Introduction

The whole idea for this book started with a box of Kleenex. The box sits on top of my desk, at all times, in my office, within easy reach for all visitors.

There is a distorted relationship between Kleenex and entrepreneurs. The true entrepreneurs know exactly what I mean. For the rest of you, I will explain fully, right here.

Every morning at 6am I read the Wall Street Journal with my cat, Pearl. While reading the daily business news, I notice the same images that we all see throughout each day, whether in the paper, on the news, on TV in the gym as you are sweating on the treadmill, in the magazine racks: The contented grin of Bill Gates, the self-satisfied smirk of Mark Zuckerberg, the victorious guys of Twitter, white teeth gleaming after their successful IPO, still debating whether they have created an unfiltered, instant news source, or a personal GPS that lets you tell your 342 followers what you are thinking as you wait in line for your Starbuck’s mocha latte. Instagram, your self imposed electronic leash describing in vivid detail with a multi-pixilated graphic photo your $18.95 kale and avocado salad is now a part of our daily life.

Who doesn’t want to wear a hoodie to work? Who doesn’t want to quit their day job and set up shop in their garage to develop the next big social media, time saving device, or the next breakthrough app, maybe the new non-invasive blood testing device?

You think to yourself, “My IPO is right around the next corner.” Or the rejoinder, “I can be a unicorn.”

Yet, when I arrive at my office every morning for work, generally there is someone holding a five hour energy drink at my door, sleep deprived, appearing anxious, appearing desperate. Most likely, someone is waiting for my email reply on scheduling a meeting later that morning.

As I settle into my chair, I make sure that the box of Kleenex is within easy reach.

Then comes the outpouring of emotion (Pick one or more that apply):

My largest client is stringing me out to net 90 days.

I cannot make payroll this week.

I cannot pay for the materials to meet the new purchase order.

QVC needs me to scale up to 50,000 units. By Monday.

My partner will not cooperate.

The bank called again.

My father in law wants his money back.

My husband says I am wasting my time.

My wife wants me to get a ‘real’ job.

Their client’s lawyer called, again.

I have to move back with my parents

If they can’t pay I’m just out of business.

What am I doing wrong?

It is fair to say that not everyone is cut out to be an entrepreneur (more on that later). It is unfair to say that all incubator entrepreneurs end up pouring their tears into my box of Kleenex. But after nearly ten years as the chairman of one of the oldest, most successful and most high performing small business incubators, I can tell you the difference. I can tell you the tools and the resources and the features and the amenities and the facilities and the equipment and the resources and the personal attributes you need in order to attract entrepreneurs, to successfully grow a business, to provide explosive economic development, and to provide meaningful job growth.

The uncertainty of jumping off a cliff to start your own business can be lonely and terrifying. You need all of the help and support you can find. The lows can be deep and threatening. But the highs can be exhilarating and liberating. There is simply nothing better. But you have to be aware that the roller coaster of emotions in between is exhausting. The uncertainty from hour to hour, from day to day is nothing less than bewildering. The reminder of everything you gave up to start your own venture haunts you every waking hour, and, if you manage to get any sleep at all, it even haunts you then.

Larger than the story of the office Kleenex, there are some things we can all do. In fact, there are some things that we all must do, in order to ensure that America maintains its pre-eminent position as the world’s leading free enterprise economy.

We stand alone above every other economy because of the promise of opportunity. Every personal economic challenge can be met and overcome with a job. Every local economic challenge can be met and overcome with a job. National economic struggles can be met and successfully overcome with jobs, jobs and more jobs.

If indeed we are a nation of immigrants, our forefathers took the risk, they rose up and came to America in search of a better life, greater freedom, independence, and the hope of a meaningful life through hard work. The need and the desire to control their own destiny drove people to pack everything and come to America in search of a job and a better life for themselves and for their families.

Depending upon your own personal tolerance for risk, the greatest way to control your own destiny is to start your own business. Hard work, innovation, perseverance, responsibility, opportunity, and hope. This all leads to freedom, success, independence, personal wealth.

That is the beauty of the free enterprise system, and that is what separates the United States of America from every other country on the planet.

In this context, I am going to explore the role of government in economic development and promoting job growth. This is where entrepreneurship provides the best value, so we are going to explore exactly how to encourage and promote young entrepreneurs. On January 3, 2015, the Wall Street Journal front

page article claims that we now face “An Endangered Species: The Young Entrepreneur”.

To summarize, “The share of people under age 30 who own private businesses has reached a 24-year low……underscoring financial challenges and a low tolerance for risk among young Americans.” A low tolerance for risk, combined with the increasing burdens of student loans, help drive the young toward the security of a stable job with an established employer.

As the pendulum swings, The New York Times Business Section of Friday, August 20, 2021 proudly points out that “Year of Covid Fueled Surge of Start-Ups”. Specifically, “The coronavirus pandemic appears to have unleashed a tidal wave of entrepreneurial activity, breaking the United States – at least temporarily – out of a decades-long start-up slump.”

As we will explore in further detail later in this book, there is a close correlation between national unemployment rates and start-up activity. The lower our national unemployment rate drops, as jobs are created and filled, the national entrepreneurial start-up activity correspondingly falls with it. The risk of starting your own business is mitigated by the safety and security of fulltime employment, with as regular paycheck and with benefits and with prospects for advancement.

A private enterprise challenge we are experiencing now in the plunging rates in entrepreneurship deserves a private enterprise solution. We need to do everything in our power to attract, foster, support and encourage people of all ages, all races, all nationalities, and all genders to develop their ideas and to start and to own their own businesses.

Government assistance can generally be helpful at any level: Federal, State or even Local Municipal Government. After all, it is the overall general economy which benefits the most from new business startups with the companies’ growing payrolls supporting diners, office supply outlets, restaurants, coffee shops, local merchants, banks, attorneys, financial planners, consultants, and all of the ancillary industries needed by a startup company.

Mounting payrolls add revenues to the government coffers and contribute mightily to any concerted efforts toward a balanced federal budget.

Clearly, and with justification, there are many out there who think that the role of government is simply to provide the big three services: Education, Infrastructure and Security. After that, most people feel that government should just get out of the way and let free enterprise and the markets work their magic.

There is, after all, a clear case that can be made that Reagan Era deregulation in energy, airlines, communications, insurance and other major industries resulted poorly for companies like Enron, AIG, and WorldCom. But it also paved the way for companies like Southwest Air, Microsoft, Google, Dell, and Intel. These shining examples were all startups that through the perseverance of several individuals with

a dream and a better way, and are now major employers in our country.

Likewise, Clinton Era deregulation, especially through the elimination of the Glass Stegall Act of 1934 which for 50 years protected us all from self-dealing investment bankers, paved the way for the growth in our major banks jumping into broader, market influencing roles in commodities like ethanol, aluminum, uranium, markets which control energy, and complex derivatives like credit default swaps and collateralized mortgage obligations and synthetic collateralized debt obligations. You wonder what happened to the classic “2-3-2 Rule” when bankers paid savers 2%, lent out to local business owners and home owners at 3%, and were on the golf course by 2pm. JPMorgan made $21Billion dollars in 2021, and they have grown astronomically since Covid-19 (after fines, fees and justice department penalties) They did not make this kind of dough by lending to the local businesses.

Government can and does help in areas to promote economic development and foster job growth. And government can do this in the main mission of Education, Infrastructure and Security. It is when security turns more broadly into protection. But the caution is that when government gets out of the way, the free market is left to its own devices, avarice creeps in, that’s when the principles of survival of the fittest and buyer beware kick in. The dark side of deregulation can certainly be traced to one of the leading causes of the meltdown of 2008 and everything that followed which is now affectionately referred to as the Great Recession.

Security broadens to protection. And that can include protection from ISIS, and al Queda, protection from fire and theft, protection from tainted foods, from Covid-19, from faulty buildings, and from toxic air, from Ebola and poison water, from bankers, even from ourselves.

Of course, government assistance with the Erie Canal, the Panama Canal, the transcontinental railroad, the Federal Reserve, along with the establishment of the Glass Steagall Act all did more to promote trade and free enterprise and entrepreneurship. So obviously, some balance has to be reached. President Obama’s ill-advised campaign speech of July 13, 2012 in Roanoke, Virginia caused so much controversy when he said, “Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that”. It was taken as an insult by every entrepreneur, but his point was that free market promoting government can be an asset. You can still set up a corporation in America in one afternoon.

After a brief contextual overview of the role of business incubators in creating jobs to further economic development, I am going to review for you all of the key elements in forming and operating a high performing small business incubator, including the facilities ramifications. Most of the segment will be focused on the real estate aspect of the incubator, not just because I am a real estate guy, but because it

is undoubtedly the key number one feature and it determines the entire success or failure of the model.

After you finish reading, you may still not be convinced of that, but if you ever attempt on your own to establish a small business incubator yourself, or you even explore the opportunity of joining an incubator setting, you will soon discover that the driving force behind the performance is the resolution of your real estate issues (expansion, contraction, flexible leasing, programming, resources, networking). In the meantime, if you go to the constant conversations shared on line at the National Business Incubator Association, you will discover the same thing. Number one issue: Facilities.

All of the major elements, location, office space, lease terms, flexible terms, amenities, furnishings, infrastructure, services, these are all addressed in detail and a thorough explanation of why these elements are critical to the success of your incubator model are covered in detail in Chapter 4.

Lastly, there are some distinguishing personality traits that must be addressed if you want a collaborative, high performing incubator to succeed. These are discussed and put into practical context within the anecdotal section of the book. Anecdotes are important here because there are lessons to be learned from studying individual cases. You can almost claim that there are as many valuable lessons to be learned as there are actual vetted companies. Almost each and every company has a lesson for you: A model to duplicate, or a behavioral type to avoid, a posture to be imitated, or a quality to discourage.

Each company, each entrepreneur is an integral part of a puzzle in the collaborative, cooperating atmosphere you need to assemble if you want a high performing, successful business incubator. The hallways are built as in a loop in order to encourage networking. The hallways are wide to accommodate heavy, two-way, water cooler conversation traffic because each company has something to offer the rest of the crowd. This is not a one way business where the Incubator gives and gives and the entrepreneur takes and takes.

This is a giving, sharing, learning environment where the real gift is not just to offer the strengths you have, but the real gift is to reveal the strengths that the other client companies have and the benefits that each company can bring to the success of your model.

If a newly formed marketing company entrepreneur wants to come into the incubator to acquire and develop a short list of new clients, turn them down. That’s a one way street going the wrong way. If anyone gives the indication that the reason they project to entering the incubator is for self-centered purposes, turn them down. This is covered in detail later in Chapter 7 under protecting your client companies from the industry predators.

Stay tuned here as we add more elements of the high performing small business incubator. These elements will include access to incubator services, relevant business programming, like business loans, insurance, human resources, capital resources, and business mentoring.

As always, we look forward to your questions, comments and concerns. Let us know your specific needs, and let us offer over 40 years of entrepreneurial experience to help solve your most serious business challenges.

More soon right here.

2.) Economic Development and Jobs

Economic development for our purposes here is the direct, qualitative and quantitative general improvement of living standard within a specified, geographic region and is a direct result of private or public policy as the result of direct and focused action.

In our examples here, the most direct way to jump start economic development in a particular region is to attract small business startups, encourage their success and development, provide the tools and infrastructure needed to nurture their growth and encourage hiring and investment, which results in more jobs and more space required.

To a particular town or city or region, this fosters more commerce related traffic, more local investment, more spending, more commercial activity. In the practical sense, more employees drive or train into town for work. They stop at the convenience store for their coffee and donut on the way to their cubicle. They get out at lunch, they shop at CVS for the basic hygiene needs, maybe stop at Nordstrom’s for the gift they need this weekend, maybe a peek into the bike shop. Perhaps they will have their spouse join them after work for a cocktail, or a quick dinner, perhaps even a movie. Soon you have a bustling, thriving, sustainable economy because a handful of startups succeeded in your town and began hiring. And startups want to be next door to other startups. This is living, growing, economic development which catches like a prairie fire.

As the local new company grows, they increasingly need the services of an attorney, an accountant, a community bank, a consultant, and hopefully a financial adviser. Soon the engine is primed.

Federal Budget Deficits and the Role of Jobs

To better understand the inter relationship between economic development and employment and jobs, let’s take a step back to briefly examine economic conditions, unemployment and entrepreneurship since the turn of the 20th century.

The most glaring example of job growth and the economic development can be viewed in the close examination of the Clinton-Gore Administration. During the Clinton-Gore administration, which was the largest economic expansion in American history, more than 22 million jobs were created in less than eight years.

This directly translated to the lowest unemployment in 30 years as the national unemployment rate dropped from 7.0% in 1993 to 4.0% at the end of 2000. This jobs growth we know led to the greatest economic expansion ever in the United States.

According to the United States Department of Labor, Bureau of Labor Statistics, unemployment rates tracked as follows in the years 1993 through 2001:

Month Federal Unemployment Rate

January, 1993 7.3%

January, 1994 6.6%

January, 1995 5.6%

January, 1996 5.6%

December, 1996 5.4%

January, 1997 5.3%

December, 1997 4.7%

January, 1998 4.6%

December, 1998 4.4%

January, 1999 4.3%

December, 1999 4.0%

January, 2000 4.0%

December, 2000 3.9%

January, 2001 4.2%

December, 2001 5.7%

Correspondingly, during this same period, according to the Congressional Budget Office, The United States federal budget has only run a budget surplus an alarming FIVE times since 1969. Four of those years were during this period of low unemployment:

Fiscal Year Budget Surplus

1998 $69.3 Billion

1999 $125.6 Billion

2000 $236.2 Billion

2001 $128.2 Billion

We can further see the clear connection between the increased employment figures and the direct effect on higher rates of home ownership, greater education, lower poverty, reduced welfare responsibility, lower crime rates, and increased job training.

Lower unemployment rates have a direct and immediate impact on increased federal tax receipts which contribute to lower federal budget deficits. In fact, the rise in employment figures was the leading contributing factor to eliminating the largest federal budget deficit in American history at the time, $290Billion(FY1992), and turning it into a budget surplus of $236Billion (FY2000). That was the last budget surplus we have seen. The connection between jobs and our federal budget simply cannot be overlooked.

When you begin to see the link between full employment and our balanced federal budget, you then see the need to focus on small business growth in America.

It is often said that small business is the backbone of America. The competitive nature of our small businesses is the source of strength in the United States. Why is that so often said?

***** Data and the role of small business in building America *******

) unemployment rates haunt US business and commerce

) the source of economic development is confidence to invest and spend

The solution is jobs. It is always jobs. Incubator Executive Director Tim Lavengood reminds us time and again, “The entrepreneur is never unemployed.” Provide the incentives and the tools to the entrepreneur and the jobs will follow and the economy will expand. Just get out of the way and let the forces of entrepreneurship work to build the US, just as they have done for well over 300 years. It is what separates this country from every other country on earth.

There are many among us who feel that economic development and providing jobs is a public (government) challenge that requires public, government solutions. Many municipalities across the country are already providing public tax payer support to grow business and fuel job growth.

Free enterprise challenge deserves a free enterprise solution. Personally I feel that the challenges of free enterprise require a solution from free enterprise. Free from government intervention and free from government regulation. Free of government reporting and free from government oversight.

Funding for your work in economic development will naturally come with strings attached

Private funding strings: Prompt financial reporting, performance milestones, budget restrictions.

Public funding strings and obligations: Taxpayer money will require strict reporting.

Foreign members of incubator: countries represented

America is where the world sends it’s young to get educated. It is where foreign entrepreneurs come to launch their businesses. It is still easiest to set up a new company in the USA than anywhere else on the planet.

When you are hiring, and when your neighbor is hiring and the economic engine starts humming, more workers are coming into your facility, they all grab a coffee on the way in, they need to eat lunch nearby, they will stop at Walgreens after lunch, they may stay late, grab dinner and maybe a movie or a cocktail. Suddenly the whole neighborhood is alive with your economic drivers and the local economy thrives.

It all starts with jobs. The pump is primed with good, high paying jobs.

1.) General Economic Cycles (Relationship down cycle and incubator growth)

Not all economic cycles are conducive to starting a small business and not all economic cycles are compatible with fostering job growth. Some cycles offer greater opportunities than others.

Let’s take the most recent example of the latest economic downturn in 2008. Despite what we attribute the causes to (wild speculation by investment bankers, losses on oversized bets inside the Wall Street casino that could not be covered, the abuse of the unregulated derivatives market, not recognizing the housing bubble, excessive risk in the credit markets) the latest economic recession (or depression depending on whom you speak with) serves as a great illustration in the role of small business startups and the economic downturn.

Despite the combinations of the perfect storm that created the downturn, as the general economy tanked through 2007, 2008 and 2009, we thrived. The more bad economic news was released to the general public, the more our phones rang off the hook. As many people realized that their jobs were lost, the more they turned to starting their own business. The more people came to realize that their former job was never to be recovered, they turned to pursuing the dream that they had quietly

harbored for several years leading up to the downturn.

The more that people scoured the internet ads for employment, the more they quietly schemed about setting up their own shop downstairs or out in the garage. Then more time they wasted waiting for the response on their resume which was submitted with 3,200 other waiting applicants, the more their spouse asked them to get their junk out of the garage or the basement and move it to a small office down the street.

With a flexible lease at a respectable business address, with some used furniture, with a cell phone and an internet connection on your laptop, you can be in business in less than week in this country. That is a feature that literally draws millions of people to American incubators every year. There is no place easier on this planet to start a small business than in the old USA.

The government assistance, the government encouragement, the lack of bureaucratic red tape actually led to President Barack Obama’s ill-timed remark “You did not build that” in 2012 as he intended to take credit for the governments ample assistance in helping small businesses address startup and growth in the face of the economic downturn. The reaction was swift and negative, but his point was not missed.

The United States government has always grasped the important value of the small business in the economy of America and for that reason has done its best to get out of the way and clear the road for greater innovation, higher employment and economic growth. The answer to every government challenge has always been more education and more jobs. It serves as the basis of our free enterprise system.

It is important here to point out an important observation. As the general economy improved, as large companies began investing in the American people and as hiring increased, there were less and less calls to enter the incubator. The temptation of a steady paycheck, better health insurance plan and more fulfilling work was too much for many young entrepreneurs with families to turn down. This phenomenon, the concurrence of declining incubator inquiries with an overall improving economic

condition is not viewed here as a coincidence.

*****Government responsibility in job growth

3.) History of the Incubator

One of the self perpetuating strengths of a high performing business incubator is its lasting legacy, the gravitas which is afforded based upon track record, reputation and duration. Being formed in 1986 and having survived every type of economic boom and bust, from the dot.com boom and crash all the way through the 2008 Great Recession and its recovery.

Having originated in 1986 in what was affectionately referred to as The Research Park, a new and innovative concept for the time, our Director of Economic Development (also an innovative term and position for the time) had the foresight to include a small business incubator, quite a novel idea for the time. He felt that economic development can come from three different approaches: Incentivizing current conditions, improving our marketing and attractiveness, and building a new model, The small business incubator was the new approach to attracting economic development.

One of the greatest quotes of all time in viewing downtown economic development came out of a group meeting I was fortunate enough to have attended with him. Speaking to a group about one of the consummate challenges of our downtown business district, I remember him claiming, “Not enough parking is NOT an economic development challenge. Rather, TOO MUCH parking is the real economic development challenge.” Think about it.

Anyway, this coming year will be our ((29 th)) year of being in the business of business startups.

Indeed, the fact that our business URL is theincubator.com speaks to the age, the duration, the success, and the credibility of our legacy. That we were among the first small business incubators in the country at that time and that we are still actively successful to this day, speaks volumes of our persistence and our resourcefulness, especially when today we are seemingly over run by accelerators and different incubator models.

In our rich history, we have thrived and survived because of our success, our track record and our resourcefulness.

In the self written history called “The Perils of Pauline”, our challenges, our tribulations are well documented and it serves now as a sort of institutional memory tracing our past.

At the outset, as a byproduct of the Research Park, we were enthusiastically supported financially by the City and by the University that originally founded us. That lasted for seventeen years until priorities changed, as interest waivered, and funding was eliminated. Peoples’ priorities in economic development and focus was diverted elsewhere.

The incubator was indeed in dire straits as funding dried up, as leadership was distracted in other “town/gown” distractions, infighting had taken over. Worse yet, the independently owned building which had served as our home had actually fallen into foreclosure and we were faced with mounting management issues. After 17 years of success and proud performance, the very survival of the incubator was in true jeopardy.

That is when two representatives came to see me about possible real estate solutions. It was then that serious facility issues came to the surface. The most serious challenges facing any non profit organization is the facilities issue. It affects every decision, from funding to expansion.

What I saw at that time was much more than a facilities solution. What I saw was an opportunity to revive a true economic driver in our City. Our local economy was a mess with infighting, self interests and no practical leadership. The claim was budget constraints, but it was not an issue of unavailable funding, it was an issue of misplaced priorities. Self interests had taken over and infighting was rampant.

Worse yet, our state government was starting to show obvious cracks in its budget as decades of “borrow and spend” policies uncovered our mounting structural deficits.

Even our federal government was ailing in a true reflection of the economic times. The Clinton administration had proven through improvement in nearly full employment, that the one true lasting reliable solution to all of these challenges, local, state and federal, was J-O-B-S.

In my mind, there was no better way to increase job opportunity than to foster economic growth through our country’s most enduring traditions – Entrepreneurship. Don’t take a job. Create a job. Follow a dream. Take the risk. Find a better way, a faster way. Make the investment. Start a company. Jump off the cliff. Determine your own destiny. Follow in the rich tradition of our country behind Rockefeller, Vanderbilt, Ford, Watson, Gates, Dell, Zuckerberg and thousands others. It all started with one small step.

The roots of our particular incubator go all the way back to the local push for economic development in 1986. In one of the last coordinated efforts in town at joint cooperation in what is referred to as “Town/Gown Relations”, there was a partnership set up between the local municipality and the university and a commitment was made to fund a research park. One of the key elements to the research park was a small business incubator.

Over time, the incubator grew and thrived and in fact, was named in 1997 as the Incubator of the Year by the National Business Incubator Association. Board of Directors composition included representatives from the local community bank, from the university, from the research park administration, from the city administration, and wisely, an intellectual property lawyer. Unfortunately, as time went on and as relations became strained between city officials and university administrators, the board meetings became forums for everything except the job of attracting entrepreneurs, small business incubation, economic development, and job growth. Furthermore, budget constraints slowly moved even economic development needs to the bottom of the list of funding priorities. Money was diverted to other more pressing shorter term matters, and the emphasis on longer term goals of economic development faded into memory.

As that emphasis shifted, the business of small business development got ignored, and leadership suffered, capital dried up, the building infrastructure was allowed to deteriorate, and finally, the building which housed the incubator slipped into foreclosure.

One of the oldest and proudest and most successful incubators in the country was in jeopardy of collapsing when the situation was presented to me in late 2005.

17 years of being in the startup business was in real jeopardy.

When the challenge was presented to me, the timing could not have been better. I was approaching the end of a personal cycle, having served eight years as an elected official in local government. The time was right for me to pursue an even greater challenge on a broader scale.

I made a conscious decision to build on the success and reputation and rich tradition of one of the country’s original small business incubators. I decided then and there to resurrect the failing incubator. I made a personal commitment to inject new leadership, new capital, new infrastructure and provide new headquarters and for four years I personally supported the incubator through my own personal resources. After the first four years, I realized that my enthusiasm was going to outlast my financial resources and as long as our mission was expanding and that we were attracting business start ups and providing real, meaningful jobs, but we needed some shared responsibility. The City was a true beneficiary of our work, reaping the real economic benefits of hundreds of local jobs and the ancillary benefits.

Fortunately at the time, this coincided with new City leadership, with a Mayor who had seen the real direct benefits of promoting the city through attracting entrepreneurs, new innovative companies, some based in new emerging technologies. Through her dedicated effort, over the opposing voices of diverse interests, we prevailed and we were awarded financial assistance.

With this added financial assistance and deeper resources, we were soon were recognized by Forbes.com as one of the Top Ten Business Incubators “that are changing the world” in 2011.

Despite the fact that we were growing and expanding, and despite the fact that through our efforts, additional recognition and more awards were granted, and despite the fact that we were providing true economic benefit to the local economy, our City funding was discontinued after three years.

We had peaked at 42 young companies providing over 200 jobs, just within the walls of the incubator. Throughout the city and broader regions, we were directly responsible for thousands of additional jobs. Those jobs supported hundreds of ancillary services in banking, consulting, accounting and law. Additionally, our entrepreneurs went out to lunch and went shopping locally every day in support of our local economy.

Through our efforts we had attracted entrepreneurs from six foreign countries: England, Spain, Japan, Belgium, India, and Canada. But despite all of this success, and despite our real contributions to the local and state economy, our viability was questioned, our model was vilified and our funding was discontinued.

We were forced into debt in order to continue our work and to continue our efforts to attract government assistance in any form. Borrowing was not the way to go, but as any small business startup, we were faced with the only option available if we wanted to survive.

(The debt haunts us to this day, but we are still in business thanks to the drastic steps we took that year.)

A mission like this cannot survive solely on relying upon public funding or on the changing whims of local public officials and administrators. This is after all, a private enterprise challenge, and it must be met with a private enterprise solution. If indeed you really want the government to just get out of the way, then you really cannot rely upon them solely for funding your important operations. I say this even though I truly believe that the local economy is the real direct beneficiary of any small business

incubator.

After our public funding was discontinued, we wandered in the desert for a full year, but continuing our work, continuing our self promotion, and adding to our track record of strong, direct results.

Through our resourcefulness and through our limited self promotion, we attracted the attention of a neighboring community who had noticed our successes and asked us to duplicate them in that location.

What followed was a vindication of our work…….

(3 + 1 + 3 + 1 + 1) Self, loan, City, none, Skokie.

Over 350 companies. Peak of 42 during my leadership

Board member contributions and resources.

New Headquarters Address the important facilities issues: proximity to transportation, jet fuel

New Leadership: Resources needed to carry on the mission

New Infrastructure: Necessary to attract entrepreneurs and to promote growth

New Capital: Resources necessary to market and grow a nationally recognized business incubator

Awards: NBIA and Forbes.com

You may want to include the copy of the Forbes.com Award in 2010.

You may want to include proof of the NBIA Award for Incubator of the Year

Add: Patch articles, Roundtable articles, awards.

5.) Facilities Issues

NBIA #1 issue is facilities related

Survey after survey after survey says: Cheap Rents #1 motivation

Therefore, Incubator must have cheap space in order to pass that on to client companies

That immediately leads to the discussion of the following:

Master lease vs tenant relationship with building: Let Exec Dir focus on building businesses, not collecting rents.

Location: Accessibility by car, bus, train, bike, boat

Surrounding area: working late, attract customers and staff

Lease terms: flexible, short term, low cost

Space flexibility: ability to expand, and contract

Furniture: keep costs low, money into business

Equipment

Kitchen: Full kitchen, coffee, fridge, microwave

Common area mail room

Conference room availabilities

Technology Infrastructure scalability, up and down

Parking: consideration for staff, for customers, for investors, for company board members and advisors

Proximity to transportation: El, Metra, bus, car, bike, and boat

Proximity to the jet fuel of every startup: Coffee and fast food

Need to accommodate the odd hours with safe, reliable, resourceful location

In most cases, this will be the worldwide headquarters of your client companies. You must be able to project the image, appearance, infrastructure, and resources to support that.

Let your client company focus on their core strength and business sales and business development.

You don’t want them distracted by the obligations of a three year binding lease commitment.

Most companies will not even know where they will be in six months. Do not set yourself or them up for failure.

Proximity to a major university and all of the rich resources they can provide: research, interns, student projects.

You need access to opportunities of student interns for meaningful work experience with vetted companies. Likewise, student projects can easily assist client companies with marketing research you could not easily obtain by yourself.

Continuing education opportunities are plentiful and mutually beneficial.

Facilities built out to encourage networking where ever and whenever possible

Built out as a loop to encourage that networking

4.) Key Elements of the high performing incubator Resources

NBIA resources: The real value as a network. The conversation.

University as a resource: Interns, case studies, student projects, research, market data

So a guy walks into the Incubator, explains his company and expresses an interest in joining up. We show him an office and set up the move. As he is signing the lease, he turns to me and says, “There’s one more thing”. (There is always one more thing.) He goes on to explain that he owns a player piano, he does not want to part with it, it comes with about 200 rolls of old time songs, but it won’t fit in the office we just rented to him. To move things along, I tell him to bring it with him, that I will hold it in the lobby until we figure something out. At that time he failed to mention that the piano does not work.

So we have a new client company. And in the incubator lobby sits an upright, electric player piano, with two boxes of “Dancin’ in the Rain” type rolls.

The point of this story is that even in a high performing, well networked incubator community as ours, sometimes we fail to recognize or fail to take advantage of the fact that entrepreneurs are generally well educated, talented individuals who more often than not have talents and resources well beyond their core specialty which they exhibit in their startup company. Just because a guy is a PhD in computational fluid dynamics does not mean he cannot be a baroque concert pianist. In other words, if there are talents and resources beyond an individual’s core competency in their startup, we ought to explore what those are and take advantage of them among our client companies.

I kept the player piano in the lobby, now fully operating in all its glory, as a musical metaphor for the Incubator. It was a constant reminder to explore and discover complementary talents, and work to share them among our members.

During the course of our business, many people often inquired about our “incubation period”. How long do we keep client companies? Why have some client companies noticeably seem to linger, not move on, not graduate, as if it was considered some type of stigma, or that they have failed to reach some magical milestone.

We never developed a structured, timed, developmental program with milestones to achieve which led up to you graduation and move out. Rather, there are true benefits to be harvested form some of our seasoned veterans, especially if they are willing to share some of their most valuable lessons.

It is very valuable to have on site, experienced entrepreneurs who have gone through dot com booms, dot com busts, recoveries, recessions, economic cycles up and cycles down. Folks who have enjoyed the exhilaration of hiring additional staff assigned to a new project, but also have languished in the heartfelt pain of layoffs and firings.

We have a guy who travels to China several times a year, has a Chinese wife, has many established connections in manufacturing in China. He knows how to successfully conduct business in China, he can spot the benefits as well as point out the pitfalls. If you are coming to an incubator and you are looking into establishing contacts, or you need to explore the relative advantages of manufacturing in China, it is important to have a valuable and knowledgeable source like this. We had several engineers, the type that build lasers, have lifelong collections of lab equipment necessary to assess everything from salt water to moon dust. If administrators in Japan needed to know the effects of pouring 63 million gallons of ocean salt water onto a nuclear reactor, say like Fukajima, he could tell them. This is a valuable resource to have around and I am not going to move him out because of a mandatory graduation time requirement. He is much more valuable to the new breed of entrepreneurial engineer.

Naturally, you need to focus on building up a cooperative, collaborative atmosphere to take advantage of those entrepreneurs who have blazed trails before you. It is important to recognize their talent and experience, but it is equally important to recognize that you cannot take unfair advantage of them either.

Provide all of the tools to meet the challenges of starting a business

Develop the strengths, avoid mistakes, eliminate the mistakes, address the weaknesses, fine tune the inconsistencies

Compatibility, Diversity of businesses, contributions, encourage networking and the sharing of ideas to everyone’s benefit

Access to dough: Not the primary driver. Maybe third or fourth

So what is one, two and three?

Admission requirements

Graduation requirements

NOT money as an attraction: Ability yes; Network yes; primary focus? No.

6.) Key elements to the Business Plan

Come in requesting $250,000, when all you need is a better business plan and $100,000 for a better marketing approach.

Make you address issues Make you adapt game plan

Strengths, weaknesses, opportunities, threats

Before you get behind the wheel, you need a flight plan. No one is going to take you seriously without a written business plan. You cannot even take yourself seriously without a written business plan.

And it really is not really even the business plan that is the important aspect. It is the process.

The process of writing a serious business plan forces you to carefully examine the market for your service or your product. It has to be realistic, as in, based in reality, and not your personal vision of reality. It must be objective, informative, detailed, researched, and precise. Everyone who reads it will have a special focus.

I concentrate on the management team and the financial projections. Many lenders will focus on the marketing and sales strategy, since that is how they get paid back.

Investors will scrutinize your experience and the velocity of return. They are comparing your plan to the other 320 business plans on their desk.

You can obtain this outline just about anywhere online, but basically here are the features:

1.) Executive Summary

2.) Business Description

3.) Definition of Market

4.) Description of Products and Services

5.) Organization and Management

6.) Marketing and Sales Strategy

7.) Financial Management

8.) Financial Projections and Analysis

I always have the entrepreneur include adding the real estate considerations. Office location, surrounding area, office lease terms, furniture, equipment, technology infrastructure, parking, access to public transportation, ability to expand (and contract), and of course, cost. It shows you have considered one of your earliest major expenses and obligations. It makes you consider physical surroundings, first impressions, customer access, attraction of staff and employees, your ability to make customer calls, get coffee, eat, stay late, transact the business of your business. It is an important aspect, and one you need to seriously consider before you launch. You had better be comfortable because you are going to be there a lot.

Finally, in business term jargon, you are going to hear the term SWOT. Spend a lot of business plan focus

on your:

1.) Strengths

2.) Weaknesses

3.) Opportunities

4.) Threats

This is where you include why your business, your service or your product will succeed. Why you are better. How you compare next to all of your competition, in all aspects of consideration, including: cost, location, price, management, resources, marketing. Here is where you explain why you are better, faster, cheaper, and how you intend to break into that market.

Nobody likes surprises. Explain what you believe are your weaknesses. Everybody has them. Simply explain yours and offer your plan to improve.

Explain why you feel there is a market for you, and how you perceive those opportunities. Why isn’t someone already doing this? What do you bring to the table?

Lastly, acknowledge your competition. Explain how you intend to drive market share and exploit the weaknesses of your competition.

And if I failed to mention it earlier, remember to be realistic. It is very important for the reader of your business plan to know that you have considered each of these things in your process. They will normally have questions, but they will remember that you have carefully considered these important elements. You never want to be in a position where to have to say “Good question” or “I don’t know” or “Let me

follow up and get back with you on that”. The product is important, but this is one time when the process trumps product.

Your business plan will continue to be a work in progress. It will need continuing attention, updating, fine tuning and tweaking. It will be evolutionary in nature.

Just going through the process may change the focus of your business based upon the discoveries you make and the research you uncover.

You need to remain flexible and open to this change. You need to recognize that you have to put the original plan on pause while you go off in a new direction, based upon your thorough research.

You may be forced to change your business model, or adapt based upon new technology, new developments, new legislation, new management.

You may even be forced to abandon your model if your research proves that the completion is too well positioned, or that your resources are not deep enough to weather the competition or a sudden downturn in the economic climate.

Where will you draw from to assemble your labor pool? What do you have to pay to attract the kind of employees you need? What will you have to offer prospective employees in terms of salary and benefits to attract them to your shop? What training will you need to offer? What investments in their abilities will be required to have them work efficiently and represent your company?

This is why you go through the process. This is why the process is so valuable. Take off the rose colored glasses for a while and look at your market realistically.

7.) Features Amenities Tools of successful incubators

Resources, Locks, privacy, conference rooms, networking, shared services, kitchen, access

With the space built out in a loop to encourage networking, you will quickly discover that the new perplexing or debilitating challenge recently experienced in suite #107, was just addressed and solved by the startup across the hall in suite #110.

Surveys: Why are you here? Why do you stay? What is most beneficial? What do you need?

Access to other entrepreneurs and like minded individuals, the ecosystem

The nurturing of ideas

Immigration assistance: attracting, keeping

Role of Predators and the Protection from

Factoring guys

Bankers

Real estate guys

Marketing guys

Salesmen

Investors: Time and place. Not the time and not the place.

At the front door, literally

Keep your head on a swivel

Worldwide marketing exposure and promotion

Mentorship, access to advisors, Role models

Access to resources: Universities, Lenders, Associations, consultants, accountants, customers

Shared resources: Infrastructure and exposure

Tours: in country, out of country

Special projects: Japanese students, foreign students, high school students

Engagement of high school teachers and high school students: Present opportunities

Encouragement of entrepreneurship everywhere, preparing the young

Showcase Events: Access to lenders, investors, advisors, consultants, customers, marketing types, networking opportunities, trading partners, constructive criticism, like minded individuals

Introduce disruptive technologies: (eg, 3D Printing)

Maker Fair movement: exposure

Access to Dough: Not the main priority

Building a strong network of alumni: Updates, communications, pitfalls

Dealing with lawsuits: the inevitable

8.) Services Programming

Services offered:

Legal: Corporate structure, protection of IP, Corporate records

Choices of LLC, Sole Proprietorship, Partnership, Corporation: Advantages/Disadvantages

Financial: Record keeping, budgets, forecasting, goals, financial statements

Accounting: Payroll, government reporting, tax returns, Income & Expense Statements

Business Planning: How to set realistic goals, how to meet those goals, how to adjust those goals

Funding Options: % ownership vs equity vs loan obligation

Help in articulation of business model: Elevator speech in front of suits

Business Plan competitions

Showcase Events (Investors, Mentors, Advisors)

Presentations in front of all audiences

Level of sophistication

Use of social networking

Web presence: worldwide exposure, credibility

Seminars, forums, continuing education, interns, business planning, goals, milestones, forecasting, budgets, goals.

Topics of most popular seminars:

How to obtain financing (loans, grants, government assistance, investors

Internet marketing and search engine optimization

Accounting requirements: Payroll, budgets, forecasting, bookkeeping

Health Insurance for the small business

Human resources (Hiring (and yes, firing, or affectionately referred to as

downsizing)

Development of IP, Protection of IP

Recruitment of help: paid and unpaid, where to look

9.) Personality Traits

In a great book I refer to just about everyone called “The Entrepreneurial Imperative” by Carl J. Schramm of the Kaufman Foundation, the author claims in his Chapter 5 that ‘Entrepreneurs Are From Venus, Managers Are From Mars’. Because your average entrepreneur is indeed an unusual creature, it is worth exploring the typical attributes in case you ever come across one and need to interact. There are particular traits, not all of them that flattering, which set the entrepreneur apart from normal human beings.

There are many reasons why people decide to become entrepreneurs. You know most of them.

>Make money.

>Cannot find an employer to notice their value in the workplace or hire them.

>Unwillingness to respond civilly to corporate memos.

>Desire to work alone. People just don’t understand them.

> Trouble with authority figures. Inability to take orders or to follow orders.

>

>

The true entrepreneur however? They do not decide to become an entrepreneur. That decision was made for them a long time ago. A long, long time ago.

It is no longer a choice for the entrepreneur. There is a drive, a focus, a passion, an ambition, a higher calling to get a job done faster, better, cheaper. Seemingly without caution or care about the consequences, the signal is tripped, or broken and our soon to be ‘former’ employee simply closes their eyes, holds their nose and just jumps off of the cliff without knowing where or when they are to land. After that, it is endless days and endless nights. When will the order be placed? How am I going to meet payroll? Where will the resources come from? When will I sleep again?

No longer can our entrepreneur tolerate the suffocating corporate structure. No longer can she sit through the endless meetings that seemingly have no other purpose than to decide when there will be the next meeting. No longer can he respond to the endless stream of corporate memos, quarterly reports, policy changes. The bureaucracy has become a straightjacket. The delays are impossible to overcome, and decisions come at a pace suitable for a glacier.

Employment no longer seems to be that warm, comfortable blanket of security and health insurance.

The bi monthly paycheck is not commensurate with the talent and ability. I can do better on my own.

The thoughts of innovation and efficiency have taken over my mind. I can no longer stay here.

Temptations of employment

Opportunities

Encourage good behavior and cooperation

Peer review of unacceptable behavior: Distractions, disruptions, unannounced visits

FTF issues

Gender Issues

Women in the workplace

Women and the technology workplace

Gender challenges That awkward element

Personality traits, accommodation for, dealing with aberrant behavior

Dealing with diversity

Why some succeed and why others fail

Persistence, innovation

In law financial support might include in law criticism

Dealing with disappointment: Kleenex, not everyone cut out

Downsizing, lowering expectations

No women when I arrived: Then marketing, philanthropy, food, education. Break that mold efforts.

10.) Anecdotes

Precision, Psylotech, CRI, Materials Development, Geofeedia, Better Whey, Sales-I, Recor, Design Factory, Illumen

Trade services, Build a network

Compare Incubator Models: success vs failures

Facilities issues: Old schools shut down, Industrial buildings, vacant offices

“This would make a good space for an Incubator”

Times come and times go. Markets change. Rents come back.

Lessons learned

Money, income, sales, stress, health, sleep: Do what you like to do

Too little sales, too much sales

Under promise, over deliver

Management styles, expectations

Famous quotes??

The entrepreneur is never unemployed

There are as many stories and lessons as there are companies

Success stories: Why did they succeed? Why did they fail?

What to avoid: Don’t do this

Student owned companies: Dangers in success (equity); Dangers in failure (liability)

Here’s why this won’t work…….

Be very careful of………

Unpleasant traits……..

List of companies as examples:

Precision, Enhanced Plasmonics, CRI, Engrana, Psylotech, Geofeedia, Sinode, Networked Robotics (platforms),

Contributing companies vs non contributing companies

The temptation of employment

Full commitment vs moonlighting

The BIG Jump

PhD vs PhD

Tracking companies and the challenges

Reporting income, size, employees

FAQ’s

11.) Bibliography

Entrepreneurial Imperative,

Freedom from Fear,

Hoover Memoirs,

Caught in the Middle,

Vanderbilt: The First Tycoon,

Hatching Twitter,

Abundance,

Too Big To Fail,

Stress Test,

0Coolidge

“The business of America is business” Calvin Coolidge

“Do what you love and you will never have to work a day in your life”_____________

A wise old owl lived in an oak. The more he saw the less he spoke.

The less he spoke, the more heard. Now why can’t we be more like that bird?