property management 55%
Assistance with e-commerce 54%
Business management process, customer assessment service, inventory management 54%
International trade assistance 49%
General legal services 46%
Human resources support or training 43%
Assistance with manufacturing practices, processes, and technology 38%
Economic literacy training 33%
Assistance with product design and development practices, processes, and technology 32%
Logistics/distribution support or training 31%
In-house investment funds 27%
Loaned executive to act in management capacity 17%
Geographic Area
The area of the incubator‘s location is very important to its mission, goals and necessary
services. For instance, most of the
focused incubators, especially
technology ones, are located in the
urban and suburban areas, while
rural communities have mostly
mixed-use incubators. That
difference can be explained by
factors such as the presence of
academic institutions and
Urban
52% Suburban
28%
Rural
20%
Geographic Area
Figure 6: Incubation program geographic area (p. 11)
18
technology or other specific industry clusters in the cities. Rural communities, on the other hand,
need the incubator to cater to their diversity. Over a half of the incubators that responded to the
survey are located in the urban area. Suburban and rural areas hosted 28 and 20 percent
respectively.
Sponsorship
While the ideal scenario for an incubator is to reach a point of total self-sustainability, not
many incubators are really able to do that. Every incubator‘s reasons are different, depending on
whom the incubator serves; however, one of the most common problems is that the rentable
space is either too small or too big for generating enough revenue to cover the expenses.
Therefore, the incubator needs a reliable source of income that covers the difference. About a
third of the incubators
indicated Economic
Development organizations
as their primary sponsors.
Next big group was
government organizations
and academic institutions,
each of which sponsored a
fifth of the incubators.
Two- and four-year
colleges and universities
see the incubators as a
place to encourage business
development of their
neighborhood, for students to obtain real-life experiences in different areas, and for professors
and faculty to further develop and market findings from the research labs. Other categories of
sponsorship, such as hybrid sponsoring, no sponsoring entity, or a different source of
sponsorship added up to eight percent per category. Lastly, four percent of the incubators receive
profit from client revenues.
Economic
Development
Organizations
31%
Government
21%
Academic
Institutions
20%
No
Sponsoring
Entity
8%
Hybrid
8%
For-profit
Entity
4%
Other
8%
Sponsorship
Figure 7: Incubation program sponsoring entities (p.6)
19
Revenues and Expenses
Only 98 respondents shared their yearly revenue; the reported revenues range from
$14,000 to $5,469,951 for different incubators per year. The average revenue is $597,083, which
is almost twice as much as
the median, $283,000. The
main source of revenue is
rent or fees that the clients
pay. The next biggest
revenue source, service
contracts or grants, covers
provision of certain
services, i.e., business
training or micro-loan
assistance.
Similarly to the revenues, expenses differ greatly from one incubator to another. Reported
values range from $7,000
to $5,359,931. The median
lies at $339,690, while the
average is $548,358. The
costs associated with the
building and the salary and
benefits for the employees
comprise the two biggest
expense categories, over a
third each. Average
incubators spend almost a
fifth of the money on
Rent and/or
fees
59%
Service
contracts
and/or grants
18%
Cash
operating
subsidies
15%
Other
8%
Percent Revenue by Source
Total payroll/
benefits
36%
Building costs
38%
Program
Expenses
19%
Other
7%
Expenses by Source
Figure 8: Incubation program revenue by source (p.33)
Figure 9: Incubation program expenses by source (p. 35)
20
programs run by the incubator. The last seven percent are used on unique incubator‘s needs.
The respondents were also asked to rate their ability to maintain operation and find an
alternative source of income if the main subsidy source ceased. Only 15% of incubators, the ones
that have been operating for a significant amount of time, would be able to continue their normal
operation; nearly a third of the incubators would be able to operate on minimal levels only. A
loss of the subsidy would lead to closing of about 23% of the incubators. Lastly, another third of
all respondents indicated that they do not receive any cash operating subsidies.
Client revenues
Even though the staff and facilities of incubators are declining, the programs still serve a
large number of clients: the number of manufacturing incubators is decreasing, while the number
of mixed-use and technology incubators is increasing – and their clients need less space than the
manufacturing firms, therefore smaller facilities can accommodate same or larger numbers of
clients. Currently, the average incubator has 24 clients, median has 18, and the range is one to
124. Respondents also indicated serving an average of 16 and median of 6 of affiliated or virtual
clients. The average and median numbers of months that the resident clients spend in the
incubator before graduating are 33 and 36 respectively. The combined client revenues for the
most recent fiscal year are, on average, $16,129,359. The median is almost a third of it,
$5,000,000, while the range is $2,000 to $220,000,000. Those numbers include both resident and
affiliate clients, and both sales and grant revenues. On average, the clients employ 97 full-time
(with the range of 1-944) and 24 part-time (range 1-220) workers; the medians are 60 and 10,
respectively.
21
Incubator Size
As seen on the chart below, incubators occupy different areas based on the needs of the
clientele they serve. The reported gross floor areas range from 1,600 to 215,000 square feet. The
median lies at 28,300, and the average is 37,086 square feet. The actual leased space is smaller
though because of the non-
leasable common space,
such as reception areas,
conference rooms, kitchens
and other facilities that
might be unique to the
incubator. The reported
range is also very spread
out, from 600 to 192,000
square feet. The average
leased space is 26,528, and
the median is 20,000
square feet. As far as
occupancy is concerned, on
average, 76% of the incubator‘s space is leased out (85% median, 5-100% range). Usually, the
incubator‘s coordinator would plan on 80% occupancy, in order to give the existing clientele
room to expand. An important tenant category is anchor tenants, defined by NBIA as follows:
Anchor tenants – businesses that are located within an incubator facility but do not
receive business assistance services – provide many incubation programs with a stable
source of supplements revenue and a good base of experienced mentors and business
service providers for their clients. (p.19)
About two thirds of respondents to the survey indicated that they had anchor tenants. The latter
occupy on average 10,479 square feet, with the median of 5,000, depending on the needs of the
company and the total space of the incubator. On average, there are three anchor tenants per
incubator; the median is two, and the range is one to twenty.
19%
17%
16%
9%
14%
5%
6%
4%
1%
3%
6%
Lowest - 9,999
10,000-19,999
20,000-29,999
30,000-39,999
40,000-49,999
50,000-59,999
60,000-69,999
70,000-79,999
80,999-89,999
90,000-99,999
100,000-highest
Incubator Gross Square Footage
Figure 10: Incubator gross square footage (p. 15)
22
Staff and Other Service Providers
There is a trend for more recent incubators to occupy smaller and newer facilities, which
means less maintenance and allows having more lean staff. Right now, the average for the
number of full-time staff is 1.8; it is higher than the reported 2.4 and 2.8 in 2002 and 1998
respectively. As shown in Table 3, managing the facility is the second-highest time-consuming
task for the incubator‘s staff, and having a low-maintenance building allows the staff to focus
more on serving clients, building networks and maintaining the program.
Table 3: Rank order of activities according to percentage of time incubator manager and staff spend
performing them
Activity
Rank from most frequent to
least frequent
Manager Staff
Delivery of business development services 1 1
Facility management 2 2
Building/managing business resources network 3 3
Client recruitment 4 5
Fundraising 5 7
Staff development/management 6 6
Other activities 7 4
23
On average, the incubator‘s manager devotes 32 hours a week to the program; the mean is 32
hours, while the range is one to 70 hours. The total amount of time that the staff works averages
to 73 hours a week, with the median of 58 hours, and the range of one to 535. Usually, the staff
relies on outside
professionals for help in
specific areas that are
outside of the staff
expertise; 97% respondents
indicated receiving such
regular assistance on a
regular basis (see Figure
11). Only eight percent of
the incubators have over 50
advisors; the rest of
respondents are almost
evenly spread out between
1-5, 6-10, 11-20 and 21-50
outside assistants.
2.2.2 General History of Business Incubators
It is important to understand the history of business incubators in order to properly
implement them. By researching the origins and history of incubators, we can study patterns and
strategies that proved effective, as well as those that were not able to withstand the varying
demands of the market and economy and therefore failed.
Sally Richards, a business advisor in Silicon Valley, states in her book Inside Business
Incubators & Corporate Ventures that the idea of a business incubator first originated in the
nineteenth century, but it was not until the late twentieth century that they began to take hold and
become more popular. Some of the incubators were used to increase economic development in
certain areas, but eventually they were accepted by large corporations that saw them as money-
making opportunities. As the role of the internet grew, many businesses began to operate as
internet corporations, such as the companies CarDirect.com and MyWay.com. Large
corporations, such as CMGI and idealab!, believed they could make large profits by providing
funding and resources to small starting companies, and then receive returns once the latter had
None
3%
1-5
24%
6-10
23%
11-20
22%
21-50
20%
Over 50
8%
Outside Service Providers:
mentors, volunteers, business
professionals, academics
Figure 11: Number of outside providers that regularly assisted clients (p. 40)
24
grown and prospered. However, many of these small companies eventually failed, partly because
the ?incubating? companies assumed that funding itself would be enough for a small company to
prosper without a thoroughly developed business plan (Richards, 2002).
Since business incubators have emerged relatively recently, it was difficult early on to
determine what was a good practice or strategy for an incubator. However, as time has passed
and numerous incubators have failed or succeeded in their endeavors, people have begun to learn
what features make a good incubator. For example, it is very important for incubators to create a
business plan and budget for themselves, not just their client companies. Another important
realization is that there is no definite golden rule for creating a successful incubator, since each
one serves different types of companies and will have different needs and challenges. As
Richards (2002) puts it,
Metaphorically speaking, you are practicing the ancient art of turning raw
materials into gold. Even when you think you have all of the right elements in
place, you have to keep in mind that it‘s a touch of alchemy and a bit of chemistry
that will see you through. You have to take the right money, have reasonable and
obtainable goals, align yourself with the right partners, take on the right
companies, and have the right people in your organization to support both you and
your startups through the milestones you will have to make. (p. 12)
2.2.3 Good Business Incubation Practices
After years of successes and failures, people have learned what makes a business
incubator successful or not. Although each incubator must develop a different formula depending
on its environment, certain common practices or traits are seen as necessary to a good incubator.
A very important feature of the incubator is the qualifications of the director. According to Jim
Robbins (2002), the person in charge of the incubator should both have business experience and
be well integrated in the community that the incubator will be serving. Having a history of
successful business experience is essential, because it means that the director of the program
knows what businesses need and how to run them. Being socially involved in the community is
also important, because that leads to an understanding of how to adapt the incubator to better
serve the needs of its area. It also means that the director has access to resources in the
community. Another crucial fact is that the incubator itself is a company. Although the
incubator‘s job is to help other businesses, it still has its own financial needs that must be
fulfilled. If the incubator cannot maintain itself, it will close, and then it cannot help any more
25
businesses. Regardless of whether or not it is non-profit or for-profit, the incubator must be able
to raise funds to support itself (Richards, 2002).
In order to sustain itself, an incubator should have a clear set of defined client screening
policies and graduation policies. An effective incubator should have a clear client screening
process for evaluating potential tenant companies. The incubator should examine the status of the
company, what its chances for success are, and its compatibility with the incubator and existing
tenant businesses to determine if the applying company is worth the incubator‘s time and effort.
Without this careful screening process, an incubator could accept a business that has no chance at
growing successfully or that would conflict with the incubator‘s other companies. This would
waste the incubator‘s resources and diminish its good reputation. An incubator should also have
well defined graduation policies. These concern what the criteria are for the client company to
graduate and have to move out of the incubator and how long the incubator can provide its
resources to the client company. These will vary based on the incubator‘s mission and
operations, but should be clearly presented so that a client understands them if they are accepted
into the incubator (Wolfe, Adkins, & Sherman, 2001).
2.3 Creative Industries
The creative industries are considered a major demographic that can be nurtured in this
business incubator. This group can be very broad and can include art, film, advertising, crafts,
designer fashion, interactive leisure software, performing arts, publishing, software and computer
services and many others. These industries have several specific issues to address with the help
of a business incubator. The crafts industry, for example, is typically a one- to two- person job,
and devoting time to management and promotion of the business can be challenging. Another
major problem is that most artistic people do not earn an income that reflects their training, skills
and long hours of labor. An incubator can provide craftspeople with business management skills,
which make the public aware of the artistic skill and time it takes to make each of the crafts, and
attracts prospective customers to expensive products.
Another creative industry that could benefit from an incubator environment is the
performing arts, including musical and theatrical production. The major problem with this
industry is that the older, more experienced and better-known companies have more sponsors
than the newer ones. Another key issue is that the audience for this industry is often comprised of
26
the older generations. One of the ways these issues can be addressed is by involving schools in
the performing arts, so that younger generations can be exposed and therefore be more attracted
to this creative industry. A response to the problem of sponsorship is to encourage investors to
support the experimental and innovative younger theatrical companies (Ministerial Creative
Industries Strategy Group, 2001).
Creative industries as a whole tend to have difficulty marketing outside of their region,
because of a lack of general business skills. They tend to rely on their local shops, publishers and
advertisers to find customers. Some artists even seek help from non-profit organizations, but
sometimes it is not enough to help them expand. And, similar to general businesses, the creative
industry requires capital, but since it is not able to promise rapid growth, not many sponsors are
interested in investing (Rosenfeld, 2003).
The development and nurturing of the creative economy helps not only the artists
themselves, but also the community in which they are located. Creative establishments can help
to revitalize communities, and help young people stay off the streets and out of trouble. Creative
support has helped in such places as the Bronx, a neighborhood better known for its crime, poor
housing, and underprivileged schools. Currently, a program called ?The Point? focuses on
identifying the talent and aspirations of local Bronx residents. It then assists them in developing
their skills in some creative industry, including music, dance, fashion, theater and many other
fields. In addition to helping the residents to discover and expand their talents, The Point, along
with other organizations, studies local issues, such as transportation, pollution, and
environmental concerns (Evans et al., 2006).
2.4 Immigrants in Small Businesses
In Worcester, immigrants compose a significant portion of the small business market, and
therefore are an important consideration for our incubator. Immigrants may have several unique
needs to which an incubator must be able to cater. For example, it can be much more difficult for
recent immigrants to obtain loans from banks because they may lack a formal credit history and
may not be proficient in English. Therefore, it is much more common for immigrants to use their
own savings and loans from friends and family as a starting capital. Also, while there are
commonalities between different ethnic groups, they usually have different preferences on how
to obtain their start-up money. A study of US immigrants in the late nineties found that the most
27
important source of funding for Korean and Japanese immigrant entrepreneurs was personal
savings, while Taiwanese immigrants relied the most on family loans (Kushnirovich &
Heilbrunn, 2008).
2.5 Relationships Between Worcester Businesses and Students
Since our project is expected to be a part of an overall effort to connect the city with its
students, it is important to understand the existing relationship between these groups. A study
was conducted in 2000 by WPI students to assess the relationship between the businesses and the
college students in Worcester, and how they perceived each other. In general, the researchers
found that businesses have a hard time reaching the student market for two primary reasons. The
first reason is that they do not understand the needs and lifestyles of students well enough. A
better understanding of students, their interests and means of transportation would assist the
businesses in marketing to the students. The second reason is that the businesses are unsure of
what types of advertising media are best for reaching the students. This research shows that
business owners have uninformed and generalized assumptions about the students, and as a result
develop inaccurate plans in advertising to them (Cormier, Goodwin, & Harley, 2000).
Alternatively, the project also studied the students‘ perceptions of the city and how to
remedy some of the businesses‘ issues. It found that students have an overall positive view of the
city, and are eager to develop a better relationship with the city and its businesses. Transportation
methods and gaining knowledge about the city‘s events and companies were the key obstacles
mentioned. Students also believed that the renovation of the downtown area of Worcester would
make it more appealing, instead of looking so industrial. It was suggested that a common email
or website describing the city‘s offerings every week could be one way to improve students‘
awareness (Cormier et al., 2000). Since then, Worcester has created several programs and
initiatives to help connect its students to the city, such as the Social Web website and the Woo
card system.
2.6 Case Studies
In this section, we present information about existing business incubators. With two
exceptions, these incubators are all located in Massachusetts. Gathering information on them was
an important part of this project because we needed to find specific information on how real
28
incubators operate in addition to the general information we have already presented. By directly
studying real incubators we learned about actual problems they have faced as well. We also
planned visits to several of these facilities to talk to their staff in person, which is explained more
in the next chapter, Methodology.
There are several buildings that provide space, but what makes an incubator different
from just providing space is that it provides business assistance resources, regular meetings on
the progress of the company, shared space, and sometimes community workshops. Some
buildings that only provide artisans and businesses with work space are Eastworks, an old
factory building located in Salem, and The Torpedo Factory Art Center, in Virginia. One of the
reasons why we looked into Eastworks, even though it‘s not an incubator, is because it is a
mixed use building. It leases space to a number of different businesses, such as The Apollo Grill,
Pioneer Valley Ballet, Laurel Mountain Gift Baskets and provides working and living space for
artisans. The wide array of business allows for no competition in between businesses. Another
reason for studying Eastworks is that the Registry of Motor Vehicles is one of the tenants, which
is a great way of ensuring that people come into the building and are exposed to the other
businesses (http://eastworks.com).
The Torpedo Factory is different from Eastworks in that its target market is artists. Since
this is one of the groups our proposed incubator is also targeting, we wanted to learn how other
facilities were helping them. This facility is home to 160 professional artists who work, display
and sell their art. This building includes 82 artists‘ studios, six galleries, three workshops, The
Art League School, and The Alexandria Archaeology Museum. The studios are open to the
public during certain hours a day, depending on the artists. Not only can you observe the artists
at work during their open hours, but they also sell some of their work in their studios. The Art
League School is non-accredited and open to members and non-members of the Art League.
Some of the classes offered to both children and adults are drawing, painting, pottery, and
jewelry. What sets this facility apart is not only the building‘s rich history as a torpedo
manufacturing factory, but also that it houses a museum on the third floor and its interior design
(http://www.torpedofactory.org). The proposed incubator for Worcester must be welcoming and
creative, and one way of achieving this is by creating a very unique interior like the Torpedo
Factory Art Center, which can be seen in Figure 12.
29
Figure 12: Staircase in Torpedo Factory Art Center (“Torpedo Factory”, 2008)
As said before incubators not only provide space, but also business resources to its
tenants. A good model of an incubator that we visited is The Enterprise Center located at Salem
State College in Massachusetts. It covers a wide range of interests, such as education,
advertisement, medical industry, fitness, music, and many others. This center offers shared
facilities, such as the use of conference and training rooms, and a kitchen. They also strive for
their tenants to have a painless adjustment period when they leave the incubator. They do this by
promoting independence and encouraging the tenants to choose their own banks, marketing firms
and accountants for their individual businesses. Another way is by having their rent above
market rate. The creative economy in the Enterprise Center is a fairly new idea that was formed
in 2003, and is being implemented now in 2008. They are currently conducting programs around
the community to make people aware of the different creative businesses that exist in the region.
The purpose of the Center is to provide a nurturing and growing environment for businesses that
benefit the city. Recently they created a sector in the facility for very new business, so that the
new entrepreneurs will be able to interact more, and help each other with the difficulties that may
arise (North Shore‘s Small Business Incubator and Growth Center, 2008).
30
Another successful local incubator is Massachusetts Biomedical Initiatives (MBI). This
incubator is located in the Gateway Park building complex in Worcester. Because of its close
proximity to our school, we were able to visit it early into the academic term to gather
information about it. We interviewed its president, Kevin O‘Sullivan. MBI is a business
incubator dedicated to life sciences and biotechnology companies. Because it is solely focused
on these industries, it is able to provide specific resources that biotech companies need, such as
special laboratory space and equipment for each client. Twenty-eight companies have graduated
from MBI since the year 2000, and twenty of those companies were still operating at the time of
our interview. MBI expected to have thirty-four of its thirty-five laboratories occupied by
January of 2009.
The Martin Luther King, Jr. Business Empowerment Center (MLK Jr. Center) is an
example of an incubator in Worcester that initially targeted its services to minorities
(http://www.mlkj-bec.org/). The Center used to be an envelope company before it was
remodeled into the MLK Jr. Center in 1998. It is located on one of the city‘s busiest streets and is
easily accessible by foot, car, or bus. The center has internet access, a business library and a
computer lab. The mission of the MLK Jr. Center is ?to help provide a better quality of life
through business development, culturally sensitive education and training in the minority
community.? Even though its mission is to assist minorities, it currently supports any person who
seeks assistance. These clients benefitted from the incubator by having access to job skills, office
space and business skills (see Figure 13). The staff keeps a job posting, offers assistance with
preparing a resume, and holds training workshops. The workshops, designed to assist people in
learning how to dress for a job, perform in an interview and many other business tips, are meant
for individuals who are registered with the Center, while the rest of the resources are available to
the general public. Another service offered is job placing assistance which is one of the unique
qualities seen only in the MLK Jr. Center that sets it apart from the other incubators we visited.
31
Figure 13: Martin Luther King, Jr. Business Empowerment Center
One group the proposed incubator targets are students. Most students would rather not
risk starting a business because of their lack of experience and money. One way of providing
students with that experience is by allowing them the opportunity to startup a business without
having to suffer the consequences of a failure. The Springfield Business Incubator has a separate
section in their building for students who wish to start their businesses; not only is support
provided to them, but they pay a subsidized fee for space within the incubator. This program is
both a learning experience and an opportunity for new businesses to form. Other unique features
of this Incubator are its board of directors and the large amount of business resources it provides,
which are explained in more detail in Chapter 4.
Advanced Technology Development Centre (ATDC) is another incubator that had its
roots in an educational facility like The Enterprise Center. This Facility was established by
Georgia‘s Institute of Technology in 1980. It commenced by focusing its services to provide
education in starting and managing high tech businesses for entrepreneurs, and domestic and
foreign technology companies. The ATDC is an example of a very successful incubator. After
seven years of being established it began setting up business incubators throughout the state.
Less than two decades after, the ATDC opened a new branch on a floor of the Georgia Centre for
32
Advanced Telecommunications Technologies (GCATT) building. This new branch expanded its
focus to include new companies in multimedia, software businesses.
The ATDC services its companies through three main programs: entrepreneurial service,
faculty research, and R&D. The entrepreneurial program admits small companies (that are less
than a year old) to become members. One in five applicants that submit a formal application is
accepted as a member. Member benefits include assistance with business planning, sales and
marketing strategies, development of financial services and access to the Incubator‘s and
Georgia Tech‘s facilities. The faculty research program offers assistance to faculty members
with project management, marketing, business planning and licensing. The last program provides
corporate R&D divisions with space and access to facilities within an incubator.
The ATDC has been very successful, and the occupancy rates of its facilities have
averaged 95%. In addition, from 1986 through 1995, 111 firms had been admitted to ATDC. The
average graduate firm had revenues of $ 8.7 million and about 66 employees. This incubator is
an illustration of a good model that attracted the right companies in order to expand its size. This
in turn augmented employment opportunities and helped more new businesses thrive (Culp &
Shapira, 1996).
The results of our background research have taught us about strategies used by different
business incubators and what methods they have employed to become successful. We have also
learned about other subjects that will affect the operations of proposed incubator, such as the
general economy of Worcester, models of other incubators and the target market of our
incubator.
33
3. Methodology
At the request of the City of Worcester‘s Office of Economic and Neighborhood
Development Division we gathered data on the feasibility of a business incubator for creative
industries and small businesses in Worcester. The incubator will help bring more diversity to the
city‘s economy and educate students on opportunities for growth in it. There are many groups
that may be involved in the incubator, including small businesses, creative industries, college
students, established companies, Worcester‘s government, colleges and universities, as shown in
Figure 14. Artists, small businesses, and creative industries are the intended tenants of the
incubator. Students can be involved in a number of ways, as entrepreneurs who start businesses
in the incubator, as customers of the businesses in the incubator, or even as interns, which will
help the students gain real world experience while providing assistance to the incubator‘s tenant
companies.
Figure 14: Targeted Incubator Groups
3.1 Interviews
Some in-depth information cannot be easily obtained through surveys or reports, but it
can be gathered through interviews. They allow learning directly about someone‘s personal
thoughts and feelings on a subject. Interviews can be structured rigidly so that very specific
questions can be asked, or be made to adjust depending on how the conversation flows.
Interviews can also take the form of focus groups, which involve larger groups of people, usually
up to seven participants at once. In the course of our project we conducted 47 individual
Incubator
Groups
Small
Businesses
Creative
Industries
Students
City
Government
Colleges,
Universities
Established
Companies
34
interviews with representatives of specific groups to learn about their needs and concerns. The
interviews were structured so that we could obtain the information we needed from our
interviewees, but were flexible enough so that we could change or add questions if a new
concern presented itself during the interview. We have conducted three focus groups, two of
them with students from Assumption College, and one with artists. The following sections
explain the groups we interviewed.
3.2 Artistic and Cultural Organizations
Understanding the needs of the artist groups and individual artists of Worcester was one
of our primary objectives within this project, since they are potential tenants of the incubator. We
tried to find common themes that such a diverse population would find pertinent, because artists
and the cultural community they bring with themselves could become a major asset to the
development of the business incubator. We performed a series of interviews with individuals
from this particular group, to understand their needs. Our information came from the artists
groups in the city of Worcester such as:
? Joy of Music Program (http://www.jomp.org/): A non-profit community music school
dedicated to providing quality music lessons to younger children. The goal of this
school when it opened its doors was to provide a solid foundation of music to
preschoolers. It began with three classes of 12 students, and grew over the course of
three years to 75 students.
? Worcester Cultural Coalition (http://www.worcestermass.org/arts-culture-
entertainment/worcester-cultural-coalition): A cultural community comprised of
members from 60 art and cultural organizations in Worcester. Major Goal of this
Group was to create synergy and a common voice in between the members. Three
areas it covers are: promotion of arts and culture (e.g. Woo card), members service
the community, and advocate for economic development within the community.
We interviewed people from artists‘ organizations who were willing to offer their input
on how an incubator could benefit them, or the community they represent. These included Music
Worcester Inc., Worcester Center for Crafts, Mechanics Hall, and Hanover Theater. We also
interviewed college art professors as they could provide a more detailed view of how they
visualized the creative economy in the city, especially in terms of opportunities for their students.
35
The in-depth interviews allowed us to gain an understanding of what the incubator can do to
address artistic needs in the city, and how artists can be a part of the revitalization of Worcester.
Using these interviews, we also studied other initiatives similar to incubators started by cultural
and artistic organizations in the city, and evaluated their plans and techniques. We learned about
problems they faced, and how those problems were overcome or contributed to the failure of the
projects. This historical analysis also showed us how the city‘s artistic and cultural development
has changed over time; it was useful to learn what had and had not worked in Worcester, and
what could be done to meet the city‘s specific challenges.
3.3 Business Owners and Incubator Professionals
In order to make proper recommendations for the incubator, it was important that we
understand the types of issues that startup businesses and incubators face. To learn about these
topics, we conducted interviews with people who had started their own business, as well as with
people who had worked in business incubators.
The main purpose of a business incubator is to help prospective business owners start or
support their business. Thus, startup business owners are a vital focus for our project, and similar
to artists these people have specific problems that the proposed incubator must address. Our
strategy was to conduct interviews with people in Worcester who had started their own
companies from the ground up to learn about examples of problems they encountered with
creating and growing their business, as well as what type of help they received or wished they
had. The purpose was to find out what the incubator could do to best assist its clients.
Aside from startup businesses, it was also important to learn about the inner workings of
a business incubator. Case studies were an important foundation to our research development,
because every business incubator has a history that can be examined to better understand the
development of an incubator and its properties. Business incubators that we visited included the
Martin Luther King Jr. Business Empowerment Center in Worcester, The Enterprise Center at
Salem State College, Springfield Business Incubator and Massachusetts Biomedical Initiatives,
which is located at Gateway Park in Worcester. These incubators were different from each other
in several ways, so they provided us with several different models and perspectives. As with the
startup business owners, we conducted interviews with people who were actively involved with
the operations of those business incubators. These professionals knew from experience what
36
actually happens in an incubator. They gave us detailed information about what practices are
common in successful incubators, and how we could apply those practices to ours.
3.4 Worcester Area College Students
It was important to assess the needs of Worcester‘s college students when developing the
plan for a successful business incubator. The city wanted to involve them in the downtown
incubator in the hopes that the experience will reinforce their ties to Worcester and help to keep
students in the community after graduation. We wanted to investigate what career paths they
planned on pursuing after graduation, if they see themselves having a future in Worcester, and
why they were or were not interested in staying in the city. We also gathered information on how
to attract them to our proposed incubator as a possible source of employment, internship or
entrepreneurship.
To gather information from Worcester‘s college students, we used two main methods.
The first was to conduct interviews with business management professors because these
educators interact with college students on a daily basis, and know about the types of
opportunities for the students. In addition, it was easier for us to arrange meetings with
professors instead of organized groups of students because the professors had set office hours
when they were available and were easy to contact via email. Second, we conducted two focus
groups in classes of business students to gather direct information from them. We were able to
arrange those with the help of their professors.
For our discussions with the professors and students, we sought the same types of
information. We discussed how they may be interested in interacting with a business incubator,
such as using it to help them establish their own business or obtain real world experience by
working with startup businesses. The colleges that we looked into in our area included Worcester
Polytechnic Institute, Clark University, College of the Holy Cross, Worcester State College,
Assumption College, and Quinsigamond Community College. Representatives from those
schools allowed us to deduce the general trend among students of different colleges and apply it
to our project.
3.5 Building, Staff and Other Logistics
A major consideration for the proposed incubator is the characteristics of the building
itself. There are several important factors in this area that we have researched, which include the
37
location of the building, its appearance, the space available for use, common and working spaces,
and safety. These characteristics will be important to the success of the incubator and its
performance and functions.
A successful business incubator requires excellent staff, great consultants, a convenient
location, good technology, and many volunteers. However, in a world of scarce resources, the
cost of the incubator should be carefully considered and trade-offs be made if necessary, in
accordance with the incubator‘s mission. The initial cost of the incubator is comprised of the cost
of the building itself (renovation, rent and security deposit), equipment and supplies, the staff
salary and initial consultation fees. The operating costs include various services, rent, salaries,
and other expenses which depend on the type and specific needs of each incubator, as shown in
Figure 15. We gathered information on initial and operational costs of the incubators we visited,
as well as funds and resources that were used to start the incubator and keep it running.
Figure 15: Operational Costs of the Incubator
Major
Operational
Costs
Salary for
the Staff
Custodian
Rent and
Mortgage
Equipment
and
Supplies
Services Security
Advertising
Programs
Utilities
38
4. Findings and Discussion
The data we collected from our varying sources revealed a number of themes and issues
that are important for the successful establishment of an incubator in Worcester. We analyzed
these findings and grouped them together according to how they relate to each other. In this
chapter, they are organized into the following topics:
Building Logistics; characteristics of the incubator building, including location, parking,
available spaces inside, and other physical logistics.
Incubator Management; the internal management and organization of the incubator
facility.
Cost Analysis and Possible Funding; the ways the incubator can be funded and sources of
income.
Student Involvement; how students can be involved in the incubator.
Our findings represent the information we gathered about a possible structure of an
incubator. The ideas presented in this chapter will show how the incubator can be tailored to the
Worcester environment. In the next chapter, we present our recommendations for how the city
could proceed with the project. All of our information, including quotes, comes from our
interviews, which are listed in Appendix A.
4.1 Building Logistics
A major consideration for the proposed incubator is the characteristics of the building
itself. There are several important factors in this area that we have researched, which include the
location of the building, its appearance, the space available for use, common and working spaces,
and safety. These characteristics will be important to the success of the incubator and its
performance and functions.
4.1.1 Location and Building
Our interviews with people involved in artistic, cultural and business fields indicated that
Worcester has a need of a ?central location? that can bring together resources, refer people to
already existing organizations, and be a meeting place for networking events. While there were
various suggestions for location throughout Worcester, most respondents agreed that it should be
in the downtown area. The location of the incubator should be easily accessible to clients and
visitors; it should have enough parking spaces and have convenient access to public
39
transportation. Also, the building should be relatively easily subdividable into smaller office
spaces, unless it already has a suitable setup.
4.1.2 Appearance
The location and appearance of the incubator are considered important factors for its
growth, although there exist opposite opinions as to whether the building should be renovated
outside. Steven Rothschild, a Worcester entrepreneur and owner of an internet company, thinks
that a simple, basic building is enough for creative industries. Beate Becker, independent
consultant specializing in cultural economic development, informed us about a design incubator
that had been established in New York City. This incubator could not attract designers because
the building was too ?fancy? and the designers would have been happier if the money had been
spent on building community. The Printer‘s Building owner, Wyatt Wade, thinks that ?artists are
the least demanding, the most creative, most interesting population?, in a sense that ?they don‘t
demand high-end space, so there is no need to invest a huge amount in infrastructure.? Professors
Steven Taylor from WPI and Joanna Ziegler from College of the Holy Cross, on the other hand,
emphasized that the appearance is very important, especially to artists. We concluded that a
modernized building would attract clients and customers, be an advertisement in itself and
contribute to creating a more vibrant downtown.
4.1.3 Square Footage
Based on NBIA literature and our interviews with staff at the incubators we visited, we
found that the building should be able to accommodate 30,000 square feet when first starting,
which includes individual client space as well as shared space. Having a smaller area could make
the process of becoming self-sustainable harder for the incubator, since the rent paid by clients is
a significant portion of the incubator‘s income. By having a smaller area, the incubator has less
space that can be leased to clients to raise income. A much bigger area, on the other hand, would
most likely have a low occupancy rate in the early years, which in turn would bring losses for the
incubator that still has to pay for the area that is not rented out. However, the possibility of
expansion should be considered while choosing a location, because if growth is impossible
within the same building, it might be necessary to duplicate many services and equipment
elsewhere. In this case, the new location will need its own set of administrative support, such as a
receptionist, copy and fax machines, a separate phone system, possibly even a kitchen, common
rooms, security and manager, especially if the building is more than a block away.
40
Salem Enterprise Center‘s building just expanded to 53,000 square feet; their suites range
from 200 to 6,000 square feet. Springfield incubator has a total of 37,000 square feet, but only
12,000 are rentable to clients; single suites are 375 square feet (shown in Figure 16), and as the
client company grows, it can move into a double suite.
Figure 16: Springfield Business Incubator’s single suite
4.1.4 Common and Working Space
Similar to any other facility, an incubator needs to have an interior layout that is
appropriate for the overall purpose of the building. The Enterprise Center in Salem provides
private offices and space for each business that is accepted into the facility. These spaces vary in
size depending on the magnitude of the business and its equipment. The Enterprise Center has a
section of the building dedicated to growth of the youngest businesses within the incubator.
Grouping starting businesses together allows them to easily share experiences with one another.
During the three years that the young businesses are allowed to spend in the incubator, they build
a strong network with similarly sized businesses. The cooperation and enthusiasm of the starting
entrepreneurs help their success and growth within the incubator. The facility also provides
shared space which is used among all clients; it includes conference rooms, a kitchen,
bathrooms, and a lounge area. The conference rooms have moveable walls which can alter the
size of the rooms and help create a flexible environment that better meets the needs of the
businesses (shown in Figure 17). Common areas help create synergy and facilitate peer
interaction between clients, as well as cut down expenses of each individual client by sharing
41
that space. Interaction in the common areas helps entrepreneurs to learn from each other‘s
mistakes and successes, thus educating them on good business strategies.
Figure 17: A conference room in The Enterprise Center
Fundamental networking space is a way to encourage positive interaction between
tenants, and a business incubator can provide the environment for it. Artists and other clients of
the building should be united in a way that allows discussions and suggestions to be held. The
lounge area in the Enterprise Center is an example of how shared space can be used to unite
people. It provides seating for people as well as a gallery for students from Salem State to
display their artwork. This acts as free advertising for the artists, which is imperative considering
their common need for marketing and business skills. While the Enterprise Center does not focus
specifically on artistic and creative industries, it is a good example of an incubator that takes full
advantage of common space between clients.
Massachusetts Biomedical Initiatives (MBI) applies a somewhat opposing technique,
minimizing the common space between clients for the main purpose of maximizing the amount
of space rented out to clients. Every extra foot spent on shared space results in less space that can
be charged for rent. By having a smaller percentage of shared space (33%, compared to the
NBIA average of 55%), the incubator can house more businesses and charge less per client to
cover the same costs of running the facility. The Enterprise Center and Massachusetts
Biomedical Initiatives use different techniques for their shared space, but their focuses are also
42
different, which allows both methods to be successful. Client businesses at the Enterprise Center
need more space for presentations and meetings, but businesses in the biotech industries at MBI
often need specific equipment for their individual work which limits the use of shared space.
Compared to the Enterprise Center, MBI has notably less available common space.
4.1.5 Safety
People, especially younger population, are naturally attracted to the exciting night life
that a city can offer. Cities like Boston and Providence not only provide tourist attractions and
exciting scenes to visit, but they make accessing these sites easy. Walking through these cities to
witness the local businesses and attractions for personal enjoyment is considered to be common
practice. When we asked students from Assumption College and College of the Holy Cross
about which city was a more desirable travel destination, Boston was consistently chosen over
Worcester. While Worcester does have its own attractions, it is not necessarily well-advertised
and user-friendly to people traveling by foot, and they also believe that Boston has more to offer
than Worcester does.
By researching the operating hours of businesses downtown (see Appendix B), we have
found that many local businesses in Worcester close early, and by 7:00 pm downtown Worcester
is virtually shut down. With work over for the day and businesses closed, Worcester quickly
becomes abandoned at night. Interviews with local Worcester college students revealed a
common perception that the city lacks safety and comfort among people walking along the
streets at night. We learned from our interviews that poor lighting in many locations and a lack
of excitement in the center of Worcester discourage people from walking around at night.
The thought of walking down a vacant, unlit street while alone at night is unpleasant for
many people who are looking for something to do in Worcester. One Holy Cross student
mentioned that while they and their friends visit bars nearby their college campus, they take a
taxi to arrive at their destination. They went further to say that they did not pay much attention to
their surroundings while in the cab, and once they exited the cab, they walked straight into the
bar. Because the streets were not adequately lit or just not attractive enough in general, the
students reacted by ignoring the surroundings altogether.
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All visitors to Worcester face the same issue of walking through uninteresting and unsafe
streets. This includes local employees who travel to and from their car and the building they
work at every day. The proposed incubator should have enough parking spaces for the clients,
staff, customers, investors and guests of the incubator. A close-by, well-lit, secure parking lot
will help create a feeling of safety while outside. This is especially important for entrepreneurs,
who tend to work long, non-traditional hours.
The businesses themselves can help improve safety by lighting up the streets nearby their
businesses. Appealing and well-lit signs for tenant companies in the incubator will help
illuminate the surrounding streets as well as create a reason to travel to that location in the first
place. A security guard for the incubator would also contribute to the promotion of safety around
the incubator, and would further encourage people to comfortably walk near it. As an advocate
for business and safety, the business incubator can be a trend setter for surrounding businesses
and the local economy of Worcester.
4.2 Incubation Practices
During our information collection period, we spent considerable time researching
business incubators, especially how they are run. We visited existing incubators and people who
had been involved in incubators. These included Massachusetts Biomedical Initiatives (MBI),
which runs a life sciences incubator in the Gateway Park building in Worcester, the Enterprise
Center, which is an incubator that operates on the Campus of Salem State College, the Martin
Luther King Jr. Business Empowerment Center in Worcester, and the Springfield Business
Incubator at Springfield Technical Community College. We learned a great deal about the
internal workings of business incubators and how we could apply those to our proposed
incubator.
4.2.1 Incubator Goal and Focus
Having a clear focus is one of the most important elements in starting this incubator. It is
important to decide on the purpose of the incubator before its establishment begins, so that the
founders can have a definite vision of how to proceed. Focus applies to both the ultimate goal of
the incubator and the types of industry it targets.
The goal is the incubator‘s mission statement, which describes what the incubator is
trying to achieve. This can be anything, including enhancing the economy in the local
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community or simply trying to raise a profit from starting businesses. A clear goal will keep the
incubator on track and growing in the right direction. For this, it is vital that there is a vision for
the incubator and a plan to pursue the goal. The goal of the proposed incubator was already
partly decided: helping to revitalize downtown Worcester and making it more attractive to
college students. However, the specifics of achieving those goals have to be considered. One
advisable strategy is to use the incubator to help in the establishment of diverse and interesting
businesses which would make downtown Worcester a more attractive place.
As part of its goal, an incubator‘s target client base should also be defined. The incubator
can be general, taking in any viable client business, but it can also be more selective by only
accepting client businesses of a particular industry. This decision will greatly affect how the
incubator will operate and whether or not it will succeed.
The staff at MBI advocated that having an incubator dedicated to a particular industry can
allow it to better serve the needs of the clients. For example, MBI is an incubator dedicated to
biotechnology and life sciences businesses. The biotechnology industry is a field that requires
very expensive and specific equipment and space, and it would be difficult for a general purpose
incubator to provide the required specializations that biotech companies need. Because MBI
focuses on biotech industries, it was specifically built to give its client companies those
resources. Having a clear focus from the beginning will both allow the incubator to suit its
clients better and save the incubator from unforeseen difficulties that arise from dealing with an
industry whose needs they did not anticipate. However, when focusing an incubator on a
particular industry, it is important that there are enough of those types of businesses in the region
to move into the incubator; otherwise the incubator will not have enough clients to survive.
A general purpose incubator accepts most businesses types regardless of their industry,
and thus is designed to provide general resources that are common to most businesses, but not
necessarily what would be needed by a specific industry. General purpose incubators can be as
successful as dedicated industry incubators, as shown by the Enterprise Center in Salem. This
facility has been incubating businesses from a variety of industries since its establishment,
approximately ten years ago. It is currently at its maximum client occupation limit, with several
businesses on a waitlist. Incubated businesses include graphic arts, manufacturing, lab equipment
refurbishment and many others. The Enterprise Center typically provides the same types of space
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and resources to all of its businesses, regardless of industry. Therefore, while having the
incubator specialize in a certain type of business can make the incubation process easier, it is
quite possible for an incubator to succeed without doing so.
An ideal industry focus for ours would be creative industries, because Worcester has such
a lively artistic community. On the other hand, we have learned that having a variety of different
businesses in an area can be better for making it more attractive and economically stable. A wide
range of businesses in an area means that there are many reasons why people would visit it. It
also means that if the economy becomes unfavorable for one type of business, the whole area
would not suffer. Creative industry is a very diverse sector, however, and would still be a safe
focus for us.
4.2.2 Client Selection and Graduation
When the incubator is established, it will start accepting client companies. As we learned
from our interviews at the incubators, an incubator needs to be selective about which clients it
accepts. Having an incubator that lets in anyone might seem like it would make everyone happy,
but would inevitably lead to problems for the incubator and the business later on. A business
should have a reasonable chance of succeeding in order to be worth the incubator‘s time, money,
and effort. Failing businesses can harm an incubator‘s reputation and financial stability. We
learned that if a business is constantly struggling to maintain its finances, it cannot properly
concentrate on its trade and grow. This is counter to the purpose of the incubator, which is to
help the business expand. While the incubator is supposed to provide assistance in management
and organization, it cannot do all the work for the client company. Therefore, a company must
still be able to stand on its own to some degree; otherwise, it will just weigh the incubator down.
Another consideration is how open a client is with the incubator and how willing he or
she is to share issues and problems with the incubator‘s advisors. We found that the Springfield
Business Incubator in their contract with client has a requirement for the entrepreneur to openly
discuss his or her problems and financial issues with advisors. One of the most important
services an incubator can provide is counseling sessions with a team of advisors who offer
advice to tenant companies. If a client is not willing to share their business problems, however, it
makes helping them very difficult and wastes the incubator‘s resources. The incubator needs to
stay apprised of the business situations that its clients face. Thus, it is important to ensure that
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incoming clients are willing to accept help and talk freely with incubator representatives about
their company.
Each incubator should have its own policies for acceptance. The Enterprise Center
accepts businesses that have operated out of home for a few years and are in need for assistance
or better space. Applicants that need help with writing their business plan or with other elements
of starting a business are referred to the Small Business Development Center (SBDC), which is
also housed within the building. The SBDC is an establishment designed to help entrepreneurs
with the first steps of starting the business. Because Worcester also has its own SBDC on the
Clark University campus and a Service Corps of Retired Executives (SCORE) branch
downtown, a similar arrangement could be made in Worcester with those organizations. The
proposed incubator could refer entrepreneurs to the SBDC or SCORE for help with the first steps
of starting a business. When the entrepreneur has an official business plan and enough capital to
pay the rent, the incubator can consider accepting him or her as a client.
Michael Holbrook, who works in Worcester‘s SBDC, said that the SBDC would be
interested in helping with the incubator‘s client selection process. The Springfield Business
Incubator houses SBDC, SCORE, and Small Business Administration (SBA) offices, which
makes all their services easily accessible to incubator staff and clients. It would be ideal to have
some business assistance organization offices inside the proposed Worcester incubator as well.
Another factor to keep in mind when selecting clients is the variety of businesses already
accepted into the incubator. For example, having two similar businesses in the incubator could
lead to conflict and competition. Incubator tenants are supposed to interact and support one
another, but if they are business rivals, it is not likely to happen. Depending on the focus, our
proposed incubator will have to choose clients carefully, so that it does not create internal
conflicts and stays loyal to the industries it intends to serve. Another possible aspect of the
selection was suggested by Small Business and Entrepreneurship Class: students said that there
is a danger of businesses using the services of the incubator and moving to a different town after
graduation. To prevent that, the incubator can have a requirement in the contract for the business
to stay in Worcester for a certain number of years after it leaves the incubator. An alternative to
that would be to have special tax, property or other incentives for the businesses to stay in the
city.
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Along with the client selection, it is necessary that the incubator has a graduation policy
in place. Graduation is a certain milestone in the company history when it is asked to leave the
incubator. It can happen once the company‘s revenue exceeds some set limit, once the company
outgrows the space or after a certain time period. Time is one of the most popular factors; the
average reported by the NBIA is three years. Springfield incubator started with the policy of
graduating businesses after three years of being in the incubator; however, they soon realized
that often companies start expanding and hiring more employees at three years, and they still
need assistance and advice. Based on that observation, the incubator extended the allowed time
to five years. Unlike the Springfield incubator, Salem Enterprise Center does not have any
graduation requirements; they currently have 46 clients, and only 12 have graduated since the
establishment of the program.
4.2.3 Staffing the Incubator
With the wide array of services provided and the large number of businesses it has to
interact with, it might appear that a business incubator would need a very large staff. However,
we discovered that the business incubators we studied employed a very small number of people.
The incubators keep costs down by a having a lean staff; it can include full-time and part-time
employees. At MBI, the staff consists of the company president, an operations manager, a
facilities manager, a health and safety manager, and an accountant. The president handles the
leadership of the incubator and meets with outside organizations, representing the incubator. The
operations manager handles the inside organization of the incubator and its clients. The facilities
manager takes care of the building itself. The health and safety manager works one day a week in
the incubator, and the accountant works twenty hours a week. Both the Springfield Business
Incubator and the Enterprise Center have a director and an operations manager or administrative
assistant. Springfield Business Incubator also has a separate staff member who runs the student
entrepreneurship program in the facility. Both incubators also employ other people on a part-time
basis like MBI. These other employees vary depending on what the specific needs of the
incubator are. The SBI‘s staff is actually paid by the nearby Springfield Technical Community
College.
Incubators usually start off with a manager and a receptionist, and then expand when
necessary. The qualifications for the incubator employees vary depending on what the
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employee‘s role is, but in general the staff must have a desire to work with and help the
businesses housed in the incubator. The head of the incubator must also be in tune with the
incubator‘s mission and dedicated to leading the incubator according to its goal. Other
characteristics which are critical for the incubator‘s staff include good problem-solving,
managerial and interpersonal skills, a diverse background, and the ability to multitask and
concentrate on details. They need to understand the needs of the clients they serve, be flexible as
those needs evolve, and in general have a vision and enthusiasm for their job. Running an
incubator can be a challenging task that consumes time and energy, but it is also highly
rewarding, as it provides people without access to necessary resources and skills with an
opportunity to reach their dream of opening their own business.
4.2.4 Advertising
Any business or organization must advertise its services so that it can attract new
businesses and clients. Many businesses advertise through emails, ads on the internet, fliers,
posters, billboards, newspapers, commercials and many other ways. All interviewees agreed that
although advertising is important, it is one of the greatest expenses of a startup company.
Advertising focuses on trying to attract potential customers or consumers, and also planning how
to promote the company by using a quick catch phrase, a unique logo, marketing video or photo.
As mentioned above, advertising is not only costly but must be planned very carefully.
Advertising in a newspaper over time embeds the message into the minds of the people who read
it. It does not create an instant customer base. Instead, it reminds customers of the services the
business provides. Sometimes businesses do not need flashy signs or enormous amounts of
advertisement. An example of a simple advertising method was used when the Enterprise Center
at Salem first opened its doors to businesses; it only advertised with a sandwich board and
acquired a total of 15 companies. Their current forms of advertisement are through mailing lists,
the newspaper and pamphlets, but what places them on the map is the many workshops they hold
for the community.
On the other hand, owners of creative businesses around the city such as C. C. Lowell do
not advertise much, but use different methods to acquire customers. Bill Cavanagh, who owns C.
C. Lowell, said the company‘s primary target market is students, so they try to speak with art
professors in universities and the instructors at the Worcester Art Museum. Another form of
advertising they had been using for five years was a billboard sign. They also distribute
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approximately 30,000 holiday fliers a year and have a website to sell their products. Another
establishment, Joy of Music, a nonprofit organization that teaches music, theater, and dance to
younger children, used an even simpler form of advertisement than what the Enterprise Center
used. Rich Ardizzone, the associate director of Joy of Music, and many others that we
interviewed agreed that ?the cost of advertising is ridiculous,? which is why their preferred form
of advertising is through word of mouth. Most parents of young children will ask their friends
where their kids take music lessons, and eventually they will call the facility to learn more about
the programs that are available. The organization also advertised in magazines for parents and by
holding recitals. Bill Cavanagh agreed with the Enterprise Center that a good way of advertising
is by reaching out to the community or just becoming more involved in it. As an example, he is
in the steering committee for Worcester Local First, an organization that works to strengthen the
small business community.
Jamie Rotman, a young entrepreneur who owns a small jewelry and handmade gift store,
advertises through mail and emails. She also hired an internet company to market her
establishment. Another interviewee, Tuan Vo who owns a computer software company,
suggested that the incubator could be advertised through the Chamber of Commerce.
During a focus group we conducted with students at Assumption College, the students
gave opinions on how the incubator or its companies could advertise themselves. One of their
recommendations was through an exclusive Worcester career-fair, in which companies from the
incubator and around Worcester could set up tables to attract students. This would be one way to
solve the problem of why students do not stay in Worcester. They also mentioned that it would
be helpful if the public were given information about businesses being accepted into or
graduating from the incubator. This information could include the information about the
businesses along with their new addresses if they are graduating, and could be featured in local
newspapers or business publications. Advertising could be also done through websites like
Facebook or on a social board that people visit frequently. The major idea was that businesses
need to have a better connection with the college students of the city. In conclusion, starting
businesses need help with advertising, because it will allow the entrepreneur to concentrate more
on the business itself. Therefore, the incubator should provide its clients with marketing help.
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4.2.5 Shared Resources
During our visits to the Enterprise Center, Springfield Incubator and MBI, we learned
about how incubators handle common services for their clients. It is a regular practice for an
incubator to provide several services and resources that are shared by all of its clients. For
example, the Enterprise Center employs a full time receptionist/administrator who performs the
secretarial duties for all of the incubator‘s clients. At MBI, all of the client companies have
access to a single ice-making machine. Tenants of the Springfield Incubator have a computer
room that they can use (shown in Figure 18). By providing a single resource for all the clients to
share, the incubator is able to help keep its costs down. Our proposed incubator should provide
common resources such as these. Basic resources such as a shared receptionist, copy machine,
fax machine, and break rooms would be good for almost any type of client, but depending on the
focus of the incubator, there could also be more specific shared resources, such as MBI‘s ice
machine. Another advantage of these shared services is that the clients can split the cost among
them, saving money. However, it is important to consider how the resources will be shared
among the client companies. If there are too many businesses, they might not be able to share a
single machine or a lone receptionist might not be able to keep up with them. This would not be
a problem in the early stages of the incubator‘s life, but it is important to keep in mind as the
incubator grows so that they can be expanded as needed.
Figure 18: Computer Lab at Springfield Business Incubator
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4.2.6 Immigrants
In the course of our research, we found that there are many ethnic associations in
Worcester that can help immigrants integrate into American business culture. For example, there
are the Southeast Asian Center, African Community Development Corporation, Centro Las
Americas and other organizations that are tailored to specific cultures. While some incubators,
such as the Martin Luther King Jr. Business Empowerment Center, offer culture-sensitive
training, it would be better if the proposed incubator referred the client to an established
organization that has experience with culture-specific issues. Since those resources are already
available, the incubator does not have to double them.
4.2.7 Established Companies
Established companies can be involved in the incubator by sponsoring incubator‘s events
and being anchor tenants. Anchor tenants are companies in the incubator that are no longer
considered starting businesses. Although these companies do not necessarily need business help,
they still benefit from the incubator environment‘s resources, and provide the incubator with a
reliable, stable source of income because they are not as likely to suddenly fail. In the Enterprise
Center, for example, large companies participate in sponsoring events, such as the Business Plan
Competition. About 50 percent of the Center‘s tenants are established companies; one of them is
a Taco Bell office that oversees 14 restaurants. On the other hand, Springfield Business
Incubator limits its number of anchor tenants to one because it wants to keep the majority of its
space available for younger businesses.
According to Tuan Vo, a software company owner, some businesses start as spin-offs of
a larger company. When a company discovers a potential field to expand to, but does not have
the budget or space to develop it, sometimes it is willing to pay overtime to a worker who would
be eager to start a business and work on the new idea. The new business can receive a space
inside an incubator and help from both the sponsoring company and the incubator. The
sponsoring corporation can supply monetary support, and might also help with the business side
of the startup, thus allowing the incubator manager to concentrate more on other businesses.
Another way for established companies to get involved in the incubator was suggested by
Andrea Ajemian. She said that it would be very helpful for starting businesses to receive a
?coupon book? from established companies with significant discounts for necessary equipment
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or services, such as high-quality or oversized printing. In her opinion, it would help new
businesses immensely, and they would become faithful clients of the established companies and
build a network with the latter.
4.2.8 IncuTrack
IncuTrack is an online system created by Cybergroup that is specifically directed towards
business incubators and technology centers. Cybergroup itself is a graduate from the University
of Maryland Baltimore County Business Incubator Program. The purpose of IncuTrack is to
track a client‘s progress and save time, money, and effort for tenants and faculty members in the
process. Some examples of this include working with a company's lease, insurance, investments,
business reviews, and milestones. Tenants may communicate with one another and share
information through the use of IncuTrack‘s website which stores their files in a secure network.
The following chart shows the optional payment packages of IncuTrack for incubators and other
clients interested in using its software:
Table 4: IncuTrack Payment Plans
Package Monthly Rate Clients Included Additional Clients
Incutrack-
Developing
$50 5 $15
IncuTrack-10 $120 10 $11
IncuTrack-20 $200 20 $8
IncuTrack-30 $250 30 $6
IncuTrack-
Unlimited
$300 unlimited n/a
Using IncuTrack enables the Springfield Incubator to work more efficiently. Deborah
King says, ?Instead of me e-mailing clients for their information and putting it into a
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spreadsheet, they upload it.? According to King, the Salem Business Incubator pays $120 per
month for a total of 10 clients to use IncuTrack, as well as a $150 annual security certificate fee.
Springfield Incubator also paid an initial fee of $600 for training involved with IncuTrack. The
Enterprise Center in Salem does not use IncuTrack, since it does not monitor their clients that
closely, and most businesses are established and have operated for a significant amount of time.
4.2.9 Board of Directors
Board of directors is another important component of the incubator. Jean McLean,
assistant professor of Business Administration and coordinator of the Business Administration
Related Programs in Quinsigamond Community College, stated that ?a good advisory board is
crucial?. Advisory board members can be a great resource to the incubated companies because of
their expertise and networks. Board members of Springfield Business Incubator include lawyers,
accountants, bankers, and other people with expertise in small business help. Currently, there are
39 people on the Springfield Incubator‘s board; they started with 10 people. The board of Salem
Enterprise Center consists of 11 people. It has two government representatives on board, the
Mayor and the City Planner, who help maintain the connection between the city and the
incubator and ensure that both are headed in the same direction. Communication between the
two parties can be very valuable for both, because the city‘s endorsement can open doors for the
incubator, while the latter can help the city achieve its economic growth objectives.
The board of directors can also act as advisors to clients. In the Springfield Incubator
each client is assigned four or five board members as advisors. They meet once in a quarter to
discuss financial matters and issues that the client might be facing, and to set milestones for the
following quarter, which helps the client to keep focused and revisit his or her goals and
objectives. The total time commitment from board members is eight hours per year; however,
many board members volunteer to meet with the client more often. Advisors‘ help is very
valuable for starting businesses. Jamie Rotman said that she wishes she had an advisory board
that includes people with expertise in various fields. Such a board would have helped her avoid
trivial mistakes and would have given her important feedback and counsel. Carrie Johnson, the
director of Center for Women and Enterprise, agreed with the importance of counseling and
financial accountability, and said that, from her personal experience, entrepreneurs often become
so busy with their product that they do not manage the company well. Tuan Vo stated that this
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first challenge as an entrepreneur was to find a good advisor, preferably in the same field. A
?serial entrepreneur?—a person who starts a business, sells it once it is established and needs
more capital investments to grow, and starts another business—would be a perfect advisor,
according to Tuan Vo. Steven Rothschild added that ?the entrepreneur‘s skill set is never
complete? and advice is always needed in different areas. The board can mentor clients, thus
enabling the manager to focus on other important tasks, such as obtaining funding and planning
community outreach programs.
While the incubator will indubitably benefit from a good board of directors, the board
members, according to Professor McLean, can in return receive recognition. The
acknowledgement can come in form of a dinner in their honor, a plaque, a press release and a
hall of fame in the incubator. Aside from the recognition, the board members are typically not
paid. At the Springfield Business Incubator, we learned that some lawyers may be required to do
pro bono work for the community, which means they must volunteer their professional skills to
help. Being on the board for an incubator is one good way to do this, and it provides the
incubator with free legal skills and help. The Springfield Business Incubator‘s board members,
according to Deb King, enjoy working with the incubator and its clients, and as a result, the
board is full. There is even a waiting list with more people who are eager to join.
4.2.10 Outsourcing Resources
The incubator can greatly benefit from existing organizations that provide small
businesses with help or are focused on one specific group. The incubator does not have to create
already existing resources and compete with these organizations. Instead, it may be more
effective or feasible to bring these resources together through the incubator. The organizations
that help entrepreneurs and starting businesses include the Small Business Development Center
(SBDC) in Clark University, the Center for Women and Enterprise (CWE), ArtistLINK and the
Service Corps of Retired Executives (SCORE), as well as others which are linked through the
websites of these organizations. SBDC in Clark would be willing to help with the selection of
businesses that are accepted into the incubator. The mission of the SBDC is to help entrepreneurs
by meeting with them on a one-on-one basis to guide them through the entire process of starting
a business, including shaping the entrepreneur‘s vision, obtaining a loan, and helping with
marketing. They are willing to assist incubator applicants with business skills. CWE is another
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group that guides entrepreneurs through the process of developing a business by offering
education, training, technical assistance and access to debt and equity capital. This resource is
primarily focused on helping women entrepreneurs, unlike SBDC that offers help to everyone.
SCORE is similar to SBDC in that it offers help to anyone in need of business
counseling. SCORE covers many aspects of business entrepreneurship, including one-on-one
business counseling, team business counseling, business plan development, cost-effective
marketing suggestions, succession planning, business growth mentoring, and strategy
development. There are 389 chapters of SCORE, one of which is currently located in the
Worcester Regional Chamber of Commerce. This local SCORE chapter includes 32 business
executives with a total of over 700 years of experience in the business field. We met with Joe
Patten and Scott Rossiter, who are members of the Worcester SCORE chapter, during our
interviews. Joe Patten said that ?More than half of the clients who come to SCORE are looking
to start their own business.? They went further to say that SCORE would be interested in
working collaboratively with the proposed incubator in downtown Worcester.
Along with entrepreneurs and small businesses, the proposed incubator will also serve
the artist community. An existing group that helps artists is ArtistLINK; it provides three key
resources to artists and artist organizations. It helps locate, create and preserve affordable
working space, living space, rehearsal space, community centers for artists, and supplies artists
with connections to funding and to legal services. The last key resource it provides is policy
work to encourage arts and district zoning.
Another resource that the incubator can use is volunteers. Committed volunteers can help
with organizational details, bring new ideas, and even give valuable advice if they are
professionals. Volunteers can stretch the incubator‘s resources a long way by performing simple
tasks such as answering calls, filing paperwork, shopping for supplies, sorting mail, and so on.
The staff needs to make sure that the assignments are clearly defined and communicated, and
that volunteers receive recognition and encouragement that keep them motivated. Important
considerations include how the incubator can be advertised and attract volunteers, as well as in
which areas volunteer help is appropriate and necessary.
4.2.11 Networking
Businesses need a support network to draw ideas, knowledge, and valuable relationships
from. It can include peer-to-peer, clientele, or marketing networks. According to Geoffrey Long,
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the Communications Director at GAMBIT, a program at the Massachusetts Institute of
Technology (MIT) that focuses on exploring new directions for the video game industry,
There is definitely a value in having a space for everyone to get together in a shared
environment like an incubator... If you have the community of the company itself but
then also the community of neighboring companies, so that those people could sit down
and compare notes once a week, either in like a coffee shop on the first floor or in some
special organized function or even in something like a message board, basically a
communication system setup specifically for those needs. Another thing that you could
possibly use…is an information resource for all the companies that are part of the
incubator, so that there would be a database of known and reliable lawyers or like
affordable marketing companies.
By creating a database of legal services, not only do the lawyers and marketing firms
benefit from the advertisement, but it also serves as a way for starting businesses to acquire
affordable services. Incubators not only promote synergy among tenants, as George Gendron,
founder and director of Clarks University‘s Entrepreneurships‘ Program, said that the proposed
creative business incubator could be more of a center where people from different backgrounds
gather, such as business professionals, students, CEO‘s and basically anyone from the
community. The incubator can thus become ?a trading post of ideas where people hang out.?
This would allow that both incubated and non-incubated small businesses acquire clients, and
knowledge on business issues they may be facing.
In order to gather knowledge about actual existing incubators, as said earlier in this
chapter, one of the incubators we visited was the Springfield Business Incubator. During that
visit we were able to speak with the only anchor tenant in the building, which allowed us to
gather the perspective of an incubator tenant. Peter Ellis, who is the co-owner of Digital Imaging
Firm (DIF) design, said that that one of the greatest benefits of being a tenant in the incubator is
the networking opportunities his company has with businesses and professionals at the facility.
Deb King, Director of Springfield Business Incubator, said that one of the reasons DIF became
an anchor business was because they service 75% of the building: ?a lot of tenants use them for
marketing design.? Peter Ellis also made note that for three years his company has not done any
marketing for their business, since all their clients have been advertised to by word of mouth.
Networking has not only occurred among companies, but also through the advisory board, which
Peter Ellis said has given DIF a couple of jobs.
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Jon Weaver, a young project manager in the WBDC, indicated a need of a young
entrepreneur network in Worcester. In his opinion, such a network can be a support group, where
young entrepreneurs can ?share business plans, receive feedback and confidence.? Incubator
would be a perfect place to host once-a-month social events for students and young
entrepreneurs, something that is already in practice at Clark University.
4.2.12 Tech Support
Computer technology has become an essential portion of any modern business.
Regardless of its trade, almost any business will rely on computers in some fashion. Some new
business owners may not be familiar with the necessary skills required, so the incubator can
provide technology assistance for them. Carrie Johnson, who works at the Center for Women in
Enterprise, said that many entrepreneurs need help with computer skills such as website creation
and online marketing. Some of our other interviewees such as Jaime Rotman and Andrea
Ajemian agree that technology help is extremely valuable to business owners. The incubator
should have a way to provide this, perhaps by hosting technology workshops or employing
someone to help the clients.
4.3 Cost Analysis and Possible Funding
There are five major grant categories (see Figure 19) that typically help to pay the
starting expenses of incubators, including federal government and various foundations. However,
once established, the incubator is expected to be able to obtain its own source of funding, such as
charging its occupants for rent. The financial plan for the incubator has to include strategies that
will enable it to meet its operational costs. We have obtained the operational costs of the Salem
incubator (see Appendix C), including the facility expenses, salary to people on staff and
custodians, cost of equipment, utilities, services and programs. Appendix C also lists income
received from clients, such as rent payments, utility and other fees. The proposed incubator must
decide on how much to charge for these fees by balancing the costs of the services with what is a
reasonable amount to expect the client companies to be able to pay.
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Figure 19: Funding Sources.
The importance of affordable office space was emphasized by number of Worcester
entrepreneurs, including Andrea Ajemian, Tuan Vo and Steve Rothschild, and people who work
with starting businesses, such as Wyatt Wade. David Forsberg, president of WBDC, suggested
that the incubator will require a subsidy to offer more affordable space. Therefore, he said, the
incubator should be a product of a partnership between two or three different groups that seek
?not a maximum dollar amount, but a maximum positive impact on economy.? Such a
partnership, in his opinion, will create a more reasonably priced organization.
Another way to deal with the issue of self-sustainability is charging rent that is higher
than market, such as the Salem Enterprise Center does. Tenants in that incubator are willing to
pay $18.50 per square foot they occupy because of the opportunities and services they receive as
a client. The incubator is almost self-sustaining, but they still receive one-time grants for various
needs, such as buying cameras in order to record workshops and make them available online.
Springfield incubator, on the other hand, cannot function on rent payments only because
of a relatively small area occupied by tenants (12,000 square feet). Rent is $650 per 375 square
feet (the smallest suites available); that price is comparable to market and includes a portion of
common space. Specific information on the incubator‘s finances is not available to public.
However, it is known that in addition to rent income of $175,000 a year, the incubator‘s staff is
paid by the Springfield Technical Community College. There is also a ?Hall of Fame?
fundraising dinner every year, at which five or six local entrepreneurs are inducted into the
Massachusetts hall of fame; all 500 tickets to the event usually sell out for $150, plus guests
Grants
Community
Foundations
Corporate
Foundations
Federal
Government
Family
Foundations
Operating
Foundations
Colleges and
Universities
59
donate generously. The incubator also receives one million (recently cut down to half a million)
dollars a year from state funding, as well as some donations from local businesses.
We have interviewed Gail Carberry, current president of Quinsigamond Community
College, who was part of the Springfield developing team. According to her, it took two and a
half years to bring the program to life. Initial program cost for the incubator and adjacent
industrial part was $3.9 million, $1 million of which was obtained through the US economic
administration, another $250,000 through Northeast Utilities, $50,000 through Western Mass
Community Foundation and the rest came from private campaigns. Most of that money was used
for bricks and mortar.
4.4 Students
We have conducted interviews and focus groups with entrepreneurial and business
students and professors, as well as students who started their ventures. In the course of our
research, we found that the majority of respondents believe that in general students are not ready
to start a business right after graduation from college. Several of the most often mentioned
reasons are the lack of capital, business skills, and knowledge. For instance, one student at
Assumption College said that her desire is to open a restaurant, but she would do it when she
gains enough experience in five or ten years. However, despite the popular opinion, the SBDC at
Clark University does have several students each year that ask for assistance with starting a
business. Most of the interviewed professors also mentioned that they know a couple of students
that started their businesses and seemed to be successful. One of the entrepreneurs we
interviewed, Tuan Vo, started his business while he was a junior in a university, and his software
company has successfully existed for almost twenty years now. Nevertheless, because the
number of the student entrepreneurs is low, we suggest that the incubator be advertised to
students, but not count on them as major stakeholders.
Another reason for advertising the incubator to students is that even though many
graduates tend to seek employment with established companies in big cities, young people often
move back when they reach their late twenties. Many do so either because they start a family and
want to settle down, or they had worked for several companies and decided that they would
prefer to work for themselves. Many people in our interviews have also said that the cost of
living in Worcester is less than in Boston. In any case, people tend to move to middle-size cities,
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where they can have good quality of life as opportunities to grow. According to George
Gendron, the founder and director of the Innovation and Entrepreneurship Program at Clark
University, ?the need [for entrepreneurs] is enormous; the opportunities are huge? in Worcester.
Worcester has a rich culture and easy access to many amenities, including camp grounds,
beaches, mountains for skiing and hiking, restaurants, museums, galleries, cultural organizations
and other recreational facilities to accommodate people with different lifestyles.
In addition to being a client company in the incubator, students can be involved in the
incubator via internships, work studies or for-credit projects. For example, Small
Entrepreneurship class students at Assumption College currently have to write a theoretical
business plan for their class and during our interview they expressed a strong interest in
partnering with a ?struggling young business? to improve existing business plans. This practice
is used in the Salem Enterprise Center. Marketing and business students from Salem State
College have opportunities to do for-credit projects related to developing a marketing plan for
one of the incubated companies. Some of the other professors and students we interviewed
agreed with that idea, and added that the students would be very interested in even unpaid
internships, because of the practical business experience and accomplishments that can be
presented to a future employer, such as a website students designed or a business plan they
wrote. Different levels of education would be welcome, because help is needed at various stages,
such as book setup, simple accounting and so on.
Involvement of students from various backgrounds is equally important. Students with
computer and web skills could be of tremendous help with setting up and troubleshooting
computers and networks, training the clients to use software, and even running workshops on
related topics. One of the young entrepreneurs, Jaime Rotman, noted that she is in the process of
posting her products on her website, and that an intern with some web knowledge would be
greatly appreciated. Finally, students of any majors could perform simple yet time-consuming
tasks, such as sorting the mail, filing paperwork, running errands for businesses, even
brainstorming programs and helping to organize them.
There is a special program at the Springfield Business Incubator, called the Student
Business Incubator. This is a space in the facility that is reserved for students looking for real
world experience in business ownership. Students who enroll rent their own cubicle office (see
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Figure 20) at a subsidized rate of $50 per month. There are a total of nine cubicles available for
rent. From there, the students create, operate, and manage their own real business and receive
help from the incubator. They are encouraged not to worry about success or failure, because it is
a learning experience that benefits them regardless of the outcome. Students of all ages
participate in the program, and one student we talked to at the incubator said that he loves being
there. Because college students are very eager to gain real world experience, a program similar to
this would serve the proposed Worcester incubator very well in getting college students
involved.
Figure 20: Student Business Incubator
In conclusion, there are many roles that students would be able and willing to play in the
incubator if it is advertised enough to them. Worcester is unique because of the big student
population, and it is a clear advantage to the incubator. Having students do various tasks would
be very beneficial for the staff, and would provide invaluable real life experience for students.
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4.4.1 Colleges and Universities
Colleges and universities can play an important role in the incubator. They can adjust the
coursework to provide students with opportunities to work in the incubator for course credit or as
an internship. Educational institutions can also become anchor tenants of the incubator by renting
space for classes. Jean McLean, a business professor at Quinsigamond Community College
stated that the college currently is in great need of space, and expanding several classes into the
downtown of Worcester would be a great way to solve the problem. Also, as a real-life
environment, the incubator will encourage students to consider starting their own businesses. If
they do, Professor McLean believes that the school would be willing to subsidize the space that
students will need. George Gendron said that the Clark University is also considering starting an
incubation program. However, they would prefer to do it on campus or right next to campus, so
that it is easily accessible to students, faculty and SBDC. As students at Assumption College
pointed out, involvement in an incubator can be a great selling point of the college to the
prospective students.
However, there were five professors from different schools, including WPI, Worcester
State College, Clark University and Assumption College, that stated that they would not be able
to make a commitment to the incubator because of time constraints that their job places on them.
Professor Carol Harvey from Assumption College suggested that the incubator should invite
students to be involved in it, even as clients and they should be mentored by experienced
entrepreneurs, not professors.
4.5 Summary
In the course of our interviews, we found that there is a need in Worcester of a common
space that will bring together the city‘s various cultural, artistic, business and student
communities. From our visits to existing incubators we learned how the incubator should be
organized, managed, and how it can serve the existing communities. We have also learned about
resources already available in the city to assist small businesses and creative industries. In the
next chapter we will present in greater detail how the city should proceed with bringing the
incubator to life.
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5. Summary and Recommendations
At the end of our research, we analyzed the data collected from literature and interviews.
This chapter is a brief summary of the important results, as well as our recommendations on how
the city should proceed with establishing the incubator.
5.1 Goals and Targeted Groups
A business incubator is a great tool that can assist the city with its current goals and
objectives, such as revitalizing downtown and bringing together Worcester‘s numerous
entrepreneurs, creative individuals and business assistance resources. The incubator can help the
city become more attractive to residents and visitors and add to its economic stability. It can do
so by serving a diverse range of small businesses and creative individuals instead of a single
industry, according to several business owners we interviewed.
5.2 Building
The characteristics of the building that will house the incubator are very important to its
performance and success. While there were different opinions as to whether the building should
appear modern and attractive, most respondents agreed that it would make the facility appear
safer, more professional and will be an advertisement in itself. The building should also be easily
accessible by car, foot, or public transportation, and preferably have its own parking lot, as
mentioned by our interviewees. The incubator professionals and literature we consulted
recommended that the incubator facility should start with about 30,000 square feet of floor space
in order to properly support itself on client rent. There should be a possibility for growth though,
and we recommend that the building expand to 40,000 – 50,000 square feet by its tenth year
anniversary.
A good model for the proposed incubator is located in Springfield, MA. Based on the
characteristics of that facility, as well as the information we obtained in the course of our
research, we recommend that the incubator occupy a multi-story building (or several stories of a
bigger building). The main floor should feature the front desk and receptionist‘s area, along with
a big conference room, which would serve as a gallery space for creative industry clients and a
room for workshops and networking events. Any business assistance organizations that move
into the building would also be located on the main floor, so that they are accessible to visitors
while keeping the traffic to the main floor, thus ensuring clients‘ safety and quiet working
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environment. It would also be good to have one or more small retail stores for the clients that
make tangible artwork and other products. Other clients can use the store as another way of
advertising, by placing their business cards and information sheets there. The upper floors would
contain the clients‘ office suites or other space utilized mostly by clients.
Salem Enterprise Center is a good model in terms of community outreach: it hosts
workshops, conferences and other social events that are open to public. Since many professors,
young entrepreneurs and artists we interviewed expressed a strong interest in networking events,
we recommend that the incubator advertise itself as a center for social interaction. It can host art
shows and sales, student and young entrepreneur dinners, workshops and seminars and other
events. The conference room should always have displays of the clients‘ work as a way of
advertising to the general public. Finally, a good anchor tenant could be a restaurant or a coffee
shop because it would bring people in and could serve as a ?common area? for the clients.
The proposed business incubator will require a facility that meets the needs of its tenants,
which includes both individual and private space. The incubator is expected to have about 55%
of its total area dedicated to common space for everyone in the facility to share. The remaining
45% of the building would be used as rental space for tenants. Our team contacted several
people, including Paul Morano, Erika Hall and Richard Trifero, for the purpose of better
understanding a potential location for the incubator. The results showed that Worcester has many
buildings that offer space for lease, while there are fewer opportunities for owning a building.
Our team compared three specific locations (see Appendix D) that are currently available for
lease (as of 12/12/08) which are all located in downtown Worcester (see Figure 21).
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Figure 21: Districts of Worcester (Sasaki Associates, ZHA, 2004)
At 40 Southbridge St., there are 27,000 square feet available of office space with a listed
price of $12.50 per square foot. At this size, the building would barely qualify for housing a new
business incubator. However, since the incubator is not expected to run at 100% occupancy when
it opens, 40 Southbridge St. would be capable of housing the incubator during its initial years of
establishment but would not offer room for growth unless more space became available. The
advantage of the building is that the space for parking is available, in the form of 2.1 parking
spots per 1,000 square feet of space leased which would result in 56 potential parking spaces.
Another option, the Commerce Building was constructed in 1896 and is located at 340
Main St. The building comprises of 27,778 square feet of space per floor and offers up to 93,481
square feet of total available office space, charged at $15.50 per square foot. In this case, the
proposed incubator could initially lease one floor for its opening debut and acquire additional
space on other floors as needed. The Commerce Building also offers parking in the form of 1.4
parking spots per 1,000 square feet of space leased. If the business incubator maintained one
floor of the building, it could potentially receive about 38 parking spots for staff and tenants.
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There are also 80,000 square feet of office space available at 90 Front St., where the
average floor size is 48,907 square feet and lease costs are labeled as ?negotiable.? Similar to the
Commerce Building, this location contains enough space for the incubator to grow. Additionally,
the building is located within the proposed CitySquare project boundaries, which may likely
become the premier location of downtown Worcester when the project is completed. Assuming
that the cost of leasing is affordable, the incubator should have potential long-term success if
located at this site.
The CitySquare project is a $564 million project that involves transforming 20.2 acres of
downtown Worcester into a new community with mixed-use space. From the total cost, $470
million will be privately funded by Berkeley Investments Inc., while the remaining $94 million
will be publicly funded. CitySquare development will include commercial, retail, entertainment,
residential, and potential hotel space when complete. It will also provide a new parking garage
with 1,025 spaces. Additionally, there will be four new streets and new pedestrian walkway with
friendly sidewalks and plazas which will all contribute to a new vibrancy in downtown
Worcester.
CitySquare will consist of numerous buildings with different purposes and will be
constructed at different stages of the project. According to Richard Trifero, Building H will act
as a trigger for phase 1A (see Figure 22) when it secures 135,000 square feet of space from
locked-in tenants. Phase 1A will be the first major step towards physically implementing the
CitySquare project. In this phase, the Worcester Common Outlet Mall will be demolished while
Front St. will be extended. Mercantile St. will be constructed along with Public Plaza Area and
an underground parking garage. When complete, CitySquare may ultimately become the greatest
attraction for the city of Worcester.
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Figure 22: CitySquare (Berkeley Investments, Inc., 2008)
The founders of the proposed business incubator may want to consider locating the
facility within office space offered through CitySquare. This will allow the incubator to be
situated at the center of Worcester, which will help it better interact with the surrounding
community. In this case, there would also be easy access to parking for any faculty or tenant
members of the incubator. However, the offices located in CitySquare may cause some
inflexibility for space obtained by the incubator. A tenant inside the incubator may have
difficulty working in the building if their business requires an unusual space, not available in the
offices. The founders of the incubator should contact Berkeley Investments Inc. to further
discuss any potential connections between the incubator and one of the buildings affiliated with
the CitySquare project.
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5.3 Obtaining Support and Funding
The proposed business incubator in Worcester will require funding for acquiring and
preparing the facility, as well as maintaining the facility once the program has been established.
As with the other incubators we studied, funding for the incubator is expected to come from
numerous resources that fall into two general categories: rent fees and external donors. When the
incubator building is obtained, financial support for the purchase will depend solely on external
donations since there will not be any revenue from rent yet. These grants will most likely come
from multiple sources in order to cover the expensive costs of ownership. Recommended general
sources for initial subsidizing include aid from local colleges, angel investors, various grants and
bank loans. Grants can be subdivided into five smaller foundation groups based on their source:
community, operating, corporate, federal government and family foundations.
Worcester is widely known for having aged industrial and manufacturing buildings that
may or may not be in use. Purchasing and renovating an older building offers the potential of
receiving tax credits. The National Park Service, Internal Revenue Service, and State Historic
Preservation collaboratively run an operating fund that offers a 20% tax credit toward restoring
certified historical structures, such as abandoned factories or warehouses. To qualify for the tax
credit, the building must be used for business purposes, be listed on the National Register of
Historic Places, and have been built before 1936. After the incubator has been established and
has tenants, three additional sources of income can be attained from within the incubator: royalty
agreements, equity agreements, rent fees.
Revenues from rent and fees charged to tenants within the incubator should be able to
cover a minimum of 40% of the total maintenance costs of running the incubator. However, it is
recommended that rent covers closer to 60% or higher. Rent fees should remain close to the
market rate, but not necessarily match it. For example, during an interview at the Enterprise
Center in Salem, MA, Catherine Julien noted that the incubator charged $18.50 per square foot
which is slightly higher than market rate. Rent fees that are reasonably over the average market
rate are justified through the business expertise that is offered through the incubator. An
incubator may also charge a set late fee if a tenant does not pay the rent in time. The following
chart is a general depiction of the annual income and expenditures for the Enterprise Center in
Salem. A more detailed table can be found in Appendix C.
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Table 5: Salem Enterprise Center costs
Cost Categories July ‘07 – June ‘08
Staff Salary and Part Time Pay Roll $244,710.85
Faculty Expenses and Utilities $138,113.21
Depreciation Expense $137,400
Mortgage and Real Estate Taxes $72,583.17
Programs $68,880.98
Administrative Expenses $38,113.21
Professional Services $12,678.25
Table 6: Salem Enterprise Center income
Income Category July ‘07 – June ‘08
Total Rent Income $498,395.55
Grants and Other Income $147,211.39
According to the NBIA, 46% of business incubators have some type of equity ownership
agreement with tenant companies. An equity investment occurs when an incubator obtains a
stake in one of its tenant companies and then sells that stake later if the tenant graduates and is
bought by another company. For example, the Enterprise Center in Johnson County, Kansas,
held a 2% stake in a tenant company that was going to be purchased for $30,000,000. As a result
the incubator would have received $600,000 in return, but after two months, both firms had gone
out of business. Four years later, the Enterprise Center still had not gained any returns on equity
investments. Equity investments are precarious and should only be considered for particular
tenants (specifically technology) that clearly show a great potential for growth. According to
Bonnie Herron, who is the executive director at Intelligent Systems Incubator in Norcross,
Georgia, even very successful companies will take four to seven years to reach a point where
equity can potentially become profitable (?Securing grant funding for your incubator?, 2004).
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Royalty agreements are more feasible for business incubators than equity investments
because they can be can be used when a tenant is only mildly successful, which is critical
considering the limitations of new businesses. Through a royalty agreement, an incubator may
take a percentage of revenue earned by the tenant. While royalties are a more reliable source of
income than equities, they still harm the tenant company‘s chances for successful growth.
Tenants of an incubator need every dollar they can acquire during their early stages of
development. It is recommended that the proposed business incubator in Worcester not rely on
equity or royalty agreements, unless income from rent and outside funding is insufficient to keep
the facility running profitably.
According to Michael Lanava, the Business Resource Manager at Worcester Chamber of
Commerce, there is potential to receive assistance from the Chamber of Commerce with
acquiring funding for the proposed incubator. The staff for the proposed incubator will need to
spend time looking for grant suppliers. For example, the Appalachian Center for Economic
Networks in Ohio requires its staff members to spend 5% of each week solely dedicated to
locating potential funding sources (?Securing grant funding for your incubator?, 2004).
During the first year of the incubator‘s operation, there will be a heavy reliance on
subsidized income. As compensation for the renovation process is eliminated, the incubator‘s
dependency on subsidies will immediately decline. During the following years, the incubator
should expect to grow as additional companies move in. The following tables show cost
projections for the first year of establishment while running at 85% capacity, which includes the
cost of renovating 30,000 square feet for the incubator site. According to NBIA professionals, on
average, only 45% of the space can be leased to the clients; the rest is common space. In this
case, the incubator is housed in a leased building that it does not own. The lease rate was
determined by averaging the labeled costs of two potential locations. The purchase of furniture
for the incubator is included in the cost of renovating.
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Table 7: Financing projections for first year, expenses
Expenditure Sources Actual Costs
Cost of Housing
Cost of renovation ($50 psf) $1,500,000.00
Cost of leasing ($14 psf) $420,000.00
Total $1,920,000.00
Salary for Staff
Executive Director $75,000.00
Operations Manager $50,000.00
Clerical Salary $32,000.00
Janitor Services $20,000.00
Total $177,000.00
Cost of Utilities (85%)
Natural Gas $7,395.00
Electricity $25,925.00
Internet Services $1,827.50
Office Supplies $2,975.00
Total $39,750.00
Total Expenses $2,135,122.50
Table 8: Financing projections for fist year, income
Income Sources (85% Capacity) Actual Income
Tenant Rent ($17 psf) $195,075.00
Subsidized Income $1,940,047.50
Rent is expected to cover estimated 10% of the total costs leading up to the first year of
operation. Prior to the third year of operation, the incubator should not consider filling its total
available space with occupants. If the building were to immediately reach full capacity, it would
cause all the tenants to graduate simultaneously. The acceptance of clients should be carefully
organized so that the graduation of tenants is evenly dispersed to maintain economic stability for
the incubator. During the initial years of operating with full occupancy, rent earnings are
expected to cover 35.6% of the incubator‘s total operational costs.
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Table 9: Full use of incubator without renovation fees, expenses
Maintenance Costs Actual Costs
Cost of Housing $420,000.00
Salary for Staff $177,000.00
Cost of Utilities (100%) $46,765.00
Total Expenses $643,765.00
Table 10: Full use of incubator without renovation fees, income
Income (100% Capacity) Actual Income
Tenant Rent ($17psf) $229500.00
Subsidized Income $414265.00
The proposed business incubator should establish a ten-year goal for itself, which would
be a realistic depiction of the facility‘s capabilities based on the success of its initial years of
operation. It is recommended that the incubator aim for a general size of 40,000-50,000 square
feet by the time it reaches the ten-year mark. The following charts show the operational costs and
revenues that would likely exist if the incubator grew to 45,000 square feet and had no increase
in staff or lease charges. Under these circumstances, the original common space would be
sufficient enough to remain the same, while rented space would grow from 13,500 square feet to
28,500 square feet.
Table 11: Financing projection for 10
th
year, costs
Maintenance Costs Actual Costs
Cost of Housing $630,000.00
Salary for Staff $177,000.00
Cost of Utilities (100%) $70,147.00
Total Expenses $877,147.00
Table 12: Financing projection for 10
th
year, income
Income Source (100% Capacity) Actual Income
Tenant Rent ($17psf) $484,500.00
Subsidized Income $392,647.00
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After 10 years, the incubator will obtain a 55.2% stake in its revenues through rented
space to its clients while its need for grants would be reduced to 44.8%. The results show the
increase in the incubator‘s financial stability as it reaches 10 years of operation. This cost
analysis demonstrates three potential stages of the proposed incubator in which it continues to
gain financial independence. While the incubator will heavily depend on subsidized income for
the preliminary stages of its founding, by the tenth years it should be in a position where the rent
to subsidy ratio is well within the recommended assessment of 40-60%. The proposed incubator
could have even greater financial success if the lease fee of $14 per square foot was lowered to a
more affordable rate. If the incubator were to own the building, it would cost more to take
ownership in the building initially, but eliminate the expenses of leasing space in the long run.
Therefore, it is recommended that the incubator should purchase its own site, if funding can
allow it.
5.4 Running the Incubator
Depending on the mission of the incubator and the needs of its clients, there are different
practices that incubators could follow. The following recommendations address how the
proposed incubator should operate in order to best serve its purpose.
5.4.1 Client Selection
According to directors of the other incubators, such as Kevin O‘Sullivan at MBI, the
proposed incubator needs to be careful in screening prospective clients. The clients must have a
valid and feasible business plan and be able to afford the cost of rent in the incubator.
Entrepreneurs also need to be willing to interact positively with other tenants and share their
business‘s status and financial information with their advisors, because the latter are one of the
most valuable features that incubators can offer, as shown by the Enterprise Center and
Springfield Business Incubator. The city or the incubator director must also decide how many
anchor tenants will be allowed in the incubator. We recommend that the number be kept to a
minimum, to allow more space for starting businesses; however, anchor tenants provide stable
income, therefore the number should depend on financial stability of the incubator.
5.4.2 Staffing
Incubators that we have studied operate with a relatively small number of staff, especially
at the launch of the program. Depending on what the city of Worcester chooses to do, the
74
incubator may have different staff needs. Regardless of the program, it will most certainly need a
director, who will lead the incubator and manage it. This position demands good organizational
skills, experience with business and financing, desire to work with and help new businesses, and
a proper understanding and dedication to the incubator‘s mission statement. The director at
Salem‘s Enterprise Center was paid approximately $77,000 from July 2007 to June 2008. The
next important position is the operations manager. The operations manager controls interactions
that take place inside the incubator, and works closely with the tenant companies. Similarly to
the director, this position requires good organizational skills and a passion for helping the client
companies grow. At the Enterprise Center, the operations manager was paid approximately
$53,000 from July 2007 to June 2008. Other job positions in the incubator can include a
receptionist, facilities manager, safety manager, accountant, or others depending on the actual
setup of the incubator. Since an incubator keeps its costs low by not having more staff than it
needs, if an employee is not needed full-time, such as an accountant, they should only be
employed on a part-time basis.
5.4.3 Board of Directors
Another consideration is the incubator‘s board of directors. Springfield Incubator‘s board
is an example of an excellent board: the board members come from a variety of backgrounds,
such as lawyers, accountants, businessmen and other people with expertise in small business
help. This ensures that the incubator has a wealth of necessary knowledge guiding it. Similarly to
Springfield, we recommend that the incubator assigns four or five board members as advisors to
each client company. They discuss the issues the young business is facing, offer advice and help,
and set milestones for the business to accomplish. The board members need not be paid, but they
should be rewarded and recognized for their time and effort, possibly through a ?hall of fame,?
appreciation dinners, newspaper articles and other means of acknowledgement. According to
Gail Carberry, the size of the Worcester city should allow the board assembling process to be
relatively easy, since many professionals have networks with other people in their fields, so the
word about the program will spread quickly. Since being an advisor is a rewarding job, where
people can see the results of their effort, the program is expected to generate interest among
professionals.
75
5.4.4 Services and Advising
It is vital that the incubator provides valuable services to its clients. This is what
differentiates an incubator from an ordinary building with available office space and justifies a
higher rent rate than normal market rates. We recommend that the incubator provide shared
resources, including copy machines, fax machines, computer technology and a receptionist. This
saves the client companies money by allowing them to split the costs of these resources. The
incubator should also provide access to business and other forms of assistance by linking clients
to other organizations, which could be housed in the incubator or at an outside location.
The most important service the incubator can provide to its clients, however, is the
opportunity to interact with others and share ideas. One topic that continually came up in our
interviews was that new entrepreneurs greatly benefit from the advice of knowledgeable
professionals and from sharing experiences with other new business owners. From our
interviews, we found that there are two very good ways to provide this. One is through regular
meetings with a team of experienced advisors, as mentioned in the section above. The other way
for business owners to gather knowledge is by interacting with each other. The Enterprise Center
in Salem hosts regular events where their tenant businesses are grouped together according to
how long they have been running. The business owners share experiences with one another and
offer help. Enterprise Center also has an open door policy, where the business owners are
encouraged to come to each other‘s offices if they have questions or need help. Giving the
business owners the chance to work together with professionals and other entrepreneurs provides
invaluable knowledge and can be a positive experience. Being a business owner can be lonely,
according to the entrepreneurs we interviewed and Deb King, and it is a relief to relate with
similar people. We recommend that the incubator provide the opportunities for these types of
interactions.
5.4.6 Student Involvement
We found that college students are eager to gain real world experience, and would
appreciate the chance to work in the incubator. There are several advisable ways to involve
students in the proposed incubator. One of the ways is to have a student entrepreneurship
program similar to the Springfield Business Incubator‘s Entrepreneurial program. Students from
any of the Worcester colleges could rent out space set aside for them at a special subsidized rate,
where they could operate their own business and receive assistance from the incubator. The
76
program should encourage learning experience, regardless of success or failure. Jean McLean
said that Quinsigamond Community College expressed a very strong interest in renting out space
for a student business program or classroom space, so involving colleges is a very viable
possibility. Another way to involve them is through projects and internships. The incubator can
make arrangements with colleges so that students can intern at the incubator‘s client businesses
or do projects to help the businesses. This interaction with real companies is very attractive to
students, as the business students at Assumption College indicated. Business plan competitions
for students can also be a valid way to involve them.
5.5 How to Advertise
According to most of our interviewees, marketing any kind of business is very costly, but
it is also very important for gaining clients. One of the best advertising practices we have
discovered in our interviews is hiring a marketing consultant to plan out advertising for the
business. However, it is also one of the most costly solutions. A good alternative, as all
interviewees agreed, is becoming well involved in the community; it is a great way to spread
knowledge about the incubator. It could be done through programs, such as festivals similar to
the concept of the ?Water Fire? festivals at Providence Rhode Island, as mentioned by Catherine
Wilcox-Titus, an assistant professor of art history at Worcester State College (WSC). The
incubator could include lecture series on business-related themes, marketing, or legal issues and
permits. These lecture series could be performed by business professionals from corporations or
older businesses, discussing what kinds of services they consulted when they first began as
entrepreneurs.
Advertising through banks is another valid option, because many entrepreneurs will apply
for loans through banks when they are starting their business. This is one of the marketing
strategies used by the Springfield Business Incubator to attract clients. It is essential that an
incubator have a good reputation, in order to acquire support network groups. A great asset that
both the Springfield incubator and the Salem Enterprise Center have is business assistance
organizations such as the SBDC, SCORE and others. If the city can relocate one of these
organizations into the incubator, many people from the community will become aware of the
resources and benefits the incubator has to offer.
A great way to attract student entrepreneurs is by advertising to the colleges, not just
local ones but perhaps also in the surrounding areas. Another way to advertise is through the
77
alumni groups and the entrepreneurial programs at the different colleges. Eitan Gilnert, the
founder of Fire Hose Games, who just started his company less than five months ago, said that if
we were trying to recruit his company as a client we ?would have had to go through the alumni
association of MIT.? Advertising through known organizations, such as colleges, entrepreneurs,
banks and investors is a great way to promote the incubator even more without spending a
fortune on advertising.
5.6 Future Impact and Conclusion
From this point on, the city of Worcester will decide how to proceed with this project.
They will need to decide exactly what form of structure they want the incubator to have and
devise a mission statement for it. The city will then need to gather funding and support and select
a location for the facility. We have provided them with our recommendations, so now they must
choose exactly what they want the incubator to be and implement it.
Worcester has both a large student population and artistic community, and many very
helpful business resources, but it needs a central hub that would connect those groups. An
incubator can be that hub; it can serve as a catalyst for social networking and a place for social
interaction. It will also benefit the economy of Worcester, even in difficult economic times.
According to the Small Business Administration, only 40% of businesses startups still exist after
six years. For Springfield Business Incubator graduates that number is 94%. An incubator can
provide the structure where many clients can cooperate and build supportive networks;
entrepreneurs can also share resources and work with advisors that they might not be able to
afford otherwise. In doing so, the companies thrive. And so does the local economy.
78
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Appendix A: List of Interviewees
These interviews all took place between Nov. 1, 2008 and Dec. 17, 2008 with the exception of
one interview conducted September 30, 2008.
Business Owners
Interviewee Date Position/Affiliation What we learned from
the interview
Ajemian, Andrea November 21 Video entrepreneur and
owner of Artigo/Ajemian
Films
Film industry
entrepreneurship, and
financing
Cavanagh, Bill November 24 Owner of CC Lowell Creative businesses,
and advertisement
Gilnert, Eitan December 7 Founder of Fire Hose
Games
Video games industry
Rothschild, Steve November 21 Owner of Bulbs.com Entrepreneurship in
Worcester
Rotman, Jamie November 20 Founder of
DesignCenters.com
Entrepreneurship in
Worcester
Vo, Tuan November 25 Compex Software
owner/founder
Entrepreneurship and
owning a business
Business Assistance Organizations
Interviewee Date Position/Affiliation What we learned from
the interview
Holbrook, Michael November 12
Small Business
Development Center in
Clark University
The involvement of
SBDC with proposed
incubator, and its
current assistance
towards entrepreneurs
Johnson, Carrie November 19 Director of the Center for
Women and Enterprise
What CWE does in the
city and possible
interactions with the
incubator
Patten, Joe December 3
December 9
Chairman of SCORE Possible roles for
SCORE in an incubator,
and business practices
Rossiter, Scott December 9 Member of SCORE Possible roles for
SCORE in an incubator,
and business practices
82
Creative Industry Organizations
Interviewee Date Position/Affiliation What we learned from
the interview
Ardizzone, Rich November 19 Joy of Music Non-profit music
organization
Dunlap, Ellen September 30 American Antiquarian
Society and Worcester
Cultural Coalition
Cultural organizations
in Worcester
Gagne, Kathleen November 14 Mechanics Hall Music industry in
Worcester
Hovenesian, Stasia November 19 Music Worcester, Inc. Music organization
Patrick, Meghan November 21 Hanover Theatre
Production Manager
The music industry in
Worcester
Schupbach, Jason November 26
Boston
Creative Economy
Industry Director at
Massachusetts
Department of Business
Development
For-profit creative
industries
Walzer, Barbara November 11 Executive Director of
Worcester Center for
Crafts
Artistic organizations in
Worcester
College Professors
Interviewee Date Position/Affiliation What we learned from
the interview
Banks, Macrae November 11 Professor of
Management at WPI
College student
Entrepreneurship
Buswick, Ted November 11
Visiting Faculty MBA
for Clark University
References of people
involved in creative
industries
Gendron, George November 12
Founder/Director of
Innovation and
Entrepreneurship
Program at Clark
University
Learned how students
could get involved, and
how other cities are
revitalizing
Harvey, Carol November 19 Assumption College
business professor
College student
entrepreneurship
Hunter, Jeff November 19 Assumption College
business professor
College student
entrepreneurship
McLean, Jean November 24 Head of business
program at
Quinsigamond
Possible ways to
involve students in an
incubator
83
Community College
Taylor, Steve November 19 Associate Professor of
Management at WPI
Artist who gave us
comments on the
building‘s exterior
aspect
Wilcox-Titus,
Catherine
November 5 Assistant Professor of
Art History at WSC
Artistic organizations
and events in Worcester
and college art students
Ziegler, Joanna November 13 Professor and Chair of
visual arts at The College
of Holy Cross
View of college student
involvement, and
comparison of
Providence, RI
Focus Groups
Interviewee Date Position/Affiliation What we learned from
the interview
Various Artists at
ArtSpeak
November 20 Event hosted at CC
Lowell
Small focus group with
artists
Carol Harvey‘s
Students
November 19 Small Business and
Entrepreneurship Class
Possible ways to
involve students in an
incubator
Jeff Hunter‘s Students November 20 Marketing Management
Class
Possible ways to
involve students in an
incubator
Incubator Professionals
Interviewee Date Position/Affiliation What we learned from
the interview
Carberry, Gail December 11 President of
Quinsigamond
Community College and
helped start the
Springfield Business
Incubator
How she helped gather
resources and set up
SBI
Julien, Catherine November 18 Operations Manager at
Enterprise Center in
Salem
How Enterprise Center
began and how it
operates
King, Deborah December 8 Director of Springfield
Business Incubator
How SBI began and
how it operates
O‘Sullivan, Kevin November12 President of How MBI began and
84
Massachusetts
Biomedical Initiatives at
Gateway Park
how it operates
Sabato, Diane December 8 Director of
Entrepreneurship
Institute and the Student
Business Incubator at the
Springfield Business
Incubator
Student involvement in
SBI‘s Student Incubator
Program
Other Professionals
Interviewee Date Position/Affiliation What we learned from
the interview
Becker, Beate December 2 Independent consultant
specializing in cultural
economic development
Conducted a
symposium on design
incubators
Bilotta, Mark November 19 CEO of consortium and
one of our sponsors
How to talk with
college business
professors and convince
them to support the
incubator
Crane, Stephen December 25 Special Projects
Coordinator
City of Worcester
Economic Development
Division
Memorial Auditorium
tour
Drew, Christine December 2 WPI Librarian How to calculate
statistics on creative
industries in Worcester
Forsberg, David November 10 President of Worcester
Business Development
Center
WBDC‘s involvement
in Gateway Park Project
Hall, Erika S. October 31 Real estate agent Potential incubator
locations
Holstrom, Julie November 10 WBDC Project Manager Entrepreneurship in
Worcester
Lanava, Michael S. December 17 Business Resource
Manager, Worcester
Regional Chamber of
Commerce
Possible funding and
statistical data on small
businesses in Worcester
Long, Geoffrey December 4 Communications
Director at MIT
GAMBIT labs
Video games industry
85
Morano, Paul D. Jr. December 12 Director of Business
Assistance, Economic
Development Division
Potential incubator
locations
Trifero, Richard December 10 Construction Manager
for the city of Worcester
CitySquare project
information
Wade, Wyatt November 21 Printers Building Owner
and President of Davis
Publications
Artistic businesses and
the Printer‘s Building
Weaver, Jon November 10 WBDC Project Manager Entrepreneurship in
Worcester
Individual Students
Interviewee Date Position/Affiliation What we learned from
the interview
Hopkins, Sarah November 20 Student at Holy Cross Business plan for a
company that would
sell affordable building
materials
Kassenbaum, Paul November 21 WPI Grad Student and
founder of Genius!
Student
entrepreneurship
Kimberley, Ian December 13 Student at Worcester
State
Works in Worcester for
Irish Times, perspective
of downtown at night
86
Appendix B: Business Closing Hours in Downtown Worcester
Times taken from businesses that displayed working hours as of 12/13/08
Businesses located on Main St, Front St, and Franklin St
Businesses Sunday Monday Tuesday Wednes. Thursday Friday Saturday
Armsby Abbey unknown unknown unknown unknown 2:00am 2:00am 2:00am
A's Barber Shop closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm 6:00pm
Bank of America closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Bay State Savings
Bank
closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm closed
Beauty Supply closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm
Commerce Bank closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm closed
CVS 6:00pm 7:00pm 7:00pm 7:00pm 7:00pm 7:00pm 6:00pm
Dunkin Donuts 5:30pm 7:00pm 7:00pm 7:00pm 7:00pm 7:00pm 6:00pm
Elwood Adams
Hardware
closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm closed
EverGreens closed 7:00pm 7:00pm 7:00pm 7:00pm 7:00pm closed
Fashion Express closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 5:30pm
FedEx Kinkos closed 7:30pm 7:30pm 7:30pm 7:30pm 7:30pm 3:00pm
Flagship Bank closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Garden Fresh
Courthouse Café
closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm 2:00pm
Honey Dew Donuts 6:00pm 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm 6:00pm
House of Men's Hair
Styling
closed closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm
Irish Times unknown unknown unknown unknown 2:00am 2:00am 2:00am
Java Joe's closed 3:00pm 3:00pm 3:00pm 3:00pm 3:00pm closed
Little Kitchen closed 4:30pm 4:30pm 4:30pm 4:30pm 4:30pm closed
Main Beauty
Supplies
closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm
Markos Jewelers closed closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm
Neighborhood Café closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm closed
New York Jewelers closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Owl Shop closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm
Plastic Energy 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm 8:00pm
Red Baron unknown unknown unknown unknown 2:00am 2:00am 2:00am
Shavarsh 4:00pm 4:00pm 6:00pm 7:00pm 6:00pm 6:00pm 4:00pm
Spoodles Deli closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm 3:00pm
Star Nails closed 6:30pm 6:30pm 6:30pm 6:30pm 6:30pm 6:00pm
State Opticians closed 5:00pm 5:00pm 7:00pm 5:00pm 5:00pm 2:00pm
Super Variety closed 5:30pm 5:30pm 5:30pm 5:30pm 5:30pm 5:00pm
87
Sylvia's 5:00pm 5:30pm 5:30pm 5:30pm 5:30pm 5:30pm 5:30pm
TD Bank North closed 5:00pm 5:00pm 5:00pm 5:00pm 5:00pm 12:00pm
The Hooka Hot Spot 12:00am 12:00am 12:00am 12:00am 2:00am 2:00am 4:00am
The Money Stop closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm 5:00pm
The News Room
Hallmark
closed 6:00pm 6:00pm 6:00pm 6:00pm 6:00pm unknown
Worcester Credit
Union
closed 4:30pm 4:30pm 4:30pm 4:30pm 4:30pm closed
Worcester Family
Dental
closed 7:30pm 7:30pm 7:30pm 7:30pm 7:30pm 3:00pm
Worcester Family
Eyecare
closed closed 2:00pm 4:30pm 4:30pm 4:30pm unknown
WRTA closed 4:00pm 4:00pm 4:00pm 4:00pm 4:00pm closed
Z Café closed 3:00pm 3:00pm 3:00pm 3:00pm 3:00pm closed
88
Appendix C: Salem Enterprise Center Income and Expenses
Results taken from July 2007 – June 2008
Jul '07 - Jun 08
Ordinary Income/Expense
Income
DBT Grant Income 7,998.98
Rental Income
Rent - Building 3 498,395.55
Total Rental Income 498,395.55
Other Income
2008 Mott Grant 10,710.00
Other Income 6,500.00
Other Income 2008 150.00
Business Seminars 4,027.84
CEO Groups 10,725.00
Sponsorships 2008 35,500.00
Conference Room Income 5,619.24
AV Equipment Rental 25.00
Electricity Charges 26,099.94
Natural Gas Charges 3,693.10
Interest & Dividend Income 4,131.27
Other Income - Other 40,030.00
Total Other Income 147,211.39
Total Income 653,605.92
Gross Profit 653,605.92
Expense
66900 · Reconciliation Discrepancies 1.00
DBT Grant Expense 8,173.98
Miscellaneous 500.00
Administrative
Bank charges & merchant fees 326.27
Catering Services 6,485.77
Conferences & Training 1,036.00
Dues & Subscriptions 4,717.00
Comp & Equip repairs & mtce. 11,442.37
Internet Services 3,825.27
Mileage 747.71
Office Supplies and Expenses 6,166.76
Software 1,455.59
Telephone 1,016.44
Travel & Expenses 894.03
89
Total Administrative 38,113.21
Bad Debt Expense 6,484.94
Interest/Taxes/Contributions
Mortgage Interest 20,010.78
Mortgage Interest - Buildout 52,134.20
Late charges 51.07
Contributions 150.00
Real Estate Taxes 237.12
Total Interest/Taxes/Contributions 72,583.17
Facility Expenses
Insurance 268.05
Building Improvements 4,037.27
Building Supplies 4,023.42
Electricity 51,120.08
Janitorial Services 20,341.34
Natural Gas 26,890.55
Repairs and Maintenance 18,910.17
Security Services 3,563.68
Tenant Fit Up 4,479.77
Trash Collection 4,165.85
Total Facility Expenses 137,800.18
6560 · Payroll Expenses
Assisant Director 5,230.80
Contract/Temp Labor 3,470.00
Operations Manager 53,192.99
Clerical Salary 31,938.90
Ex. Director Salary 77,489.91
Maintenance Salary 23,581.64
Intern 1,950.00
Employee Benefits 21,613.82
Outsourced Human Resources 10,449.74
Insurance - Workers Comp 1,799.82
Payroll taxes 13,993.23
Total 6560 · Payroll Expenses 244,710.85
Professional Services
Architect Fees 975.00
Audit Costs 5,375.75
Bookkeeping Costs 4,940.00
Legal Costs 1,387.50
Total Professional Services 12,678.25
Programs
2008 BPC expense 14,237.00
90
Chamber Flyer insert or labels 1,409.00
Advertising 270.72
Contract facilitators/speakers 5,800.00
Design Costs 10,327.00
List purchases 2,233.90
Mailing House Costs 1,643.00
Postage,Shipping & Delivery 21,476.60
Printing 11,483.76
Total Programs 68,880.98
Total Expense 589,926.56
Net Ordinary Income 63,679.36
Other Income/Expense
Other Expense
Depreciation Expense 137,400.00
Total Other Expense 137,400.00
Net Other Income -137,400.00
Net
Income
-73,720.64
91
Appendix D: List of Possible Locations
As of December 12, 2008.
92
93
94
95
Appendix E: Number of Creative Industries in Worcester in 2006
Data taken fromhttp://www.census.gov/epcd/cbp/download/06_data/index.html
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
Core Cultural Industries
Group 1 Cultural Goods Production
323110 Commercial Lithographic Printing
01603 2 0 1 0 0 1 0 0 0 0
01604 3 1 1 0 0 0 1 0 0 0
01605 3 2 0 0 1 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
Subtotal 10 4 3 0 1 1 1 0 0 0
323111 Commercial Gravure Printing
323112 Commercial Flexographic Printing
323113 Commercial Screen Printing
01603 1 0 0 0 1 0 0 0 0 0
01605 1 0 1 0 0 0 0 0 0 0
01610 1 0 0 1 0 0 0 0 0 0
Subtotal 3 0 1 1 1 0 0 0 0 0
323115 Digital Printing
01608 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
323117 Books Printing
323119 Other Commercial Printing
01604 1 0 1 0 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 3 2 1 0 0 0 0 0 0 0
323121 Tradebinding and Related Work
323122 Prepress Services
01604 1 0 0 0 1 0 0 0 0 0
01606 2 1 1 0 0 0 0 0 0 0
Subtotal 3 1 1 0 1 0 0 0 0 0
325992 Photographic Film, Paper, Plate, and Chemical Manufacturing
327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing
01602 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
327212 Other Pressed and Blown Glass and Glassware Manufacturing
01604 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
332323 Ornamental and Architectural Metal Work Manufacturing
333293 Printing Machinery and Equipment Manufacturing
334310 Audio and Video Equipment Manufacturing
334612 Prerecorded Compact Disc (except Software), Tape, and Record Reproducing
337212 Custom Architectural Woodwork and Millwork Manufacturing
01604 2 1 0 1 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01607 1 0 0 0 1 0 0 0 0 0
Subtotal 4 1 1 1 1 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
96
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
339911 Jewelry (except Costume) Manufacturing
01604 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
339912 Silverware and Hollowware Manufacturing
339913 Jewelers‘ Material and Lapidary Work Manufacturing
339914 Costume Jewelry and Novelty Manufacturing
339942 Lead Pencil and Art Good Manufacturing
339992 Musical Instrument Manufacturing
Group Total 27 11 7 3 4 1 1 0 0 0
Group 2 Cultural Goods Distribution
423410 Photographic Equipment and Supplies Merchant Wholesalers
423940 Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
424110 Printing and Writing Paper Merchant Wholesalers
01606 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
424920 Book, Periodical, and Newspaper Merchant Wholesalers
01605 1 1 0 0 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01607 1 0 0 0 0 0 0 1 0 0
Subtotal 3 1 1 0 0 0 0 1 0 0
443112 Radio, Television, and Other Electronics Stores
01603 2 1 0 1 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01606 5 1 2 1 0 0 1 0 0 0
01608 2 2 0 0 0 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
01610 3 2 1 0 0 0 0 0 0 0
Subtotal 15 7 4 3 0 0 1 0 0 0
443130 Camera and Photographic Supplies Stores
01606 1 0 1 0 0 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
Subtotal 2 0 2 0 0 0 0 0 0 0
448310 Jewelry Stores
01603 1 1 0 0 0 0 0 0 0 0
01604 2 2 0 0 0 0 0 0 0 0
01606 5 1 2 2 0 0 0 0 0 0
01608 5 4 0 1 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 14 9 2 3 0 0 0 0 0 0
451130 Sewing, Needlework, and Piece Goods Stores
01605 1 0 0 0 1 0 0 0 0 0
Subtotal 1 0 0 0 1 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
97
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
451140 Musical Instrument and Supplies Stores
01605 1 0 1 0 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01608 1 0 0 1 0 0 0 0 0 0
Subtotal 3 0 2 1 0 0 0 0 0 0
451211 Book Stores
01602 2 0 1 1 0 0 0 0 0 0
01605 2 1 0 0 1 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01609 2 1 0 1 0 0 0 0 0 0
01610 1 0 0 1 0 0 0 0 0 0
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 9 3 2 3 1 0 0 0 0 0
451220 Prerecorded Tape, Compact Disc, and Record Stores
01603 1 0 1 0 0 0 0 0 0 0
01604 1 1 0 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
01609 2 2 0 0 0 0 0 0 0 0
01610 1 0 1 0 0 0 0 0 0 0
Subtotal 6 3 2 0 1 0 0 0 0 0
453920 Art Dealers
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
712110 Museums
01604 1 0 0 0 0 1 0 0 0 0
01606 1 0 0 0 1 0 0 0 0 0
01609 3 1 0 1 0 0 1 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 6 2 0 1 1 1 1 0 0 0
812921 Photofinishing Laboratories (except One-Hour)
01602 1 1 0 0 0 0 0 0 0 0
01603 2 2 0 0 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 4 0 1 0 0 0 0 0 0
812922 One-Hour Photofinishing
01602 1 1 0 0 0 0 0 0 0 0
01606 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
Group Total 69 33 15 13 4 1 2 1 0 0
Group 3 Intellectual Property Production & Distribution
511110 Newspaper Publishers
01604 1 0 0 0 0 1 0 0 0 0
01605 1 0 0 1 0 0 0 0 0 0
01608 1 0 0 0 0 0 0 0 1 0
Subtotal 3 0 0 1 0 1 0 0 1 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
98
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
511120 Periodical Publishers
01602 1 1 0 0 0 0 0 0 0 0
01604 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
511130 Book Publishers
01608 1 0 0 0 1 0 0 0 0 0
01609 1 0 0 0 1 0 0 0 0 0
Subtotal 2 0 0 0 2 0 0 0 0 0
511191 Greeting Card Publishers
511199 All Other Publishers
512110 Motion Picture and Video Production
01606 1 1 0 0 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
01609 1 0 0 1 0 0 0 0 0 0
Subtotal 3 2 0 1 0 0 0 0 0 0
512120 Motion Picture and Video Distribution
512131 Motion Picture Theaters (except Drive-Ins)
01606 1 0 0 0 0 1 0 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 2 1 0 0 0 1 0 0 0 0
512132 Drive-In Motion Picture Theaters
512191 Teleproduction and Other Postproduction Services
01606 1 0 1 0 0 0 0 0 0 0
Subtotal 1 0 1 0 0 0 0 0 0 0
512199 Other Motion Picture and Video Industries
512210 Record Production
512220 Integrated Record Production/Distribution
512230 Music Publishers
512240 Sound Recording Studios
512290 Other Sound Recording Industries
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
515111 Radio Networks
515112 Radio Stations
01603 1 0 1 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
01612 4 2 0 1 1 0 0 0 0 0
Subtotal 8 3 2 1 2 0 0 0 0 0
515120 Television Broadcasting
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
515210 Cable and Other Subscription Programming
516110 Internet Publishing and Broadcasting
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
99
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
517510 Cable and Other Program Distribution
01605 1 0 0 1 0 0 0 0 0 0
01606 3 2 0 0 0 0 1 0 0 0
01607 1 0 0 0 1 0 0 0 0 0
Subtotal 5 2 0 1 1 0 1 0 0 0
519110 News Syndicates
519120 Libraries and Archives
01609 1 0 0 0 0 1 0 0 0 0
Subtotal 1 0 0 0 0 1 0 0 0 0
532230 Video Tape and Disc Rental
01602 1 0 1 0 0 0 0 0 0 0
01603 2 0 0 2 0 0 0 0 0 0
01604 1 0 1 0 0 0 0 0 0 0
01605 1 0 0 1 0 0 0 0 0 0
01610 1 0 1 0 0 0 0 0 0 0
Subtotal 6 0 3 3 0 0 0 0 0 0
541310 Architectural Services
01603 1 1 0 0 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01605 1 0 1 0 0 0 0 0 0 0
01608 4 3 1 0 0 0 0 0 0 0
01609 2 1 0 1 0 0 0 0 0 0
Subtotal 9 5 2 2 0 0 0 0 0 0
541320 Landscape Architectural Services
541340 Drafting Services
01606 1 1 0 0 0 0 0 0 0 0
01610 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
541410 Interior Design Services
01605 1 1 0 0 0 0 0 0 0 0
01607 1 0 1 0 0 0 0 0 0 0
01611 1 0 0 1 0 0 0 0 0 0
01612 1 1 0 0 0 0 0 0 0 0
Subtotal 4 2 1 1 0 0 0 0 0 0
541420 Industrial Design Services
01603 2 0 2 0 0 0 0 0 0 0
01606 1 0 0 1 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 4 1 2 1 0 0 0 0 0 0
541430 Graphic Design Services
01602 1 1 0 0 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01606 2 2 0 0 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 5 0 0 0 0 0 0 0 0
541490 Other Specialized Design Services
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
100
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
541810 Advertising Agencies
01603 1 0 1 0 0 0 0 0 0 0
01605 2 1 0 1 0 0 0 0 0 0
01608 2 0 0 1 1 0 0 0 0 0
Subtotal 5 1 1 2 1 0 0 0 0 0
541830 Media Buying Agencies
541840 Media Representatives
01603 1 1 0 0 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
541850 Display Advertising
541921 Photography Studios, Portrait
01603 1 1 0 0 0 0 0 0 0 0
01605 2 0 1 1 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
01609 1 0 1 0 0 0 0 0 0 0
Subtotal 5 2 2 1 0 0 0 0 0 0
541922 Commercial Photography
01605 1 1 0 0 0 0 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
611610 Fine Arts Schools
01602 1 0 0 0 1 0 0 0 0 0
01603 1 0 0 1 0 0 0 0 0 0
01604 2 0 1 1 0 0 0 0 0 0
01605 2 0 0 0 1 1 0 0 0 0
01608 1 1 0 0 0 0 0 0 0 0
01610 3 2 0 1 0 0 0 0 0 0
Subtotal 10 3 1 3 2 1 0 0 0 0
711110 Theater Companies and Dinner Theaters
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
711120 Dance Companies
01614 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
711130 Musical Groups and Artists
01602 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
711190 Other Performing Arts Companies
711510 Independent Artists, Writers, and Performers
01602 1 1 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01608 2 2 0 0 0 0 0 0 0 0
01612 1 0 0 1 0 0 0 0 0 0
Subtotal 5 4 0 1 0 0 0 0 0 0
712120 Historical Sites
712130 Zoos and Botanical Gardens
712190 Nature Parks and Other Similar Institutions
Group Total 91 44 15 18 8 4 1 0 1 0
Core Industry Total 187 88 37 34 16 6 4 1 1 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
101
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
Peripheral Industries
Group 1 Cultural Goods Production
323114 Quick Printing
01602 2 2 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01604 2 1 1 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
Subtotal 6 4 1 0 1 0 0 0 0 0
325910 Printing Ink Manufacturing
01610 1 0 1 0 0 0 0 0 0 0
Subtotal 1 0 1 0 0 0 0 0 0 0
327215 Glass Product Manufacturing Made of Purchased Glass
01604 1 0 0 0 1 0 0 0 0 0
Subtotal 1 0 0 0 1 0 0 0 0 0
327420 Gypsum Product Manufacturing
327991 Cut Stone and Stone Product Manufacturing
01605 1 0 1 0 0 0 0 0 0 0
Subtotal 1 0 1 0 0 0 0 0 0 0
327999 All Other Miscellaneous Nonmetallic Mineral Product Manufacturing
333315 Photographic and Photocopying Equipment Manufacturing
334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing
01604 1 0 0 0 0 0 0 1 0 0
Subtotal 1 0 0 0 0 0 0 1 0 0
334613 Magnetic and Optical Recording Media Manufacturing
336612 Boat Building
Group Total 10 4 3 0 2 0 0 1 0 0
Group 2 Cultural Goods Distribution
423620 Electrical and Electronic Appliance, Television, and Radio Set Merchant Wholesalers
423920 Toy and Hobby Goods and Supplies Merchant Wholesalers
424990 Other Miscellaneous Nondurable Goods Merchant Wholesalers
01602 1 1 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01604 1 0 0 1 0 0 0 0 0 0
01606 1 0 1 0 0 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 3 1 1 0 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
102
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
451120 Hobby, Toy, and Game Stores
01602 1 1 0 0 0 0 0 0 0 0
01603 1 1 0 0 0 0 0 0 0 0
01604 1 0 1 0 0 0 0 0 0 0
01605 1 0 0 0 1 0 0 0 0 0
01609 1 1 0 0 0 0 0 0 0 0
Subtotal 5 3 1 0 1 0 0 0 0 0
451212 News Dealers and Newsstands
01608 2 2 0 0 0 0 0 0 0 0
01609 1 0 0 1 0 0 0 0 0 0
Subtotal 3 2 0 1 0 0 0 0 0 0
453220 Gift, Novelty, and Souvenir Stores
01602 1 1 0 0 0 0 0 0 0 0
01603 1 0 0 1 0 0 0 0 0 0
01604 1 1 0 0 0 0 0 0 0 0
01605 1 0 1 0 0 0 0 0 0 0
01606 2 2 0 0 0 0 0 0 0 0
01608 3 3 0 0 0 0 0 0 0 0
01614 1 1 0 0 0 0 0 0 0 0
01655 1 0 0 1 0 0 0 0 0 0
Subtotal 11 8 1 2 0 0 0 0 0 0
453998 All Other Miscellaneous Store Retailers (except Tobacco Stores)
01601 1 0 1 0 0 0 0 0 0 0
01602 2 2 0 0 0 0 0 0 0 0
01603 2 1 1 0 0 0 0 0 0 0
01604 4 3 1 0 0 0 0 0 0 0
01605 2 2 0 0 0 0 0 0 0 0
01608 2 0 1 1 0 0 0 0 0 0
01609 4 2 2 0 0 0 0 0 0 0
01612 1 0 1 0 0 0 0 0 0 0
Subtotal 18 10 7 1 0 0 0 0 0 0
Group Total 42 26 10 5 1 0 0 0 0 0
Group 3 Intellectual Property Production & Distribution
511210 Software Publishers
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
532220 Formal Wear and Costume Rental
01609 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
532299 All Other Consumer Goods Rental
01605 1 0 0 1 0 0 0 0 0 0
Subtotal 1 0 0 1 0 0 0 0 0 0
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
103
1-4 5-9 10-19 20-49 50-99 100-
249
250-
499
500-
999
>1000
541820 Public Relations Agencies
541860 Direct Mail Advertising
01603 1 1 0 0 0 0 0 0 0 0
01608 1 0 0 0 1 0 0 0 0 0
Subtotal 2 1 0 0 1 0 0 0 0 0
541890 Other Services Related to Advertising
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 1 1 0 0 0 0 0 0 0 0
611519 Other Technical and Trade Schools
01604 1 0 0 1 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
01609 1 0 0 0 0 0 0 0 0 1
Subtotal 3 1 0 1 0 0 0 0 0 1
711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities
01608 3 0 1 0 1 0 0 1 0 0
Subtotal 3 0 1 0 1 0 0 1 0 0
711320 Promoters of Performing Arts, Sports, and Similar Events without Facilities
01603 1 1 0 0 0 0 0 0 0 0
01605 1 1 0 0 0 0 0 0 0 0
Subtotal 2 2 0 0 0 0 0 0 0 0
711410 Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures
Group Total 14 6 1 3 2 0 0 1 0 1
Peripheral Total 66 36 14 8 5 0 0 2 0 1
NAICS
Code
Industry/ Zip
Code
No. of
Establishments
No. of Employees
doc_712703222.pdf