When Most People Think of Las Vegas, They Think of the Bright Lights and Glitz Created

[Business Development]

Smart Business: Las Vegas Business Incubator Center

Head: Viva Las Vegas

Subhead: In an Effort to Lose the Sin City Stigma, Las Vegas Is Incubating New Businesses

Summary: The city of Las Vegas' Business Incubator Center provides small businesses with low-overhead offices, training sessions and mentoring. So far 14 small businesses have reaped the benefits of the city’s efforts, and Las Vegas plans to build a similar center to attract technology companies.

Pull quote: "We don’t want all the jobs in this community to rely on just the gaming and resort industry. It’s too much pressure." -- Somer Hollingsworth, president and CEO, Nevada Development Authority, Las Vegas

When most people think of Las Vegas, they conjure images of bright lights and showgirls. But a handful of entrepreneurs see a different kind of light – one that leads them to start businesses in "Sin City." And the city is embracing these micro enterprises with open arms, via a Business Incubator Center (BIC) that helps fledging businesses find success.

Keisha McDaniel, for example, says the Center has brought her company much-needed attention and advice.

"Since I joined the Center I’d say a lot more people know about me," says McDaniel, the 13-year-old owner of Pretty Tomboy Clothing, which designs clothes for girls. "It’s helped me meet a lot of different people – people with business connections, people who work at banks, people on important boards, people from the music industry – who really help me with the business because they give lots of advice."

Besides putting Pretty Tomboy in the spotlight, the BIC has helped kick-start more than a dozen companies by providing low overhead office space, free mentoring and training since it launched in 1998. These include House of Flava, which sells Hip-Hop clothing, Baby Doodads (which develops and markets items for children), Black Magic Pest Control and AmeriDream (a buyer’s real estate agency).

With space for 14 tenants in the Office Incubator program, the Center provides an office loaded with business equipment. There is also an Industrial Business Incubator program that provides 10 storage cages. And, for individuals with home-based enterprises who would like to add a professional air, the Incubator Without Walls program offers a "businesslike" mailing address and access to phones, faxes and computers. Tenants in all programs can stay as long as two years.

BIC ties into the city’s initiative to create economic development through diversification. "The city of Las Vegas is trying to bring in new companies that are going to be non-gaming," says Somer Hollingsworth, president and CEO of the Nevada Development Authority, a nonprofit entity in Las Vegas that works with the government to diversify the Clark County area.

To achieve this goal, the BIC was started with over $2 million in financing from the U.S. Housing and Urban Development Department, other government agencies and local businesses.

Benefiting Small Businesses

BIC provides subsidized rent for tenants that, in turn, provide services to the Southern Nevada Enterprise Community says Leonard Dixon, BIC director. The rent runs just $150 for the first six months, $175 for the second, and $200 for the next year. It includes office space, free phone and fax lines, computer systems, and "all the things that incur costs and prevent entrepreneurs from starting up their own businesses," says Dixon.

AmeriDream owner Linda Abrams says these savings helped her get off to a healthy financial start when her company debuted in September 2000. "When you have to pay for the office, phone and other expenditures, it’s a lot," she says. "This takes a huge load off your mind, because for the first year or two of business there’s only one low fixed expense." For a business in its infancy, she says, that's very helpful.

In addition to cheap overhead, BIC offers participants something that Dixon deems just as important – the chance to receive training and to work with a professional management consultant. Services include skills deficiency assessments, reviews of quarterly projections, help with identifying or readjusting target markets and training in the areas of business plan development and marketing.

"Most entrepreneurs go into business because they have a good idea," says Dixon. "But there’s not many who have the skills and knowledge to handle all the facets of managing a small business."

Franklin Burke, owner of Black Magic Pest Control and a BIC tenant, found these services invaluable. "I had an idea about starting a business, but I never managed one," he says. "They taught me the skills I needed so I could manage my inventory, handle invoices, market my business and advertise to a target audience."

Before joining the center in September 2000, Burke ran Black Magic out of his home for a year. He says having a low-cost office with all the right equipment has added the necessary professionalism to his business. "Running a pest control business out of your home is not professional," he says. "Here I have a real business setting where I have a conference room if I need to meet a client."

Burke credits Black Magic’s tremendous growth – he started with 20 customers and currently has 300 -- to these factors. His clients include celebrities like Bob Barker, Gladys Knight and Michael Jackson's mother.

"When I started I was scared because I only had 20 customers and I got those by knocking on people’s doors," says Burke. "But by becoming more professional and learning proper business procedures, I’ve been able to grow my business more than I thought I could. I’m currently earning about $8,000 a month and by the end of the summer I should be making over $20,000 a month, which will enable me to get my own building when I graduate from this center."

Adds Burke: "I’m not saying I wouldn’t have been successful without the help of Mr. Dixon and the center, but I don’t think I’d be where I am now. To me, this is like home schooling."

Real World Reality Check

Kyle Heckard, part owner of House of Flava and a graduate of the Incubator Center, warns that things can get tough when the coaching ends, however. For instance, upon graduating from the Center, Heckard says they decided to change the company’s business structure, but it didn’t turn out as planned.

"House of Flava isn’t where we expected it to be," he says. "Had we left our structure intact, I think we would have been better off. We were doing better when we were with the Incubator because when we left, we lost our support system. We don’t have anyone to turn to when we get into trouble."

But not all graduates face transition problems. Linda Martinelli, owner of Baby Doodads and a recent graduate, says being a part of the Center gave her a network of business associates and resources that she can still call upon. "During my time at the Business Center, I learned about other resources for small businesses, so it has provided me with a network of people that I rely on to help me through unfamiliar territory," she says.

Through the Business Incubator Center, Martinelli was introduced to the Small Business Administration, which offers books, facilities and resources targeted at helping small companies develop business plans. She is also involved in a program that offers the services of retired executives to provide business advice and direction.

"Being a part of BIC provided an atmosphere where people starting small businesses can learn from each other and thrive off that knowledge," says Martinelli. "The incubator introduced me to all that."

Losing the 'Sin City' Stigma Through Diversification

Las Vegas is pleased with the results of the Center and plans to create another incubator aimed at attracting technology companies. "The city is working with a private enterprise that will break ground in the next 90 days to build a large technology complex that will include incubator space," says Hollingsworth. "In an effort to bring sophisticated technology companies into the area, the city will put their arms around those in the incubator and cultivate them."

Adds Hollingsworth: "You can really do it here and the city is trying to help. We don’t want all the jobs in this community to rely on just the gaming and resort industry. It’s too much pressure."

When Most People Think of Las Vegas, They Think of the Bright Lights and Glitz Created

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