RESEARCH TEAM SAYS INCUBATOR FEASIBLE

A Southeast Missouri State University research team says a business incubator for Cape Girardeau is feasible under certain conditions.

"Cape Girardeau has a great deal to offer as a setting for an incubator," said Linda Cochran, director of economic development at Southeast Missouri State University. "An incubator is feasible if certain conditions are met."

Cochran met with members of the Cape Girardeau Chamber of Commerce's Small Business Committee Tuesday to discuss an incubator feasibility study that was completed this week.

"A lot of work is involved by the research team, and this report gives us the information we need to make a recommendation to the chamber," said Ray Duffey, who heads the incubator subcommittee for the Small Business Committee. "We polled all members of the committee following the presentation, and agreed to recommend that the chamber go for an incubator."

The idea for a business incubator in Cape Girardeau is not a new one.

"It's been talked about for a number of years," said Duffey. "After hearing the report on the survey, we're ready to go for it."

Duffey said the recommendation would be made during the chamber's Tuesday board meeting.

Business incubators are facilities that provide small, entrepreneurial businesses with the exception of retail with affordable space, shared support services, and business development service while helping the young businesses survive and grow during the startup period when they are most vulnerable.

On hand for the Tuesday session were Jamie Frakes of Portageville and Christy Mothershead of Benton, graduate students at the university who headed up the research project under the guidance of Cochran.

"There must be a strong community support and reasonable financial expectations for an incubator here," said Cochran. "Adequate seed capital must be secured, and potential incubator entrepreneurs should be identified as much in advance."

Cochran and the research team estimated that the startup costs could run as much as $800,000.

"We were liberal on cost and expense estimated," she said. "And, we were conservative on income the project would create."

The survey also includes three potential sites for an incubator. It cited several sources of startup revenue that may be available.

During her address to the committee Tuesday, Cochran pointed out the positives and negatives of an incubator.

"The Cape Girardeau market appears to be more conducive than the average community for small-business success," she said. "Nationally, about 80 percent of businesses fail within the first five years, but that percentage in Cape Girardeau is only 54 percent."

Cochran said the research team researched Cape Girardeau business startup data from 1985 through 1990.

"We looked at a variety of businesses," she said. "They included restaurants, retail and service operations, wholesale, and some light manufacturing.

Of 837 starts during the period, 487 are still operating.

"Good transportation, modern education, medical facilities and an able workforce are all strong points for the area," she said. "Cape Girardeau is a regional trade center, drawing in businesses from 10 or more surrounding counties."

On the negative side, however, only one of six local banks described itself as moderately progressive in lending policies to start up businesses.

"Most of the local financial institutions describe themselves as conservative," Cochran said. "However, participation in an incubator may encourage banks to lend more progressively to new businesses. Nationally, the success rate of incubator businesses is 80 percent, just reverse of non-incubator businesses."

Mothershead, who said the research team talked with 45 to 50 incubator operations, reported to the committee on local buildings that could be available.

"We looked at a list of several buildings which were available," said Mothershead. "We narrowed that list to three The Bunny Bread Building, 310 Christine, 44,000 square feet; Paramount Liquor Building, 2333 Rusmar, 30,000 square feet; and the Mid America Distributing Building at 2101 Highway 74 South, 45,000 square feet.

"Two of the buildings would have lease-back clients, which would provide annual income to the incubator," said Mothershead. "Bunny Bread would lease 9,000 square feet for its bread sales, and Mid America would lease a portion of the Mid America building for at least three years."

There are 346 incubators in 41 states, and the National Businesses Incubation Association estimates that by 1995 there will be 1,000 such facilities.

During the past three years, incubator programs have opened in two area cities: Carbondale, Ill., sponsored by Southern Illinois University's School of Business and the Carbondale Chamber of Commerce; and Poplar Bluff, developed by the Ozark Foothills Regional Planning Commission and Economic Development Association with involvement by Three Rivers Community College.