Buffalo business incubator's success mixed with growing pains
Correction: We originally referred to one of NxtArrow's incubator clients as "WorkSmart Solutions" in this story, but as founder Michelle Maria Nicholas notes in a comment below, the name of her firm is "WorkSmart Small Business Support, LLC." The Innovation Trail regrets the error.
One trip around the sun ago, NxtArrow launched in Buffalo.
To recap, this for-profit private business incubator offers free rent and other services for any business willing to move to western New York.
While the venture saw some success in its first year, it also experienced some growing pains.
“I could sell an Eskimo a refrigerator”
Steven Czyrny runs a new social media management company, known as Higher Visibility. The 24-year-old has office space in downtown Buffalo and access to free legal and financial services - quite the leg up for a young business.
“Lots of times if you’re starting out and you want to provide services for companies they might not take you as seriously if you’re just working out of your house,” Cryrny says.
Czyrny hitched his wagon to NxtArrow, and by extension, the incubator’s Buffalo-area partners, like landlords, lawyers, and marketers. Their services are offered for free for a year, but then clients must pay for those services down the road.
NxtArrow bets these perks will convince entrepreneurs from all over the country to take a chance on Buffalo.
“I think I can sell Buffalo to just about anybody. You know the old cliché? I could sell an Eskimo a refrigerator,” says John Howell founder and CEO of NxtArrow.
Howell attracted 12 new companies to the incubator in its first year. But the goal was to lure 20. Recruiting has been tough, Howell admits.
So the incubator is casting a wider net, a net that emphasizes Buffalo’s best advantage: It’s cheap.
“Places like San Francisco, Los Angeles, New York or Chicago, it’s going to cost a fortune to do anything, where their mortgage is probably more than their total budget would be here in Buffalo. That’s one demographic that I’m aiming at,” Howell says.
These expensive cities often force small businesses to skimp on things like branding and marketing, Howell says.
“They’ll have their next door neighbor’s nephew’s girlfriend do the graphics for them,” he says.
That might save money in the short term, but it also keeps business from setting itself apart. Thanks to NxtArrow’s perks, participating businesses don’t have to do that, which can make all the difference, Howell says.
“If you have a digital presence and graphic presence that says you’re elite, then essentially that makes you elite,” Howell says.
“It hasn’t worked out”
That pitch worked on Michelle Maria Nicholas, who moved her business WorkSmart Small Business Support, LLC from Boston a year ago. But the incubator hasn’t helped Nichols’s company, she says.
“It’s been a challenge, it’s been a huge challenge. But if I asked someone to help me with my website or marketing or branding, [nxtArrow] has offered a person, I have met with a person, it just hasn’t worked out,” Nicholas says.
NxtArrow’s providers that offer those free services pay attention to their regular paying clients first, at the expense of those in the incubator, Nichols says. In addition, she asserts that NxtArrow itself is also a startup company, not much older or better organized than its clients.
“There are some differences in the way that I would run a business compared to how they would run a business. Because of that things haven’t been what I had hoped it to be,” Nicholas says.
Howell admits some tensions between clients and providers. That’s part of the business, he says, as is the fact that many one-person startups never hire a second person and fail within a few years.
Even if one of the companies takes off, there’s no obligation to stay in Buffalo, a city saddled with a reputation as a bad business climate, not to mention the actual climate.
“If you’re a weather wimp, this is probably not the place for you to come,” Howell says.
But Howell’s pressing on, despite the challenges. In 2012, he pledges to lure 30 companies to town and 50 the year after.