There are 20-plus business incubators throughout Mississippi nurturing startups until their owners are ready to graduate and leave for their own location. The incubator experience gives the new ventures a boost in longevity.
“We do know that when people are part of an incubator organization, they stand an 80 percent chance of succeeding,” said John Brandon of the Mississippi Development Authority. That compares to about 20 percent for startups on their own.
Brandon said the incubators spread across the state operate independently with their own staff and governing board. “We do promote and encourage them and help them see the best practices in the field,” he said. MDA’s website features the incubators and their contact information to help market their services.
In 2012, there were more than 1,250 incubators in the United States, up from 12 in 1980. Most are “mixed use” while others focus on technology related business. Historically, 87 percent of all firms that have graduated from their incubators are still in business, according to the National Business Incubation Association.
Brandon said there are several reasons for the success rate, including proximity to other entrepreneurs. “You have neighbors to visit with who may have similar problems. You have a management team willing to help you, to sit down and go over the numbers or work on a business plan. And they’re sharing some services there.”
The shared services include office machines and high speed Internet and allow the business owner “to focus on the core business and not be as concerned about copiers or a fax machine.” Some incubators offer clerical staff services also to answer phones or send out letters.
Brandon said the number of business incubators grew in the 1980s and 1990s and by the early 2000s the expansion plateaued, mainly because all regions of the state are covered and because of the cost associated with establishing new facilities. “It is an expensive proposition to build a 10,000- to 40,000-square-foot building and put in offices and light manufacturing workspace,” he said.
Holly Kelly, executive director of the North Mississippi Enterprise Initiative’s enterprise centers in Oxford, Batesville and Grenada, said she’s seen good increases in the number of tenants over the last six years. “The biggest influx was when the economy took a dive and not because of any job loss. It was just the timing. They were ready to find their own space,” she said.
The 37,000-square-foot center in Oxford is the largest facility and has 11 tenants, mainly technology based companies. Batesville and Grenada have mixed use occupants in their 20,000-square-foot buildings with warehouse and office space.
The ideal tenant stays in the incubator one to three years, Kelly said. “In our incubators we do like to have anchor tenants, somebody to keep the cash flow going when you’ve got a turnover of tenants. That is particularly important to ours because we do not receive any public funding or outside subsidies.”
The Oxford incubator attracts university graduates as tenants, Kelly said, “but we also have had some professors and people in the community involved with technology that have come in.”
Dr. William McHenry executive director of the Mississippi e-Center which houses the Mississippi e-Business Innovation Center in Jackson, said the center has an average of 30 tenants. “We try to focus on businesses that use information technology because we have such great resources here to support those types of start up companies,” he said.
McHenry said the center is growing in the areas of workforce development and training. “I think in the next year or two you will see a lot of innovative things taking place at the e-Center.”
One success story to come out of the Mississippi e-Center is Navagis, which spent its first two years in the center and graduated two years ago. “For us the main thing was getting a good size office that we could afford,” said co-founder Ben Hubbard. He and the others also took advantage of an in house business coach who provided guidance and insight to the young entrepreneurs.
“We work with large companies and organizations that have their own data and create Google Map based software that allows them to visualize the data,” Hubbard said. Clients include the largest utility in the Philippines with 5.2 million customers and the fastest growing wireless provider in Indonesia.
Renasant Center for IDEAs is the Tupelo/Lee County Regional Business Incubator.
IDEA stands for innovation, development, entrepreneurship and action. Renasant Bank bought the naming rights to the building.
Judd Wilson, director of Small Business Development for the Community Development Foundation, said the Tupelo facility is a mixed use incubator with some light manufacturing space, office space and a section where cubicle space is rented by the month.
The Tupelo incubator program has had 15 graduates who have created more than 370 jobs.
“Right now we have 26 client companies in the building. Six are one-man shows in the cubicles. Of the 26 companies, they are employing 115 people right now,” he said.
Wilson said Toyota employees worked out of the second floor of the incubator while the Blue Springs manufacturing plant was being built. During that time, he said, the owner of a cleaning company formed a relationship with Toyota and eventually got a contract with the plant. The cleaning company now has a crew of around 60 employees.
Wilson counts startups that don’t make it out of the cubicles as success stories because the entrepreneurs didn’t lose a lot of money. “If they went somewhere else in the community they would probably have been locked into a long term lease,” he said.