EDA Study Backs Business Incubation

TEC Dayton Archive

Important research just announced by the U.S. Department of Commerce Economic Development Administration (EDA) proves that business incubators provide communities with significantly more jobs at far less cost than do any other public works infrastructure projects – including road and bridges, industrial parks, commercial buildings, and sewer and water projects.

According to “Construction Grants Program Impact Assessment Report,” based on a study conducted for EDA by Grant Thornton, business incubators provide up to 20 times more jobs than community infrastructure projects (e.g., water and sewer projects) at a fraction of the cost.

This study reveals what we at The Entrepreneurs Center have known all along: Business incubation programs are proven tools for helping entrepreneurs grow successful businesses. And especially during times of economic crisis, it is vitally important that the nation leverage its existing investments in incubators to generate new jobs and innovations and to help individuals facing layoffs to start their own firms.

The Entrepreneurs Center, TEC, is a technology business incubator that has been located in downtown Dayton for the past eight years.  Of the fifty-one businesses that have been incubator clients, thirty-eight are still in business today.  TEC’s tenants have created 410 new high-tech jobs and retained 127 jobs.

The Entrepreneurs Center is an Ohio Edison Technology Incubator. This network of 13 incubators is funded in part by the Ohio Department of Development.  Last year these business incubators leveraged $90 in private investment for every $1 dollar of state funding.  Collectively, Edison incubators house 270 companies that employ 2247 people in Ohio.  These are good paying jobs with an average salary of more than $50,000.

The National Business Incubation Association (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.

An 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. Jobs created by incubators are enduring, high-paying positions with benefits that contribute to community and U.S. global competitiveness.

In today’s struggling economy, now is not the time to let these foremost job creators wither away. We appreciate your support for The Entrepreneurs Center in the past, and we encourage you to continue to help us serve entrepreneurs in the future. With your help, we can help America’s small businesses continue to create new jobs and return the U.S. economy to health.