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November 21, 2013

Business incubator could open soon in Warrenton

File Photo/Lawrence Emerson
Steps at left lead down, directly to the second level at 70 Main St., where the incubator would operate.
Everybody we’ve shown it to has been impressed.
— Mles Friedman, county economic development director
Business incubator
• What: A center with inexpensive office space, meeting/training rooms, equipment and technical support to help startups and small businesses grow and “graduate” to their own offices.

• Where: 3,200 square feet at 70 Main St. in Warrenton.

• Partners: County government, George Mason University and possibly chambers of commerce.

• Operating costs: Estimated $123,430* in first year, rising to $158,240, when it would generate surplus revenue.

• Director: Mason Enterprise Center employee, earning $70,000 salary, included in operating costs.

• Up-front costs: Estimated at $63,500* for furniture, AV equipment, phones, network equipment, etc. Excludes real estate.

• Rent: About $4,500 a month.

• Decision: Rests with board of supervisors Dec. 12.

• Other centers: Mason has business incubators in Fairfax, Leesburg, Prince William and Springfield.

• Website: http://www.masonenterprisecenter.org

* = Estimates based on planning for a larger center. No updated figures available.
By .(JavaScript must be enabled to view this email address)
Editor
George Mason University could open a business incubator in Old Town Warrenton by February.

Fauquier County Economic Development Director Miles Friedman will present a lease for the space to the board of supervisors Dec. 12.

The board probably will vote unanimously to approve a two-year lease.

It would obligate the county to monthly rent of about $4,500. Fauquier plans to lease 3,200 square feet in the five-story office building at 70 Main St., Mr. Friedman said.

The supervisors last week gave him authority to negotiate the agreement.

The Mason Enterprise Center would hire a site director, earning $70,000 a year, to manage the Warrenton incubator/accelerator, designed to help start-up and young businesses grow.

Incubator tenants would pay rent to offset the expense. Still, the county probably would have to help fund the center, at least for the next several years.

“I wouldn’t call it a subsidy,” Mr. Friedman said. “We won’t subsidize those businesses; they will pay market rent.”

Still, the supervisors in September reviewed projections that showed a $37,000 deficit in the incubator’s first year. In future budgets, the board almost certainly would create a new line item for the center's support.

Mr. Friedman suggested the county support should be considered “an investment.” The supervisors seem to agree. Recognizing the county’s need to grow its business tax base and local employment opportunities, the board unanimously has expressed enthusiasm for the incubator.

Startup costs will include furnishings and telecommunications equipment.

The space has a kitchenette and adequate network cabling. An elevator makes it handicapped-accessible, with restrooms off the common hallway.

Constructed in the early 1980s, the building has undergone renovations and remains in excellent shape, Mr. Friedman said.

“Everybody we’ve shown it to has been impressed,” he said.

The incubator would occupy second-level space, next to the Hidden Jules Café. The location includes private offices and open space, an ideal combination, according to the economic development director.

Tenants would have keys and access to the space 24/7.

But, it represents only a “short-term” solution, Mr. Friedman said.

Ideally, the incubator would have 8,000 to 10,000 square feet.

County officials also considered buying the 6,200-saquare-foot, bank-owned “Mural Building” at 25 S. Fourth St. and leasing 5,200 square feet at 70 Main. But, 2,000 square feet in the later building leased before the county could act, leaving the proposed location as the largest available on one level.

A fledgling company may lease space or a “virtual” presence — mailing address, support and occasional onsite use — at the center.

“We’ve already shown it to two prospects,” Mr. Friedman said.

George Mason operates four similar business development centers in the region. The incubators offer support from university experts, along with office space, equipment use and networking opportunities.

The supervisors in June visited the 10,000-square-foot center that the Town of Leesburg owns and GMU operates.

Ultimately, a new center in Warrenton might house the county’s economic development staff and a chamber of commerce. Fauquier officials will consider building a new structure, perhaps on county-owned land between Chestnut, West Lee, Pelham and Waterloo streets — where temporary trailers house the cooperative extension offices.

Eighty-four percent of businesses “graduate” from Mason’s incubation centers around Northern Virginia and move to their own offices, Mr. Friedman told the supervisors in September.


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Uh....No · November 22, 2013 at 6:24 pm

Uh....no, I personally do not think this venture deserves taxpayer funding.

If someone wants to start a business it's up them to figure out how to jump through the hoops to get it off the ground and I sincerely hope they succeed and reap the benefits. I'm happy for them but they need to do it with their money and resources that we already have.

Good points Ziggy but don't ask the Fauquier Chamber for advise either. No real leadership, a clueless board and they seem to be barely running themselves.
RGLJA · November 22, 2013 at 10:51 am
This is not an effective use of taxpayer money at all. This incubator is an awful idea, because it is founded on the notion that government bureaucrats and academics know more about business than small businesses themselves. Do our Supervisors really think we aren't attracting businesses to Fauquier County because those businesses cannot find affordable office space to rent? That is ridiculous. Do they think small businesses are clamoring for some government "experts" to advise them? The entire idea is preposterous. This incubator will be just another government expansion that will cost more taxpayer funding year and year, with no genuine benefit. If we were serious about attracting new business to Fauquier County we would be removing the real impediments they face in high taxes and regulations. Government incubators in general have a dismal track record, and it looks like Fauquier County is doing nothing to improve those prospects with this poorly conceived implementation.
Ziggy · November 22, 2013 at 9:32 am
Before spending taxpayer money for this venture, I hope the public and our Supervisors will become familiar with the operation of an incubator and what it really means. There are pros and cons and all have to do with the style of the incubator, not the mere fact that you have one. What is lacking so far is a lot of details on how the incubator will operate. The ethos of this investment is certainly laudable, but the devil is in the details.

The first question everyone needs to ask, “What is the track record of incubators in general, what is the track record of the organization proposing to sponsor the incubator, and what is the track record of the individual who will be running the incubator.” It is important to note that research has shown that incubators are prone to: Only build relatively small companies; divert talent from higher-growth startups; good companies still fail after incubator programs; incubators attract companies that are already struggling; they contribute to the creation of a bubble. And of course when evaluating success, careful attention needs to be paid to the "Return On Investment" (ROI) for these operations. Are they really provided a net plus return on the investment or is it actually just a stimulus scheme that winds up costing the taxpayers money for every job created?

When evaluating success, do not rely on the marketing material from the people pushing the incubator. Research some of the independent research such as the Syracuse University study, “Boon or Boondoggle? Business Incubation as Entrepreneurship Policy.” One key quote from that study was, “The findings reveal that the effects of incubation are potentially deleterious to the long-term survival and performance of new ventures." They also go on to say, "... claims that business incubators are highly successful and serve a significant number of businesses are overstated.”
What is not included in the article is how much of a bite the incubator will take out of the business. Will there be a required commitment of capital by the startup? Will there be a required payment beyond the services related expenses? Will there be required annual fees? Will there be required time commitments by the participants? And once all the details have been provided, ask the existing small businesses in the County if they would use such a service given all the facts known about it or would they still have just done it on their own.

According to this article, “A fledgling company may lease space or a “virtual” presence — mailing address, support and occasional onsite use — at the center.” and “We won’t subsidize those businesses; they will pay market rent.”

A virtual presence can be obtained at several locations in Fauquier County already. What is missing is the cost to the business for this service and how this will compare to the costs at the other locations in Fauquier. Occasional onsite use is already provided at several locations in Fauquier County already. So what is the cost to the business for this service and how does it compare to the others? Add to that the fact that you then have Government (or a Government funded entity) competing with the private enterprises in Fauquier that already provide those services. And if they businesses are paying “market rent”, then again, why are we competing with the other spaces in Fauquier that might even be willing to give a break to startup businesses.

Please do not think I am saying this is a negative for Fauquier, just that we need to proceed with caution and look at other alternatives. Maybe the funds would be better spent just having a consultant review the County tax codes and regulations to determine if they are presenting a stumbling block to business startup in the County (a one-time expense). Maybe the funds would be better spent just having the space available for no-cost or low-cost training provided by our LOCAL business leaders to help others with startup questions. I think we have a lot of very smart LOCAL business leaders who can assist others with their business questions rather than bringing in a professor from another location to teach the same lessons.

Before we allocate a line item in the budget to create an incubator, maybe we should talk to our local business organizations (Chamber of Commerce, Vint Hill Economic Development Authority, Southern Fauquier Business Owners’ Association to name a few) to see if they can provide similar resources at the same or even less cost to the County. After all, we should not spend our tax dollars to recreate things we already have, or use our tax dollars to compete with the local businesses that already provide services that will be duplicated with an incubator.
lfccartwoodwrd · November 21, 2013 at 6:12 pm
I like Warrenton and if I ever get a chance to start a business,
or do something to support other businesses in my own way being
a former teacher, office support and Executive Assistant, I would
be interested. I hope it is approved and gets the O.K.
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