Business incubator: Investing in Federal Way's economy

Federal Way is investing in its small businesses with the hope they will revitalize the city. - Mirror illustration by Andy Hobbs
Federal Way is investing in its small businesses with the hope they will revitalize the city.
— image credit: Mirror illustration by Andy Hobbs

Federal Way is investing in its small businesses with the hope they will revitalize the city.

On Oct. 6, the city council unanimously approved a $100,000 contribution in 2010 and another of equal value in 2011 to a business incubator the Federal Way Chamber of Commerce and partners are working to create. Deputy mayor Eric Faison was absent and Dini Duclos recused herself.

"We really believe this is a way to grow local economy, local jobs," said Tom Pierson, Chamber CEO. "These are the (economic) times, small and large, companies get started."

Start-up costs of $325,000 for the mixed-use incubation program have been secured, he said. The council approved its $100,000 to come out of the downtown development fund, which was established in 2005, said financial services administrator Bryant Enge.

"I think this $100,000 in 2010 and 2011 would be a wise investment," said Mike Park, city council member and small business owner.

The state has earmarked $125,000 toward the program, Pierson said. Another $100,000 is coming from the 2009 American Recovery and Reinvestment Act, he said. The incubator is planned to operate a minimum of 10 years on a $700,000 budget. Pierson plans for the model to be self-sufficient after three years.

The program is designed to assist in the development of small businesses in the city. Resources and services, such as financial management tools, marketing advice, access to capital, business training programs, mentoring and more will be offered to start-up and young companies through the incubator.

"Every business is going to have different needs, different resources," Pierson said.

There will be room for about 37 entrepreneurs at a time to hone their business skills. They will receive help from the Chamber and several other local partners, including school districts, the Multi-Service Center and the small business development center. The businesses will be operated from one 14,048-square-foot office building near City Hall.

"Really, the goal is creating jobs," Pierson said.

The model differs from a small business development center or research park. Participants will graduate from the program, thus ensuring they are better prepared to operate the business. The end result: More businesses thriving in Federal Way, more jobs produced by those businesses and more public money staying in the community.

"We need to jump-start our jobs, jump-start our development and get this city moving again," city council member Linda Kochmar said.

Mayor Jack Dovey, also a small business owner, said he fully supports the incubator program, but wishes to receive quarterly updates on how the program is faring. The program also got support from audience members and interested partners.

"I'm an activist and advocate for small business," Auburn resident Ralph Ibarra said.

By the numbers

• 84 percent of business incubator graduates continue business operations in the community

• 87 percent of graduates are successful and continue in their operation after graduation

• 54 percent of business incubators are designed as mixed-use

• In 2005, business incubators in North America helped launch 27,000 start-up companies and provided full-time employment to more than 100,000 workers

• In 2005, business incubators in North America generated annual revenues exceeding $17 billion.

• For every $10,000 invested in a business incubator, approximately 50 jobs are created.

All statistical information is collected from the National Business Incubation Association's Web site ( and the U.S. Department of Commerce Economic Development Administration's "Construction Grants Program Impact Assessment Report."

More info

Incubator sponsors – organizations or individuals who support an incubation program financially – may serve as an incubator’s parent or host organization or may simply make financial contributions to the incubator.

About 31 percent of North American business incubators are sponsored by economic development organizations.

21 percent are sponsored by government entities.

20 percent are sponsored by academic institutions.

8 percent are sponsored by other types of organizations.

8 percent of business incubators are “hybrids” with more than one sponsor.

4 percent are sponsored by for-profit entities.

8 percent of incubators have no sponsor or host organization.

Source: 2006 State of the Business Incubation Industry

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