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The Appalachian Regional Commission (ARC) views entrepreneurship as a critical element in the establishment of self-sustaining communities that create jobs, build local wealth, and contribute broadly to economic and community development. A special ARC initiative has provided more than $35 million in support to more than 370 projects to help build entrepreneurial economies across Appalachia. More than 200 projects that have been completed report the creation of more than 1,200 new businesses and the creation or retention of more then 5,000 jobs in the Region.

Support and technical assistance for new businesses via business incubation, association development, and through private sector resources is one of four important components of ARC's entrepreneurship initiative. (More information about the initiative can be found at Communities often see business incubation as one component of an overall strategy for economic development, one that combines business attraction, retention, and expansion schemes with other entrepreneurial activities. The incubator's mission is to help firms grow to the point of viability after "graduation" from the facility, thus becoming an integral part of the local business community.

ARC's financial support for business incubation dates back to 1978 when the first award was made to Broome County, New York, for the construction of the Broome County Industrial Incubator. Since then, ARC has provided more than $17 million in funding for business incubation in the form of 108 different grants. Those project dollars have leveraged over $22 million in funding from other federal agencies, $8.3 million from the 13 ARC states, and $28 million at the local level.

Since 1997, a regional advisory committee has assisted ARC in its work to support the development of business incubators. Through the leadership of this committee, the Commission has sponsored a range of training and technical assistance activities to support emerging business incubators, and engaged the National Business Incubation Association (NBIA) to operate a mentorship program for communities interested in forming new incubators.

In 2001, ARC completed the first comprehensive survey of business incubators in the Appalachian Region. In summer 2004, ARC contracted with Greenwood Consulting Group, Inc. (GCGI), to conduct an update to the survey. The purpose of the update was to (1) collect current information on Appalachian incubators, and (2) identify any new incubators and those that had ceased operations since 2001. This information will be used for ARC planning purposes, to assist Appalachian communities considering starting incubators, and to allow operators of Appalachian incubators to compare their programs with incubator "norms" across the Region.

GCGI conducted this survey using four steps. First, the list of possible incubators in Appalachia was updated using a variety of sources, including the 2001 ARC survey list; NBIA membership listings; and personal knowledge of GCGI, ARC staff, and members of ARC's Business Incubator Advisory Committee (described below). Second, a survey form was developed, based in part on the one used in 2001, but with additional questions of interest to ARC. Some of the new questions would also allow GCGI to make comparisons with survey data from other sources, such as NBIA. Third, the survey form was disseminated to the list of existing Appalachian incubators, in both hard copy and electronic form. Fourth, results of the survey were tallied, analyzed by GCGI, and reported in this document.

The purpose of this report is to highlight the conclusions from the 2004 survey of Appalachian incubators. Some of the data are presented with comparisons, either with the 2001 ARC survey or with one of several earlier surveys by NBIA, where comparative data were available and useful.

Several caveats are in order. First, while every attempt was made to accurately and fairly represent the results of the 2004 survey of Appalachian incubators, there are often alternative interpretations or conclusions that can be drawn. The reader, therefore, is urged to review the individual survey results, as reported on the ARC website, Second, comparisons with prior years' surveys must be couched in terms of uncontrolled variables that may affect the comparisons or the conclusions that can be drawn from them. For example, one survey may be more heavily influenced by the large number of for-profit incubators that existed around 2000, but that number has dramatically decreased since then. In addition, different surveyors and different survey instruments may result in very similar questions being interpreted differently by survey respondents or analysts. Response rates also are relevant; for example, the 2004 ARC survey achieved almost a 90-percent-response rate among Appalachian incubators, while more typical response rates are less than half that number. Seventy-six responses were received, and another nine incubators were identified but did not participate, for a total estimated pool of 85 Appalachian incubators.

Readers of this report on the 2004 ARC survey of Appalachian business incubators should consider the following additional parameters in this study:

  1. Appalachian incubators are defined as those located within one of the counties in ARC's service area ( Therefore, some incubators that readers might believe are in Appalachia are not included in this survey if those incubators are not located within an ARC county.
  2. Consistent with the 2001 ARC survey, this analysis includes only incubators that have facilities; i.e., "virtual incubators" or "incubators without walls" are not included.
  3. The following simple definition was used to define an incubator for purposes of this project: An incubator is a facility with on-site management where services and programs are offered to tenants and other clients that collectively increase the formation, growth, and survival of small and start-up businesses. Therefore, a multitenant facility that does not provide business assistance services is not considered an incubator in this survey.
  4. Some of the survey results are presented as percentages. In these cases, the most appropriate base for each percentage was selected, whether it was the total number of survey respondents, the number of respondents answering a particular question in the survey, or some other quantity.

This report is organized into the same major sections that are found in the 2004 survey instrument. Each section includes a presentation of data, followed by conclusions drawn about those data. The information provided includes:

  • Incubator Characteristics—a discussion of incubator size, client typology, and outcomes achieved by incubators.
  • Incubator Services and Programs—a discussion of the range of basic office services and business assistance services provided by respondent incubators.
  • Tenant Exit and Graduation—policies regarding tenant exit and graduation.
  • Incubator Finances—size and source of operational revenue.
  • Staffing—staff educational attainment and salary data.

ARC is indebted to the ARC Business Incubator Advisory Committee, which provided input throughout this project. Members of this committee are:

Todd Christensen, ARC State Program Manager, Virginia
Jerry Davis, Executive Director, Shoals Entrepreneurial Center, Alabama
Jeff Dukes, Special Projects Officer, Mississippi Development Authority, Mississippi
Tommy Fouts, Executive Director, Smokey Mountain Development Corporation, North Carolina
Bill Goode, Acting Executive Director, Charleston Area Alliance, West Virginia
Lisa Ison, President, New Century Venture Center, Virginia
Don Masisak, Deputy Director, North Central Pennsylvania Regional Development Commission, Pennsylvania
Jeff Spencer, Executive Director, Ohio Valley Regional Development Commission, Ohio