Business incubator ideas for small towns

In our weekly newsletter, we have talked quite a bit about what to do with empty buildings in your small town. Ron Hirst replied and offered such good information about incubators that I needed to share them with you, too. –Becky

Reflections of downtown buildings in the big small town of Hutchinson, Kansas. Photo by Becky McCray.

Guest Post by Ron Hirst, Director
Quest Center for Entrepreneurs, Inc.
Hutchinson, Kansas

Becky, I really appreciate your newsletter and I have passed items of interest that could be utilized in the rural communities that I assist to those who can put them into practice.  I noticed with interest several times that the idea of a business incubator has been mentioned. As the third ever Director of The Quest Center for Entrepreneurs in Reno County, the first business incubator in Kansas, I include some of only my own comments regarding incubators. The Quest Center was started in 1987 because there was insufficient space for start ups in Hutchinson and the economy had just suffered from a down sizing of a major employer.

While the mission has not changed, the method of applying the mission has. In other words just like a business, the business model must adjust to the environment which the business  must operate. Which is why 7 years ago we started an “Incubator Without Walls” program. This is where the Quest Center travels the county and meets with individuals, businesses, city councils and others in the 15 smaller rural communities, both incorporated and non-incorporated, in our county. In addition we work with local Chambers of Commerce, community associations, banks and other groups throughout the county. Not a duplication of services but allowing each organization know that we offer services that are not available elsewhere. We now have a decent amount of funds in our revolving loan accounts to offer direct and gap financing to qualified start ups, purchases and expansions of businesses.

In the case of turning a vacant building into an incubator, this can be an excellent program if proper elements are present, in my opinion. Also without some of the proper elements then the building could be like a revolving door. One startup, then another, and so on until it gets a bad name in the community. Owners of the building, private or city/county owned, have to be aware of the cost and direct return or no return on the operations of an incubator before venturing forth. Do owners of other potential lease space within the community look at the incubator as a competition for their space? Will the incubator need to have a core tennant/s in order to meet basic costs of taxes, utilities, maintenance and/or depreciation of any provided M&E?

The proper elements in my opinion would include:

1. mandatory business plan before consideration of occupancy,
2. someone or group to review the business plan giving the business an OK to lease,
3. a lease agreement based on a sliding scale charge with time,
4. ability to find or assist with start up financing,
5. proper liability insurance,
6. a mentor,
7. someone or small group to review P&L/financials and overall business operations of occupant on a monthly basis for a minimum of 6 months and then semi annually while occupying the building.

I believe if we (meaning all smaller communities) could really develop local investing in developing local businesses, utilizing their assets in formation of the business, then our rural communities and rural schools would have a much better chance of survival. In assets I am not just talking about finances but natural, cultural,  human, social, political, and built capital.  Community development and economic development need to happen together. Community Pride is there but sometimes needs a little nudge to grow.

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