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Published February 10 2012

Area business incubators help new businesses get off the ground

DETROIT LAKES, Minn. – In the agricultural heartland of Minnesota, the word “incubator” is likely to conjure up images of fluffy yellow chicks pecking their way out of their shells and into the world.

But in the past few years, a new kind of incubator is popping up in the region – the kind that hatches businesses.

Three business incubators have been established in the region by the Minnesota State Community and Technical College Business and Entrepreneurial Services Center, with a fourth opening in March and a fifth anticipated before the end of the year.

The incubators are designed to help new businesses get up and running by providing mentoring, training, services and low-cost space.

Mechanical engineer Kevin Disse owns and operates KGD Engineering out of the Detroit Lakes incubator. Having his business there means he can stay in his hometown and do the work he wants to do.

“The incubator is allowing me to stay in the career I want to, as well as the Detroit Lakes area,” he said.

He started at the incubator in July.

The incubators address a business reality in the rural communities, said BES Executive Director Beth Pridday, whose office is in Detroit Lakes.

Small towns “just can’t attract large employers anymore,” she said. “Once in a while, you get a dumb luck score and you get a 50- or 75- employee kind of thing to move into your town.”

But, she says, the “heart and soul” of small Minnesota towns are the entrepreneurs, the “small businesses up and down main street.

“That’s what we’re in support of here.”

Six months before launching the Detroit Lakes incubator on the MSCTC campus in 2009, officials thought they would fill the center in 2½ years.

“We opened the incubator; we were full in three months,” Pridday said. “And people were calling us to do this other places. I never anticipated that in a million years.”

They worked with Frazee to open a center there in December 2010 and then teamed with Hawley to launch a third at the end of 2011.

A fourth incubator is set to open around mid-March in Perham, and they anticipate opening a New York Mills incubator in the spring, Pridday said.

Frazee City Administrator Jonathan Smith said the incubator is “great” for the local economy.

“We basically have five businesses now that we didn’t have before,” Smith said.

The Hawley incubator had four tenants in the first 30 days it was open. C.J. Holl, president of the Hawley Economic Development Authority, calls the incubator “a way to organically grow business.” And, for a small town, Holl believes growing companies from the ground up is more effective than chasing after a large employer.

Among the Hawley tenants is Allan Fenske, who owns Hawley Area Financial Management. Fenske, a retiree from the U.S. Army, said he probably wouldn’t have been able to go out on his own if it hadn’t been for the incubator.

“I think the cost would have been just a little too high for me to start,” he said.

Fenske pays $110 a month to lease his office space, and that comes with a number of other perks like a desk, computer and high-speed internet access. There’s a phone answering service, access to a scanner and copier, help with marketing and other training. He also has access to a conference room and mentoring.

“It’s given me the opportunity that I probably never would have had,” Fenske said.

Fenske’s cost to lease a space at the incubator will gradually increase over time. Businesses at the incubators can stay no longer than five years.

Along with the low cost and services, there’s another advantage for Fenske: Going to work used to mean a drive to Fargo.

“I haven’t missed the commute,” he said.

The program is funded from multiple sources, including grants and money communities pay the BES to manage the incubators. MSCTC supports the program by paying BES staff and providing space.

Pridday believes the incubators are “reflective of M State’s greater mission … to support economic development in our region.”

The businesses and services using the incubators run the gamut from book writing to counseling to computer services to vacuum cleaner and sewing machine repair to fitness coaching and beyond.

“I’m telling you, we’ve about heard it all,” Pridday said. “We’ve had a lot of great business ideas. We’ve had a lot of crazy business ideas.”

The incubator isn’t just for getting a business going. It can also help a budding entrepreneur discover that an idea isn’t going to work.

“It’s affordable enough that people can be in here the first year and never really do the business of the business,” Pridday said. “They can just be in R&D (research and development). They can just be exploring whether this is a real business model that can make them money.”

As for the future, it looks like more growth may be on the way.

“We’ve got interest from several other cities,” Pridday said. “I could on and on.”

Readers can reach Forum reporter Shane Mercer at (701) 451-5734