The Nashville Business Incubation Center is making headlines in the Tennessean for “quietly fostering companies’ growth.” The author, Jamie McGee, does an excellent job of depicting what NBIC really is: practical. It highlights companies that have been successful during and after doing business with NBIC. Check out the article below!
Nashville Incubation Center quietly fosters companies’ growth
On my visit to the Nashville Business Incubation Center, Executive Director Angela Crane- Jones walked me through a 30- year-old Tennessee State University building that has a loading dock in the back, long bare hallways and very few windows.
“We’re not sexy,” she said matter-of-factly.
The incubation center is gritty, unglamorous and starkly contrasts against the new, sparkly Entrepreneur Center on the south side of downtown, which is outfitted with sleek meeting rooms and a Turnip Truck cafe and is often hosting events with big-name entrepreneurs and investors.
But the incubation center is not about being shiny and it’s not about venture capital. The entrepreneurs working out of the 21 office spaces have come there to bootstrap and grow their company without having to give up an equity stake. Through the center, a nonprofit, companies get a downtown location offered at far below market rate, subsidized accounting and legal services and access to zero-interest loans that can help them make the leap to bigger contracts.
Companies often come in as a mom-and-pop business, often in low tech sectors, and the goal is to grow them to a larger, job-creating company. But, instead of venture capital allowing them to scale quickly, they grow with revenues generated. As a result, the focus is on products and customers, without having to worry about finding investors.
“A lot of small businesses that are bootstrapped are creating a lot of jobs and have kept on going through this recession,” Crane-Jones said.
Take Zycron, for example. The company went through the center in the late 1990s. Now, it has six offices across the U.S. and in London generating more than $40 million in annual income and was named a top 100 fastest-growing inner-city company by Fortune last year. Other alumni include The Christie Cookie Co., Beacon Technologies, The Grilled Cheeserie and engineering firm K.S. Ware & Assoc.
“Just about every business in there is profitable; most are profitable from day one,” said J.J. Rosen, a mentor at the center and founder of Atiba. “It has a very practical aspect to it.”
The problem many small companies run into is they have landed a deal but need capital to produce enough goods to see the deal through. They can’t get a bank loan until they have two years of revenue under their belt, and they are reluctant to bring in an investor and share company ownership. The incubation center can loan $25,000 — or in some cases more — for three to six months, charging no interest.
In Crane-Jones’ 11 years at the center, she has not had one company default. Just like smart people don’t loan to unreliable friends, the center is very selective when choosing its companies, she said.
“By your second anniversary you can go to the bank, if we’ve done our job well,” she said.
And while the companies’ founders don’t owe interest or don’t have to share a stake, they do have to meet certain requirements that are aimed at helping them further. They must meet with an adviser every two weeks, and they must come to monthly meetings during which industry experts share advice on relevant topics such as marketing, accounting, legal issues and human resources.
Long list of alumni
While touring the building on 10th Avenue North, I was introduced by Crane-Jones to a commercial cleaning and infectious control company, Diamond Restoration, which had just moved in. Its chief financial officer was sitting on the floor of a small room with her laptop resting on paint cans while the other executives painted the office walls.
A few doors down, Charlie Tambellini showed me around his spice and sauce manufacturing plant, pungent with notes of garlic, paprika, cayenne, dill and celery. His company, Further Foods, makes the sauce according to recipe for several local restaurants — The Southern, Acme Feed & Seed, Edleys Barb-B-Que, etc. While he works on building a new site on a 100-acre farm, he is taking advantage of good rent near his clients.
“Everything comes with the place — trash, water, loading docks,” Tambellini said.
For that, he pays $1,500 a month for 2,000 square feet near many of his clients. As Crane-Jones explains, the more companies can save on costs, the more they can invest in their own company. In the two years Tambellini has been at the incubation center, Further Foods’ revenue has climbed to $700,000 from $20,000 and he has been able to hire five employees.
Further down the line, Michael Weiss operates MedForward, a company that does website design for physicians. In place of a window, he works under a picture of a cloud-filled sky.
What’s interesting about Weiss is that he came to Nashville from Baltimore because of the incubation center, having discovered it online. He pays $500 in membership fees that include his office space and access to business advisers, who recently coached him on the finer points of hiring employees. He has since made a company handbook and hired nine full-time staffers and subcontractors.
Crane-Jones has a long list of alumni companies generating several million in revenue and creating hundreds of jobs in Nashville and other cities. Weiss, Tambellini and founders of the 19 other companies at the center hope to join their ranks.
The incubation center is hungry for more mentors who can share their expertise with these small businesses. Just as local business leaders have rallied around new accelerator efforts through Jumpstart Foundry, the Entrepreneur Center and LaunchTennessee, they can support these bootstrapping companies as well. The companies — and their offices — aren’t necessarily glittery and they aren’t aiming to be the next Twitter or LinkedIn, but they are an important part of the city’s entrepreneurial network, bringing more jobs and more economic strength to Nashville.
Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.