Rural Business
Incubators
Effects on Rural Economic
Development
Rural Business Incubators
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What are they?
Who might be attracted by these Incubators?
What are problems facing successful
development of Rural Business Incubators?
Recommendations
Examples of Rural Business Incubators
Rural Business Incubators
Defined
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Managed by public, private, and/or nonprofit
organizations and academic institutions,
incubators offer qualified businesses a range
of products critical to business success,
including space, shared office services,
business services, financial resources, and
tenant networking
Businesses participating in incubators may
have a better chance of success as operating
costs are lowered, access to business
counseling, and networking among tenants is
encouraged to facilitate information
gathering.
Rural Business Incubators
Defined
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The National Business Incubator Association
definition: A business incubator is a
comprehensive business assistance program
targeted to startup and early stage firms with
the goal of improving their chances to grow
into healthy, sustainable companies.
Businesses are allowed to start up in the
incubators but must move out after a
prearranged time period.
Rural Business Incubator
Potential Tenants
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A successful rural business incubator may
have a certain criteria that potential tenants
must meet but who might be attracted to a
rural area for a start up business.
“Lone Eagles” are perhaps an increasing
source of potential tenants to rural business
incubator facilities.
Rural Business Incubator
Potential Tenants
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“Lone Eagle” – Well-educated entrepreneurs
who use the latest telecommunications gear
to sell specialty goods and services all over
the country, if not world wide.
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Often times these individuals are tired of
dealing with the ills of the urban environment
such as crime, traffic congestion, smog, poor
schools, burdensome taxes, and the high cost
of living.
These individuals tend to be drawn to rural
areas by natural beauty, outdoor recreation,
no commute times, and lower crime rates.
Rural Business Incubator
Potential Tenants
Location of
Purchaser
Local Area
Lone Eagle
15.2%
Locally Oriented
Firm
89.8%
Elsewhere in
21.9%
State
Elsewhere in
20.9%
Region
Elsewhere in U.S. 24.9%
9.1%
Canada
8.1%
0%
Other Countries
9%
.1%
.7%
.3%
Rural Business Incubator
Potential Tenants
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Table illustrates the Lone Eagle’s reliance on
computer technology and telecommunications.
Must also have access to Overnight Parcel
Service (UPS or Fed X) and must be within a
reasonable distance to a airport.
Incubators could provide the appropriate
computer technology and telecommunications
infrastructure as well as training to these
potential tenants making the decision to locate
in a particular community that much more
attractive.
Problems Facing Successful
Rural Business Incubators
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Funding
Lack of community understanding of the
incubator’s role
Inadequate facilities or space for clients
Lack of full-time staff dedicated to the incubator
Lack of governing board involvement
Inability to follow up with client’s (graduates)
addressing client issues
Difficulty recruiting clients
It has been determined that size of community has
generally no affect on success or failure of a Rural
Business Incubator
Recommendations for
Successful Rural Incubators
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Conduct feasibility study preceding development of
a Rural Incubator Program. A study should
examine problems and give clear direction in
overcoming them.
Those involved in supporting and developing an
incubator should bridge political and organizational
boundaries to ensure that everyone in the
community who can bring value to startup
companies is coordinating their efforts for
maximum impact.
Recommendations for
Successful Rural Incubators
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Where entrepreneurship has not traditionally
been a strong part of the culture or economic
development strategy, incubation proponents
should work to educate and demonstrate the
impacts that startup businesses can have on the
community.
Incubator developers should make it a top
priority to hire and adequately compensate an
experienced top executive to oversee the
program and ensure that individual has the skills
to help companies succeed.
Recommendations for
Successful Rural Incubators
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Incubator developers should pursue all
pathways possible to ensure that the facility
is technologically up-to-date to meet the
needs of client companies.
Rural communities developing incubation
programs should continue to place emphasis
on improving infrastructure-from roads to
communications technology-through all
means available. This will help ensure
business retention.
Examples of Rural Incubators
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Maddock, North Dakota
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A community which had decreased in
population from 750 to 550 from 1986 to 1989.
Maddock Economic Development Corporation
(volunteer organization consisting of 10 to 15
individuals) started 15 years ago to try to
address Maddock’s out migration.
The answer was a technology center that
placed all of Maddock’s economic
development efforts under one roof.
Examples of Rural Incubators
(Maddock, ND)
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Decision to build technology center was based on
funding.
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Money appeared to be readily available to construct
Rural Business Incubators, so Maddock pursued this
course of action.
$400,000 from USDA low interest loans, $200,000 from
city of Maddock, $149,000 in USDA Grants, and
$25,000 from the state of North Dakota.
The building is now self-sufficient, pulling in enough rent
from its assorted tenants to pay $2,350 in dept service
each month plus $1,650 in operating expenses.
Examples of Rural Incubators
(Maddock, ND)
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The 12,000 sq. foot building features fiber optic
connection which offers the ability for 51 T-1
telephone line connections.
Current tenants include the Benson County
Information Technology Coordinator, Kids on the
Block Child Development Center, Homelink
Televoice, Young Entrepreneurs, Herm’s Repair
(computer sales and service), Innes Publishing,
Marianne Sears (CPA), Farmers Union Insurance,
Early Head Start and Head Start, Agri ImaGIS,
Touchstone Transport, and Nodak Insurance.
A study by the Maddock Economic Development
Corps. Indicates that the center employs 50 people,
75% of which would not be employed in Maddock if
it were not for the center.
Examples of Rural Incubators
(Maddock, ND)
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Implications of Center
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Education
 Has begun computer classes to educate residents on how to
operate computers and surf the internet and hope to teach
classes on website design.
Offers for computer terminals providing free internet access
to residents.
A renewed hope
 Before the center opened the pharmacist and grocery store
closed up.
 After center was constructed a new pharmacist moved into
town. He stated the reason for locating in Maddock was that
the center showed the towns character to survive. The
grocery store also reopened after center was constructed.
Examples of Rural Incubators
(Watford City, ND)
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Set up a “virtual” community technology
center, served by high-speed
telecommunications, where local citizens
upgrade their technology skills to move into
new or more advanced jobs. The promise of
a tech-skilled workforce attracted three
companies to the area, generating 80 new
jobs.