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Bouncing Back |
by Linda Knopp -
NATIONAL BUSINESS INCUBATION ASSOCIATION
NBIA REVIEW - December 2006 Volume 22, No. 6
The
Owned and operated by the Industrial Council of Nearwest Chicago and its sister
organization, the Kinzie Industrial Development Corp., FCC was managed by a
series of property management companies during much of the 1990s. And the
results weren’t good. Incubator services dwindled, and clients lost their
connection to each other and their community. In fact, when ICNC Executive
Director Joyce Shanahan came on board in 1999, FCC was more a real
estate venture than an incubator. “There just wasn’t that sense of community
among the clients anymore,” Shanahan says. “The perception was that we were
just the rent takers, the bad guys. We had to change that culture.”
That effort took shape in 2001, when ICNC once again assumed direct control of
the incubator. But change didn’t come easily. During the time FCC was under
outside management, there was little focus on client services, minimal
investment in long-term building maintenance and inadequate attention to
managing the incubator’s finances, Shanahan says. As a result, FCC looked more
like an office building in disrepair than the thriving incubation program it
once was.
With a renewed focus on returning FCC to its incubator roots, ICNC expanded the
center’s business assistance programs and started much-needed facility
renovations. And their efforts have paid off: In the last two years, FCC has
welcomed more than 40 new client companies, most of which are owned by residents
of Chicago’s nearwest side, women and/or minorities.
In recognition of its turnaround, NBIA presented the
THE EARLY DAYS
When
a group of
As part of those efforts, ICNC, under the leadership of June Lavelle, secured a $1.7 million grant from the U.S.
Department of Commerce’s Economic Development Administration to purchase a
former plumbing fixtures factory that filled most of a city block. In 1980,
ICNC received that grant, purchased the facility and opened one of the first
five business incubators in the
By all accounts, the neighborhood wasn’t a thriving business community; both
the crime rate and the poverty rate in the area surrounding the incubator were
high. Yet, FCC was making a difference: Between 1980 and 1992, the incubator
helped create hundreds of jobs, and industry founders considered it a flagship
for incubation. In 1990, when the combined responsibilities of managing both
FCC and the industrial council became too much, Lavelle
gave up her ICNC duties to focus on running the incubator.
But trouble was just around the corner. In 1992, Lavelle
left the
During the upheaval, the industrial council turned over management of its
410,000 square feet of incubator space to a property management firm. “It was
thought that an outside agent handling the building would alleviate any issues
between ‘programs’ (ICNC’s role in the larger community) and ‘buildings’
(ICNC’s role as landlord),” Shanahan says.
But a for-profit property management firm has a different mission than a
nonprofit incubator. Because its main role was increasing profit, the property
management firm was concerned with signing new tenants – not with helping
start-up businesses succeed. Over time, the building became more of a
traditional real estate operation than an incubator. Business services dwindled
and delinquency rates grew. Next came another property
management firm … and another … and another.
CHANGE DOESN’T COME EASILY
By
1999, when Shanahan took over as ICNC executive director, the organization had
decided to refocus its efforts toward helping grow start-ups as an important
part of its work to create a thriving business community in the neighborhood.
But by the time FCC returned to self-management in 2001, the damage was done:
The facility needed major renovations, almost one-third of the tenants were
delinquent in rent payments, and client services were basically nonexistent.
ICNC wanted to return the incubator to its former glory, but they knew it
wouldn’t be easy.
“The first major task was hiring staff with the skills and knowledge in
business development and property management and the determination to implement
change,” Shanahan says. Since 2001, the ICNC staff has grown from three to 14,
funded by federal, state, local and private grants.
“ICNC services are funded entirely through grants,” Shanahan says. “We receive
over $500,000 a year in funds to provide services to companies in the Kinzie
Corridor, including our FCC clients. ICNC staff has increased with the grant
funding increase.”
Among the grant-funded programs available to FCC clients and other neighborhood
businesses are two workforce development/employee skill training programs: the
Employer Training Investment Program and TIFWorks. Funded by the Illinois
Department of Commerce and Economic Opportunity, the Employer Training
Investment Program allows ICNC to reimburse businesses for up to 50 percent of
the cost of employee training. TIFWorks, funded through the Kinzie Tax
Increment Financing District and administered by the (
With funds from the U.S. Small Business Administration and the Illinois
Department of Commerce & Economic Opportunity, ICNC also opened an on-site
Former ICNC property manager Violette DesChamps used her architectural
background to help clients build out their space. As an experienced mediator,
she also worked out individualized payment plans for the many clients who were
delinquent in their rents. ICNC’s financial manager spent hours helping
incubator clients with QuickBooks applications, and its office manager helped
design client marketing materials. “Relationships built on trust over time go a
long way in serving our clients,” Shanahan says.
But the ICNC staff knew that simply reviving its business assistance programs
and building good relationships with clients wouldn’t be enough to turn FCC
around. When you’re operating in 125-year-old facilities that haven’t been
properly maintained, you have to invest dollars – big dollars.
In 2002, ICNC took out a $3.25 million line of credit to fund long-term
building improvements. With these funds, FCC installed 700 energy efficient
windows and 75 insulated exterior doors, repaired and replaced roofs, improved
boiler/heating systems, updated elevator systems, and extensively reconfigured
client and common space.
THE RESULTS
The
investment of both time and money is paying off for ICNC. FCC has operated at
99 percent occupancy for nearly a year, and its finances have grown stronger
each year. Building revenue increased by nearly $400,000 between 2002 and 2004,
and program income has grown in both aggregate amount and diversity of sources.
And clients are once again paying their rents; delinquencies decreased from 32
percent in 2001 to less than 8 percent in 2004.
FCC now serves as the focal point of ICNC’s efforts to provide services to
strengthen the more than 2,000 businesses in
In 2005, incubator clients and other local business owners came together to
produce a new event – the Kinzie Krawl – to introduce each other to their
products and services and to attract other entrepreneurs, neighborhood
residents and the media into the
“There’s no doubt that the key to the event’s success was a core group of
clients taking ownership of it and knocking on doors to get their peers to
participate, and then taking that energy out to the community,” Shanahan says.
ICNC isn’t stopping there, though. The organization hopes to one day renovate
and equip a commercial kitchen at FCC, and the organization recently revamped a
revolving loan fund for microenterprise clients. “The
community is growing stronger and more dynamic every day,” Shanahan says.
|
2006 Incubator of the Year |
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Industrial
Council of Nearwest Chicago Year established: 1980 Size: 410,000 square feet Focus: Mixed-use Current number of clients: 95 Number of companies assisted since opening: Nearly 300 Organizational structure: The Council of Nearwest Chicago, a 501(c)(6) organization, and the Kinzie Industrial Development Corp., a 501(c)(3) organization. quality services, which will create new jobs, increase wealth and enhance community development. Goals: “time to launch” for many companies. To enable business owners to focus on their core competence and business growth. To develop and nourish a collaborative community of small
business owners. |