In the face of persistent high unemployment, political leaders are showing a renewed interest in business incubators as a way to assist startup businesses and create jobs. U.S. Rep. Nydia Velázquez, D-N.Y., chairwoman of the House Committee on Small Business, noted in a March 17 hearing that small businesses are central to creating new jobs. Dr. Robert Strom of the Kauffman Foundation illustrated that point at the hearing, citing foundation research that "young firms, less than five years old are responsible for virtually all net new jobs. Absent startups, net job creation would have been negative for 22 of the 29 years between 1977 and 2005. When startups are included there are only three years of net job loss."

There are more than 1,100 incubators in North America, predominantly in the United States, according to the National Business Incubation Association (NBIA). These incubators are overwhelmingly nonprofit organizations that provide entrepreneurs with a variety of business support services, including rental office space, management guidance, technology support and assistance in obtaining financing. In a 2006 report, NBIA estimated that North American incubators in 2005 assisted more than 27,000 startup companies, provided full-time employment for more than 100,000 workers and generated more than $17 billion in annual revenue.

Tracy Kitts, NBIA's vice president and chief operating officer, says five characteristics define business incubation programs: 1) they have a selection process; 2) they work primarily with new companies, either startups or very young companies; 3) they offer comprehensive business assistance; 4) there is on-site management that coordinates and facilitates the delivery of those services; and 5) there is a graduation policy.

Kitts points out that business incubators not only help create jobs but also help to retain jobs, as 87% of the companies that graduate from incubation programs remain in the communities that supported them. "What I have seen is because incubation programs work with small startup companies, many of those companies are going to handle all aspects of their business locally whereas a larger company may be looking for offshore solutions to their manufacturing needs," he says.

The Georgia Center of Innovation for Manufacturing provides networking and resources to entrepreneurs and existing businesses alike.

About 3% of business incubators focus on manufacturing but 54% serve a variety of businesses that include aspiring manufacturers. That's the case with the Business Incubator Center in Grand Junction, Colo. The center is housed in a compound that was part of an old Department of Energy site and currently has 45 companies in the incubation program. About 15% of the companies are manufacturers.

"We are always looking to grow businesses that sell products outside the community and therefore bring money in. Manufacturing is one of the strongest industries in terms of improving your local economy," says Chris Reddin, executive director of the center.

Reddin says the Grand Junction area has suffered from a boom or bust economy, most recently in the case of natural gas. "We have natural gas resources here and they're fairly expensive to tap, but when natural gas prices rose, we had all kinds of drilling. Anybody who could pass a drug test could get a job for $25 an hour." But when prices fell, drilling dried up and local unemployment shot from 2% to 10%.

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