Incubating Technology

A program in Fulton County, Ga., helps IT start-ups leave the nest.

/ November 30, 1999
Government officials who recognize the value of the Web as an information and transactional tool now believe that its role in economic development -- bringing jobs and growth to a region -- is equally significant. Fulton County, Ga., officials are merging the two -- helping new information -- technology-based businesses stay afloat and transition into the marketplace.

The Fulton County Business Incubator (FCBI) established by resolution of county commissioners in 1995, is a full-service nonprofit organization that helps fledgling businesses in the volatile information technology and telecommunications industries through initial growing pains. The program, operating under the umbrella of the Economic Development Corporation of Fulton County, provides strategic marketing plans, market research, financial planning, office space and technical training.

"We've targeted two areas of the industry, information technology and telecommunications, because of their potential for growth and the creation of new jobs," said Gregory Allen, FCBI manager and CEO. "It's our goal, indeed our hope, as these businesses expand and grow, they will, in turn, graduate out into the community where they will employ its people and enhance the tax base."

The Internet plays significant roles in the incubation process: a promoter of the program, a tool for business development and, ultimately, a market for new products. Several of the 14 member-businesses offer Web products and services. One company, Summit Software Publishing, has launched a workforce-diversity tracking and utilization service under the banner eOfficemgmt.
com. Marketed to the private and public sectors, the system generates workforce-diversity and utilization reports from data input by users
via the Web. The system, used by Georgia's Department of Transportation, is intended to assist
government agencies and their
contractors comply with federal Disadvantaged Business Enterprise

Technology incubators have been helping hatch new businesses for years, but the exponential rise in Internet usage has given them new fields to conquer. The FCBI is one of the roughly 500 small-business incubators in the United States and Canada, according to the National Business Incubation Association (NBIA). Mostly nonprofit organizations operating under the guidance of economic-development initiatives within local government, incubators focus on particular business markets that suit the region where they're based. According to the NBIA, studies have shown that 80 percent of the businesses that evolve out of incubators are able to sustain themselves after graduating into the marketplace.

Warm Place to Grow

Start-ups are carefully screened before being granted FCBI membership. They must be small, typically one or two employees to start, and must not possess a dominant position in their market. An eligible business must have a tangible net worth of less than $2 million and an average net income not exceeding $500,000, after federal income taxes, for the preceding two years. Or, it must simply meet certain Small Business Administration rules and regulations. Finally, its intended product or service must be judged to have significant potential to fill a need in the marketplace.

"What we're trying to do is identify those companies that have the greatest potential for growth and success," Allen said. "If a business is a little too risky or we feel its technology isn't proven, then, in many instances, we'll pass on that business."

Recognizing that fast-thinking entrepreneurs often have good ideas but lack the organization to bring them into the market, the FCBI will grant associate-member status to a promising small business not quite ready for full incubation. Under this arrangement, a FCBI management team takes the business under its wing for up to a year, helping it meet the full-membership criteria and transition into the incubator as a full-fledged member.

Consultants assist a company with developing a business plan, cash-flow projections and market research. The business is plugged into the program's network of corporate- and educational-training programs, including programs at the Center for Entrepreneurship at Atlanta University and the Dow Jones Spelman College Entrepreneurial Center. Member businesses are also schooled in the art of financing from sources such as the Small Business Administration, private investors and joint-venture partnerships.

Perhaps the biggest obstacle the FCBI clears for a technology start-up is the need for a sound infrastructure with which to develop its product or service. In addition to strategic planning and management assistance, the FCBI offers low-cost office space fully configured with copy and facsimile machines, computer workstations, a high-speed data-communication system, conference rooms and clerical support. Volunteer professionals from the Atlanta community conduct in-house training seminars on the use of software and equipment.

Once admitted, FCBI member businesses are given three years to "graduate" from the incubator and become self-sustaining in the marketplace. To graduate, incubated businesses must generate $2 million in gross annual revenue, employ 10 or more full-time employees on site and require at least 1,200 square-feet of space for operations. Allen said businesses that fall short of these goals aren't suddenly on their own, as businesses that successfully transition out of the incubator are required, in turn, to help incubate new companies by serving as mentors.

"One of the great advantages of being a part of an incubator is you create a family of small businesses that learn from each other," Allen said. "We've found that, in many instances, companies that graduate from incubator programs are probably the most important component in stimulating the growth of new business."

Untangling the Web

Practicing what it preaches, the FCBI recently revamped its static Web site into a fully interactive, multimedia site. Employing the talents of one of its member businesses, the FCBI has expanded its site to allow interested businesses to apply for incubator membership online or submit requests for additional information.

"The Internet plays a significant role in advancing the growth of the companies we have housed in the incubator," Allen said. "We certainly want our own Web site to play a role in that."

Additional information is available by contacting Greg Allen, CEO/manager of the Fulton County Business Incubator, at 404/559-9466. Tom Byerly is an Elk Grove, Calif.-based writer. E-mail