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Closer Look
<br />
<br />Improving the Odds
<br />
<br />for Rural Incubators
<br />(adapted from an article by Mark Weinberg,
<br />Ohio University)
<br />
<br />Small business incubators are becoming a
<br />reality in rural areas. As their development
<br />continues, local government officials, ad-
<br />ministrators, and development profession-
<br />als need to carefully review the economy of
<br />the area and the level of government and
<br />community support before deciding what
<br />type of incubator to build in their com-
<br />munity, if any.
<br />
<br />Considerations should include the number
<br />of potential clients, availability of services,
<br />the economic development infrastructure,
<br />
<br />Business Incubators--
<br /> Helping the Rural
<br />
<br />the economic base, and proximity to a uni-
<br />versity. These things will he~p determine
<br />what type of incubator is appropriate, e.g.
<br />manufacturing, retail or high technology,
<br />and how it should be organized. Once
<br />these things are clear, local governments
<br />and developers have several options to im-
<br />prove their incubator's chances of success.
<br />
<br />One of the first issues is the pool of poten-
<br />tial entrepreneurs. If your area is adjacent
<br />to a larger city, it will be easier to recruit ten-
<br />ants. Either way, an aggressive marketing
<br />strategy is critical. The ability to market in
<br />rural areas is often limited because of lim-
<br />ited access to a regional media network. A
<br />good marketing strategy should tap into
<br />that network and proclaim the advantages
<br />of the amenities of rural living.
<br />
<br />Rural incubators may also have to be more
<br />flexible about the types of firms they will ac-
<br />cept. If the incubator is near a university,
<br />the Iow client pool can be overcome by
<br />focusing on business spin-offs from univer-
<br />sity research. The presence of a university
<br />increases the chances of high tach in-
<br />cubators in rural areas.
<br />
<br /> Rural based incubators may also need to
<br /> accept 'retail' entrepreneurs, traditionally
<br /> excluded from incubators. Most impor-
<br /> tantly, the incubator must be carefully
<br />
<br />geared to the types of businesses the are.=
<br />can support.
<br />
<br />The economic development infrastructur~ is
<br />measured not only by the availability of
<br />services, but also by the presence of pri-
<br />vate capital and a willingness to invest.
<br />Most rural areas do not have large bank5
<br />with the available resources needed for
<br />business expansion; rural banks rarely
<br />ticipate in complex loan packages, and
<br />small areas do not have equal access to
<br />venture capital.
<br />
<br />To increase the resources available to ru~l
<br />communities for incubator development, o-
<br />cai groups have several options. They ca-
<br />conduct a community fundraising drive
<br />Monmouth, Illinois article). Rural business
<br />loan funds can be established using Eco-
<br />nomic Development Administration or De
<br />,partment of Health & Human Services
<br />funding. Community Development Block
<br />Grants and Appalachian Regional Comms-
<br />sion funds can be used for facility renova-
<br />tion. Some state legislatures have
<br />established funds for incubator develop-
<br />ment, seed and working capital. A portio-
<br />of these funds can be set aside for rural
<br />areas to avoid competition with larger ur~n
<br />areas. In addition, rural areas must make ~n-
<br />creased use of university and communit)
<br />college services and facilities,when avait~le.
<br />
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<br />
<br />Economy Bloom
<br />
<br />by Jeff Sole
<br />U.S. Department of Agriculture
<br />
<br />Mention incubators in rural America and
<br />your associate may think you're talking
<br />about equipment to keep baby chickens
<br />warm.
<br />
<br />Mention that this can involve the welfare of
<br />56 million rural Americans, and your
<br />associate will listen closely-- because rural
<br />America has grown. In fact, during the
<br />seventies, rural and small town America
<br />grew faster than urban America -- bringing
<br />greater diversity to nearly every aspect of
<br />rural living.
<br />
<br />The Office of Rural Development Policy
<br />(ORDP) of USDA is helping these
<br />communities adjust to this new diversity,
<br />and strengthen local economies. The
<br />average farm family depends on outside
<br />employment for sixty percent of its income.
<br />If that income is from a local employer, the
<br />community is doubly strengthened.
<br />
<br />That's why the business incubator idea fits
<br />well with this local economic strategy-
<br />especially into a comprehensive downtown
<br />
<br />revitalization program. ORDP, working with
<br />the National Main Street Center of the
<br />National Trust for Historic Preservation, is
<br />promoting a program that can use business
<br />incubators to bring back bustling vitality to
<br />rural downtowns.
<br />
<br />Begun in 1977 and now encompassing 14
<br />states and more than 130 communities, the
<br />Main Street program has generated $148
<br />billion in investment, 547 new businesses
<br />and more than 600 rehabilitated buildings in
<br />the first 29 communities. The Department
<br />of Agriculture has developed a two-year
<br />program with the National Trust's Main
<br />Street Center to promote this highly
<br />successful approach in innovative ways.
<br />One hundred rural leaders from all 50 states
<br />attended the downtown revitalization
<br />institute sponsored in July.
<br />
<br />That was only the beginning. In September,
<br />the largest audience ever assembled for an
<br />educational videoconference, viewed a 51/2
<br />hour program on downtown revitalization.
<br />More than 22,000 people representing over
<br />2,900 communities participated. The
<br />program focused on the four points of the
<br />Main Street approach: organization, design,
<br />promotional and economic restructuring.
<br />Thousands of calls came from local areas;
<br />thousands of answers were discussed.
<br />
<br />The Iow initial cost and tax advantages
<br />available for rehabilitation investment can
<br />
<br />help turn architectural wonders into cent-.rs
<br />of business productivity.
<br />
<br />In Oklahoma, ORDP is working through
<br />another program to develop business
<br />incubators. Rural Enterprises, Inc., of
<br />Durant, Oklahoma is engaged in a
<br />comprehensive effort to establish new sr~all
<br />businesses, and to expand and diversify
<br />existing businesses. Rural Enterprises
<br />identifies a promising product or
<br />technology, then works with the inventor to
<br />bring it to market.
<br />
<br />Rural Enterprises has developed a
<br />business entrepreneurship curriculum t¢
<br />improve the potential of the region's
<br />residents to begin their own businesses
<br />
<br />When appropriate, these businesses car
<br />be started in incubator facilities at one o?
<br />three vocational-technical campuses in t~e
<br />area. The incubators provide rent-free
<br />space and an incubator manager who gi~es
<br />guidance in accounting, inventory control
<br />management, and production. ORDP ha~
<br />been involved with the project since Ma.~
<br />1983.
<br />
<br />Business incubators can help to keep tie
<br />link between farms and rural communities
<br />strong, by keeping small business in rura
<br />America blooming.
<br />
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