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Stacey and Associates • P.O. Box 9912 • Mobile, Alabama 36691 • 251-666-4879

Northwest Florida(Pensacola/Escambia County and Santa Rosa County)

Small Business Incubator Network Feasibility Study

Conducted for:

December 2003

Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-

Incubator Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-

Section 1: Critical Mass Analysis and Current Economic Situation . . . . . . . . . . . . . . . . . . . . -11-Critical Mass Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-Current Economic Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-

Section 2: Demand Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-

Section 3: Property Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-

Section 4: Program Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-

Section 5: Organizational Structure and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-

Section 6: Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -54-

Section 7: Implementation Track and Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -73-Implementation Track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -74-Pre-Opening Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -76-

Appendix A: Leadership Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -78-

Appendix B: S.B.D.C. Commitment Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -87-

Appendix C: Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -90-

Appendix D: Sample Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -96-

Northwest Florida Stacey and AssociatesSmall Business Incubator Network Study December 2003-1-

Executive Summary

Critical Mass< Both Escambia and Santa Rosa County possess adequate critical mass upon which to

build an incubator program. A total critical mass score of 25 in Escambia County and 26in Santa Rosa County suggests that the assets needed to support a “full service” incubatornetwork are indeed present in the region.

< The leadership attitude toward the proposed incubator program in Escambia and SantaRosa County is very positive at the present time. The leaderships’ continued support willbe vital to the success of the network program.

< There appears to be a willingness within the leadership in both counties to work togetheron a joint basis to make a two-county incubator network feasible.

Demand Analysis< We judge the amount of demand for incubator space and services in Northwest Florida to

be strong at the present time. There is a potential pool of entrepreneurs in the area that fitthe profile of incubator tenants, but reaching them may be hard. We cannot stress enoughthe importance of a strong marketing plan. A good referral network, an attractivetraining adjunct, and a creative marketing plan can capture this pool of entrepreneurs.

< We estimate that approximately 70% of the entrepreneurial demand in Northwest Floridawill come from Escambia County, while 30% will come from Santa Rosa County.

< We believe the majority (85%) of tenant prospects in the Northwest Florida area willdemand professional/service type space. Approximately 8% of these tenants can beclassified as “high-tech” in nature.

< Retail businesses do not work well in incubator space for several reasons. Ourrecommendation for this program will be to prohibit the entry of retail businesses in theincubators themselves. Retail start-ups can certainly take advantage of theconsulting/training offered at the incubators, but their location in the incubator buildingsshould be prohibited.


Property Assessment< After analyzing the demand for incubator space for the Northwest Florida network, we

found that the program can utilize approximately 33,000 to 36,000 square feet of leasabletenant space. In order to yield that amount of net leasable square feet, approximately45,000 square feet gross space will be required.

< During our survey of the available properties in Northwest Florida, we were unable tolocate any existing buildings that we thought could be converted cost effectively toincubator space. For this reason, we recommend that suitable properties in each countybe acquired/obtained and “built-to-suit” incubator facilities be constructed.

< We will recommend facilities, in both Escambia and Santa Rosa County, that areapproximately 85% professional space to 15% open/light assemble space.

< We propose the construction of a 30,000 sq/ft building in Escambia County and a 15,000sq/ft building in Santa Rosa County.

< In Escambia County we suggest first priority be given to sites located in the City ofPensacola Enterprise Zone. In Santa Rosa County we recommend property in the SantaRosa County Industrial Park.

Program Design< The administrative/business services will be handled by two full-time administrative

managers, one employed at each incubator. The technical services andconsulting/training (problem solving) will be handled by four separate entities, consistingof: the network’s executive director, a pro-bono team of local volunteers, the Universityof West Florida’s S.B.D.C. and the Women’s Business Center of Northwest Florida.

< As the day-to-day operations of the incubator project roll out during implementation, thesponsors should give strong consideration to negotiating a performance contract with theS.B.D.C. Under this performance contract, the S.B.D.C. would be retained to manage theprogram provisions and to accept responsibility for marketing and managing the programup to the time that tenant rent flows will sustain a full time Network Executive Director.

Organizational Structure and Governance< We recommend that all incubator programs be organized as not-for-profit 501(c)3

corporations or that they operate under such an existing program. This allows theprogram to pursue grants, gifts and donations to subsidize the operation.


< Because the project will encompass two physical facilities in two different counties, it isour suggestion that each county establish a separate Board of Advisors, but that thenetwork be governed by an overarching Network Board of Directors.

< A nine-member incubator Board of Advisors should be appointed by theinvestors/sponsors in each county. The Escambia County Board of Advisors and theSanta Rosa County Board of Advisors should each appoint three people from theirmembership to serve on the Northwest Florida Incubator Network Board of Directors.

< Each County Board of Advisors should undergo board training, develop a policy manualfor their local incubator and set the program goals and objectives against which theprogram should be measured.

Financial Analysis< The following table is an estimate of how much each county will have to raise in order to

launch the incubator project and run it for two years. This estimate includes the grantmatch, furniture/equipment package, pre-opening budget and two years of subsidy tooperate the program until break-even.

< Please note that much of the 20% grant match can be covered by the donation of city orcounty property and other in-kind contributions. Corporate sponsors can be called on todonate much of the furniture and equipment.

Escambia CountyIncubator Program

Santa Rosa CountyIncubator Program

20% Grant Match for Physical Facility $204,000 $102,000

Furniture/Equipment $29,625 $29,625

Pre-Opening Budget $18,225 $18,225

2 Year Subsidy $55,415 $27,294

10% Contigency $30,727 $17,714

Total Cost of Program Start-Up $337,992 $194,858


< The two year job creation totals for the incubator program can be divided into the totalprogram start-up costs to determine the total local investment per job.

Total Cost Per Job



Northwest FloridaIncubator Network

Total ProgramStart-Up Cost

$337,992 $194,858 $532,850

2 Year JobCreation Estimates

84.5 30.5 115

Cost Per Job $4,000 $6,389 $4,633


Recommendations

1. A multi-facility incubator network is feasible for Escambia and Santa Rosa Counties,therefore, a timely program launch should yield positive economic development results. We recommend that you proceed with the project.

2. The current Pensacola Area Chamber of Commerce Small Business Steering Committeeand Team Santa Rosa should each appoint an Incubator Task Force for their county to beresponsible for steering the project on a joint basis.

3. The UWF Small Business Development Center (S.B.D.C.) should be recruited andretained to be the point agency responsible for day-to-day tasks during theimplementation stages of the project. The S.B.D.C. should be authorized to coordinatethe grant preparations and handle communications with potential sponsors, fundingagencies and elected bodies, as required to move the project forward.

4. After the investing partners have been recruited, a nine-member incubator Board ofAdvisors should be appointed by the investors/sponsors in each county. The EscambiaCounty Board of Advisors and the Santa Rosa County Board of Advisors should eachappoint three people from their membership to serve on the Northwest Florida IncubatorNetwork Board of Directors. The network should be operated as a 501(c)3 not-for-profitcorporation.

5. Because no economical or functional physical facilities were identified during ourresearch, we recommend that consideration be given to a build-to-suit strategy with a30,000 square foot facility in Escambia County and a 15,000 square foot facility in SantaRosa County.

6. The two facilities should be co-managed and co-marketed by a team approved and hiredby the Network Board of Directors. We recommend that the UWF S.B.D.C. operate theincubator program until cash flow allows the hiring of a Network Executive Director.

7. All rental revenue flow should be deposited into one central network bank account andall operating expenses paid from this account.

8. In the event of a network operating budget shortfall, contingencies should be covered bythe sponsoring bodies on a pro-rata basis, based on gross square footage of incubatorspace per county.

9. Both facilities should be situated on properties that will allow future expansion, if tenantdemand justifies such an expansion.


10. Grants should be sought to supply the funds needed for construction and equipping ofeach facility.

11. The initial sponsorship for the program should be solicited from Escambia and SantaRosa Counties and the cities of Pensacola and Milton.


Incubator Concept

The following information and figures were taken directly from the National BusinessIncubation Association’s (NBIA) website http://www.nbia.org/. “Business incubation is a dynamic process of business enterprise development. Incubatorsnurture young firms, helping them to survive and grow during the startup period when they aremost vulnerable. Incubators provide hands-on management assistance, access to financing andorchestrated exposure to critical business or technical support services. They also offerentrepreneurial firms shared office services, access to equipment, flexible leases and expandablespace — all under one roof.

An incubation program's main goal is to produce successful graduates — businesses that arefinancially viable and freestanding when they leave the incubator usually in two to three years.Thirty percent of incubator clients typically graduate each year. According to the Impact ofIncubator Investments Study (1997), 87% of incubator graduates are still in business.”

“Business Incubation is an economic development best value.

• For every $1 of estimated annual public operating subsidy provided the incubator, clientsand graduates of NBIA member incubators generate approximately $45 in local taxrevenue alone.

• NBIA members report that 84 percent of incubator graduates stay in their communitiesand continue to provide a return to their investors.

• Publicly supported incubators create jobs at a cost of about $1,100 each, whereas otherpublicly supported job creation mechanisms commonly cost more than $10,000 per jobcreated.

• NBIA estimates that North American incubator clients and graduates have createdapproximately half a million jobs since 1980. That is enough jobs to employ every personliving in Denver, Colorado.

• Every 50 jobs created by an incubator client generate another 25 jobs in the community.”


Figure 1: General Incubator Types

Mixed Use 43%

Technology 25%

Manufacturing 10%

Targeted 9%

Service 6%

Empowerment 5%

Other2%

Figure 2: Incubator Clientele by Industry Type

Service40%

Light Manufacturing23%

Technology22%

Other8%

Research7%

The data illustrated in the next four figures are based on information from the NBIA’s 10th

Anniversary Survey of Business Incubators, 1985-1995: a Decade of Success and the 1998 Stateof the Business Incubation Industry report.


Figure 3: Average Space Rented to Tenants

100 to 500 sq. ft .36%

501 to 1,500 sq. ft .34%

1,501 to 2,500 sq. ft .14%

2,501 to 5,000 sq. ft .11%

5,001 to 9,500 sq. ft .5%

Figure 4: Annual Operating Expenses by Incubator Type

$208,180

$320,701

$173,785

$448,629

$185,955

$142,589

Mixed Use

Technology

Manufacturing

Targeted

Service

Empowerment


The following table lists the “typical” incubator services and the percent of NBIA affiliatedincubators that offer them to their tenants. These figures were taken from the 1998 State of theBusiness Incubation Industry report.

Types of Services Offered to Incubator TenantsHelp with Business Basics 96%Conference Rooms 92%Marketing Assistance 89%Shared Administrative Services 88%Networking Activities 86%Accounting/Financial Management 77%Loan Access/Guarantee Programs 77%Links to Higher Education Institute 76%Telephone System/Answering 65%Affiliate Programs 63%Internet Access 62%Investor/Strategic Partner Linkages 58%Comprehensive Business Training Program 49%General Legal Services 47%Custom Equipment/Custom Leasing 45%Management Team Development 44%Federal Contract Procurement Assistance 43%International Trade Assistance 42%Shadow Boards/Mentoring 42%New Product Assessment 41%Technology Commercialization 40%Computer Labs 40%Intellectual Property Management 37%Manufacturing Practices Assistance 37%Help with Regulatory Compliance 31%Management Information Systems 25%Product Design Assistance 23%Video Conferencing 19%


Section 1:Critical Mass Analysis

and Current Economic Situation


Critical Mass Analysis

To launch and sustain a successful business incubator, the facility (or facilities) must be locatedin a region that enjoys a critical mass of support factors and possesses a degree of economicactivity that provides a solid foundation for growth. Also important is are attitudes and thedegree of commitment from local community leaders.

The primary objective of this section is to assess the critical mass in Northwest Florida(Escambia and Santa Rosa County) to determine if it has the potential to support a small businessincubator network.

Critical Mass Data EvaluatedPopulation Trends

Economic Activity Non-Farm ProprietorsBusiness Start-up ActivityRetail Sales TrendBank DepositsPrivate Employment GrowthNumber of Manufacturing UnitsIndustrial Activity

Technical Core AttorneysCertified Public AccountantsEngineersComputer System Designers/ProgrammersManagement, scientific & technical consultants

Educational Institutions Four Year CollegesTwo Year SchoolsTech Schools

Industrial Development Organization

Small Business Support Chamber of CommerceIncubator ActivitySmall Business Development Center

Leadership Consensus

After assembling and analyzing the data on the preceding critical mass factors, a numericalrating system is applied (see next page). The numerical totals from the critical mass dataestablishes the county’s or region’s potential to support an incubator facility.


CRITICAL MASS RATING AND NUMERICAL VALUE**FOR INDIVIDUAL COUNTIES**

1. Population Trends Annual growth rate above stateAnnual growth rate below state but positiveAnnual growth rate negative

210

2A. New Non-Farm Proprietors Average more than 3 per monthAverage more than 2 but less than 3Average more than 1 but less than 2Average less than 1 per month

3210

2B. Start-up Activity Average more than 4 per monthAverage more than 2 but less than 4Average more than 1 but less than 2Average less than 1 per month

3210

2C. Retail Trade Trend Positive TrendFlat Trend or Negative Trend

10

2D. Bank Deposits Above State Growth RateBelow States growth Rate

10

2E. Private Employment 2 year Positive TrendStableNegative

210

2F. Manufacturing Units 100 or more units99 to 51 units50 to 26 units25 to 0 units

3210

2G. Industrial Activity 1+ new location/expansions per year 1

3. Technical Core Ratio of technical units to business units1:101:11 - 1:151:16 - 1:201:20 +

3210

4. Educational 4-Year College2-Year CollegeTechnical School

321


5. Industrial Development Organization 1

6A. Chamber of Commerce 1

6B. Incubator Activity Operating IncubatorUnder Development

32

6C. S.B.D.C. Access to nearby S.B.D.C. 1

7. Leadership Attitude Very PositivePositiveReceptiveNon-Receptive

3210


CRITICAL MASS RATING SUMMARY

After applying the Critical Mass Rating and Numerical Value to the study area, each county isplaced into one of four categories based on their cumulative score.

25 Points and aboveAreas possessing a critical mass rating of 25 and above are deemed to have all thenecessary elements to sustain a "Full Service" incubator without the addition of anysupport programs.

24 to 19 pointsAreas possessing critical mass within this range would likely be more effective asincubator satellites linked to a primary facility or as a hub linking several smallersatellites. If the missing critical mass elements in these areas are added, such asestablishment of training curriculums and access to venture capital, then their ratingwould most likely support an incubator project.

18 to 14 pointsCritical mass ratings within this category indicate that some of the critical mass structuresare in place but an incubator would need the support of a primary facility. Thus, thiscategory is suitable for a “satellite facility” only.

13 points and belowAreas falling within this category do not possess critical mass structures to support abusiness incubator. It would be extremely cost ineffective to develop the necessarystructures to boost these ratings.


TOTAL CRITICAL MASSNORTHWEST FLORIDA

EscambiaCounty

Santa RosaCounty

NorthwestFlorida

1 Population Trends 0 2 1

2A New Non-Farm Proprietors 3 3 3

2B Start-up Activity 3 3 3

2C Retail Trade Trend 0 1 1

2D Bank Deposits 0 0 0

2E Private Employment 0 2 0

2F Manufacturing Units 3 2 3

2G Industrial Activity 1 1 1

3 Technical Core 3 3 3

4 Educational 6 3 6

5 Industrial Dev. Org. 1 1 1

6A Chamber of Commerce 1 1 1

6B Incubator Activity 0 0 0

6C S.B.D.C. 1 1 1

7 Leadership Attitude 3 3 3

Total Critical Mass 25 26 27


Current Economic Situation

IntroductionIn order for a small business incubator to operate effectively, it is necessary for the local area todemonstrate a reasonable rate of new business start-ups in a wide range of products and services. This activity is a measure of the risk-taking nature of new business owners and managers. Anarea with a poor environment for entrepreneurs will make the task of developing a successfulincubator much more difficult. A strong, regional economy increases the probability of successfor any business venture. Since a business incubator depends primarily on new businesses, theeconomic strength of the surrounding area is critically important. Key indicators of overalleconomic strength include: population growth, income growth, new business starts, retail sales,and bank deposits, to name a few. This section presents data utilized to determine the economichealth of the Northwest Florida (Escambia and Santa Rosa County) area.

Population TrendsTrends in population growth or decline are important factors in assessing economic expansionpotential for an area or community. A strong growth trend normally indicates a healthyeconomic base for providing jobs and capital. New housing starts, government infrastructureexpenditures, and bank assets are all tied to population trends.

The population in Santa Rosa County grew at a very nice pace between 1998 and 2002. Becausetheir growth rate outpaced that of the State of Florida, Santa Rosa County received two criticalmass points in this category. Escambia County, whose population declined over the same timeperiod, received no critical mass points in this category.

Table CM1: Population Trends

County 1998 2002 +/-%

Change CMREscambia County 295,240 294,840 (400) -0.1% 0Santa Rosa County 113,690 127,320 13,630 12.0% 2Northwest Florida 408,930 422,160 13,230 3.2% 1State of Florida 15,468,560 16,670,920 1,184,360 7.6%

Source: 2003 Woods & Pool Economics, Inc.

Economic ActivityNon-Farm Proprietors – Non-farm proprietors are sole owners of non-agricultural businesses orpartners in unincorporated non-agricultural business partnerships. Tracking the growth trend ofthese types of proprietors provides a good indication of the entrepreneurial activity in a region.The growth in the number of non-farm proprietors in an area reflects how conducive that locality


is toward small business. It will reflect the regional attitude of entrepreneurs, as well as localcapabilities to make such ventures successful. Areas that possess a high mortality rate forproprietors need to be examined as to why this occurrence is prevalent.

The Northwest Florida area produced over 1,351 new non-farm proprietors between 1998 and 2001. This equates to over 37.5 new proprietorships formed each month. Escambia County ledthe way with by creating more than 29 new proprietors each month. This impressive activitywarrants a critical mass score of three points for each county and the region as a whole.

Table CM 2: Non-Farm Proprietors

County 1998 1999 2000 2001 +/-Per

Month CMREscambia County 24,541 23,995 24,938 25,594 1,053 29.3 3Santa Rosa County 7,065 7,153 7,406 7,363 298 8.3 3Northwest Florida 31,606 31,148 32,344 32,957 1,351 37.5 3

Source: Regional Economic Information System, Bureau of Economic Analysis, Table CA25, June 2002

Start-up Activity – An important statistic reflecting the economic activity and potential within anarea is the number of start-up companies being launched there. Newly established businessesindicate that entrepreneurial effort is present and that new ideas for products and services aremoving from concept to launch. The creation of new companies also suggests that risk capital isavailable to fuel these launches.

In order to estimate the number of new businesses being created in a county each year, weperformed a search of Dun & Bradstreet’s Marketing Files. We limited the search to newbusinesses (created between 2000 and 2003) whose business structure was categorized as eithera “headquarters” or a “single location.”

According to Dun & Bradstreet, the Northwest Florida area created over 2,547 new businessesbetween 2000 and 2003 – an average of 55.4 per month. Again Escambia County led the waywith an impressive 35.7 new businesses created each month. These growth numbers areextremely good for an area the size of Northwest Florida. A critical mass rating of three wasawarded to both counties and the region as a whole.

Table CM3: Business Start-ups

County 2000/01 2002/03 +/-Per

Month CMREscambia County 752 891 1,643 35.7 3Santa Rosa County 495 409 904 19.7 3Northwest Florida 1,247 1,300 2,547 55.4 3

Source: Dun and Bradstreet Corporation, Marketing Files


Retail Sales – Retailers are not normally considered very important to an evaluation of economicdevelopment, since retailing basically circulates dollars rather than importing new dollars for neteconomic gain. However, in light of the region’s retail complex and its ability to attractconsumers and visitors from outlying counties (and states), this may not be the case.

Santa Rosa County has experienced growth in total retail sales over the past three years, whileEscambia County has witnessed a decline. For this reason, Santa Rosa County was awarded acritical mass point while Escambia County was not.

Table CM4: Retail Sales ($000)

County Name 2000 2001 2002 +/- CMREscambia County $3,693,175 $3,606,875 $3,681,586 ($11,589) 0Santa Rosa County $678,533 $759,145 $788,008 $109,475 1Northwest Florida $4,371,708 $4,366,020 $4,469,594 $97,886 1Source: Florida Department of Revenue

Bank Deposits – As with the above categories, the economic health of the region is reflected inthe amount of bank deposits present in the counties. Bank deposits impact the feasibility of anincubator program as it would any other business venture. It indicates the capital pool that isavailable for entrepreneurs who are launching small businesses. For critical mass purposes, anycounty that experiences a growth in bank deposits that is greater than that of their state receivesone point. Neither county nor the region received a critical mass point in this category.

Table CM5: Bank Deposits ($000)

County 2000 2001 2002 % +/- CMREscambia County $2,605,174 $2,575,726 $2,622,256 0.66% 0Santa Rosa County $717,363 $747,287 $803,366 11.99% 0Northwest Florida $3,322,537 $3,323,013 $3,425,622 3.10% 0State of Florida $207,851,630 $222,797,442 $242,820,634 16.82%Source: FDIC Data Book, Summary of Deposits

Private Employment – The ability of a local economy to create and replace jobs is an importantcomponent in critical mass analysis. There are numerous factors that affect employment trends,including aging of the population, industrial expansion and contraction, governmentalinfluences, and general population growth and decline. Positive private employment trendsnormally indicate a healthy economy.


Table CM6: Private Employment

County 1999 2000 2001 +/- CMREscambia County 136,278 138,906 133,131 (3,147) 0Santa Rosa County 28,258 29,159 29,868 1,610 2Northwest Florida 164,536 168,065 162,999 (1,537) 0Source: 1969 - 2001 Regional Economic Information System, Table CA25

As indicated in Table CM6, private employment numbers in Northwest Florida have declinedbetween 1999 and 2000. Santa Rosa County has experienced a two year positive trend, thus theyreceived two critical mass points in this category.

Manufacturing Units – In deciding whether an area’s economic critical mass is a sufficientfoundation for new businesses, it is important to review the area’s manufacturing base. A regionthat attracts a large and diverse group of manufacturers greatly multiplies enterpriseopportunities that can stimulate new ventures. Manufacturing firms usually have well-trainedlabor and management personnel who often move on to launch their own firms. Nationally,business incubators are more successful in areas that have a solid manufacturing base. A criticalmass score is given in proportion to the total number of manufacturing units within a county.

Table CM7: Manufacturing Units

County 2002 CMREscambia County 242 3Santa Rosa County 63 2Northwest Florida 305 3Source: County Business Patterns

Industrial Activity – As part of the evaluation of critical mass structure, industrial expansions andnew location announcements were tracked. New location announcements indicate aggressivemarketing efforts and inter-agency cooperation, while expansions indicate healthy industries andfirms' satisfaction with the local business climate and conditions. An average of at least one newannouncement or at least one expansion per year, for the past three years, earns a county onecritical mass point.

Table CM8: Industrial Activity (1999-2003)

CountyNew

Locations Expansions Jobs Investment CMREscambia County 18 32 6,090 370,233,500 1Santa Rosa County 5 10 795 7,700,000 1Northwest Florida 23 42 6,885 377,933,500 1

Source: University of Florida - Haas Center for Business Research & Economic Development


Technical CoreThe availability of professional technical assistance is vital to entrepreneurial development.Attorneys, accountants, engineers, computer system designers/programmers, and managementconsultants provide technical support to many start-up enterprises, helping to prevent earlymistakes that can doom an enterprise before it can get established. Legal organization, statesecurity regulations, financial analysis, protection of intellectual property, design proto-typing,information technology infrastructure design and many similar activities call for professionalsupport. If local development authorities are to implement an entrepreneurial strategy, theseservices must be available in the area.

Table CM9: Technical Core

CountyTotalCore Businesses Ratio CMR

Escambia County 1,067 6,606 6.19 3Santa Rosa County 192 1,976 10.29 3Northwest Florida 1,259 8,582 6.82 3

Source: County Business Patterns and Florida Agency for Workforce Innovation, Labor Market Statistics

Educational InstitutionsThe presence of institutions of higher learning is very important to entrepreneurial developmentprograms. Colleges and universities provide a critical mass of credit and non-credit courses andcontinuing education. Libraries provide facilities for study and research, and serve asrepositories of important government information. Vo-Tech and Community Colleges play anincreasing role in job and skills training. In addition, a great deal of reasonably pricedconsulting assistance is available from faculty members. Easy access to higher education isabsolutely vital to an area’s critical mass and economic potential. Critical mass points wereawarded to the county according to the rating system outlined earlier in this section of the report.

Table CM10: Higher Education

County4-Year

Colleges2-Year

Colleges*Tech

Schools CMREscambia County 2 2 2 6Santa Rosa County 0 2 1 3Northwest Florida 2 4 2 6* 2-year colleges or 4-year branch campusesSource: University of Florida - Haas Center for Business Research & Economic Development

Escambia County Santa Rosa County– University of West Florida – Pensacola Junior College– Pensacola Junior College – University of Florida– Pensacola Christian College – Locklin Technical Center– Florida State University– Embry-Riddle Aeronautical University– George Stone Area Vocational Technical Center


Small Business SupportIn order for a small business economy and a small business incubator to thrive, it is importantthat a community possess a sufficient support network to counsel, advise, and train businessowners on a wide range of technical skills and disciplines. This network of support providers iscrucial to the success of entrepreneurial programs and incubator facilities established in a region.If such a mechanism is not in place, or is found to be incomplete, the community must be willingand able to enact those types of programs needed to provide a well-rounded support system.

Our research in this area shows there are several agencies active in the region who act as serviceproviders to support small businesses. For a comprehensive list of all small business resourcesavailable in the Pensacola area, please see the “Small Business Resource Service Matrix”attached at the end of this section.

Small Business Development Center – The S.B.D.C. is an agency that is sponsored by the SmallBusiness Administration (S.B.A.) and the state in which it is located. Their mission is to servesmall firms by providing free consultation and conducting workshops that develop managementskills. The existence of a nearby S.B.D.C. should be considered an asset for all small businesses.

The S.B.D.C. that serves the two county area is operated by the University of West Florida. TheUWF-S.B.D.C. is managed by Larry Strain, who is located in Pensacola. Having met with Mr.Strain to discuss the incubator project and how the S.B.D.C. might fit into the program design,we are confident that Northwest Florida is in very good hands. Mr. Strain is very familiar withthe incubator concept and will be a key asset for any entrepreneurial program developed inNorthwest Florida.

Women’s Business Center - Under the direction of Rosemary Fraser, the Women’s BusinessCenter of Northwest Florida serves current and potential women business owners, with anemphasis on socially and economically disadvantaged women. Located in Pensacola, the WBCserves Escambia, Santa Rosa, and Okaloosa Counties. Military bases, such as Eglin Air ForceBase and Pensacola Naval Air Station, bring many military spouses and retirees to the area. As aresult, the WBC targets these two demographic segments of the population, especially focusingon women retiring from the military who are considering business ownership as a second career.The WBC offers training, counseling, mentoring and video-conferencing services to its clients.

UWF/Haas Center for Business Research and Economic Development- The Haas Center forBusiness Research and Economic Development exists to help entrepreneurs and industry leadersmeet their information needs in the modern economy. They collect, analyze, and distributeeconomic data for clients in Northwest Florida, specializing in data analysis for the purposes ofeconomic forecasting, marketing research, business expansion, tourism, and real estatedevelopment as well as industry and academic studies.


Another program operated through the Haas Center is the Virtual Business Accelerator. Themission of the Virtual Business Accelerator is to develop and promote effective methods oftechnology transfer by providing a delivery channel for information on the technologycommercialization process for small business entrepreneurs. The project recognizes the key roleof universities and federal labs in creating intellectual property and will develop and implementcurricula and tools to facilitate the commercialization process, as well as the cultivation ofentrepreneurial skills in high impact areas. The Haas Virtual Business Accelerator also operatesa Venture Capital Forum for entrepreneurs.

Capital Resources - Programs that help link entrepreneurs and other small businesses with start-up and or operating capital are vital to the success of any entrepreneurial economic developmentinitiative. We were able to identify several such programs in the Northwest Florida area.

# The UWF Haas Center for Business Research and Economic Development, through itsVirtual Business Accelerator, manages a Venture Capital Forum for entrepreneurs.

# Community Equity Investments, Inc. - CEII is a not-for-profit community developmentcorporation (CDC) based in Pensacola, which provides a variety of small businesslending, affordable housing and community development programs in Northwest Floridaand Southern Alabama. CEII operates five different small business loan programs underthe direction of Daniel Horvath, President and Elbert Jones, Jr., Vice President, Lending.

< The State-Funded Revolving Loan Fund provides loans of up to $75,000 tobusinesses which create at least one new job for every $10,000 borrowed.

< The SBA-Funded Microenterprise Loan Fund provides micro-loans of up to$25,000 to existing or start-up businesses.

< The USDA/Rural Development-Funded Intermediary Relending Program hasallocated a total of $1 Million to CEII to make loans to start-up and existingbusinesses located in rural portions of the 15 county Northwest Florida servicearea

< Enterprise Florida - Funded Self Employment Loan Fund provides smaller micro-loans of $5,000 or less to individuals seeking to create their own jobs by starting amicro business.

< The GAP Loan Pool. Three banks (First Union, SunTrust, and Compass) haveprovided below market rate loans totaling $200,000 to fund a loan pool whichwill make loans which do not "fit" other existing programs. The GAP Pool roundsout our ability to assist new and expanding small businesses in the 15 countyNorthwest Florida service area.


# Florida First Capital Finance Corp. - Founded by the State of Florida and licensed since1984 by the U.S. Small Business Administration (SBA) as Florida’s Statewide CertifiedDevelopment Company, Florida First Capital Finance Corporation (FFCFC) is charteredfor the primary purpose of advancing the economic development and general welfare ofthe citizens of the State of Florida by promoting and assisting the growth anddevelopment of small business concerns within the state. FFCFC administers SBA 504Loans, SBA 7A Loan Guarantee, and Department of Environmental Protection RecyclingLoans.

Community Development Organizations – Community organizations (such as chambers ofcommerce, industrial/economic development organizations and existing business incubatorprograms) can provide critical assistance to the small business community. Individualcounseling, promotion of local goods and services, sponsorship of training programs, localindustry retention, and in some cases, small business loan assistance are just a few of the manyservices that these organizations can perform in a community. As for an incubator program,these organizations can become a strong marketing adjunct through referrals of potential tenants.

The following is a brief list of community development organizations that could be leveraged tosupport any entrepreneurial programs initiated in the Northwest Florida region:

– Penscola Area Chamber of Commerce – TEAM Santa Rosa– Florida’s Western Gate EDC – Gulf Coast African-American C of C– Florida Procurement Technical Assistance Center – Gulf Coast Alliance for Tech Transfer

Table CM11: Small Business Support

County IDAChamber

of Commerce Incubator S.B.D.C. CMREscambia County Yes Yes No Yes 3

Other Training Resources - In addition to the S.B.D.C. located in the region, several othertraining resources exist. Entrepreneurs and small business managers have access to variouscourses in office/business management, accounting/bookkeeping and computer technology(applications and programming) offered through the University of West Florida and PensacolaJunior College.


Leadership ConsensusA small business incubator will not be successful in a community without a strong degree ofsupport for the program. Without support from all leadership sectors, an incubator program isput at risk from the outset. The first step in determining the feasibility of establishing asuccessful incubator program in a community is to measure the degree of community consensusthat exists.

In order to measure consensus in a community, it is necessary to hold briefings to discuss allaspects of the incubator concept and to answer the questions raised by the community leaders. At the conclusion of these briefings it is necessary to survey the attendees to determine theirdegree of commitment to the project.

Stacey and Associates conducted two leadership briefings in the Northwest Florida area. Theresults from the two surveys can be found in the appendix of this report.

1.) Escambia County - A total of 30 community leaders completed and returned the leadershipsurvey on April 11, 2003.

2.) Santa Rosa County - A total of 18 community leaders completed and returned the leadershipsurvey on May 29, 2003.

Based on our leadership briefings and surveys conducted in the area, we deem the leadershipattitude in Northwest Florida to be Very Positive at the present time.

Pensacola Area Small Business Resource Service Matrix

Services UWF SBDC

Women's Business

CenterCity of

PensacolaEscambia

County

Escarosa Workforce

Center

Florida's Western Gate EDC / Pensacola Chamber FPTAC

Gulf Coast African-American

Chamber of Commerce

PJC Workforce Development &

Training

UWF / Haas Center* (no advisement)

Capital Resources CEII & FFCFC

8-A/SDB/DBE/W/MBE Certification x x x x

Access to Capital Micro/Low Doc Loan x SBA 504 x Venture Capital Forum x x

Business Accelerator x

Business Plan / Valuation Assistance x x x

Commercial Parks x x

Computer Usage/Accessibility x x

Computer Software Training x x x

Continuing Professional Education/Certifications x x x Computer Software Training x x x

Entrepreneurial Training / Business Mgmt x x x Workshops/Seminars x x x x x x

Direct One-on-One Counseling x x x x x

EDATE x x

Enterprise Zone/Tax & Renewal Incentives / Streetscape & Façade (UBED) / HubZones x x

CEII - Low Interest Redevelopment Loan

Rates

Financial Statement Analysis x x x

Foreign Trade Zone x

Government/Local Procurement Asst x x x xHuman Resource / Personnel Mgmt & Benefits such as Worker's Comp x x x

Incubator

Loan Package Development x x x

Market Research Assistance x x x

Minority/Women-Owned Business Directory x x x

Networking/Marketing Activities x x x

Patents/Inventions x

Permits/Zoning/Business Licenses Pre-Development Assessments x x

Pre-Business & Start-Up Assessment x x

Resource Library/Reference material* x x x x x

Site Location Assistance x x x x

Start-Up Kit x x

Workforce Development Assistance QRT & ITW x x

*Pub. Lib. Also maintains a reference resource *Haas - Demographics Only


Section 2:Demand Analysis


Demand Analysis

When assessing demand for incubator space and services, we employ multiple approaches ofstudy. By combining perspectives we gain validity for our recommendations.

Total DemandDrawing Area - In order for a small business incubator to be successful, it must draw its tenantsfrom the pool of entrepreneurs that exists in the general area. The marketability of the incubatorwill be determined by many factors, not the least of which are; the distance tenants must travel tothe incubator and the existence of other incubators in the area. We believe that incubators inEscambia and Santa Rosa County have a good chance of drawing tenants from multiple countiesin the region. However, in an effort to take a conservative approach to the matter, we will limitour study area to Escambia and Santa Rosa County only. In this report, the two county area willbe referred to as Northwest Florida.

Secondary Data - We began our research by studying historical data from secondary sourcessuch as the Bureau of Economic Analysis - Regional Economic Information System (BEA-REIS) and Dun and Bradstreet’s Marketing Files (D&B). According to BEA-REIS, the numberof non-farm proprietors in the Northwest Florida study area increased by 1,351 between theyears 1998 and 2001. This is an average of 37.5 new non-farm proprietors per month. Themajority of these new proprietors (78%) came from Escambia County According to D&B, theNorthwest Florida study area produced 2,547 new non-retail start-up companies between 2000and 2003. This equates to 55.4 new non-retail start-ups per month. Again, the majority of thesestart-ups (65%) came from Escambia County.

Table D1: Non-Farm Proprietors and Non-Retail Start-Ups

New Non-FarmProprietors Per Month

Non-RetailStart-Ups Per Month

Escambia County 29.3 35.7

Santa Rosa County 8.3 19.7

Northwest Florida 37.5 55.4Source: Bureau of Economic Analysis, Dun & Bradstreet

S.B.D.C. Activity - Northwest Florida is currently served by the UWF – Small BusinessDevelopment Center. We studied the S.B.D.C. consulting and training activity in the two countyarea for fiscal years 2001 to 2003.


During this thirty-three month period, the S.B.D.C. worked with a total of 1,010 pre-launchbusiness clients in the two county area, for an average of 30.6 per month. According to S.B.D.C.records, approximately 74% of these consults (749 total) were with Escambia County start-upcompanies.

Over the same time period, the S.B.D.C. conducted a workshop targeting start-up businesses thatwere in the pre-business planning stage. This workshop drew a combined attendance of 1,267.This equates to a monthly average of 38.4 attendees in the pre-business planning stage

Table D1: S.B.D.C. Pre-Launch Consults and Pre-Business Training

Pre-Launch BusinessPrivate Consults

Per Month

Pre-Business Planning Training Attendees

Per Month

Escambia County 22.7 n/a

Santa Rosa County 7.9 n/a

Northwest Florida 30.6 38.4Source: UWF - Small Business Development Center

Start-Up Bank Loan Demand - A sample of the banks that serve the demand area was polled asto the number of small business start-up loan inquiries they receive each month. The totalnumber of loan inquiries for the area was divided by the total number of banks that provided uswith information. This average helps eliminate over-estimated activity that results from a start-up company that may visit several banks in the area looking for a loan.

The banks in the demand area receive approximately twelve (12) inquiries per month for start-uploans. This does not mean that these loans were made nor does it imply that the business ideasbehind these inquiries were sound and bankable. This number simply documents the number ofpeople who enter area banks each month and inquire about start-up loans. The top twocommunities from which most of these inquiries originate are Pensacola and Gulf Breeze

Table D3: Start-Up Bank Loan DemandNumber of Inquiries

Per Month(area average)

12

Source: Survey of area banks


Total Demand - Approximately 15% of all business start-ups can be categorized as“entrepreneurial launches” that would fit the general profile of candidacy for incubator entry. This percentage is a conservative estimate based on our experience as incubator managers andDavid Birch’s work with Cognetics, Inc. at M.I.T.

From the preceding combination of sources, we estimate that each month there is the potentialfor approximately 14.7 new entrepreneurial launches in Northwest Florida.

Table D5: Northwest Florida - Total Demand

Current Demand

Non-Retail Start-Up Businesses per month 55.4

S.B.D.C. start up consults per month 30.6

Start-Up Loan Inquiries per month 12

Average Start-Up Pool 98.0

Entrepreneurial Launches (15%) 14.7

We judge the amount of demand for incubator space and services in Northwest Florida to be strong at the present time. There is a potential pool of entrepreneurs in the area that fit theprofile of incubator tenants, but reaching them may be hard. We cannot stress enough theimportance of a strong marketing plan. A good referral network, an attractive training adjunct,and a creative marketing plan can capture this pool of entrepreneurs.

Based on the data above, we estimate that approximately 70% of the entrepreneurial demand inNorthwest Florida will come from Escambia County, while 30% will come from Santa RosaCounty.

Type of CompanyDun and Bradstreet - Stacey and Associates was able to break down Dun and Bradstreet’s dataon new businesses recently launched in Northwest Florida (2000/03). The breakdown by type ofbusiness can be seen in the table below.

The vast majority of businesses that have launched in Northwest Florida over the past three yearshave been service (41%), retail (18%) and construction (18%) related.


Table D6: Type of Company - Recent Start-Ups

SIC CategoryEscambia

CountySanta Rosa

CountyNorthwest

FloridaSoutheast

U.S.Agriculture, Foresty, Fishing 5% 7% 5% 3%Mining 0% 0% 0% 0%Construction 17% 20% 18% 11%Manufacturing 4% 6% 5% 5%Transportation/Utilities 3% 3% 3% 5%Wholesale Trade 4% 5% 4% 5%Retail 19% 17% 18% 19%F.I.R.E. 4% 4% 4% 8%Services 43% 38% 41% 43%Unclassified 0% 0% 0% 0%

Source: Dun and Bradstreet, Marketing Files

S.B.D.C. Activity - According to the S.B.D.C., the majority of pre-launch business consults beingconducting in Northwest Florida are with Service based companies.

Table D7: Type of Company - S.B.D.C. Data

SIC CategoryEscambia

CountySanta Rosa

CountyNorthwest

FloridaRetail Trade 26% 27% 27%Services 51% 49% 50%Manufacturing 6% 8% 6%Other 17% 16% 17%

Banker Survey - According to data obtained during the banker survey, the people inquiring aboutstart-up loans most often are planning on starting retail trade (51%) or service based (41%)businesses.

Table D8: Type of Company - Bank Survey

SIC Category PercentAgriculture 2%Manufacturing 6%Retail Trade 51%Services 41%

Generically speaking, the start-up patterns in Northwest Florida appear to closely mirror thestart-up patterns across the U.S.– the largest concentrations are in service and retail basedcompanies.


Retail businesses do not work well in incubator space for several reasons. Our recommendationfor this program will be to prohibit the entry of retail businesses in the incubators themselves.Retail start-ups can certainly take advantage of the consulting/training offered at the incubators,but there location in the incubator buildings should be prohibited.

In order to take a closer look at the types of companies being started in Northwest Florida,Stacey and Associates acquired a list from Dun and Bradstreet of all the new businesses (startedwithin the past 12 months) in the two county area. We limited this list to the SIC codes oftenfound in incubator environments, specifically: Manufacturing (20-39), F.I.R.E. (60-67) andServices (70-89). We only looked at businesses listed as single locations or headquarters–inothers words, businesses grown organically within the area, not franchise related growth.

The list we acquired had a total of 796 new start-ups, 564 in Escambia County and 232 in SantaRosa County. We performed several queries on this list of new start-ups to determine the specifictypes of companies (by SIC code) that have been growing organically in Northwest Florida. Wethen matched these SIC groups to “typical incubator profile” SIC groups.

The following two tables represent the types of companies the incubators in each county arelikely to encounter, based on past start-up history.

Table D9 - Type of Company: Escambia County

SIC DescriptionBusinesses Started

Past 12 MonthsBusiness Services 77Management Consulting Services 12Business Consulting 11Motion Picture and Video Production 5Data Processing and Preparation 5Manufacturing Industries, Nec 5Computer Related Services, Nec 4Commercial Art and Graphic Design 3Engineering Services 3Investors, Nec 3

Table D10 - Type of Company: Santa Rosa County

SIC DescriptionBusinesses Started

Past 12 MonthsBusiness Services 39Business Consulting 8Management Consulting Services 6Data Processing and Preparation 4Investors, Nec 3Custom Computer Programming Services 2Computer Related Services, Nec 2Commercial Art and Graphic Design 2Engineering Services 2Management Services 2


One area that we focused special attention on was that of “high-tech” business start-ups inNorthwest Florida. Based on the types of companies being started in the area, it is safe to assumethat many of these will be “users” of high-technology. The question remains however, how manyof these companies will be pure technology businesses, built on cutting-edge research anddevelopment? How many of these companies will be “high-tech” employers?

The Congressional Office of Technology Assessment describes high-technology firms as those“that are engaged in the design, development, and introduction of new products and innovativemanufacturing processes, or both, through the systematic application of scientific and technicalknowledge. High-technology firms typically use state-of-the-art techniques, and, in terms ofquantifiable resources, such firms devote a ‘high’ proportion of expenditures to research anddevelopment and employ a ‘high’ proportion of scientific, technical, and engineering personnel.”

Daniel Hecker, an economist in the Office of Employment Projections, Bureau of LaborStatistics, compiled a list of SIC codes that are classified as high technology industries. TheseSIC codes are published in his report entitled, High-Technology Employment: A Broader View.This report can be found on the web at http://www.bls.gov/opub/mlr/1999/06/art3exc.htm.

We used Hecker’s list of SIC codes to determine the number of “high-technology” start-ups thathave formed in Northwest Florida over the past three years.

Table D11: High-Technology Start-Ups

County 2000/01 2002/03 +/-Per

MonthPercent of

All Start-UpsEscambia County 87 58 145 3.2 9%Santa Rosa County 51 34 85 1.8 9%Northwest Florida 138 92 230 5.0 9%

Source: Dun and Bradstreet Corporation, Marketing FilesNotes: Start Ups in High Tech/R&D Industries. Calculated using the list if SIC's

compiled by Daniel Hecker, an economist in the Bureau of Labor Statistics.The list is published in "High-technology employment: a broader view"

Based on Hecker’s definition, a total of 230 start-ups in high technology industries have formedin Northwest Florida over the past three years, an average of 5 per month. The above start-upsequate to approximately 9% of all the start-ups in Northwest Florida over the past three years.This is right in line with the findings provided by the bank loans officer survey, which estimatedthat 8% of all loan demand is coming from start-ups considered to be “technology” related firms.

Type of SpaceTo properly design the incubator “property layout”, it is important to anticipate what type ofspace prospective tenants will require. A close look at the type of businesses currently beinglaunched or planning to launch in the demand area should serve as a good example of the type ofspace tenants will most likely demand.


Based on the above data, we believe the majority of tenant prospects in the Northwest Florida area will demand professional/service type space. We will recommend facilities, in bothEscambia and Santa Rosa County, that are approximately 85% professional space to 15%open/light assemble space. For our recommended property layout, please see the followingsection of this report, entitled “Property Assessment”.

Tenant Needs AnalysisIn order to properly design the incubator “program”, it is important to anticipate what type ofservices prospective tenants will require. In order to effectively market an incubator program, theright mix of training/counseling and services/equipment must be offered. Most start-upcompanies that are attracted to incubators are attracted by the services they offer, not the lowcost rent.

Training/Consulting - In order to determine the type of training/consulting services that will bedemanded in Northwest Florida, we looked at two different sources.

First, we studied the past activity of the local S.B.D.C. to determine their most frequentlyrequested types of training/counseling. According to S.B.D.C. records, their most populartraining seminars are: 1.) Pre-Business Planning, 2.) Business Planning, 3.) International Trade,4.) Tax Planning, 5.) Accounting/Budgeting.

Next, we conducted a survey of a select group of recently started businesses in the NorthwestFlorida. The businesses we chose to survey were local start-ups that closely resembled “typical”incubator type businesses. One of the questions we asked was, “Please indicate the types oftraining/consulting that would have been most beneficial to you when you started yourbusiness?” The top three areas of training/counseling were 1.) Marketing/Sales, 2.)Finding/Securing Capital, and 3.) Legal/Organizational Structure.

Services/Equipment - In order to determine the type of services/equipment that will bedemanded in Northwest Florida, we looked at two different sources.

First, we conducted a survey of a select group of recently started businesses in the NorthwestFlorida. The businesses we chose to survey were local start-ups that closely resembled “typical”incubator type businesses. We asked these businesses to indicate which services and equipmentwould have most benefitted them when they started their business. The top four services listedwere 1.) Clerical/Typing, 2.) Receptionist/Phone Answering 3.) Internet Access and 4.)Mailing/Shipping. The top three pieces of shared equipment were 1.) Copiers, 2.) Postage Meterand 3.) Software Library.


Next, we studied the top needs of all incubator tenants, as reported by the National BusinessIncubator Association (N.B.I.A.)

Table D12: Tenants Needs - N.B.I.A.Help with Business Basics 96%Conference Rooms 92%Marketing Assistance 89%Shared Administrative Services 88%Networking Activities 86%Accounting/Financial Management 77%Loan Access/Guarantee Programs 77%Links to Higher Education Institute 76%Telephone System/Answering 65%Affiliate Programs 63%Internet Access 62%Investor/Strategic Partner Linkages 58%Comprehensive Business Training Program 49%


Section 3:Property Assessment


Property Assessment

An incubator is a multi-tenanted physical facility that houses a variety of young start-upcompanies in a controlled overhead environment. Until a physical facility has been identified, anincubator cannot exist. The incubator facility will either be a renovated existing building or abuilt-to-suit incubator.

We believe that the first approach should always be to look for an available building that can becost effectively converted to incubator use. By cost effective, we mean that it can be convertedfor a price lower than a new building can be built. If no building is available, then a specificallydesigned incubator facility should be built-to-suit the needs of the entrepreneurs found during theDemand Analysis.

An incubator property, whether a conversion or a new building, must meet the followingguidelines. (1) It must contain the type of space needed by local tenants – as determined by thedemand analysis. (2) It must contain enough leasable space to allow the generation of sufficientcash flow capable of covering program operating costs. If these two criteria are not met, theproperty is not a feasible option.

The following is a list of some of the features an incubator facility should possess. If an existingbuilding cannot be found that meets (or can be converted to meet) the majority of these needs, aspecifically designed incubator build-to-suit should be considered.

The proposed incubator property should:

– Be in a marketable location – Have good visibility– Be expandable – Be air conditioned/heated– Have adequate parking – Be in a secure area (for around the clock access)– Have a flexible space configuration – Be zoned commercial– Be compatible with the surrounding area – Possess good shipping/receiving capabilities– Have all space on ground level – Have a well lit exterior– Be available fee-simple – Be A.D.A. compliant– Have an adequate number of restrooms – Be free from any hazardous material

Northwest Florida Property NeedsAfter analyzing the demand for incubator space for the Northwest Florida network, we foundthat the program can utilize approximately 33,000 to 36,000 square feet of leasable tenant space.In order to yield that amount of net leasable square feet, approximately 45,000 square feet grossspace will be required.


During the Demand Analysis, we determined that approximately 65% of the entrepreneurialdemand in Northwest Florida will come from Escambia County, therefore, we can estimate aproperty allocation as follows:

Table P1: Property Allocation

Total Space Leasable Yield

Escambia County 30,000 sq/ft 24,496 sq/ft

Santa Rosa County 15,000 sq/ft 11,458 sq/ft

Network Total 45,000 sq/ft 35,954 sq/ft

This allocation scenario will provide good flexibility for space absorption, allowing expansionroom for tenants, and also provide some additional space should demand exceed initialexpectations.

As stated in the Demand Analysis, the large majority of demand will be for office/professionalspace. Our analysis found that less than 15% of total demand will likely be for open span, lightmanufacturing type space.

Survey of PropertiesDuring our survey of the available properties in Northwest Florida, we were unable to locate anyexisting buildings that we thought could be converted to incubator space. During our research wesurveyed 10 properties in Escambia County and 8 in Santa Rosa County. None of theseproperties fit the parameters determined suitable for this project. Buildings were either poorlymaintained; too large; too small; offered inadequate parking or incorrectly configured for ourneeds.

For this reason, we recommend that suitable land in each county be acquired/obtained and “built-to-suit” incubator facilities be constructed.

Incubator Facility LocationsIt is our suggestion that first consideration be given to property sites that can be donated to theincubator program as part of the local funding match required by granting agencies. Please keepin mind that the property selected must still meet most of the requirements listed above,especially related to marketability and expand ability.

Both facilities should be situated on properties that will allow future expansion, if tenant demandjustifies such an expansion.


In Escambia County we suggest first priority be given to sites located in the City of PensacolaEnterprise Zone. In Santa Rosa County we recommend property in the Santa Rosa CountyIndustrial Park.

These sites are convenient and accessible for the citizens of both counties–they can be reachedeasily by main traffic arteries and should be well known to most local citizens.

Advantages of Built-to-Suit IncubatorsA build-to-suit strategy gives wide latitude to site selection. It will also assure that maintenanceand upkeep expenses will be drastically contained. In addition, there are other advantages ofchoosing to go with a new built-to-suit incubator facility:

1. New construction methods allow any subsequent reconfiguration to be accomplished atminimal cost

2. Flexibility of site selection opens the opportunity to utilize properties already owned bythe city or county

3. Utilization of currently owned land may qualify as local funding match to stimulategrants for construction

4. Build-to-suit structures offer the opportunity to “size” leasable space more closely todemand

5. By selecting a site for new construction, you have assurance that adequate parking willbe available

6. By selecting your site you are assured of all code compliance, plus infrastructure needswill be met

7. Selection of a site for new construction also enhances the marketability of the program,in that more care can be given to convenience, visibility, security and proper fit with thesurrounding neighborhood.

While we cannot rule out the possibility that a perfect property will come available in the nearfuture, the time constraints of our research require that we make the foregoing recommendation.

The following floor plans give a suggestion as to how your physical facilities may be configuredto accommodate your program. Please note that Stacey and Associates does not haveengineering, construction or architectural capabilities, therefore, these renderings should serve asa guide only.


Escambia CountyIncubator Floor Plan


Santa Rosa CountyIncubator Floor Plan


Section 4:Program Design


Program Design

Business Incubator NetworkThe Pensacola Area Chamber of Commerce and TEAM Santa Rosa retained the services ofStacey and Associates to determine the feasibility of creating a small business incubator networklinking entrepreneurial programs in Escambia and Santa Rosa counties. The Critical Mass Auditand Demand Analysis findings suggest that such a plan is feasible, if managed properly.

Configured as an incubator network, the facilities in both Escambia County and Santa RosaCounty can lower their management and marketing costs and gain access to expanded trainingassets. The availability to pursue joint grant applications is also very beneficial to both programs.

While it may be possible to run each program as an individual endeavor, we believe the bestscenario is to proceed with this project as first planned–as an incubator network sharingresources and leveraging each other’s assets. Operating the two programs individually wouldresult in increased overhead for both facilities. In addition, both programs would be pursuinggrant opportunities from the same agencies, thus creating a competitive environment that couldbe detrimental to both communities.

Service PackageThe primary benefit of a business incubator is the bundle of services offered to the entrepreneur. An incubator provides administrative/business services, such as phone answering, clericalassistance, desk-top publishing, etc. Also, incubators offer technical services such as: legaladvice, accounting, marketing and research. Possibly the most important service offering is thedaily access to consulting/training (problem solving) provided by the incubator staff andvolunteer committees.

It is difficult to predict every service an incubator must offer its tenants. The services outlinedbelow fit the needs of those entrepreneurs identified during the demand analysis and also trackclosely with the basic services suggested by the National Business Incubation Association(N.B.I.A.).

The service package mix varies from one incubator to another and evolves over time as specificneeds arise. The tenant mix will determine, to a large degree, the make-up of the servicepackage. The service package must be flexible in order to adapt to the changing needs oftenants.

The service package below should suffice for entrepreneurs working in a wide variety ofbusiness endeavors, be they high-tech firms or generic service enterprises. As in most businessincubators, the Northwest Florida network will attract a wide range of tenants dealing in a widevariety of market niches, coming into the program with multiple educational backgrounds andpractical business experiences.


Based on the information we gathered during the demand analysis phase, we suggest theNorthwest Florida incubator network offer the following service package as a minimal startingpoint:

Administrative / Business Services• Secretarial/Clerical• Telephone answering• Mail & package handling (US Mail, UPS, Fed Ex)• Desk-top publishing• Bookkeeping (as an added charge if needed)• Access to equipment, such as:

- Computer workstation - Copier- Color laser printer - Fax machine- Software library - Internet Access (at least T1 service)- Postage meter/scale - Scanner- Furniture rental - Overhead projector/screen- Hand truck - Paper Shredder

Technical Services• Legal assistance:

- Organizational structure - Patent protection- Contracts - Copy write protection

• Accounting:- Bookkeeping - Taxes- Financial planning - Payroll

• Research- Market research - Database research

Consulting / Training (Problem Solving)• Consulting/Training Topics:

- Business Plan Writing - Finding/Securing Capital- Financial Analysis/Cost control - Cash Flow Management- Marketing/Sales - Computer/Software Applications- Management Skills - Personnel/HR

We suggest that, as the tenant load increases, regular surveys be conducted to uncover otherservice needs and that the program remain flexible enough to accommodate these needs.


Service ProvidersThese above services will be provided by the following people/teams:

1.) One (1) Network Executive Director (manages both facilities)2.) One (1) Network Operations Manager (manages both facilities)3.) Two (2) Administrative Managers (one at each facility)4.) Local pro-bono team of volunteers (from each county)5.) S.B.D.C. (consulting/training at both facilities)6.) Women’s Business Center (consulting/training at both facilities)

The administrative/business services listed above will be handled by two full-time administrativemanagers, one employed at each incubator. The business services equipment will be purchasedby the incubator network as part of the start-up budget (see Financial Analysis Section).

The technical services and consulting/training (problem solving) will be handled by fourseparate entities, consisting of: the network’s executive director, a pro-bono team of localvolunteers, the University of West Florida’s S.B.D.C. and the Women’s Business Center ofNorthwest Florida.

Network Executive Director - The person hired to direct the entire incubator network will handlemost of the day-to-day consulting and some of the training. This person will also oversee themarketing and management of all incubator facilities.

Both facilities will be expected to pay a pro-rata share of the director’s salary, based on eachcounty’s pro-rata share of the incubator network’s total square footage.

We recommend that this position not be filled until the program has adequate cash flow tosupport such a hire. Until that point is reached, we recommend that the S.B.D.C. be contracted toperform all the duties of the Network Executive Director (please see the S.B.D.C. sectionbelow).

Pro-Bono Team of Volunteers - We suggest that a pro-bono committee of local lawyers,educators, accountants, technicians and other business professionals be established to providesupplemental training and consulting services. Our experience indicates that this is a good wayto increase community involvement and greatly expand the service capacity of the incubator, aswell as leverage the marketing strategy.

Our research findings suggest that Northwest Florida has a more than adequate core of professionals from which such a network can be recruited.


Legal Assistance - It is our experience that many lawyers are willing to provide limitedpro-bono services to start-up entrepreneurs. At a minimum, the executive director shouldbe able to engage local attorneys who are willing to provide legal services at a very lowrate.

Tax and Accounting Services - As addressed above, our experience is that pro-bono orvery low cost assistance is available in most communities to aid start-up companies.

Engineering and Technical Services - In most situations, such services may be obtainedthrough area universities or local professional firms. If services cannot be found on apro-bono basis, usually a limited fee schedule is negotiable.

Small Business Development Center (S.B.D.C.) - The UWF Small Business Development Centeris one of the strongest programs of its type with which our firm has ever worked. For this reason,we are very comfortable in making the following recommendations. We suggest that theS.B.D.C. play a dual role in this incubator program.

First, we suggest that the local S.B.D.C. be utilized to provide a wide variety of consulting andtraining services. In addition, this center should be used to gain access to the wide range ofuniversity resources available at UWF.

Second, as the day-to-day operations of the incubator project roll out during implementation, thesponsors should give strong consideration to negotiating a performance contract with theS.B.D.C. Under this performance contract, the S.B.D.C. would be retained to manage theprogram provisions and to accept responsibility for marketing and managing the program up tothe time that tenant rent flows will sustain a full time Network Executive Director.

Once the program is fully underway, with adequate rental revenue flows, consideration shouldbe given to hiring a full time Network Executive Director who will be charged with day-to-daymanagerial responsibilities.

At that time the S.B.D.C. can revert to a more standard support role and be leveraged as thedirector deems necessary.

Women’s Business Center - We suggest that the local Women’s Business Center be called uponto handle some of the training load for the incubator program.

Training RecommendationsWe cannot stress too strongly that constant and consistent training be made available to yourtenants. Upgrading managers’ skills assures a higher rate of business success. Most incubatorsoffer training during evening hours and weekends, so as to not disrupt day-to-day business


operations. Topics should be rotated on a regular basis in order to accommodate new entrants. Many business issues will be dealt with as they arise, through interaction of tenant and incubatorstaff, but exposure to training and skills improvement is essential to long term success.

We suggest that the incubator program work closely with the S.B.D.C. and the W.B.C. to securea commitment to provide some of these training services. Such responsibility may be shared orrotated so that the work load is equitably handled. We stress the importance of these trainingmodules to the success of the program.

We also suggest that all training be available to any entrepreneur in the region, not just incubatortenants. Such training provides an excellent means of marketing the program.

Whenever possible, training should be presented at one of the incubator facilities.

Accessing CapitalWhile capital formation and sources of venture capital are not part of the mandate of this study,we would be remiss not to note that access to local capital is very important to a well roundedincubator program. Linking entrepreneurs to capital is one way to accelerate enterprise growthand community wealth creation. The most common methods are:

1. Angel Networks2. Venture Capital Forums3. Revolving Loan Funds4. Micro-Loan Programs

The following programs were identified during the Critical Mass phase of our research:

# The UWF Haas Center for Business Research and Economic Development, through itsVirtual Business Accelerator, manages a Venture Capital Forum for entrepreneurs.

# Community Equity Investments, Inc. provides a variety of small business lending andcommunity development programs in Northwest Florida, including: < The State-Funded Revolving Loan Fund< The SBA-Funded Micro-Enterprise Loan Fund< The USDA/Rural Development-Funded Intermediary Relending Program< Enterprise Florida - Funded Self Employment Loan Fund< The GAP Loan Pool.

# Florida First Capital Finance Corporation administers SBA 504 Loans, SBA 7A LoanGuarantee, and Department of Environmental Protection Recycling Loans.


The above programs should be leveraged to help provide capital for worthy incubator start-upfirms. In addition to these programs, the Network Executive Director should work to create otherfunding avenues for local entrepreneurs.

Generic Job DescriptionsNetwork Executive Director:

– Manage day-to-day operations – Market the program– Train and counsel tenants – Forge strategic alliances– Coordinate all on-site training – Recruit pro-bono/non-staff consultants– Manage the budget – Generate accounting/financial reports– Public relations – Governmental liaison– Work with “satellite” programs – Communicate with board of directors– Grant acquisition – Oversee on-site technology package

Network Operations Manager:– Manage the physical facilities – Oversee leases and lease adherence– Property maintenance – Equipment purchases/maintenance– Purchase all supplies – Facility use scheduling– Facilitation of on-site meetings – Manage administrative staff– Act as secretary to governing board – Route reports to board members– Oversee supplemental clerical needs – Oversee tenant space modification

Administrative Managers:– Clerical/secretarial services for tenants – Mail and package handling– Oversee janitorial services – Day-to-day equipment maintenance– End of day security lock down – Inventory of office supplies– Purchase of break room supplies – Track tenants monthly fee schedules– Host on site events – Oversee classroom/common area supplies


Section 5:Organizational Structure and Governance


NetworkBoard of Directors

(6 members)

Escambia CountyBoard of Advisors

(9 members)

Santa Rosa CountyBoard of Advisors

(9 members)

NetworkBoard of Directors

(6 members)

Escambia CountyBoard of Advisors

(9 members)

Santa Rosa CountyBoard of Advisors

(9 members)

Organizational Structure and Governance

We recommend that all incubator programs be organized as not-for-profit 501(c)3 corporationsor that they operate under such an existing program. This allows the program to pursue grants,gifts and donations to subsidize the operation. If a 501(c)3 shelter exists that can be expanded tocover the program, there is no need for the redundancy. Legal opinions should be sought prior tolaunching the project in order to gain specific insight.

The following scenario is only a suggestion of how the incubator network may logically andeffectively govern the program. It is only natural that, as funding considerations are encounteredand dealt with, the investing partners will require representation in the governing structure.

Because the project will encompass two physical facilities in two different counties, it is oursuggestion that each county establish a separate Board of Advisors, but that the network begoverned by an overarching Network Board of Directors.

County Boards of AdvisorsA key element of a successful incubator program is an independent board of advisors. Such aboard establishes entry/exit criteria for their local program and defines the measurable objectivesupon which the program will be judged. We urge that each board develop a written policymanual. A sample copy of a policy manual is included in the Appendix. It is for guidance only.

The make-up of each board and the authority to appoint members to this board is a matter forlocal consideration. It should be evident that those investing sponsors receive appointingauthority. Those organizations that assume operating responsibilities should also be grantedsuch authority.


Both Escambia and Santa Rosa County should establish a Board of Advisors to provide guidanceand input into their respective operations. Such input should include.

1. Entry / Exit criteria for their facility2. Final site selection for their facility3. Employment of engineering, architectural and construction firms to be engaged as needed4. Hiring of their local administrative manager5. Joint approval for hiring of the Network Executive Director and Operations Manager6. Adoption of their local policy manual7. Unspecified issues specific to their county, including measurable objectives

Each Board of Advisors should be limited to nine members, with three officers chosen from theirmembership. The officers should be a chairman, vice chairman and secretary.

These advisory boards should reflect a broad cross section from each county with emphasisplaced upon appointment of successful business and professional leaders.

We suggest that no elected official assume a voting position on these boards, thus assuring noappearance of conflict of interest. Elected entities with appointing authority should use theopportunity to name successful local business owners.

Appointment to Boards of AdvisorsAs noted, the investing partners should retain the authority to appoint members. We stronglysuggest that consideration be given to simply extending the mandate of those leaders who havehelped bring the project to life.

In Escambia County, the Small Business Steering Committee assembled by the PensacolaChamber of Commerce certainly exemplifies the kind of diverse and high quality leadershipgroup that could easily transform into a sound Board of Advisors.

In Santa Rosa County, Team Santa Rosa should be in a good position to spin out a highlycompetent Board of Advisors.

Both groups represent a good cross-section of community leadership and volunteer activists whohave given complete support to the incubator project.


Network Board of DirectorsThe officers from each Board of Advisors will automatically serve on the Network Board ofDirectors.

The primary duties of the Network Board of Directors is to:

1. Oversee the roll-out of the project2. Approve program design and contract with consulting/training providers3. Hire the Network Executive Director and Operations Manager4. Assure that incubator management team is meeting objectives set by Boards of Advisors5. Approve budgets set by incubator management team

Setting ObjectivesA business incubator is an economic development program, therefore, its primary objectiveshould be to create a positive impact on the local economy. The following are some areas thatshould be considered when measuring the success of the incubator program. This list willprovide some guidelines for setting goals and objectives and measuring outcomes againstexpectations. Ultimately, the Boards of Advisors in each county will establish the specifics ofhow their program should be measured.

1. New Businesses - This is a common incubation objective for obvious reasons. It is veryeasy to measure and track over time. All new firms create economic activity merely byopening their doors.

2. New Jobs - This is another common measurable criteria. New jobs create new payrollswhich in turn are circulated in the local economy, stimulating economic activity.

3. Net Economic Impact - This factor is becoming a more common objective for measuringan incubator’s results. It is measured by tracking revenues of incubator tenant companiesand separating (by invoice review) how many new dollars are being “imported” into thelocal economy as goods/services are being “exported” outside the area. Such new dollarscan be assigned an economic multiplier to estimate their impact. For example, ifincubator tenants, collectively, ship $1,000,000 of product out of the area, the localimpact will be at least 2.0 X $1,000,000 or $2,000,000.

4. Mobile Entrepreneurs - Current trends indicate the ability of communities to attract newentrepreneurs from outside the area. This indicator is easy to measure and implies thatoutside talent and capital are being imported into the local economy.

5. Tax Revenue - Many incubator managers document how much newly imported andcirculated revenues become taxable transactions, thus producing new public revenue.


These figures allow elected officials to measure the return on their investment into theincubator program.

6. Capital Stimulation - As new businesses are started, they require start-up capital.Importing new capital into the local market for start-up companies generates transactions,payrolls and tax revenues.

7. Tourism - Visitors coming to the local area to study the incubation program or explorepossible entry into the program has the same impact as traditional tourists.

8. Community Participation - New start-up companies commonly join the local chamber ofcommerce and other business associations

9. Diversification - Some incubators require all tenant companies to be working in nichesnot currently being serviced in the local economy. Such “innovation” requirements createnew types of jobs and promote clustering of similar types of firms, rather than justduplicating the businesses already in the local economic mix.

10. Non-Tenant Start-Ups - In many instances, incubator programs work with entrepreneurswho will not (due to entry criteria barriers) become tenants in the incubator, but who willstill launch businesses in the community. It is important to track this indirect economicimpact.

In summary, there are numerous ways in which to measure the success of an incubator program.It is always best to settle on objectives that fit local community needs. Regardless of theobjectives selected to measure success, they all must meet the following three point criteria. Allobjectives must be: 1.) Measurable, 2.) Reasonable and 3.) Timeable.


Section 6:Financial Analysis


Financial Analysis

When conducting an incubator feasibility study, there are two budgets that must be considered,the (1.) Start-Up Budget which includes the funds needed to acquire, renovate or build a physicalfacility, as well as the funds needed to furnish, equip and cover the “pre-opening” expenses andthe (2.) Operational Budget which includes all normal operating expenses.

Start-Up Budget

Northwest Florida Incubator Network

Estimated Start-Up BudgetEscambia County Santa Rosa

County

Land Acquisition $0 $0

Construction Costs @ $34 sq/ft.* $1,020,000 $510,000

Incubator Furniture and Equipment $29,625 $29,625

Incubator Pre-Opening Budget $18,225 $18,225

Total Start-Up Costs: $1,067,850 $557,850* estimate only–this figure is based on the construction costs of the Oxford Mississippi incubator, supplied to us by the Three Rivers Planning and Development District, Inc.

Land Acquisition - For this project we are assuming that the property on which the facilities areto be built will be donated by the appropriate authorities and used as part of the matching fundsneeded to acquire grants.

Construction Costs - The facilities that will have to be constructed to house the incubatorprograms will be approximately 30,000 sq/ft. in Escambia County and 15,000 sq/ft. in SantaRosa County. For a construction estimate, we applied a figure of $34/sq/ft. This would equate toa total construction cost of $1,020,000 in Escambia County and $510,000 in Santa Rosa County.Please note, this is just an estimate. Stacey and Associates is not a contractor or engineeringfirm. A professional service provider will have to supply the actual construction estimates, whichmay be higher or lower than our estimate. These estimates should serve as guidelines only.

Furniture/Equipment - The following lists contain an estimated budget for essential furniture andequipment for each incubator in the network. Buying the equipment and furniture for bothfacilities at one time may allow some price reductions due to economies of scale. We also highlyrecommend the solicitation of donated furniture and equipment which could drastically reducestart-up costs.


Furniture/Equipment Budget - Per Incubator Facility Item Unit Cost Total

Computers 2 @ $2,500 $5,000

Color Laser Printer 1 @ $4,000 $4,000

Software - - - $5,000

Fax Machine 1 @ $350 $350

Typewriter 1 @ $200 $200

Copier lease lease

Television/VCR 1 @ $800 $800

Overhead Projector/Cart/Screen 1 @ $500 $500

Telephone Switchboard 1 @ $2,000 $2,000

Desks 2 @ $500 $1,000

Office Chairs 2 @ $250 $500

File Cabinets 4 @ $200 $800

Conference Table 1 @ $1,000 $1,000

Conference Chairs 15 @ $125 $1,875

Bookshelf 4 @ $175 $700

Hand-truck 1 @ $150 $150

Coffee Pot 1 @ $180 $180

Microwave 1 @ $250 $250

Refrigerator 1 @ $500 $500

Mailbox Unit 1 @ $100 $100

Shipping Scale 1 @ $200 $200

Mail Scale 1 @ $100 $100

3 Hole Punch 1 @ $100 $100

Folding Tables 8 @ $40 $320

Program Chairs 32 @ $50 $1,600

White Boards 4 @ $100 $400

Miscellaneous - - - $2,000

Total Cost $29,625


Incubator Pre-Opening Budget - This budget includes the up-front marketing costs and otherexpenses. This scenario is based on the premise that the UWF Small Business DevelopmentCenter will be contracted to assume the pre-opening marketing and management of the twofacilities. Please see the Appendix for a commitment letter for the UWF S.B.D.C.

Incubator Pre-Opening BudgetPer Incubator Facility

UWF S.B.D.C. performance contract (½ of total) $8,125Basic Brochure 2,000 @ .10 each 200Stationary 250Office Supplies 300Postage 300Workshop promotion 1,500Refreshments - Media tour 100Refreshments - Service providers tour 100Newspaper - 200 inches @ $30/inch average 6,000Open House 200Luncheons - 30 @ $5 each 150Grand Opening 500Misc. 500Estimated Pre-Opening Expenses: $18,225

Combined Operational BudgetThe operational budget is somewhat more difficult to construct than the start-up budget becausemany variable factors come into play, such as:

- Absorption rates - Scholarship space, if provided- Rent Rates - Private contributions- Turnover of tenants - Space flexibility- Unbundled income streams - Program income

An incubator's success and self-sufficiency is based upon how much space is put under lease andat what rate it is rented. The director must be aware of these basic factors as well as beingconstantly aware of how to contain all operating costs. Minor adjustments in rent schedules canprovide major cumulative effects on the revenue streams. The board of directors and executivedirector must monitor these variables closely in the early years of the project. A well managedbudget will guide the program along sound financial lines, maximizing the use of resources andpushing the program to self-sufficiency in a timely manner.


Budget Assumptions - The following is a list of assumptions that we used when producing theoperational budgets.

Northwest Florida Incubator Network AssumptionsIncubator Space 40,000 sq/ft. total; 35,954 sq/ft. leasablePre-Opening Lease Up 10% of leasable sq/ft.Absorption Rate of Leasable 4.00% per monthIncubator Rental Price $12.00 sq/ft. (Professional); $6.50 sq/ft. (Open)Maximum Occupancy Rate 75.00% (of leasable space)

Escambia County Incubator AssumptionsIncubator Space 30,000 sq/ft. total; 24,496 sq/ft. leasablePre-Opening Lease Up 10% of leasable sq/ft.Absorption Rate of Leasable 4.00% per monthIncubator Rental Price $12.00 sq/ft. (Professional); $6.50 sq/ft. (Open)Maximum Occupancy Rate 75.00% (of leasable space)

Santa Rosa Incubator AssumptionsIncubator Space 15,000 sq/ft. total; 11,458 sq/ft. leasablePre-Opening Lease Up 10% of leasable sq/ft.Absorption Rate of Leasable 4.00% per monthIncubator Rental Price $12.00 sq/ft. (Professional); $6.50 sq/ft. (Open)Maximum Occupancy Rate 75.00% (of leasable space)

The basic assumptions are that a 75% occupancy will not be exceeded in either facility.Approximately 10% of the space in each facility will be pre-leased before opening. Theremaining space will lease up at about 4% per month until the maximum occupancy is obtained.Rental income will be generated from charges to the incubator tenants. A modest copy centerincome stream can be expected as well as a small amount of income from fax usage and furniturerental. In addition to these “typical” fees, we also estimated some income from monthlypayments received from non-tenant associates.

Budget Highlights - The tables on the following page breakdown the first three years ofoperating revenue and expenses for each facility and the network as a whole. The net andcumulative net figures estimate the budget short-falls (deficits) during the lease-up phase. Thesefigures are only estimates and could be managed higher or lower depending on how quicklyleases are signed and when exactly each facility comes on line. These numbers will have to beupdated and more closely addressed as the project is implemented.


Northwest Florida Incubator Network

Year 1 Year 2 Year 3

Revenue $100,378 $273,705 $351,631

Operating Expenses $171,477 $214,215 $253,814

Net ($71,099) $59,489 $97,817

Cumulative Net ($71,099) ($11,610) $86,208

Deficit peaks during Month 13 at $77,703

Escambia County Incubator Network


Revenue $68,631 $181,264 $238,778


Net ($36,631) $49,138 $79,290

Cumulative Net ($36,631) $12,507 $91,797


Santa Rosa County Incubator Network


Revenue $31,747 $95,062 $112,900


Net ($34,468) $12,460 $18,565

Cumulative Net ($34,468) ($22,008) ($3,443)



Budget Deficits - Under a network plan, deficits should be covered by the sponsoring bodies on apro-rata basis, based on gross square footage of incubator space per county. Following thebudget scenario above and dividing the deficits along a square footage basis, each county’ssponsors would have to commit to covering the following shortfall:

Network Budget Deficits

Year 1Deficit

Year 2Deficit

TotalDeficit

Escambia Countysponsors (67%)

$47,636 $7,779 $55,415

Santa Rosasponsors (33%)

$23,463 $3,831 $27,294

Network Total $71,099 $11,610 $82,709

Total Cost of Program Start-Up - The following table is an estimate of how much each countywill have to raise in order to launch the incubator project and run it for two years. This estimateincludes the grant match, furniture/equipment package, pre-opening budget and two years ofsubsidy to operate the program until break-even.

Please note that much of the 20% grant match can be covered by the donation of city or countyproperty and other in-kind contributions. Corporate sponsors can be called on to donate much ofthe furniture and equipment.



20% Grant Match for Physical Facility* $204,000 $102,000

Furniture/Equipment** $29,625 $29,625

Pre-Opening Budget $18,225 $18,225

2 Year Subsidy $55,415 $27,294

10% Contigency $30,727 $17,714

Total Cost of Program Start-Up $337,992 $194,858* donated land and in-kind contributions can be applied as part of match** much of the furniture and equipment can be donated by corporate sponsors


Job Cost Benefit AnalysisA business incubator is an economic development program targeted to creating new jobs bycreating new companies. This type of program can provide meaningful economic impact in acommunity in a highly cost effective manner.

It should be cautioned, however, that it takes time for an incubator program to mature and tobegin graduating young companies. It is through the graduation and replacement process thatthe cost/benefit begins to gain momentum. In the early years, the emphasis must be placed uponidentifying good entrepreneurs with good business plans and growth potential.

Start-up businesses produce few jobs initially, but after achieving stability and market maturitythey can grow quite fast. Most new enterprises will consume more capital than they produce. Salaries remain low as revenues are generally reinvested in the business to improve products oradd markets.

Most job and revenue growth will occur after the companies have graduated from the incubator. As graduates are replaced with new companies, the economic effect will begin to compound,usually between the second and third year of the incubator operation.

The following scenario is an estimation of the potential economic impact of a well run incubatorprogram. The job creation impact is a projected calculation based on broad outcomes of similarprograms.

Our projections are ambitious but are certainly attainable in Northwest Florida, if the program ismanaged and marketed in a professional manner. Many factors impact lease-up in incubatorprograms, most importantly the consistency of the marketing plan and the entry/exit criteria ofthe facility. Both of these factors will be controlled by local policy and operating structure andare beyond the ability of this study to predict.

Job Creation Estimates - Industry averages show that firms housed in incubators create two tothree jobs per firm in the first year and add one to two jobs in the second year. Using thisformula we can estimate the following results over the first two years of operation:

2 Year Job Creation Estimates




Incubator Start-Ups 26 9 35

Start-Up Employees 83 29 112

Incubator Employees 1.5 1.5 3

Total Employees 84.5 30.5 115


The two year job totals can be divided into the total program start-up costs (including operatingsubsidy) to determine the total investment per job.

Total Cost Per Job




Total ProgramStart-Up Cost

$337,992 $194,858 $532,850

2 Year JobCreation Estimates

84.5 30.5 115

Cost Per Job $4,000 $6,389 $4,633

Net Economic Impact Estimates - We suggest that all incubator tenant firms be tracked for newdollars imported into the local economy. Products sold outside the area which attract newrevenue inflows into the area are then measured against the local economic multiplier.

For example, if each company created has an average gross revenue of $100,000 per year, with50% occurring outside the region, it would yield the following net economic impact:

2 Year Net Economic Impact Estimates



Gross Revenues of Start-Ups $3,800,000 $1,300,000

% Revenue From Outside County 50% 50%

Local Multiplier 2.5 2.5

Net Economic Impact $4,750,000 $1,625,000


Most chambers of commerce state that for each $200,000 of new net economic impact, acommunity can expect to support one net new job. We, therefore, can extrapolate the following:

2 Year Total Program Related Jobs



Incubator Related Jobs 85 31

Net Economic Supported Jobs 24 8

Total Program Related Jobs 109 39

NOTE: All estimates will be affected by the Entry/Exit Policy and objectives establishedby the incubator board of directors. Strict entry criteria will slow facility lease up,thus slowing new business start-ups. A lax exit policy that allows tenants to stayin the facility for prolonged periods will slow down graduation and thus slowdown turnover of tenants which slows the growth dynamic.

Northwest FloridaSmall Business Incubator Network

Scenario 1 12/23/2003

ABSORPTION FACTOR: 4.00% OCCUPANCY FACTOR: 75%

PROF. AVG ANNUAL RENT $1.00 PROF MAX. OCCUPANCY 23,231 sq/ft.OPEN AVG. ANNUAL RENT $0.54 OPEN MAX. OCCUPANCY 4,980 sq/ft.

========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH

1 2 3 4 5 6 7 8 9 10 11 12 TOTAL***REVENUES*** ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========

PROFESSIONAL SQ/FT. LEASED 2,323 3,252 4,181 5,111 6,040 6,969 7,898 8,828 9,757 10,686 11,615 12,545 12,545OPEN/MFG. SQ/FT. LEASED 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL SQ/FT. LEASED 2,323 3,252 4,181 5,111 6,040 6,969 7,898 8,828 9,757 10,686 11,615 12,545 12,545

Rent Income $2,323 $3,252 $4,181 $5,111 $6,040 $6,969 $7,898 $8,828 $9,757 $10,686 $11,615 $12,545 $89,206Copy Center $108 $152 $195 $239 $282 $325 $369 $412 $455 $499 $542 $585 $4,163

Fax Center $58 $81 $105 $128 $151 $174 $197 $221 $244 $267 $290 $314 $2,230Furniture Rental $62 $87 $112 $136 $161 $186 $211 $235 $260 $285 $310 $335 $2,379

Associates Program $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400Other Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $2,751 $3,772 $4,793 $5,813 $6,834 $7,855 $8,875 $9,896 $10,916 $11,937 $12,958 $13,978 $100,378

***OPERATING EXPENSES***SALARIES:

S.B.D.C. Contract $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $35,000Network Operations Manager $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Administrative Managers $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $28,000Employment Tax $178 $178 $178 $178 $178 $178 $178 $178 $178 $178 $178 $178 $2,142

Unemploy Ins & Work Comp $28 $28 $28 $28 $28 $28 $28 $28 $28 $28 $28 $28 $336UTILITIES:

Electric/Gas $1,421 $1,537 $1,653 $1,770 $1,886 $2,002 $2,118 $2,234 $2,350 $2,467 $2,583 $2,699 $24,720Telephone + Long Distance $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600

Internet $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600MAINTENANCE:

Janitorial (common space only) $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $5,400General Supplies $750 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $1,575Repair/Renovate $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600

ADMINISTRATION:Office Supplies $750 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $2,400

Copier Supplies $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $900Copier Lease $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $9,600

Library $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400Postage/Shipping $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400

Travel/Conferences $0 $0 $0 $2,000 $0 $0 $0 $1,000 $0 $0 $1,000 $0 $4,000Petty Cash $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200

Furniture $750 $0 $0 $0 $0 $0 $750 $0 $0 $0 $0 $0 $1,500Breakroom Supplies $92 $92 $92 $92 $92 $92 $92 $92 $92 $92 $92 $92 $1,104

Marketing $3,000 $3,000 $1,500 $1,500 $750 $750 $750 $750 $750 $750 $750 $750 $15,000Insurance $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000

Miscellaneous $3,000 $3,000 $3,000 $1,500 $1,500 $1,500 $750 $750 $750 $750 $750 $750 $18,000----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $22,945 $16,036 $14,652 $15,268 $12,634 $12,750 $12,867 $13,233 $12,349 $12,465 $13,581 $12,697 $171,477

NET: ($20,193) ($12,264) ($9,859) ($9,455) ($5,800) ($4,896) ($3,991) ($3,337) ($1,433) ($528) ($624) $1,281 ($71,099)CUMM NET: ($20,193) ($32,457) ($42,316) ($51,771) ($57,571) ($62,467) ($66,459) ($69,796) ($71,228) ($71,756) ($72,380) ($71,099)


Scenario 1 12/23/2003




13 14 15 16 17 18 19 20 21 22 23 24 TOTAL***REVENUES*** ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========

PROFESSIONAL SQ/FT. LEASED 13,474 14,403 15,332 16,262 17,191 18,120 19,049 19,979 20,908 21,837 22,766 23,231 23,231OPEN/MFG. SQ/FT. LEASED 3,186 3,186 3,186 3,186 3,186 3,186 3,186 3,186 3,186 3,186 3,186 3,186 3,186TOTAL SQ/FT. LEASED 16,660 17,589 18,518 19,448 20,377 21,306 22,235 23,165 24,094 25,023 25,952 26,417 26,417

Rent Income $15,200 $16,129 $17,058 $17,987 $18,917 $19,846 $20,775 $21,704 $22,634 $23,563 $24,492 $24,957 $243,261Copy Center $777 $821 $864 $908 $951 $994 $1,038 $1,081 $1,124 $1,168 $1,211 $1,233 $12,170



----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $17,238 $18,258 $19,279 $20,300 $21,320 $22,341 $23,362 $24,382 $25,403 $26,423 $27,444 $27,954 $273,705


S.B.D.C. Contract $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $35,000Network Operations Manager $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $28,000





Janitorial (common space only) $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $5,400General Supplies $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $900Repair/Renovate $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $7,200






Marketing $2,500 $1,500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $9,000Insurance $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000

Miscellaneous $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $9,000----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $23,842 $17,208 $16,325 $18,441 $16,557 $16,673 $17,539 $17,905 $17,021 $17,138 $18,254 $17,312 $214,215

NET: ($6,604) $1,050 $2,955 $1,859 $4,763 $5,668 $5,822 $6,477 $8,381 $9,286 $9,190 $10,643 $59,489CUMM NET: ($77,703) ($76,653) ($73,699) ($71,840) ($67,076) ($61,408) ($55,586) ($49,109) ($40,728) ($31,442) ($22,252) ($11,610)


Scenario 1 12/23/2003




25 26 27 28 29 30 31 32 33 34 35 36 TOTAL***REVENUES*** ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========


Rent Income $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $25,929 $311,142Copy Center $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $1,317 $15,798



----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $29,303 $351,631


Network Executive Director $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $55,000Network Operations Manager $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $2,450 $29,400


Unemploy Ins & Work Comp $114 $114 $114 $114 $114 $114 $114 $114 $114 $114 $114 $114 $1,373UTILITIES:









Marketing $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000Insurance $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000

Miscellaneous $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $9,000----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $26,026 $20,276 $20,276 $22,276 $20,276 $20,276 $21,026 $21,276 $20,276 $20,276 $21,276 $20,276 $253,814

NET: $3,276 $9,026 $9,026 $7,026 $9,026 $9,026 $8,276 $8,026 $9,026 $9,026 $8,026 $9,026 $97,817CUMM NET: ($8,333) $693 $9,720 $16,746 $25,773 $34,799 $43,075 $51,102 $60,128 $69,155 $77,181 $86,208

Escambia County Incubator FacilityNorthwest Florida Small Business Incubator Network

Scenario 1 12/23/2003


PROF. AVG ANNUAL RENT $1.00 PROF MAX. OCCUPANCY: 15,987 sq/ft.OPEN AVG. ANNUAL RENT $0.54 OPEN MAX. OCCUPANCY: 3,186 sq/ft.

========== ========== ========== =========== ========== ========== ========== ========== ========== ========== ========== ========== ==========MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH

1 2 3 4 5 6 7 8 9 10 11 12 TOTAL***REVENUES*** ========== ========== ========== =========== ========== ========== ========== ========== ========== ========== ========== ========== ==========

PROFESSIONAL SQ/FT. LEASED 1,599 2,238 2,878 3,517 4,157 4,796 5,436 6,075 6,715 7,354 7,994 8,633 8,633OPEN/MFG. SQ/FT. LEASED 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL SQ/FT. LEASED 1,599 2,238 2,878 3,517 4,157 4,796 5,436 6,075 6,715 7,354 7,994 8,633 8,633




----------------- ----------------- ----------------- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $1,856 $2,559 $3,261 $3,963 $4,666 $5,368 $6,070 $6,773 $7,475 $8,177 $8,880 $9,582 $68,631


S.B.D.C. Contract (67% of total) $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $23,450Network Operations Manager $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Administrative Manager $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $15,000Employment Tax $96 $96 $96 $96 $96 $96 $96 $96 $96 $96 $96 $96 $1,148


Electric/Gas $888 $968 $1,048 $1,128 $1,208 $1,288 $1,367 $1,447 $1,527 $1,607 $1,687 $1,767 $15,930Telephone + Long Distance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $1,800


Janitorial (common space only) $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600General Supplies $500 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $1,050Repair/Renovate $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400




Travel/Conferences $0 $0 $0 $1,000 $0 $0 $0 $500 $0 $0 $500 $0 $2,000Petty Cash $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600

Furniture $500 $0 $0 $0 $0 $0 $500 $0 $0 $0 $0 $0 $1,000Breakroom Supplies $67 $67 $67 $67 $67 $67 $67 $67 $67 $67 $67 $67 $804

Marketing $2,000 $2,000 $1,000 $1,000 $500 $500 $500 $500 $500 $500 $500 $500 $10,000Insurance $2,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,500

Miscellaneous $2,000 $2,000 $2,000 $1,000 $1,000 $1,000 $500 $500 $500 $500 $500 $500 $12,000----------------- ----------------- ----------------- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $13,820 $10,050 $9,130 $9,209 $7,789 $7,869 $7,949 $8,029 $7,609 $7,689 $8,269 $7,849 $105,262

NET: ($11,963) ($7,491) ($5,869) ($5,246) ($3,124) ($2,501) ($1,879) ($1,256) ($134) $488 $611 $1,733 ($36,631)CUMM NET: ($11,963) ($19,454) ($25,323) ($30,569) ($33,693) ($36,194) ($38,073) ($39,329) ($39,463) ($38,975) ($38,364) ($36,631)


Scenario 1 12/23/2003




13 14 15 16 17 18 19 20 21 22 23 24 TOTAL***REVENUES*** ========== ========== ========== =========== ========== ========== ========== ========== ========== ========== ========== ========== ==========





----------------- ----------------- ----------------- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $11,272 $11,974 $12,676 $13,379 $14,081 $14,783 $15,486 $16,188 $16,891 $17,593 $18,295 $18,646 $181,264


S.B.D.C. Contract (67%) $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $1,954 $23,450Network Operations Manager (67%) $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $1,563 $18,760












Miscellaneous $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000----------------- ----------------- ----------------- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $14,199 $10,779 $10,109 $11,189 $10,269 $10,349 $10,929 $11,009 $10,589 $10,669 $11,249 $10,788 $132,126

NET: ($2,928) $1,195 $2,567 $2,190 $3,812 $4,435 $4,557 $5,179 $6,302 $6,924 $7,047 $7,858 $49,138CUMM NET: ($39,559) ($38,364) ($35,796) ($33,607) ($29,794) ($25,360) ($20,803) ($15,623) ($9,322) ($2,397) $4,650 $12,507


Scenario 1 12/23/2003




25 26 27 28 29 30 31 32 33 34 35 36 TOTAL***REVENUES*** ========== ========== ========== =========== ========== ========== ========== ========== ========== ========== ========== ========== ==========





----------------- ----------------- ----------------- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $19,899 $19,898 $19,898 $19,898 $19,898 $19,898 $19,898 $19,898 $19,898 $19,898 $19,898 $19,898 $238,778


Network Executive Director (67%) $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $3,071 $36,850Network Operations Manager (67%) $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $1,642 $19,698












Miscellaneous $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000----------------- ----------------- ----------------- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $15,832 $12,832 $12,832 $13,832 $12,832 $12,832 $13,332 $13,332 $12,832 $12,832 $13,332 $12,832 $159,488

NET: $4,066 $7,066 $7,066 $6,066 $7,066 $7,066 $6,566 $6,566 $7,066 $7,066 $6,566 $7,066 $79,290CUMM NET: $16,573 $23,639 $30,705 $36,771 $43,836 $50,902 $57,468 $64,034 $71,100 $78,165 $84,731 $91,797

Santa Rosa County FacilityNorthwest Florida Small Business Incubator Network

Scenario 1 12/23/2003




1 2 3 4 5 6 7 8 9 10 11 12 TOTAL***REVENUES*** ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========

PROFESSIONAL SQ/FT. LEASED 724 1,014 1,304 1,593 1,883 2,173 2,463 2,752 3,042 3,332 3,622 3,911 3,911OPEN/MFG. SQ/FT. LEASED 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL SQ/FT. LEASED 724 1,014 1,304 1,593 1,883 2,173 2,463 2,752 3,042 3,332 3,622 3,911 3,911

Rent Income $724 $1,014 $1,304 $1,593 $1,883 $2,173 $2,463 $2,752 $3,042 $3,332 $3,622 $3,911 $27,812Copy Center $34 $47 $61 $74 $88 $101 $115 $128 $142 $155 $169 $183 $1,298

Fax Center $18 $25 $33 $40 $47 $54 $62 $69 $76 $83 $91 $98 $695Furniture Rental $19 $27 $35 $42 $50 $58 $66 $73 $81 $89 $97 $104 $742


----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $895 $1,213 $1,532 $1,850 $2,168 $2,486 $2,805 $3,123 $3,441 $3,759 $4,078 $4,396 $31,747


S.B.D.C. Contract (33% of total) $963 $963 $963 $963 $963 $963 $963 $963 $963 $963 $963 $963 $11,550Network Operations Manager $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Administrative Manager $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $1,083 $13,000Employment Tax $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $994


Electric/Gas $533 $569 $606 $642 $678 $714 $751 $787 $823 $859 $895 $932 $8,790Telephone + Long Distance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $1,800



ADMINISTRATION:Office Supplies $250 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $800


Library $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200Postage/Shipping $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600


Furniture $250 $0 $0 $0 $0 $0 $250 $0 $0 $0 $0 $0 $500Breakroom Supplies $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $300


Miscellaneous $1,000 $1,000 $1,000 $500 $500 $500 $250 $250 $250 $250 $250 $250 $6,000----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $9,125 $5,986 $5,522 $6,059 $4,845 $4,881 $4,917 $5,203 $4,740 $4,776 $5,312 $4,848 $66,215

NET: ($8,230) ($4,773) ($3,991) ($4,209) ($2,677) ($2,395) ($2,113) ($2,081) ($1,298) ($1,016) ($1,234) ($452) ($34,468)CUMM NET: ($8,230) ($13,002) ($16,993) ($21,202) ($23,878) ($26,273) ($28,386) ($30,466) ($31,765) ($32,781) ($34,016) ($34,468)


Scenario 1 12/23/2003




13 14 15 16 17 18 19 20 21 22 23 24 TOTAL***REVENUES*** ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========





----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $5,966 $6,284 $6,603 $6,921 $7,239 $7,932 $8,250 $8,568 $8,887 $9,205 $9,523 $9,683 $95,062


S.B.D.C. Contract (33%) $963 $963 $963 $963 $963 $963 $963 $963 $963 $963 $963 $963 $11,550Network Operations Manager (33%) $770 $770 $770 $770 $770 $770 $770 $770 $770 $770 $770 $770 $9,240











Marketing $1,000 $500 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $4,000Insurance $2,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,500

Miscellaneous $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $9,643 $6,429 $6,216 $7,252 $6,288 $6,397 $6,684 $6,970 $6,506 $6,542 $7,078 $6,597 $82,602

NET: ($3,677) ($145) $387 ($331) $951 $1,535 $1,567 $1,599 $2,381 $2,663 $2,445 $3,086 $12,460CUMM NET: ($38,145) ($38,290) ($37,902) ($38,233) ($37,282) ($35,747) ($34,181) ($32,582) ($30,201) ($27,539) ($25,094) ($22,008)


Scenario 1 12/23/2003




25 26 27 28 29 30 31 32 33 34 35 36 TOTAL***REVENUES*** ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========





----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------TOTAL INCOME: $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $9,408 $112,900


Network Executive Director (33%) $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $1,513 $18,150Network Operations Manager (33%) $809 $809 $809 $809 $809 $809 $809 $809 $809 $809 $809 $809 $9,702












Miscellaneous $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

TOTAL COSTS $10,195 $7,445 $7,445 $8,445 $7,445 $7,445 $7,695 $7,945 $7,445 $7,445 $7,945 $7,445 $94,335

NET: ($786) $1,964 $1,964 $964 $1,964 $1,964 $1,714 $1,464 $1,964 $1,964 $1,464 $1,964 $18,565CUMM NET: ($22,794) ($20,830) ($18,867) ($17,903) ($15,939) ($13,975) ($12,262) ($10,798) ($8,834) ($6,870) ($5,407) ($3,443)


Section 7:Implementation Track and

Marketing Plan


Implementation Track

1.) The Pensacola Area Chamber of Commerce Small Business Steering Committee shouldappoint five of its members to an Escambia County Incubator Task Force.

TEAM Santa Rosa should appoint five members from its Board of Directors to a SantaRosa County Incubator Task Force.

2.) Each Incubator Task Force should work to secure funding to retain the services of theUWF S.B.D.C. to act as the point agency responsible for day-to-day tasks during theimplementation stages of the project. The S.B.D.C. should be authorized by these taskforces to coordinate the grant preparations and handle communications with potentialsponsors, funding agencies and elected bodies, as required to move the project forward.

3.) Each Incubator Task Force should work within their own county to recruit investingpartners to make matching contributions for grants and secure commitments tounderwrite any operating short-falls during the lease-up of the incubator facilities.

4.) After the investing partners have been recruited, a nine-member incubator Board ofAdvisors should be appointed by the investors/sponsors in each county. The EscambiaCounty Board of Advisors and the Santa Rosa County Board of Advisors should eachappoint three people from their membership to serve on the Northwest Florida IncubatorNetwork Board of Directors.

5.) Each County Board of Advisors should undergo board training, develop a policy manualfor their local incubator and set the program goals and objectives against which theprogram should be measured.

6.) Each County Board of Advisors should be responsible for selecting a property on whichto build their incubator facility and undertake any negotiations needed to get the propertydonated or optioned.

7.) Each County Board of Advisors should be responsible for selecting anarchitect/engineering firm to begin drawing plans and generating construction estimates.

8.) Each County Board of Advisors should continue to work with the S.B.D.C. during grantpreparation and application.

9.) After grants have been secured, each County Board of Advisors should approve allnecessary construction contracts.

10.) Each County Board of Advisors should recruit a pro-bono committee of local lawyers,


educators, accountants, technicians and other business professionals to providesupplemental training and consulting services to the incubator program.

11.) The Northwest Florida Incubator Network Board of Directors should finalize the programdesign and contract with training providers.

12.) Six months prior to the opening of the first incubator, the Northwest Florida IncubatorNetwork Board of Directors should retain the services of the UWF S.B.D.C. to beginmarketing the incubator program, screening clients and preparing to take overmanagement of the incubator program until internal cash flow will support the hiring ofan executive director.

13.) The Northwest Florida Incubator Network Board of Directors and the S.B.D.C. shouldwork together with local funding entities to create a formal network to link qualifiedentrepreneurs with capital.

14.) Prior to the opening of their respective facility, each County Board of Advisors shouldhire an administrative manager to handle the administrative/business services forincubator tenants.


Pre-Opening Marketing Plan

60 Days Prior to Opening:< Stage press conference on-site at each incubator to introduce program, policy, objectives

and introduce the local Board of Advisors.< Layout and print basic brochure.< Personal meetings with area small business service providers to discuss entry criteria and

support services and to solicit referrals.< Make speeches to local civic clubs to inform them about the program and solicit

assistance, specifically:- Ask for tenant referrals- Seek donations of furniture, equipment and supplies- Continue to recruit pro-bono volunteers

< Advertise workshops to be held on-site at new facility< Distribute brochure to loan officers, service providers and C.P.A.’s.< Stage at least 2 workshops (How to Start a Business, Securing Capital...)< Conduct tour of facility for bank loan officers, C.P.A.’s and other service providers.< Insert brochure in local chambers of commerce mailings.< Continue civic club speeches. Be sure to seek speaking opportunities in surrounding

counties.< Advertise (newspaper) open house public reception.< Send an e-mail to university/community college/tech school faculty/staff about program< Negotiate leases with initial tenants and put out press release about those tenants.

30 Days Prior to Opening:< Attend workshops/classes at universities/colleges/tech schools to introduce program.< Advertise and stage at least 4 workshops at each new facility.< Continue to seek out speaking opportunities.< Conduct an informational mail-out to all current S.B.D.C. clients.< Distribute brochures at all S.B.D.C. workshops performed throughout the region.< Use P.S.A.’s to invite community to visit the facility.< Use press releases to announce new tenants, use all media.< Stage Grand Opening ceremony

Month 1:< Run weekly newspaper ads to promote the program. Feature the services and training

available at incubator.< Write press releases on new tenants. Use all media.< Advertise and stage at least four workshops at each new facility.< Place brochure in libraries and post them on bulletin boards at colleges and university.< Continue to seek speaking opportunities


Beyond this point, marketing will become less formal, but must remain pro-active. Stay incontact with your referral network, stage workshops, and issue press releases. These types ofactivities must be constant until the incubator is filled.

The following list contains some marketing tactics that have been successfully employed in otherincubator programs.

< Compile list of new businesses in area. Mail information and invite for tour.< Place flyers at check out points of office supply stores, computer stores, libraries and any

business license offices throughout the region.< Supply all loan officers, accountants, business consultants with brochures.< Host a business after hours tour. Co-sponsor with chambers of commerce.< Set up employee out placement counseling program.< Offer training space to non-incubator functions.< Seek corporate sponsorship for entrepreneurs (cover one year rent).< Host annual reception or luncheon for bank loan officers and other service providers.< E-mail faculty and students at regional colleges/universities to introduce program


Appendix A:Leadership Surveys


Escambia County Florida Leadership SurveyEntrepreneurial Economic Development Informational Session

A total of 30 community leaders completed and returned this leadership survey on April 11,2003.

1. In your opinion, how important is it for your community to spend time, money and resources on the followingeconomic development initiatives:

Not Important-- 1 2 3 4 5 --Important

Recruiting new businesses from outside the county? Mean Score = 4.30

Retaining/Expanding existing county businesses? Mean Score = 4.73

Creating new businesses from within the county? Mean Score = 4.73

2. In which three (3) areas do you think your county should concentrate its resources to improve first? Place a checkmark beside the top 3 options only.

Frequency Percent

Economic Development 28 93.3%

Physical Infrastructure 20 66.6%

Education/Training 18 60.0%

Housing 5 16.6%

Transportation 6 20.0%

Healthcare/Childcare 6 20.0%

Tourism 5 16.6%

Others mentioned: Environmental Quality 1 3.3%

3. As a leader in your community, do you think that your county should concentrate some of its resources on a


strategy of entrepreneurial economic development?

Frequency Percent

Yes 30 100.0%

No 0 0.0%

4. Are you satisfied with your county’s current economic development strategy?

Frequency Percent

Yes 9 30.0%

No 19 63.3%

N/C 2 6.6%

5. Which type of business do you think should be the top priority, for recruitment, by your county? Place a checkmark beside only 1, top priority option.

Frequency Percent

Manufacturing 17 56.6%

Tourism 2 6.6%

Service/Office 7 23.3%

Telemarketing 0 0.0%

Others mentioned: Technology/Innovation “Clean” Manufacturing Aviation/Aerospace Distribution

4111

13.3%3.3%3.3%3.3%


6. Should your county be using more of its resources to assist existing business and industry to expand?

Frequency Percent

Yes 28 93.3%

No 2 6.6%

7. Which of the following types of incentives should your county offer to attract new business and industry? Place acheck beside all that apply.

Frequency Percent

Tax Abatement 30 100.0%

Worker Training 28 93.3%

Free/Low Cost Land 20 66.6%

Others mentioned: Office Space Loan & Equity Capital Facade/Renovation Funds

132

3.3%10.0%

6.6%


8. If you are interested in lending support to the creation of an entrepreneurial economic development program inyour county, what type of contribution are you willing (or capable) of making? Place a check beside all that apply.

Frequency Percent

Political Vote 9 30.0%

Help Find Local Entrepreneurs 17 56.6%

Monetary Contribution 4 13.3%

Serve on an Advisory Board 21 70.0%

Donate Supplies/Equipment 1 3.3%

Work with Entrepreneurs 18 60.0%

Training/Curriculum Development 13 43.3%

Others mentioned: 6 Workforce IncentivesEDA Rep

Building SpaceAssist w/ Grants

Publicity/StaffingLoan Capital


Santa Rosa Florida County Florida Leadership SurveyEntrepreneurial Economic Development Informational Session

A total of 18 community leaders completed and returned this leadership survey on May 29, 2003.

1. In your opinion, how important is it for your community to spend time, money and resources on the followingeconomic development initiatives:

Not Important-- 1 2 3 4 5 --Important

Recruiting new businesses from outside the county? Mean Score = 4.35

Retaining/Expanding existing county businesses? Mean Score = 4.94

Creating new businesses from within the county? Mean Score = 4.72

2. In which three (3) areas do you think your county should concentrate its resources to improve first? Place a checkmark beside the top 3 options only.

Frequency Percent

Economic Development 18 100.0%

Physical Infrastructure 13 72.2%

Education/Training 7 38.9%

Housing 0 0.0%

Transportation 9 50.0%

Healthcare/Childcare 0 0.0%

Tourism 3 16.7%

Others mentioned: Create business friendly county Worker’s Compensation

11

5.5%5.5%

3. As a leader in your community, do you think that your county should concentrate some of its resources on a


strategy of entrepreneurial economic development?

Frequency Percent

Yes 18 100.0%

No 0 0.0%

4. Are you satisfied with your county’s current economic development strategy?

Frequency Percent

Yes 10 55.5%

No 6 33.3%

N/C 2 11.1%

5. Which type of business do you think should be the top priority, for recruitment, by your county? Place a checkmark beside only 1, top priority option.

Frequency Percent

Manufacturing 4 22.2%

Tourism 0 0.0%

Service/Office 4 22.2%

Telemarketing 0 0.0%

Others mentioned: High Technology Aviation/Aerospace Retail

511

27.7%5.5%5.5%


6. Should your county be using more of its resources to assist existing business and industry to expand?

Frequency Percent

Yes 15 83.3%

No 0 0.0%

7. Which of the following types of incentives should your county offer to attract new business and industry? Place acheck beside all that apply.

Frequency Percent

Tax Abatement 10 55.6%

Worker Training 7 38.9%

Free/Low Cost Land 9 50.0%

Others mentioned:

Capital Availability, ManagementTraining,

Mentoring,Capital Raising Assistance,

Business Incubator,Foster entrepreneurship

Wavier of FeesSupport Services


8. If you are interested in lending support to the creation of an entrepreneurial economic development program inyour county, what type of contribution are you willing (or capable) of making? Place a check beside all that apply.

Frequency Percent

Political Vote 5 27.8%

Help Find Local Entrepreneurs 7 38.9%

Monetary Contribution 2 11.1%

Serve on an Advisory Board 11 61.1%

Donate Supplies/Equipment 0 0.0%

Work with Entrepreneurs 8 44.4%

Training/Curriculum Development 5 27.8%

Others mentioned: 2 Mentoring,Help Raise Capital


Appendix B:S.B.D.C. Commitment Letter


Appendix C:Trend Analysis


The U.S. economy is in the midst of being reshaped by six fundamental and governing trends. Our entire socio-economy will be lifted by the confluence of these trends. These trends willchange how we work, where we work, how we consume and, to a degree, how we conduct ourlives.

For many communities and regions these trends will provide great opportunities. Those whocreate innovative programs to adapt to these trends, those who adopt a new mind-set of regionalcooperation, will benefit. Those communities that choose to pursue a strategy of “business-as-usual” will find their regions under threat.

No one can predict the future, but an informed and prepared leadership can shape it.

Trend 1 - Demographics:Much has been made of the fact that the baby boomer generation is crossing the 50 year oldthreshold. Beginning in 1996, 10,000 boomers started turning 50 every day. This will continueuntil 2006. We are a nation growing older. As we do, our needs, attitudes and financial habitschange. As this population group changes its mind-set from daily consumption to saving forretirement, it will drive the capital and equity markets.

Those dollars consumed will be spent increasingly on travel (tourism) and on products andservices that make life easier and more enjoyable. Spending on health, well being and recreationwill spark thousands of new businesses catering to these demands.

This increase in travel and tourism will offer an opportunity to attract new sources of revenue.

Trend 2 - Capital Formation:As the boomers move through their saving and investing years, our capital markets will deepen. In the South it has been difficult to raise or attract investment and venture capital. The growth inavailable capital offers us the opportunity to participate at a level never before enjoyed.

Solid entrepreneurial growth companies will have the opportunity to attract outside capital. Overthe next five years we will see venture capital pools grow by billions of dollars each year. Enlightened leaders will support programs that promote entrepreneurship and thus give theircommunities and regions the hope of participating in this opportunity.

Total funds in retirement accounts now stand at over $3 trillion and will grow to over $5 trillionby 2001. New retirees moving to new regions will bring millions of dollars in bank deposits anddisposable income to those regions who actively pursue this market. Tourism is a primarymeans of introducing retirees to a community.


New jobs will be created in the areas of financial planning, money management and financialinformation. Tourism attracting new residents will support these new jobs.

Businesses catering to tourists seeking recreation will be in demand. R.V. parks, boat andfishing gear rentals, and tour services will rise in demand.

Trend 3 - New Organizational Structure:During the past industrial era of large vertically integrated companies, with deep hierarchicalstructures, the movement of knowledge and information flowed up and down, elevator style,within the enterprise. Firms were centralized and restrained by their own organizationalstructure.

Due to a new management attitude and rapid deployment of telecom networks (and otherbroadband technologies), large companies may now highly decentralize their operations whilestaying linked electronically. Knowledge and information is immediately available throughoutthe company via networks and server technology.

Companies can now disburse plants into lower cost regions without loss of productivity orcoordination of planning.

Another rapidly growing feature of this new organizational structure is the outsourcing ofmanufacturing functions to contract companies. This is particularly evident intelecommunications where companies like Cisco, Lucent and Nortel are outsourcing productionto firms like Jabil, Selectron, S.C.I. and Flextronics. Outsourcing firms are spreading plantsacross the nation. Outsourcing allows each company to concentrate on its core competencieswhile staying linked to its vendors and customers throughout the value chain.

We believe this trend offers an opportunity for the Escambia County area, where land andproduction costs are reasonable.

Trend 4 - Boomer Spending Cycles:America is a nation of consumers. Households aged 45 - 53 are the biggest spenders, averaging$44,000 per year. Our highest consumption years are between ages 40 and 49. In the U.S. ourlargest demographics group will pass through the spending peak between now and 2010.

66% of our G.D.P. is attributable to consumer spending and 14% of G.D.P. is corporate responseto that demand. Therefore, the U.S. economy should remain robust for the next decade.

An economic development strategy targeting these trends will have a 10-year window ofopportunity within which to execute. This should give the Escambia County adequate time tocreate, coordinate, implement and fine tune such strategies. This growth period will beespecially opportune for entrepreneurs.


Trend 5 - Technology “S” Curves:Each generation innovates it own technology. The early cohort of a generation creates newtechnologies while succeeding cohorts apply the technology and push them into mass markets.

The early boomers created the digital fiber optic and wireless technologies while the laterboomers are perfecting and applying these technologies. Products based on these technologiesare moving into the mainstream.

As product acceptance and absorption grows, prices fall and absorption grows faster. Onceproducts breakout beyond the 10% market absorption point, sales accelerate until the productreaches 90% absorption. Many of the boomer technology based products currently have lowabsorption rates, for instance:

• Personal computers have reached 50% of the household market.• Cell phones have reached less than 35% of market penetration.• On-line services and Internet commerce is still in its very early stages.• Portable computers are at less than 35% potential penetration.• Worldwide consumption of personal computers is less that 25%.

Telecommunications and fiber optic technology is growing at a 50% per-year rate and shouldcontinue at this rate for at least another five years.

Demand for these and related products is on a fast track. More and more manufacturing of these products is being outsourced to contract manufacturers.

Another growing trend being driven by falling tech prices and expanding broadband availabilityis the mobile entrepreneur. This is a person that can base a new business in virtually anygeographic location and still stay linked to national or global markets. This trend offers anopportunity for communities supporting entrepreneurial programs.

Finally, growing tech penetration and falling prices will present trainers and educationalinstitutions a chance to reach students more economically.

Trend 6 - Fifth Migration:Americans are a mobile breed. This is illustrated by the fact that there has been four major re-disbursements of the American population in its brief history. The fifth migration is a populationshift from the large cities and their suburbs to small communities in high amenity regions.

It is estimated that between 60 million and 100 million people will relocate within the U.S. bythe year 2015. This massive relocation will be lead by retirees and followed by young families.


If the Escambia County area can leverage its tourism assets with a strategy that attracts retirees,this region can benefit from the fifth migration.

It will be important to develop recreational assets and residential development to attract retirees. It will be necessary to offer job opportunities within the region to attract young families. Thiswill take time and commitment. One project will have to build upon another.

Currently, 43% of rural growth is due to in-migration–new people moving into new regions. From this trend, new regions will arise.

One cautionary note. Some counties will gain population from fifth migration patterns. Thosecounties will be the ones that understand the convergence of these trend and who put innovativestrategies in place to take advantage of the opportunities. Some counties will lose. Those whorefuse to adopt a new “entrepreneur friendly” strategy and those who refuse to commit to a long-term strategy of regional development, will be among the losers.

How To Take Advantage of Converging Trends

The primary means of taking advantage of the trends that are reshaping our economy is toemploy a regional strategy.

It is important for the leaders in Escambia County to understand that existing politicaljurisdictions will not suffice in defining future growth regions. Leaders must identify theregional resources that are the basis for enterprise development and clustering and develop astrategy to leverage these resources. Economic corridors linking these enterprise clusters with area assets will be more important than roads and highways.

In order to develop a region where enterprise and program clustering can occur, a change inmind set is required to overcome current competitive attitudes. There must be a change in theway we recruit industry and develop our economy. Cultural and societal changes must be madeas well.

As described earlier, the new business organizational structures allow free and simultaneousmovement of knowledge and information within the organization. This organizational modelmust also be applied when designing regional networks for economic development. Ideas,information and experience must move freely throughout the network.

It is essential to involve the region’s educational institutions. Western Florida University and thecommunity colleges must play a major role in community and economic development. Fromthese sources come the capacity to teach, train, research, transfer technology and provide forumsfrom which knowledge and new ideas can be formulated and circulated.


Chambers of commerce, trade organizations, bankers, professionals, scientists and engineers ofevery discipline must be engaged in the regional process. It is the responsibility of our leaders tobring these elements together and keep them together.

Regions that want to take advantage of the above trends must be open to newcomers andappreciate the entrepreneurial ethic.

The following characteristics are found in successful growth regions:

• Regional institutions must be involved and responsive to the needs of firms in the area.• Governmental bodies must be oriented to public/private alliances.• Educational institutions must understand the need for applied research (both products and

markets) and readily adapt to market needs.• Industrial recruiters should concentrate on attracting firms that share these

characteristics:– Decentralized– Less hierarchical– Linked to customers and vendors in business-to-business value added systems– Like to do joint ventures – Outsource manufacturing capable– Attract clusters of similar or related product producers

• View infrastructure needs as problems to be addressed with regional action.• Encourage institutions to provide capital, technical and managerial help to entrepreneurs.• Welcome newcomers.

The test for regional leadership will be how well they practice, not just espouse, actions thatcreate the environment to grow and sustains these characteristics.


Appendix D:Sample Organizational Documents


EXHIBIT A: SAMPLE BYLAWS AND ARTICLES OF INCORPORATION


BY-LAWS OF

A NONPROFIT CORPORATION

ARTICLE ONE

INTRODUCTION

Definition of By-laws

1.01 These By-laws constitute the code of rules adopted by , for the regulation and management of itsaffairs.

ARTICLE TWOOFFICES AND AGENCY

Principal and Branch Offices

2.01 The principal place of business of this Corporation in Florida will be located at .In addition, the Corporation may maintain other offices either within or without the State of Florida, as its business requires.

Location of Registered Office

2.02 The location of the initial registered office of this Corporation is . Such office will be continuously maintained in the State of Florida for the duration of this Corporation. TheBoard of Directors may from time to time change the address of its registered office by duly adopted resolution and filing theappropriate statement with the State.

ARTICLE THREEMEMBERSHIP

Definition of Membership

3.01 The Members of this Corporation are those persons, corporations or other entities having membership rights inaccordance with the provisions of these By-laws.

Class(es) of Members

3.02 This Corporation will have one class of Members.

Qualifications of Members

3.03 The qualifications of the Members of this Corporation are as follows:

(1) The payment of the initial admission fee and such other requirements as may be determined by the Board ofDirectors from time to time.

The initial members of this Corporation shall be:

a) b) c) d)


Members' Dues

3.04 The annual dues payable to the Corporation by Members will be One Hundred and No/100 ($100.00) Dollars oras may be determined from time to time by resolution of the Board of Directors. The first annual dues will be payable andsubmitted in full with the application for membership. Future annual dues will be payable in advance on the anniversary of theMember's admission or the first day of each fiscal year. Notwithstanding anything herein to the contrary, the Board of Directorsin its discretion may allow for the payment of any initial admission fee or annual dues through services in kind, in such amountsas deemed appropriate by the Board. Provided, however, that the admission fee of the initial members of the Corporation listedabove shall be paid in immediately available federal funds.

Assessments

3.05 Members will be nonassessable.

Place of Members' Meetings

3.06 Meetings of Members will be held at the registered office of the Corporation in Florida or at any other placewithin or without the State as provided.

Annual Members' Meetings

3.07 The annual meeting of the Members will be held on the last Tuesday of February of each year.

Special Members' Meetings

3.08 Special meetings of the Members may be called by either of the following:

(1) The Board of Directors(2) The President(3)Members having at least ten (10) percent of the votes which all members are entitled to cast at such meetings.

Notice of Members' Meetings

3.09 Written or printed notice, stating the place, day, and hour of the meeting and (in the case of a special meeting) thepurpose or purposes for which the meeting is called, must be delivered not less than ten (10) nor more than fifty (50) days beforethe date of the members' meeting, either personally, by mail, by or at the direction of the President, the Secretary, or the officersor other persons or Members calling the meeting, to each Member entitled to vote at such meeting. If mailed, the notice will bedeemed to be delivered when deposited in the United States mail addressed to the Member at his address as it appears on therecords of the Corporation, with postage prepaid.

Voting Rights of Members

3.10 Each Member will be entitled to one vote on each matter submitted to a vote of Members.

Members' Proxy Voting

3.11 A Member may vote either in person or by proxy executed in writing by the Member or by his duly authorizedattorney-in-fact. No proxy will be recognized as valid after eleven (11) months from the date of its execution unless expresslyprovided otherwise in the proxy.

Quorum of Members

3.12 The number of percentage of Members entitled to vote represented in person or by proxy which constitutes aquorum at a meeting of Members will be Members holding a majority of the votes entitled to be cast in such manner. The voteof a majority of the votes entitled to be cast by the Members present or represented by proxy at a meeting at which a quorum ispresent is necessary for the adoption of any matter voted on by the Members, unless a greater proportion is required by law, theArticles of Incorporation of this Corporation, or any provision of these By-Laws.


Transferability of Membership

3.13 Membership in this Corporation is nontransferable and nonassignable.

Termination of Membership

3.14 Membership will terminate in this Corporation on receipt by the Board of Directors of the written resignation of aMember, executed by such Member or his duly authorized attorney-in-fact.

ARTICLE FOURDIRECTORS

Definition of Board of Directors

4.01 The Board of Directors is that group of natural persons vested with the management of the business and affairs ofthis Corporation subject to the law, the Articles of Incorporation, and these By-laws.

Number of Directors

4.02 The number of Directors of this Corporation will not be less than three at any time. Until further amendment ofthese By-laws, the number of Directors presently will be eight.

Terms of Directors

4.03 (1) The Directors will hold office at the pleasure of the appointing member. Each member will have the rightand ability to appoint two (2) Directors to the Board of Directors.

Vacancies on the Board

4.04 Resignation of Directors will become effective immediately or on the date specified therein and vacancies will bedeemed to exist as of such effective date.

Place of Directors' Meetings

4.05 Meetings of the Board of Directors, regular or special, will be held at , the registered officeof this Corporation or at any other place within or without the State of Florida as provided or such place or places as the Board ofDirectors designates by resolution duly adopted.

Regular Directors' Meetings

4.06 Regular meetings of the Board of Directors will be held, at least quarterly, on the first Thursday of the first monthof each calendar quarter. Should any such day in any year constitute a legal holiday for all businesses, then the meeting will beheld instead in such instance the Thursday immediately following. This provision of the Bylaws constitutes notice to allDirectors of regular meetings for all years and instances, and no further notice shall be required although such notice may begiven.

Notice of Special Directors' Meetings

4.07 Written or printed notice stating the place, day, and hour of any special meeting of the Board of Directors will bedelivered to each Director not less than two (2) nor more than five (5) days before the date of the meeting, either personally or by


first class mail, by or at the direction of the President, or the Secretary, or the Directors calling the meeting. If mailed, suchnotice will be deemed to be delivered when deposited in the United States mail addressed to the Director at his address as itappears on the records of this Corporation, with postage prepaid. Such notice need not state the business to be transacted at, northe purpose of such meeting.

Call of Special Board Meetings

4.08 A special meeting of the Board of Directors may be called by either:

(1) The President(2) Any committee appointed by the Board of Directors(3) A quorum of the Board of Directors.

Quorum of Directors

4.09 A majority of the whole Board of Directors will constitute a quorum; provided, that in no event will a quorumconsist of less than one-third (1/3) of the whole Board. The act of a majority of the Directors present at a meeting at which aquorum is present will be the act of the Board of Directors unless a greater number is required under the provisions of theArticles of Incorporation of this Corporation, or any provision of the Bylaws.

ARTICLE FIVEOFFICERS

Roster of Officers

5.01 The Officers of this Corporation will consist of the following personnel:

(1) A President(2) A Secretary(3) Such other officers as the Board determines necessary.

Selection of Officers

5.02 Each of the officers of this Corporation will be elected or appointed for such term, not exceeding three years, asdetermined by the Board of Directors. Each officer will remain in office until a successor to such office has been selected andqualified.

Multiple Officeholders

5.03 In any election of officers, the Board of Directors may elect and appoint a single person to any two or moreoffices simultaneously, except that the offices of President and Secretary must be held by separate individuals. Officers of thisCorporation may not serve ex-officio as Directors of this Corporation.

President

5.04 The President will be the Chief Executive Officer of this Corporation and will, subject to the control of the Boardof Directors or Director Committees, supervise and control the affairs of the Corporation. The President will perform all dutiesincident to such office or such other duties as may be provided in these Bylaws or as may be prescribed from time to time by theBoard of Directors.

Vice President

5.05 The Vice President will perform all duties and exercise all powers of the President when the President is absentor otherwise unable to act. The Vice President will perform such other duties as may be prescribed from time to time by theboard of Directors.


Secretary

5.06 The Secretary will keep minutes of all meetings of members and of the Board of Directors, will be the custodianof the corporate records, will give all notices as are required by law or by the Bylaws, and, generally, will perform all dutiesincident to the office of Secretary and such other duties as may be required by law, by the Articles of Incorporation, or by theseBylaws, or which may be assigned from time to time by the Board of Directors.

Treasurer

5.07 The Treasurer will charge and custody of all funds of this Corporation, will deposit the funds as required by theBoard of Directors, will keep and maintain adequate and correct accounts of the Corporation's properties and businesstransactions, will render reports and accounting to the Directors and to the Members as required by the Board of Directors ormembers or by law, and will perform in general all duties incident to the office of Treasurer and such other duties as may berequired by law, by the Articles of Incorporation, or be these Bylaws, or which may be assigned from time to time by the Boardof Directors.

Removal of Officers

5.08 Any officer elected or appointed to office may be removed by the persons authorized under these Bylaws to elector appoint such officers whenever in their judgement the best interests of this Corporation will be served. However, suchremoval will be without prejudice to any contract rights of the Officer so removed.

ARTICLE SIXINFORMAL ACTION

Waiver of Notice

6.01 Whenever any notice whatever is required to be given under the provisions of the law, the Articles ofIncorporation of this Corporation, or these Bylaws, a waiver of such notice in writing signed by the person or persons entitled tonotice, whether before or after the time stated in such waiver, will be deemed equivalent to the giving of such notice.

Action of Consent

6.02 Any action required by law or under the Articles of Incorporation of this Corporation or these Bylaws, or anyaction which otherwise may be taken at a meeting of either the Members or Board of Directors may be taken without a meetingif a consent in writing, setting forth the action so taken, is signed by all of the persons entitled to vote with respect to the subjectmatter of such consent, or all Directors in office, and filed with the Secretary of the Corporation.

ARTICLE SEVENCOMMITTEES

Definition of Director Committees

7.01 This Corporation may have certain Committees, each of which will consist of two (2) or more Directors. SuchDirector Committee will have and exercise the authority of the Board of Directors in the management of this Corporation only asprovided in the enabling resolution.


Advisory Committees

7.02 The Board of Directors may appoint from time to time certain Advisory Committees, each of which may includepersons from outside the Corporation and its membership, to advise the Board as may be requested from time to time. Suchcommittees will serve at the pleasure of the Board.

ARTICLE EIGHTOPERATIONS

Fiscal Year

8.01 The fiscal year for this Corporation will be the calendar year.

Execution of Documents

8.02 Except as otherwise provided by law, checks, drafts, promissory notes, orders for the payment of money, andother evidences of indebtedness of this Corporation will be signed by the Secretary and countersigned by the President or suchother authorized corporate officers. Contracts, leases, or other instruments executed in the name of and on behalf of theCorporation will be signed by the Secretary and countersigned by the President, and will have attached copies of the resolutionsof the Board of Directors certified by the Secretary authorizing their execution.

Books and Records

8.03 This Corporation will keep correct and complete books and records of account, and will also keep minutes of theproceedings of its Members, Board of Directors, and Director Committees. The Corporation will keep at its registered office orprincipal place of business a membership register giving the names, addresses, and other details of the membership and theoriginal or a copy of its Bylaws including amendments to date certified by the Secretary of the Corporation.

Inspection of Books and Records

8.04 All books and records of this Corporation may be inspected by any Member, or its agent or attorney, for anyproper purpose at any reasonable time on written demand under oath stating such purpose.

Nonprofit Operations - Compensation

8.05 This Corporation will not have or issue shares of stock. No dividend will be paid, and no part of the income ofthis Corporation will be distributed to its Members, Directors, of Officers. However, the Corporation may reimburse Members,Officers, or Directors for authorized expenses incurred in the furtherance of corporate business.

Loans to Management

8.06 This Corporation will make no loans to any of its directors or Officers or to any of its key management or otherpersonnel.

8.07 (1) No Member of this Corporation may have any vested right, interest, or privilege of, in, or to the assets,functions, affairs, or franchises of the Corporation.

(2) Upon the dissolution of the Corporation, the Board of Directors shall, after paying or making provision for thepayment of all of the liabilities of the Corporation, dispose of all of the assets of the Corporation exclusively for the purpose ofthe Corporation in such manner, or to such organization or organizations organized and operated exclusively for charitable,educational, religious, or scientific purposes as shall at the time qualify as an exempt organization or organizations under Section501 (c)(3) of the Internal Revenue Code of 1954 (or the corresponding provisions of any future United States Internal Revenue


Law), as the Board of Directors shall determine.

(3) The Directors of this Corporation may authorize secured transaction or other dispositions of corporate assetswithout approval by the Members.

ARTICLE NINEAMENDMENTS

Amendments of Articles of Incorporation

9.01 The power to alter, amend, or repeal the Articles of Incorporation of this Corporation is vested in the Members. Such action must be taken pursuant to a resolution approved by a majority of the Directors and pursuant to a resolution approvedby two-thirds (2/3) of the Members.

Modifications of Bylaws

9.02 The power to alter, amend, or repeal these Bylaws or to adopt new Bylaws, insofar as is allowed by law, is vestedin the Board of Directors.

ARTICLE TENMISCELLANEOUS PROVISIONS

Indemnification of Officers and Directors

10.01 Each person who shall have served as a director or officer of this Corporation, or of which it now is or mayhereafter be a creditor, shall be indemnified by the Corporation against expenses and costs (including attorney's fees) actuallyand necessarily incurred by him in connection with any claim asserted against him, by action in court or otherwise, by reason ofbeing or having been such director of officer, except when in any court proceeding he shall have been adjudged guilty ofnegligence or misconduct in respect of the matter in which indemnity is sought; provided, however, that the foregoing right ofindemnification shall not be exclusive of other rights to which he may be entitled by law.

ADOPTION OF BYLAWS

Adopted by the Board of Directors of , by resolution on , 19 .

By: As its Secretary


EXHIBIT B: SAMPLE POLICY MANUAL


INCUBATOR POLICY MANUAL

OBJECTIVE: The purpose of this manual is to establish the operational guidelines for the Pensacola/Escambia County Small BusinessIncubator - a non-profit corporation.

The Pensacola/Escambia County Small Business Incubator by definition will be a multi-tenant facility in which new businessventures and young companies are helped to grow and succeed through their vulnerable early years. It will be targeted towardsinnovative firms that lack management, technical or financial ability to survive without some assistance.

The Pensacola/Escambia County Small Business Incubator is intended to be an economic development project with an objectiveof creating jobs and economic wealth by creating new companies.

In order to meet these objectives, it will be necessary to screen potential tenants to be certain they meet the followingfundamental criteria.

GENERAL SCREENING CRITERIA:

It will be the duty and the responsibility of the Pensacola/Escambia County Small Business Incubator’s Board of Directors tocarefully review business plans of all applying tenants to be certain they meet as many of the following criteria as possible:

1. Job creation potential.2. Economic diversification.(Innovative Aspects)3. Commercialization of research.4. Products to aid local basic industries.5. Products with net economic impact potential.

The Board of Directors is to be guided by these criteria and given latitude to interpret them as broadly as they deem necessary.Since the facility will operate on a duel rent basis, it will be the responsibility of this board to assist in determining whichapplicant will be assigned to each rent category. (Commercial rent only or incubator tenant with full services included.)

ENTRY POLICY:

Once applying tenants have passed the basic screening criteria, they must be more thoroughly processed to ascertain theylegitimately require the support environment offered by the incubator. All tenants should be found to possess a reasonablechance of growing into stable companies.

The Board of Directors should consider, but not be restricted to the following checklist in their expanded screening process priorto final acceptance for entry:

1. Must have a written basic business plan.2. Must have some formal assessment of his market.3. Should be non-retail. (unless commercial rent only)4. Should not be a franchise. (unless commercial rent only)5. Enough financial ability to meet operational expenses for six months.


6. Must demonstrate that the company cannot afford to move directly into the private sector at this time, unlessit is a commercial rent only tenant.

7. Must have product prototype or formal technical assessment that product is production quality.8. If product is research based, it must be demonstrated that manager is competent in his field.9. Manager must have some functional experience in his field of pursuit.10. Must demonstrate company can consummate a sale within reasonable length of time.11. Must be able to demonstrate ability to price production cost of product.12. Should have knowledge of competition.13. Must be able to offer business references.14. Should have access to a lawyer and an accountant.15. Materials for production must be accessible.16. Must demonstrate commitment and entrepreneurial spirit.

ENTRY ASSISTANCE POLICY:

If an applicant cannot meet entry criteria but can demonstrate a product or service of sufficient economic potential, the Board ofDirectors may instruct the incubator staff to assist the entrepreneur in order to prepare him for entry.

Incubator staff should offer assistance or referral services in these areas:1. Writing business plan.2. Legal advice.3. Technical assessment of product.4. Accounting and financial planning.5. Basic market research.

The Board of Directors shall have the discretion to enlarge the scope of pre-entry assistance. Director shall encourageinteraction between Incubator staff and the Small Business Development Center or other local assistance providers.

OPERATIONAL CHECKLIST:

The incubator tenants must adhere to established operational policy. This will begin with filing the pre-entry applicationattached to a written business plan.

Upon acceptance for entry, the tenant must sign the standard center lease agreement.

Once the tenant has begun operating in the incubator he must conduct himself in a business-like manner, respecting all buildingrules.

In addition, the tenant must:

1. Submit to quarterly review of his accounting and operating statements by the incubator director.2. Quarterly review of his entry business plan to demonstrate his adherence to the plan.3. Assessment and evaluation by the incubators Board of Directors as they require.4. Submit to lease review after one year of occupancy. Review will be performed by the incubator's Board of

Directors or their designee.


EXIT/GRADUATION POLICY:

"Standard Center Lease" will be for three years. Once a tenant has operated his enterprise within the incubator for 36 consecutivemonths, he will be required to exit or "Graduate" into the private sector to continue doing business.

The incubator's Board of Directors will have the authority, at their discretion, to extend any lease on a month to month basis if itis determined that premature graduation would adversely affect the tenant's business.

Tenant may surrender space upon 30 day written notice to the incubator director, but such surrender will not terminate tenant'spay-back obligation as specified in the standard lease.

Tenant and incubator's Board of Directors may negotiate a mutual agreement for early graduation to be effective upon notarizedlease amendment.

DUEL RENT RATE STRUCTURE:

Tenants that meet the above described criteria will be charged a flat monthly rate that will include all incubator servicesincluding training and consulting.

Commercial-rent only tenants will be charged a flat monthly fee for space and utilities only. These tenants may utilize incubatorservices on an as used basis upon posting a $100 deposit in advance. Services will be charged against the deposit and a monthlystatement issued. Once the deposit is fully drawn down, a new deposit will be required before any services may be accessed.


EXHIBIT C: SAMPLE PRE ENTRY APPLICATION


SPECIMEN PRE ENTRY APPLICATION OF County

1. YOUR NAME, ADDRESS AND PHONE NUMBER:

2. IS YOUR BUSINESS: G NEW G EXISTING

3. IS YOUR BUSINESS A:

G PROPRIETORSHIP G PARTNERSHIP G CORPORATION

4. IF AN EXISTING BUSINESS:

HOW LONG IN EXISTENCE: WHERE:

NUMBER OF EMPLOYEES:

OPERATED UNDER WHAT NAME:

5. GIVE NAME, ADDRESS AND PHONE NUMBER OF PARTNERS OR MAJOR STOCKHOLDERS:

6. DESCRIBE YOUR PRODUCT OR SERVICE:

7. DESCRIBE YOUR TARGET MARKET:

8. APPROXIMATELY HOW MUCH SPACE (IN SQ. FT.) WILL YOU REQUIRE:

SQ. FT.

9. DO YOU REQUIRE ANY OF THESE SPECIAL FACILITY NEEDS:

G MANUFACTURING SPACE G LOADING DOCKS G HIGH VOLTAGE G WET LAB

G ELEVATOR G LIQUID OR CHEMICAL WASTE DISPOSAL

SPECIFY OTHER:


10. DO YOU REQUIRE SPECIALIZED EQUIPMENT? G YES G NO

IF YES, SPECIFY:

11. WILL YOU REQUIRE ANY OR ALL OF THE FOLLOWING SERVICES:

G CLERICAL G RECEPTIONIST G ACCOUNTING G MARKETING G LEGAL

G PRODUCTION

OTHER, SPECIFY:

12. WILL YOU REQUIRE SPECIAL TRAINING IN THE FOLLOWING:

G COMPUTER G TYPING G MANAGEMENT G ACCOUNTING

G BUSINESS PLAN WRITING

OTHER, SPECIFY:

13. INITIAL CAPITALIZATION OF YOUR BUSINESS:

G $0 - $50,000 G $50,000 - $100,000 G $100,000 - $150,000 G OVER $150,000

14. ESTIMATED EMPLOYMENT:

AT TIME OF OCCUPANCY (FULL TIME) (PART TIME)

AFTER ONE YEAR (FULL TIME (PART TIME)

15. WILL YOU REQUIRE FIXED ASSET FINANCING:

G YES G NO

IF YES, SPECIFY:

16. IS YOUR PRODUCT OR SERVICE A SPINOFF OR TRANSFER OF TECHNOLOGY?

G YES G NO

IF YES, WHAT FACILITY:

17. WILL YOUR PRODUCT OR SERVICE AIDE LOCAL BASIC INDUSTRY?

G YES GNO

IF YES, WHICH INDUSTRY:

18. IS YOUR PRODUCT OR SERVICE COMMERCIALIZATION OF RESEARCH?

G YES G NO

IF YES, SPECIFY:


19. WILL YOUR PRODUCT OR SERVICE HAVE MARKETS OUTSIDE County:

G YES G NO

20. ADDITIONAL REMARKS:

The Pensacola/Escambia County Small Business Incubator was created to foster entrepreneurial activities and to

provide low cost space and support services. Clients may remain in the Incubator for up to two years and are expected to show

progress in accordance with an approved business plan. Formal application involves presentation of a written business plan.

Clients will be required to conduct themselves in a businesslike manner and demonstrate commitment to their goals.

This form represents only a pre-entry application on the part of the client and is a request for entry. Acceptance of this

form will not imply acceptance for entry into the of County.

I have read this form thoroughly. INITIAL

I have received a copy of the Policy Manual. INITIAL

SIGNATURE

TITLE

DATE: ACCEPTED BY: CENTER DIRECTOR


EXHIBIT D: SAMPLE LEASE


STANDARD CENTER LEASE

This lease is hereinafter made between the Pensacola/Escambia County Small Business Incubator, referred to as the Lessor and

, hereinafter referred to as Lessee, for space as defined in the attachment APPENDIX A (Building Floor Plan)

in the Pensacola/Escambia County Small Business Incubator according with following terms and conditions:

1. TIME:

This lease will be for a period of years, but shall be reviewed at the end of the first year to determine that the

company's operation is in compliance with its business plan and with the Pensacola/Escambia County Small Business

Incubator policies. The parties may extend this lease by mutual agreement and agreed upon terms.

2. BUSINESS PLAN:

The Lessee must follow the business plan submitted as part of the application to be a Lessee of the incubator. Failure

to follow the plan will allow for unilateral termination of the lease by the Lessor upon notice set forth in SECTION 8,

below.

3. REVIEW:

The Lessee's Business Plan will be reviewed quarterly by the Pensacola/Escambia County Small Business Incubator

staff to determine the Lessee's progress and updates may be required as determined by the Pensacola/Escambia County

Small Business Incubator Director.

4. INSURANCE AND INDEMNIFICATION:

The Lessee agrees to provide insurance for all risk of loss, including fire and extended coverage insurance on all

Lessee's equipment as well as any equipment loaned or leases to Lessee by Lessor and shall carry general liability

insurance in the amounts of at least $500,000. The policies shall name the Lessor as a co-insured on leased or loaned

equipment and general liability insurance. The Lessee agrees to notify the Lessor if any change, alteration,

modification or cancellation of any such policy. Lessee also agrees to indemnify Lessor and its officials and agents

for any and all liability arising out of Lessee's operations, including any claims relating to product liability.

5. OPERATIONS:

The Lessee agrees to abide by all applicable federal, State and local laws, regulations and ordinances covering its type

of lease and operation and all the policies of the Pensacola/Escambia County Small Business Incubator.

6. TAXES:

The Lessee agrees to be responsible for all allocable property taxes, excise and franchise taxes and any other taxes

applicable to its operation.


7. MAINTENANCE AND REPAIRS:

Building maintenance and common area janitorial service will be provided by Lessor.

8. TERMINATION:

At the expiration or termination of the lease, the leasehold area will be returned to the Lessor in good condition,

reasonable wear and tear expected. Lessor reserves the right to terminate this lease on thirty (30) days notice if in its

judgement such termination would be in the best interest of the Lessor and Lessee.

9. SIGNAGE:

Lessor must approve any interior signage the Lessee wishes to use in the premises.

10. GUARANTEES:

Lessee acknowledges that occupancy of the incubator's space in no way guarantees the financial operational success of

his enterprise and agrees to hold harmless the ---------------------- , its employees, its director, its board of directors and

their agents from any losses incurred by the Lessee.

This lease represents the full and entire agreement between the parties and it may only be altered or amended by a mutually

agreed to written amendment between all parties.

Dated this day of 20 .

LESSOR:

By:

LESSEE:

By: