Study Shows Incubators Are Wise Investment

A study released earlier this year clearly proves that business incubators need to be part of the job creation equation as the nation weathers the recession. Research conducted for the U.S. Department of Commerce Economic Development Administration (EDA)* shows that business incubators provide significantly greater results at less cost than do any other type of public works infrastructure project.

In the study of the economic impacts and federal costs of EDA construction program investments, researchers found business incubators to be a more effective means of creating jobs than roads and bridges, industrial parks, commercial buildings, and sewer and water projects. In fact, incubators provide up to 20 times more jobs than community infrastructure projects like water and sewer projects.

The study showed that EDA investments on average produce between 2.2 and 5.0 jobs per $10,000 in federal spending, for a cost per job of between $2,001 and $4,611. But business incubators create between 46.3 and 69.4 jobs per $10,000 in federal investment, for a cost per job of between $144 and $216.

"It’s important to note that the jobs created by incubator tenants are long-term jobs,” says Deborah King, director of the Springfield Business Incubator (SBI) at Springfield Technical Community College. "Also companies that get their start in incubators have a significantly greater chance of succeeding than non-incubated startups do. The SBA reports that only 40 percent of business startups are still in business after six years, but our success rate at SBI is 90 percent.”

To view the complete EDA report, visit http://www.nacce.com/?statistics