LC Bulletin: Small businesses rely on incubators to spur growth

May 27, 2011. Retrieved online May 31, 2011 from Chris Erickson, Las Cruces Bulletin

Arrowhead Technology Incubator provides services for small New Mexico companies

Traditionally, economic development has been about attracting new businesses.

Often, this is accomplished by offering incentives, usually prorated based on the number of jobs created, but such efforts are zero-sum in the sense that businesses attracted by one community are lost from another community. Moreover, businesses attracted by incentives often lack loyalty and are lost once incentives run out.

Economic development experts are coming to realize that growing local businesses, rather than attracting businesses from the outside, is a more effective means of promoting economic growth. Rather than getting into a bidding war for, say, a new manufacturing plant, the idea is to provide strategic benefits to local businesses thereby promoting job creation. The focus is on an environment for growing local entrepreneurs rather than recruiting businesses from elsewhere.

One tool that can be effective in this is business incubators, which are programs designed to help new local startups. Incubators help entrepreneurs take their business from idea to execution. They do this by providing services that fill the holes in the entrepreneurs’ skill set. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term.

Most incubators provide office space and administrative services, but the core of the incubator is the specialized services specialized to help start ups in particular.

The incubator supplies core professional and technical services required to successfully develop and market a product. Important services include marketing, accounting and help arranging financing.

Not all businesses are eligible to join an incubator and must be selected for membership. Some incubators specialize in particular industries, and nearly all seek start-ups with a fair chance of long run success. A key service of the incubator is to select businesses with high probability of success, signaling quality to potential investors. Graduation is usually after two or three years.

Locally, the Arrowhead Technology Incubator (ATI), located on the New Mexico State University campus, provides a range of business services, including marketing and business consulting. ATI specializes in energy, space and aerospace and national security, providing services to New Mexican businesses, especially southern New Mexico. ATI’s Director Chris Penner has a proven management record. He started as an information technology manager at a biotech firm. Later, he started a company selling his interest to a strategic partner.

Because ATI specializes in high-tech companies, it offers services specific to this niche, including product commercialization and technology demonstration and validation. The latter service is particularly important for small start-ups by providing third party certification needed by some buyers.

ATI can introduce start-ups to potential partners, such as Sandia and Los Alamos national labs and Spaceport America.

Read the Las Cruces Bulletin article.

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