Hearing Of The House Committee On Small Business - "Business Incubators And Their Role In Job Creation"

Statement

In recent weeks, our economy has started showing signs of economic recovery. Gross Domestic Product has swung from negative 6.4 to 5.7 percent growth--the biggest 9 month swing in nearly 30 years. While indictors like these are promising, we are still not seeing the kind of job creation Americans deserve.

When it comes to creating new jobs, small businesses are always central to the equation. Following the recession of the early 1990's, small firms created 3.8 million jobs. After the recession of 2001, micro-businesses alone generated one million jobs. Entrepreneurs will be just as important to bringing our nation out today's downturn as they were during those previous recoveries.

Business incubators have long been a powerful tool for helping new businesses launch and existing firms grow. In 2005 alone, incubators assisted 27,000 start-up companies that provided full-time employment for 100,000 Americans -- and generated $17 billion in revenue.

Beyond promoting business growth, business incubators also bring proven benefits to the communities in which they are located. Nearly eight out of ten incubator graduates stay in their local communities -- meaning job opportunities and economic development remain in that region for the long term.

Today, the role of incubators is changing as the business world evolves. Although many of us think about traditional incubator services -- like office equipment or meeting space -- contemporary incubators offer everything from technical assistance, to financing options to marketing and manufacturing advice.

One promising trend has been the emergence of incubators that are especially tailored to an industry located in their community. For example, we've seen the development of a "fashion focused" incubator in New York City. Agribusiness incubators have sprouted up in areas with a high concentration of food production. In other parts of the country, with a history of technological innovation, software business incubators are taking root.

These industry-specific incubators allow new firms to tap into local knowledge and business networks that are already in place. By leveraging a town or city's existing assets, these incubators can accelerate economic development -- and create local jobs.

After all, that is what today's hearing is really about -- putting Americans back to work. We already know the job creating potential of small, growing firms. Now the question becomes how to create conditions that maximize the chances for budding enterprises to get off the ground. Business incubators have a proven track record in this area. In fact, 80 percent of firms that graduate from these institutions remain in operation, to this very day.

During today's hearing, we will hear from some of the most innovative business incubators from around the nation. I look forward to their testimony. It is my hope that this discussion will not only highlight their success stories -- but also identify how we can replicate those stories in communities across the nation.

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