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The Nussbaum Center for Entrepreneurship: Sam Funchess
Researched and written by Tai Caldwell
So you have an idea. You have a skill, you have a passion, and you want to turn it into career. You want to start your own business. Where should you turn? A bank, for a startup loan? Or maybe a lawyer to help you draft contracts. And what about a realtor to find you adequate office space?
These are the sorts of questions that plague entrepreneurs, the sorts of problems that in many cases prevent a great idea from getting off the ground in the first place. And if one does successfully start a business, the challenges certainly do not end when the doors open for the first time. Where, especially in today’s tough economic climate, is an inexperienced entrepreneur to turn?
Enter Greensboro’s Nussbaum Center for Entrepreneurship. Now celebrating its twentieth anniversary, the Nussbaum Center (NCE) is a business incubator that has over its tenure contributed millions of dollars and thousands of jobs to the local economy. Ask CEO Sam Funchess, and he will tell you that creating jobs is the Center’s number one priority. “At the end of the day, that’s all we care about,” he says. The NCE exists to help entrepreneurs succeed.
Why? Because entrepreneurship benefits everyone. Small and startup businesses provide from 70 to 80% of new job growth, and the salaries of the jobs created tend to be higher than those offered by large corporations. The profit to the community does not end there. Say you want to have a family portrait taken, and you have two choices: a local photographer who has started her own business marketing her skill, or the portrait studio at the mall. If you chose the mall, your payment goes into a cash register, then to a bank where it is funneled into a corporate account. If you pick the local photographer, however, the money will work its way back into the community as she uses the remuneration to buy food, film, and other necessities. Such is the collective benefit of entrepreneurial spirit.
The Nussbaum Center helps to foster that spirit in many ways. The most tangible resource the Center offers is the building itself. Located in a remodeled manufacturing building at 2007 Yanceyville Street, NCE has available office and manufacturing space that they rent out to the businesses they cultivate, their “associates.” They offer a competitive price, $11-13 per square foot, versus commercial office space, which can go for even $20/sqft. Additionally, they have a twelve-month leasing period, whereas many commercial sites will ask for three- or five-year leases. And if things are going well, the Center allows its associates to upsize their offices with no penalty.
Beyond the bricks and mortar, the building houses over sixty small businesses staffed with people who, no matter what their trades, all have the same goal: success. “You’re surrounded by like-minded individuals all trying to accomplish the same goal, all focused on the same thing,” says Funchess. He compares NCE to college: if one is engaged with the community, one will feel connected and gain more from the experience. Also like college, there are requirements, things that must be done in order to succeed. As language credits are now, so will tax forms be in the future.
In order to manage these endemic problems, NCE offers mentoring on the finer points of running a business. Problems faced by entrepreneurs are “universal,” Funchess states, “whether it’s a manufacturing company, a service company, an arts company. At the end of the day, you’re going to have the same challenges.” Twenty years of experience has shown the Center that those challenges are sixfold: financial, insurance, marketing/sales, information technology, legal, and human resources. Through a combination of programs offered to all associates and targeted mentoring for specific issues, NCE helps its fledgling businesses navigate those troubled waters.
For problems faced by associate after associate, such as balancing the books, the Nussbaum Center orchestrates lectures and workshops in order efficiently to teach the skill. Their usual focus, however, is not on skill education, but skill refinement. Associates have an assortment of mentors who help them with a variety of problems based on their individual needs--be it fixing an issue with computer software or with the laminating machine. For instance, prior to opening a business, a person would learn how to operate QuickBooks in college or through an extension course such as that offered by GTCC. Then later, when a problem arises in the program, the entrepreneur consults with a mentor at the Center for assistance. As such, most of what NCE offers functions on a case-by-case basis, giving individual business owners on-the-spot personalized business advice and troubleshooting.
“Business is relationship-driven,” Funchess declares, and to that end the Center sets up partnerships between associates. For instance, if an associate construction company is in need of advertising and an associate advertising firm needs clients, Funchess will put the two together for the benefit of both. Working with other entrepreneurs in a supportive environment is the ideal place to build one’s reputation, and NCE makes that possible for all its businesses.
Even under the favorable conditions provided by NCE, some upstart businesses face serious problems that threaten their integrity. Funchess says the Center will do whatever is in their power to prevent an associate from going under. “If they raise their hand and come to us, we will throw pretty much any resource we have available to them.” The Nussbaum Center is a powerful force that can help its associates negotiate with lenders to lower payments. Mentors can walk entrepreneurs through the sales process in order to get their first customer. Sometimes, just a name is enough; the Center has amassed contacts throughout the region, allowing them to follow up with clients and even perform background checks if needed.
Everything NCE offers to its associates pays off--the Center’s graduation rate is over 80%. “Graduation” entails moving out of the building, establishing offices elsewhere, and continuing to operate the business. Most associates graduate after five years, meaning the Center’s success rate is 80% over five years; according to the Small Business Administration, only 44% of small businesses last four years. This puts the NCE Graduates far ahead of those who go it alone.
Funchess points out, however, that comparing Nussbaum associates to the average small business owner is not a fair assessment. Before a company can set up in the building, they are put through a screening process that would arguably filter out some of the less-motivated entrepreneurs that contribute to the SBA’s statistic. NCE has four requirements for all its associates:
1) A business plan, submitted to and approved by Funchess and/or other NCE staff
2) General liability insurance
3) Quarterly reports of financial and employment growth
4) Engagement while in the building: participating in events and assisting fellow associates
These four regulations contribute substantially to the Center’s remarkable success rate. All financial reports remain confidential, Funchess notes, but are aggregated with numbers from other associates in order to provide statistics on the Nussbaum Center’s progress. He is also quick to say that graduation is never forced. “We don’t want to push them out before they’re prepared because that doesn’t benefit anyone.” With this in mind and given the ample resources the Center provides, why would any business make the choice to graduate? The answer is that the rent for the office space goes up every year. NCE designed it thusly as a graduation incentive; eventually, it is cheaper to rent a space elsewhere. In this way they do not push, but gently nudge, their associates towards self-sufficiency.
Funchess’s number one piece of advice for any entrepreneur, no matter their business, is to understand the concept of reputation points, or those things upon which a company can compete. The three reputation points are quality, speed, and price--a business can compete on two, and only two, of these three points. If one focuses on high quality and low cost, the product will naturally take longer to produce than a similar product whose company emphasizes low cost and high speed. The second product will suffer in quality. Take, for a ubiquitous example, Target and Wal-Mart. Both offer instant availability (speed), but Target stresses the high quality of its products while Wal-Mart’s slogan “Always Low Prices” says it all. It is financially unfeasible to compete on all three levels, and Funchess says this is vital for future business owners to understand. He also advises that once one decides which points on which to compete, “don’t ever waver from them, unless you’ve made the decision to alter your company all the way to its root level.”
Most entrepreneurs start by accident. They begin with a passion, or a skill. Bob Page started collecting china at yard sales as a hobby. Once he had a garage full, people began to take interest, asking to purchase pieces from his collection that matched their pattern. Before too long, Replacements, Ltd., was born. The Nussbaum Center wants to make sure there are more stories like Page’s in the Piedmont Triad. There are problems, Funchess says, and the road is rough, but being an associate at NCE makes the going easier. If something’s gone wrong and you’re on your own, it could be a step towards failure. But at the Nussbaum Center, “you walk down the hall and find someone who can help.”
In its twenty years, The Nussbaum Center for Entrepreneurship has graduated over 150 associates, including John Lomax Construction, Apex Analytix, Select Diagnostics, and Kindermusik. For more information, visit their website at www.nussbaumcfe.com.
CEO Sam Funchess graduated from Guilford College with majors in business and accounting. After working with a venture capital firm, Funchess moved to SouthTrust Bank. His involvement with the Center began in 2001 and he has been CEO since 2006.
This case study was conducted in May 2008 by Tyler "Tai" Caldwell, a Media Writing major in the Media Studies Department.
These case studies were compiled and archived as part of the former BELL (Building Entrepreneuruial Learning for Life) Program's Entrepreneurial Innovation in the Arts (EIA) initiative to provide a library of examples of how artists in many different fields have achieved success. The cases were researched and written by UNCG students.