We’d like to bring your attention to a recent National Business Incubation Association (NBIA) press release.  The release talks about the economic stimulus bill recently approved by The House and on it’s way to The Senate.  NBIA has issued a “call to action” for all of us, to make sure business incubation is part of the overall strategy.  In support of this effort, NBIA is publicizing some very interesting research data and created a website with the tools and information you need to:

• Contact your congressional representatives and members of the Obama Administration
• Supply information to your local media and government officials about the EDA study
• Develop op-ed or other opinion pieces in support of business incubation

NEOinc will cover some of the main points after the break in this post.  If you’d rather get started right away however, you can hop over to the NBIA’s “Business Incubation Works” page right now for all the information and templates you need to make your voice heard.

None of this is news to NEOinc.  We believe business incubations works and is highly successful creating good-paying, long-term jobs in our region.  Our leverage in turning federal dollars into sales and investments flowing into our region historically runs well above 100 to 1.   Please join us in the push to add business incubation to the economic stimulus efforts currently underway.

The Highlights

According to a research study conducted for the U.S. Department of Commerce Economic Development Administration, business incubators provide communities with significantly greater results at less cost than do any other type of public works infrastructure project.

The EDA study, “Construction Grants Program Impact Assessment Report,” was prepared by Grant Thornton and announced earlier this month in an EDA newsletter. In a recurring theme throughout the study, the authors note that “EDA’s strategic focus on innovation and entrepreneurship makes sense, in that investments in business incubators generate significantly greater impacts in the communities in which they are made than do other project types.“

Another EDA-funded study in the mid-1990s found that 87 percent of all firms that had graduated from NBIA member incubation programs were still in business – and about 84 percent of those graduates remained in the incubator’s community.

NBIA estimates that in 2005 alone, North American incubators assisted more than 27,000 start-up companies that provided full-time employment for more than 100,000 workers and generated annual revenue of more than $17 billion. Many thousands more jobs have been created by companies that have graduated from these programs and now operate self-sufficiently in their communities.

The Details

Following are some details from the EDA Grant Thornton report.

• In a recurring theme throughout the study, the authors note that “EDA’s strategic focus on innovation and entrepreneurship makes sense, in that investments in business incubators generate significantly greater impacts in the communities in which they are made than do other project types.”
• According to the study, EDA investments, on average, produce between 2.2 and 5.0 jobs per $10,000 in federal spending, for a federal cost per job of between $2,001 and $4,611.
• The results of the investments vary greatly, depending on the type of project (see table below). Business incubators produce the greatest number of jobs per $10,000 in EDA investment (between 46.3 and 69.4), while community infrastructure projects (e.g., sewer and water projects) create the least number of jobs (between 1.5 and 3.4 per $10,000 in federal investment).
• As a result, business incubators create jobs at far less cost than do other EDA investments. Incubators have a federal cost per job of between $144 and $216, compared with $744-$1,008 for commercial structures, $1,291-$2,293 for roads and other transportation projects, $1,377-$1,999 for industrial park infrastructure, and $2,920-$6,972 for community infrastructure.
• The report notes that, by dollar invested and by number of projects funded, business incubation programs have historically been the least well-funded of EDA’s public infrastructure projects.

For more information

To see both of the documents referenced in this post, along with incubation FAQs and success stories, and letter templates for use in writing both your congressional leaders and Obama’s team members, head over to the NBIA Business Incubation Works website.