Representatives from Newtown’s Economic Development Commission, Elana Bertram and Jean Leonard, recently completed working with Community Development Director Elizabeth Stocker and a group of Sacred Heart University MBA students on a project to explore the potential for a business innovation center in Newtown.
According to Ms Stocker, the students and their professor attended the last EDC meeting December 10, making their final presentation on the proposal. Briana DiPietro, Marie Legagneur, Tara Orfei, and Joseph Zumasigee were primarily responsible for this latest report.
This project represents the final of three that focused on improving the commercial and business climate in Newtown. This group of MBA candidates explored the potential need for a business incubator in town, how it might be established, and the variety of ways creating a resource for Newtown’s start-up community could happen, Ms Stocker told The Newtown Bee.
According to the report presented to the EDC, the university’s MBA program for three consecutive semesters worked on an incubator business plan to boost Newtown’s economy. To that end, the incubator, named “Newtown New Business,” was born.
The report states that the name would be synonymous with entrepreneurs coming to a “new town” to create a “new business”.
“Newtown New Business is an affordable incubator where entrepreneurs with limited time, knowledge, and resources can turn their ideas and visions into successful ventures,” the report states. “As a general services incubator, Newtown New Business will provide infrastructure, Internet, consultants, funding, accounting, legal sources, and grants assistance to its start-up clientele.”
To provide such a range of services, students stated that Newtown New Business will require ownership and grants from universities, institutions, corporate entities, and local government.
“For this project to be tangible, students formulated financial projections, sources for funding, recommendations, and foreseeable problems.
“We have provided scenarios such as if one was to buy furniture rather than rent it, what would the loss or savings be, or if you rented a space for the incubator rather than renovate an existing building,” the report states.
The project objectives for the first two Sacred Heart MBA teams were as follows:
*Exploration of community needs for a business incubator and the town’s political and funding support for developing one.
*Secondary research of successful/unsuccessful investments in business incubators and economic revitalization of small towns. What works? What doesn’t? What are the issues? What are the business metrics for measuring success? Do they break even, or are they a cost center?
*Identification of at least two relevant and feasible business incubator types, along with recommendations based on secondary research of other successful business incubators and primary research of the town’s residents, business owners, and town officials.
*Detailed recommendations for future work.
Following extensive research, the second Sacred Heart student team supported the establishment of an incubator in Newtown. Also, the team recommended the following as various forms of incubators that could be established:
University-Town Partnership — The town should partner with a university to staff and run the incubator. Through this partnership, Newtown could benefit from the university’s subject matter knowledge base.
Private Industry Partnerships — Collaboration with private companies could be a way to source funding to establish the incubator as well as tap into the industry express of existing mature companies.
State and National Funding — The town should apply for state support as well as contribute a portion of the funds needed to fund the incubator
Venture Capital Firm Affiliation — Once established, the incubator should seek affiliation with a venture capital firm for purposes of securing funding for thriving and promising businesses that will be incubated.
National Business Incubation Association (NBIA) — The incubator should be registered with the NBIA in order to benefit from the various useful services that NBIA provides its members, including operational guidance.
Business Incubator Committee — This committee will consist of staff that runs the incubator on a day-to-day basis and committed corporate and prominent personalities. They will plan for and see through the successful operation of the incubator. The EDC will still be responsible for providing, and/or liaising with other sources for funding.
Fees For Use — The incubator should charge usage fees from clients. This could be on a determined weekly, monthly, or annual fee. A one-time usage fee could also be determined to paid by clients that opt for sporadic usage of the facility
Incubator Type — Newtown should operate a “service” incubator instead of a technology or manufacturing incubator.
Reliance On Neighbors
Since Newtown has a relatively small population with relation to its bordering cities and towns, the report concludes that for Newtown to successfully launch a service incubator, the town must utilize the bordering communities and self-employed individuals in those surrounding towns about an incubator that will suit local start-ups’ needs.
“If the goal is to bring more business into Newtown, then we must outsource new ideas, entrepreneurs, and talent from outside communities,” the report states. “This is in addition, of course, to fostering the ideas of the entrepreneurs located within Newtown.”
And since Newtown’s “services” industry, at 42.7 percent, is by far in the most populated industry for local occupations, the report recommends establishing a service incubator versus a technology incubator.
“We also believe that even with this data that the EDC should test the concept of a service incubator prior to investing in a brick and mortar location,” the report states. “Our proposal on how to test the local market on its need/desire for an incubator would be to promote the idea of an incubator throughout Newtown and get a sense of whether residents would be interested in becoming clients.”
The report recommends establishing a standalone center in rented space central to the Route 25 and I-84 corridors.
“We have researched locations that vary in size; the EDC can have different sized buildings available to them when trying to plan how the initial incubator location will be set up,” the report states. “We recommend a location that is approximately 2,250 sq ft in size and have presented locations that would fit this recommendation.”
To successfully launch an incubator operation of this size, the team is recommending an annual start-up budget of $800,000 per year.
The SHU team proposes that Newtown New Business and the EDC should seek joint funding from the town, state, corporate bodies, and academic institutions. Academic institutions could also provide the base for sourcing business education for clients.
Newtown New Business would have to charge fees for membership and the usage of incubator services to sustain its operations.
The new incubator should have a board of directors who will oversee the works of the incubator’s management’s activities. The board of directors should comprise a staff of the EDC, a volunteer from the town that has vast business management experience, a representative of each financier or sponsor should have slots on the incubator’s board, the report states.
The report concludes by reviewing potential challenges to the successful implementation of such an incubator.
Among challenges Newtown New Business could face is consumer retention.
“It would be beneficial for Newtown New Business to continue to promote monthly memberships as well as allowing/inviting in one-time users, to rent out conference rooms,” the report notes. “Newtown New Business will always have to make a conscious effort to update programs, education, and infrastructure in order to provide the best services to its clients.”