Business incubation and job creation organizations work to keep North Bay communities thriving. An article written by Karen Hart in the September 2012 issue of NorthBay Biz magazine, featuring insights from Cynthia Murray, NBLC; Carolyn Stark, Executive Director, Sonoma County BEST and Jeri Gill, CEO of Sustainable Napa County.
It takes more than wishful thinking to grow the North Bay job market.
Sometimes you learn the hard way, but there’s always the potential to find a silver lining if you grasp the lesson and take positive action. That’s how Marin business groups approached things last spring after filmmaker George Lucas decided not to build a 270,000-square-foot studio in Marin County.
In early April, county officials were scrambling, trying to convince Lucas to continue pursuing his Grady Ranch digital media studio, which would have generated hundreds of jobs and millions of dollars. What’s more, it could have been a powerful endorsement of Marin and might have encouraged other companies to expand and move there.
But ultimately, the decision was final. Lucasfilm Properties decided to sell the Grady Ranch property and look elsewhere for a new studio site. It was a devastating loss for Marin, but the impact was felt throughout the North Bay.
“The key take away is that we regulate our businesses too much, and there were no incentives offered for Lucasfilm to stay,” says Carolyn Stark, executive director of Sonoma County BEST (Building Economic Success Together), who attended a meeting with Lucasfilm Properties to find out how Sonoma County could be more competitive. “Public policy decisions have to be good for everyone,” she continues, “but they should be focused less on code enforcement and more on working in partnership with business to promote economic vitality.”
“Lucasfilm was so disgusted with California’s state rules and regulations, especially the California Environmental Quality Act, that it will never do another project in California,” says Cynthia Murray, president/CEO of the North Bay Leadership Council. “Any future growth will occur outside the state and perhaps outside the country, as Lucasfilm is already expanding its operations in Singapore and Vancouver.”
The economic equation
Creating jobs to stimulate the economy is nothing new. Economic development organizations have been around for years. “A key effort of any economic development effort is to diversify the regional economy and yet build on strengths inherent to the region,” says Stark.
So what’s the key to attracting, maintaining and fostering business in the North Bay?
A successful economic development equation for job growth has to include five key areas, says Stark. First, work to retain and expand businesses in the community. Eighty percent of all U.S. job creation comes from existing small business expansion. “One of the cornerstones for growing jobs is to provide support and assistance to existing businesses,” she explains.
Second, attract new businesses. Third, support entrepreneurship. Fourth, foster a desirable business climate. And finally, create an environment that will attract and retain a quality workforce.
According to Stark, it’s absolutely essential to have these five areas in place for good economic development. “That’s the equation for job growth,” says Stark. “We’re successful if we look at all five of these areas together. You can’t just recruit people based on quality of life [in an area]. Many CEOs have trouble recruiting top talent to the region, because people want to know: Is there a possibility for another job nearby if this one doesn’t work out? Can my spouse find work in the area, too? Will my kids have good schools?”
Since a key part of the economic equation is to support entrepreneurship, North Bay business incubators have become a viable way to do that.
What are business incubators?
Business incubators nurture the development of entrepreneurial companies, helping them survive and grow during the startup period when they’re most vulnerable, according to the National Business Incubation Association (NBIA). The most common goals of business incubation programs are to create jobs in a community, enhance a community’s entrepreneurial climate, retain businesses in a community, build or accelerate growth in a local industry and diversify local economies.
Today, there are more than 1,200 incubators in the United States. “Many communities and organizations incorporate business incubation as part of their economic development strategy,” says Linda Knopp, director of policy analysis and research at NBIA.
According to an NBIA study, businesses that participate in an incubator program have a success rate of approximately 80 percent over a five-year period, compared to a success rate of 20 percent for nonincubated businesses. Many communities throughout the United States are forming business incubators and looking for ways to create and sustain businesses and draw new ones into their communities so they will thrive. Sonoma Mountain Business Cluster in Rohnert Park as well as incubators in San Francisco and Santa Cruz, are just a few examples of successful incubators.
“The business incubator concept is a time-tested and well regarded strategy to revitalize local economies and create job growth that’s relevant to the community,” says Jeri Gill, chief executive officer of Sustainable Napa County (SNC), a nonprofit organization started by the Gasser Foundation.
Growing new businesses
In Napa County, the seed of inspiration for a business incubator program took hold about nine months ago. The goal is to create high wage, white and green collar jobs and to help develop successful firms that will leave the program financially viable and independent, and that will stay in the community. The incubator was named Trellis Napa Valley (or The Trellis) as a nod to the county’s agricultural roots and for its renowned winegrape industry. “As the business plan develops, we’ll determine specific goals for the incubator,” says Gill. “For example, one of the goals of The Trellis is to graduate 100 companies in 10 years, employing 1,500 workers at an average of $50 per hour."
The Trellis plans to focus on technologies in the wine and fine food industries as well as green industry jobs such as renewable energy and clean technology. It also could draw in businesses in the biotechnology and high-tech industries. “Right now, we’re exploring our options, but we know for sure that we want to maintain a high-priority focus on technologies and innovations that support and serve the wine industry,” says Gill. “That’s the basis of our local economy, so we want to seize the opportunity.
“We’re focused on the three key elements of sustainability: the economy, the environment and the engagement of our community in issues that matter to them. We’re not looking to build, build, build.”
Top priorities of SNC include working with local stakeholders on policies and programs related to greenhouse gas emission reduction, energy efficiency and resource conservation, renewable energy and waste diversion. According to Gill, the SNC board of directors agreed that working to support a local business incubator was a good investment of their time and in keeping with their mission. “We think our incubator can help us grow purposefully in already developed areas.”
According to Gill, a business plan is nearly completed. “That’s our road map. We’ll identify what sectors we might attract, our appropriate criteria, and start appealing to potential clients,” she says.
The current location under review is the former Japan Airlines (JAL) facility in the Napa County Airport Industrial Area (AIA). The incubator will offer guidance and expertise in program areas such as law, finance, marketing, sales and human resources. In addition, it will offer new businesses office space and support services such as a receptionist and clerical staff as well as bookkeeping and shared office equipment. “People with good ideas don’t want to work in their garage or spare room, but then where do they go? An incubator is an effective and interesting alternative,” says Gil.
“We have a great location and worldwide recognition,” says Gil. “We’re close to San Francisco and other metro areas but still have small-town charm, and we’re accessible.”
The objective of The Trellis is to support the agricultural preserve and local land use policies regarding agriculture and open space. To help new businesses get started, they’ll pay below market rent the first year, the average market rate the second year and just above market rent the third year. “The idea is that [businesses] move out of the incubator into commercial space in our community. The incubator is a place to start, but not a long-term place to stay.”
According to NBIA, about 85 percent of businesses that graduate from an incubator program usually locate within five miles of where they started. This bodes well for the communities that support business incubators, because they stimulate and diversify the local economy.
An incubator is very customized to the local community and local economy. “As a result, we’re using a tested strategy and tailoring it to Napa County—and that ‘s good news. We can make it whatever it needs to be,” says Gill. “We’re getting input now from business leaders to see what they feel we need.”
People want to live and work in the area, rather than commute. “We’re hoping The Trellis offers solutions to some of the broader challenges that communities are facing, such as greenhouse gas emissions, traffic congestion and access to affordable housing. Our goal is to keep people here, living and working in our community.”
Stimulating economic vitality
Sonoma County is home to nearly 52,500 firms, employs nearly 162,000 workers and has a gross metropolitan product of $17.3 billion. But there’s always room for improvement, and the Santa Rosa Chamber of Commerce was looking for ways to stimulate economic vitality when Sonoma County BEST was formed in 2011; Stark was hired in December 2011 as executive director.
According to Stark, Sonoma County is an ideal place for promoting industry growth, innovation and business development. Between 1990 and 2003, 5,500 new firms made their start in Sonoma County. During this time, 92 percent of the firms were locally based and less than 10 years old, marking the county’s entrepreneurial spirit.
Many of the organizations that planted roots here are in information technology, tech manufacturing, agriculture and tourism. By 2003, health and wellness, professional and innovative services began to cluster in the county, too. Currently, BEST has committed to creating 2,500 new jobs in five years. “When one job is formed, typically some factor of another one is also affected. Sonoma County BEST uses the factor of 0.6. So when one job is formed directly, there’s a total of 1.6 jobs formed,” explains Stark.
To accomplish this goal, says Stark, they’re following the economic equation to job growth. One, retain Sonoma County businesses and help them to expand. Two, create a strong, vibrant and supportive business climate. Three, foster innovative businesses. Four, attract new businesses that provide high-quality jobs. And finally, build a world-class workforce based on educational attainment. According to Stark, 35 percent of Sonoma County’s workforce has a four-year college degree or higher.
“There are many reasons we’re successful in job creation,” says Stark. “The most important ones are our matchless quality of life, educated workforce, transportation improvements (including the completion of Highway 101 construction), the expansion of flights at the Charles M. Schulz Sonoma County Airport and the coming SMART train. We’re adjacent to one of the most innovative places in the world [the San Francisco Bay Area], and I believe the proximity will make Sonoma County a competitive place for companies to consider expanding operations.
“Of all the places in the Bay Area for companies to expand, Sonoma County is the most attractive.”
Taking steps to keep people working
When Lucasfilm decided not to build its new studio in Marin County last spring, business leaders took immediate action. After the Grady Ranch appeal was reported, Marin business groups formed Keep Marin Working (KMW), a coalition of seven organizations determined to keep and attract employers. The group officially launched the day after the appeal hearing. Members include the North Bay Leadership Council; Marin Builders Association; San Rafael, Novato and Marin Hispanic chambers of commerce; Marin Association of Realtors; and the Latino Council.
The KMW coalition seeks to save, create and attract new jobs in Marin County by educating the public and local governments about the importance of maintaining and generating jobs to sustain Marin’s quality of life; sharing and using the collective expertise of the business community to stabilize and grow the workforce and advocating policies and programs that are good for the economy and employment.
More than 10,000 businesses help sustain about 100,000 jobs in Marin County. And though the county benefits from the lowest unemployment rate in the state (6.6 percent, compared to the state average of 11.2 percent), it doesn’t take the jobs in the area for granted. “We don’t want another Grady Ranch incident,” says Murray.
If those 10,000 companies disappeared, business leaders in Marin recognize that very few people could afford to stay in Marin County. According to Murray, the vast majority of those companies employ 20 employees or less. Jobs are what it takes to keep a community thriving, says Murray. “We want to continue to make Marin business-friendly.” As a result, KMW is focused on helping businesses see that Marin is a place where an organization can thrive.
“If you don’t have a strong economy, you won’t have a strong community,” says Murray. “We want companies to come here and stay here.” The money generated from local businesses provides funding for important parts of our infrastructure such as schools, libraries, parks, fire and police departments, cultural attractions and more,” she adds.
“We want to raise awareness that businesses have the choice to be here or not. There’s a lot of competition for businesses, and if we don’t treat them right, they can go elsewhere,” says Murray. “And we want to help businesses be the best they can be.”
What to expect in the future
So what can we expect in terms of jobs and growth in the North Bay in the coming years?
Facilitating job growth is the main focus for Sonoma County BEST, says Stark. In addition, BEST will be a catalyst for all economic development, entrepreneurship and workforce development efforts in the region.
Enhancing the local economy is one of SNC’s goals, and it sees The Trellis—and other business incubators—as a way to improve the business climate while also supporting the ideals of sustainability. “If the economy is lagging and bottom lines are slim, it’s hard to do anything good for the environment or the community,” says Gill. “So supporting entrepreneurs and putting people to work via a business incubator is a smart way to go.”
The Marin experience shows that the Grady Ranch debacle is a cautionary tale, says Murray. “Unless we figure out how to reduce uncertainty for businesses, they won’t create jobs at the level we need them to, “ she says. “Uncertainty is a job killer. George Lucas had a timeline, and he couldn’t get his studio built by his deadline so he made a very clear business decision to go elsewhere. The last thing we want to do is make that the beginning of a parade, where other businesses give up hope and follow suit. Communities must work together with businesses to save, create and attract jobs. “