Area Business 'Incubators' Help Budding Entrepreneurs With Planning, Execution
Whether it's Steve Jobs building a computer in his garage or Hector Boyardee cooking pasta at the Plaza Hotel, many American brands and businesses start from humble origins. Current start-ups seek to replicate that success, but they don't do it alone.
In this Friday Forum, WNIJ's Chase Cavanaugh discusses the groups that help northern Illinois small businesses get started.
Entrepreneurship is a promising but difficult job. People who believe they have a great idea for a product or service need to make sure there's a market for it and have a solid business plan. Fortunately, northern Illinois businesses can get help from various incubators.
One of the first stops for many startups is a Small Business Development Center, or SBDC. These are spread throughout Illinois and are distinct for their multiple levels of support. David Buchen directs the one at Sauk Valley Community College.
"Federal funding from the Federal Small Business Administration, it's funding from the State of Illinois Department of Commerce, and then the third partner has to be at least a host, which the college is, and then there's local match money," he said. "We are very unique here because we have over nine providers in the match area."
Those funders include five banks, three communities, and what soon will be three counties. Buchen says the money allows the SBDC to assist startups at no cost. One way it does so is by vetting business plans before an entrepreneur applies for a loan.
"We don't do it for them," he said. "We'll review it. We'll give them ideas for what they need to change, what they need to add. We'll find additional information that they might not be able to get ... and we'll help them get ready to go to the bank."
SBDCs also can refer entrepreneurs to accountants, attorneys and other professionals with specific areas of expertise. Buchen says their advice may help fledgling companies avoid costly, short-term shortcuts.
He gives one example of a business owner who decided to classify himself as a sole proprietor, rather than running an LLC because it would cost more. In this case Buchen noted that a person who slipped on the ice outside the company office could go after both the business and personal assets of the sole proprietor.
Finally, although SBDCs can provide plenty of advice, their time and personnel are limited.
As Marketing Coordinator for EIGERlab, a startup resource based in Rockford, Sherry Pritz also oversees the local SBDC. She says referring startups to local and nationally based mentors, such as the SCORE program, can provide the startups more individualized attention.
"So they might meet with you five times in one week," she said. "They might go to a manufacturer with you to help explain things, or a bank, or, you know, examples such as that. The Small Business Development Center, they may be able to meet with you on a regular basis, but it won't quite be like having your own mentor."
Small business development centers help get ideas off the ground, but EIGERlab also has a Center for Product Development that checks whether these plans can be turned into tangible goods. Director Mike Cobert explains.
"We will help with everything from the idea-on-the-napkin sketch, whatever it is they start with. We'll help with the engineering, any prototyping, testing, assembly, manufacturing, packaging."
EIGERlab has been around since 2004, when it worked with the Rockford Area Economic Development Council.
"There wasn't anybody providing the service in the area," Cobert said, "so what we decided to do is get into 3D printing and rapid prototyping so that we could help businesses get products to market faster and help them gain market share. We've been doing that now for 11 years."
EIGERlab became an agency of Northern Illinois University in 2015 and has broadened its reach to Wisconsin, the Chicago suburbs, and parts of Indiana and Iowa. Much of their projects are classified to protect trade secrets, but Cobert said his services can come in handy when companies are in a bind.
He cited a past example:
"'Hey, our largest client wants us to have a design and prototype of this part in two weeks, and our engineering department is so backed up, we can't touch it for eight weeks.' So we did," Cobert explained. "We engineered it. We made a prototype, sat down with them, reviewed it, re-engineered it, prototyped it again, and they ended up getting the order to their customers."
The EIGERlab product-development center differs from SBDC in that its services are not free to businesses. However, Cobert says things like consultations can be half the cost of what a for-profit group would charge (at about $70 per hour, versus $150 for a for-profit consultant). As for time commitment, projects could take from a few weeks in the case of the engineering boondoggle to several years if a product goes through the full development process.
But this research and development doesn't take place in a vacuum. The same people who seek out Cobert for engineering solutions also go to Pritz to find business coaches and attend workshops. Cobert says the most popular of these is their "Innovation Tuesdays."
"We'll bring in speakers from around the area, whether it's IT related, marketing related, funding related. People will like to find out, 'Can I find money?' And then we have all the technical stuff, new processes you can use for a manufacturing environment."
Thus SBDCs provide advice and get people connected with experts to start their business, and product development centers like EIGERlab tackle engineering hurdles. But there is still one thing that all start-ups require: office space.
In 2016, DeKalb County opened up a formal business incubator, which offers both individual and shared workspaces for start-ups to rent at a low rate. Economic Development Coordinator Jolene Willis explains.
"This is a service and an opportunity available to any and all DeKalb County residents that want to take that business idea out of their garage or basement, establish a professional space out of it and look for available resources and assistance."
The space was particularly useful for DeKalb County Community Gardens, a local nonprofit that grows organic vegetables. It began in 2012, but Director Dan Kenney says he didn't have a central location other than his home office. This also left him with no place to interact with the public. Though the incubator first helped with office space, it also provided similar connections to those offered by SBDCs.
"The incubator was very helpful to us because it connected us with SCORE, which is a volunteer organization that provides young businesses and businesspeople with mentoring. We went to a workshop there to develop our first business plan."
Kenney's nonprofit moved out to Walnut Farm, and he credits the incubator space with enabling it to grow. DeKalb's incubator has connections to NIU, EIGERlab, SCORE, local SBDCs, and other shared workspaces like what Pritz oversees in Rockford.
Willis aims for the DeKalb space to become an all-in-one source of services.
"We want to be that one-stop shop," she said. "We want to be that nexus for entrepreneurs to meet with other support services and mentors and providers if they need the space."
In turn, EIGERlab is using its NIU connections to create an "innovation network," combining its services with the connections it has made with regional partners. Together, they hope to act as a one-stop shop for northern Illinois entrepreneurs.