Birds may be on their own—but your startup doesn’t have to be
If you’re a longtime Chattanoogan, you’ve probably seen The Pulse around for years. Maybe you used to read a copy at your favorite, now-long-gone Frazier Avenue hippie-dive bar. But believe it or not, this now-venerable weekly was once a baby arts and culture zine, and it needed help.
So those early geeks and wordsmiths turned to a place they could get business assistance—Chattanooga Chamber of Commerce’s INCubator.
Housed in the Business Development Center on the Northshore, the INCubator runs a three-year program that helps startup businesses flap their wings with a range of assistive services: rent-subsidized spaces for offices and manufacturing, training workshops, administrative help, and access to Tennessee’s Small Business Development Center.
Finding Their Wings
Laurie Stevens, founder and director of the Chattanooga School of Language, has used incubation services to help grow her school. She kept her day job since the School of Language’s inception in 2011, but by 2016 she was ready to put all her eggs, so to speak, in her new basket.
“I did things kind of backwards, actually,” she says. “I should have started at an incubator, but I made my way there eventually. We were in St. Elmo, and then we moved to the INCubator and were there for three years. That was just wonderful. It was amazing the wealth of resources for a small business.”
Starting out, Stevens says she had no business experience—her background was in studying languages in Costa Rica and then working with La Paz here in Chattanooga. Her time with the INCubator and also with the SpringBoard program—which would eventually become part of Co.Lab, another incubation hub for startups—were invaluable to her.
“I was coming from the nonprofit world,” she says. “[The springboard process] gave me practical steps to take. It was a guide. They wanted to see you succeed. They provided the practical knowledge I needed to take steps to make sure my business was aligned structurally. [They helped me understand] which business model to choose—I started as a sole proprietorship and now am a single-member LLC. It really helped me take those first very important steps to make my business practical and sustainable.”
The INCubator and SpringBoard programs also helped her connect with other community resources, Stevens says, such as bookkeeping and legal help. Now, the Chattanooga Language School has its own location in Hixson, houses an average of 15 instructors, and may have up to 20 courses going on at any given time, from on-site group classes to smaller, bespoke classes at a client’s location.
As shown in Stevens’s story, the INCubator isn’t the only “incubator” around. There’s Co.Lab, which provides business advice about legal, financial, marketing, and other topics. They offer a streamlined, nine-week program for beginners (which can be followed up with an industry-specific accelerator program) as well as an events series that any entrepreneur can drop by for ideas. Combining an incubation and venture capital model, the Lamppost Group takes entrepreneurs from planning through business initiation, providing financing as well as advice and leadership.
Then there’s LAUNCH CHA, an incubator with a specific mission of helping Chattanooga communities thrive. They focus on underrepresented business-builders—people of color, women, and people from backgrounds of poverty. And of course, there are the free, taxpayer-funded services of the Tennessee Small Business Development Centers, which provide online and in-person advice and training sessions, plus a wealth of downloadable materials.
Show Me the Money
Nascent businesses need more than solid advice—they often need financial support to help them get off the ground. This could mean money to buy manufacturing equipment or just getting the business large enough to take in more than its day-to-day operating expenses.
When starting the Chattanooga School of Language, Stevens says, she didn’t initially raise capital; instead, she funded the school by plowing all the income back into it. For five years, she both ran the school and maintained her day job. As the demand for the school’s services grew, she needed resources to devote herself full-time to it.
A counselor at the INCubator told her about Tennessee Valley Federal Credit Union’s IDEA-LEAP grant program, which provides grants to small businesses needing limited sums to get started.
Tommy Nix, TVFCU’s vice president of business and commercial services, explains that the credit union’s history in commercial lending extends back 14 years. He and his colleagues realized the Chattanooga community had plenty of availability for business lending of more than $50,000, but few options for startups requiring smaller loans, especially those without collateral to offer. In 2016, TVFCU created the Idea-Leap, a loan designed for small businesses who work with an incubator.
Established business looking for larger loans generally can put up collateral, Nix says, and can easily approach TVFCU or any other bank in the area. But newer ventures without collateral need an alternative way to prove their sustainability.
“At the early stage of creating Idea-Leap, we created a basic tenant that each business would work with a technical assistance provider,” Nix says. “To have access to an IDEA-LEAP loan, they must be referred by one group.”
Nix, who previously worked in the Tennessee Small Business Development Center, had seen that businesses which get assistance from TSBDC or similar experts have an 80 percent better chance of success than other startups.
“My traditional lending background underwent a paradigm shift of what I thought about early-stage businesses and how to assist them,” Nix says. “We created Idea-Leap as a key component of our program. Clients must work with a collaborator or technical assistance provider through the life of the loan. That’s been one of the keys to being successful at this point.”
Incubators and technical assistance providers teach management capability, Nix says—the day-in, day-out knowhow required for running a business. And management capability, in turn, primes a business to succeed.
In addition to the Idea-Leap loan, TVFCU last year added an Idea-Leap grant, a competition-based award. Announced during National Small Business Week in the spring, the grant cycle features an application and an initial screening, followed by added “pitch prep” training for a selected finalists. Then, on exciting Pitch Night, in an open-to-the-public pitch session, each finalist describes their business goals and a winner is chosen.
Along with the Chattanooga Language School, the first-place winner with a grant of $20,000, 2018’s Idea-Leap winners included Dish T’Pass, Mad Priest Coffee Roasters, LoAdeBar, and The Hot Chocolatier, all of whom received significant grant funding.
With her award, Stevens was able to expand her offerings further. Though she started on her own, she clearly benefitted from Nix’s advice:
“Find help. Lots of folks become entrepreneurs because they’re strong and independent. They are focused on their business. But don’t forget to ask for help!”
Refining Their Flight Plan
Even after businesses are thriving, they may need guidance. For advanced businesses, it’s less, “What is gross profit versus net profit?” and more “How do I identify new areas of growth? What is my strategic mission?” explains Linda Murray Bullard, MBA, PMP, chief business strategist at LSMB Business Solutions. In those cases—not before—businesses may want to invest in the services of an experienced strategist.
“In the first few years, I refer [potential clients] to the Small Business Administration or BrightBridge,” Bullard says. “When you’re starting out you don’t have a lot of money, so you should spend it wisely…Once you are ready to fine-tune what works, that is my ideal spot.”
A strategist, as Bullard says, helps businesses move from “startup to implementation”. And as a good strategist, Bullard directs potential clients to look for free help first.
“It’s never been easier to start a business,” she says. “The first step is to use all the free resources before you start paying for them. After that, [businesses] are ready to work with a coach. They have the knowledge and have tested their idea and are ready to get up and running. Whereas free services give general business knowledge, after that you need to get more niche, more customized.”
What does that look like in practice? A freelancer may be working their startup as a night job while still punching a clock during the day. After a few years of incubation, like Stevens, the part-time entrepreneur can quit the day job and work their own gig full time. But then, Bullard says, “I try to teach them you put yourself out of a job so you can grow the business.
“Most people have been doing what they want to do for years, but they have done it for an employer,” Bullard says. “What they don’t realize is they only know the technical part…they don’t realize there is an HR and finance and legal department. They haven’t been exposed to that. To be a true business, they must have those other arms in place.”
Maybe you never want to go that route. Maybe you want to keep your hands in the dough, or your feet in the classroom. But however far you plan to fly your business, know that there’s help.