Chattanooga's business incubator helps startups, veterans build, buy and grow businesses

Chattanooga's business incubator helps startups, veterans build, buy and grow businesses

March 5th, 2017 by Dave Flessner in Business Around the Region

Chris Bingham has purchased Chattanooga Plumbing with the help of the Tennessee Small Business Development Center and Pathway Lending

Photo by Angela Lewis /Times Free Press.

Hamilton County Business Development Center

› Started: 1988

› Size: 127,000 square feet

› Location: 100 Cherokee Blvd.

› Owner: Hamilton County

› Operator: Chattanooga Area Chamber of Commerce Foundation

› Executive director: Kathryn Menchetti

› Clients in building: 64

› Services: Low-cost rental space for three to five years, and access to seminars, support and counseling

› Anchor tenants: Tennessee Small Business Development Center, Chattanooga Technology Council

Tennessee Small Business Development Center

› Service region: Bledsoe, Franklin, Grundy, Hamilton, Marion, Rhea, Sequatchie, Van Buren, Warren counties.

› Executive director: Lynn Chesnutt

› Businesses serviced: 476 businesses counseled and 1,122 persons attended one of the seminars in 2016

› Staff: Five employees, including three business counselors

› Supporters: Chattanooga State Community College, University of Tennessee at Chattanooga, the U.S. Small Business Administration and Hamilton County Business Development Center

› Services: Provides startups help with business plan development, financial planning, marketing development, sources of capital and social media guidance. For existing business, TSBDC provides growth planning, government contracting guidance, international trade guidance and sources of capital.

Dan LeVan is founder and president of Energy3, which is housed in the Hamilton County Business Development Center.

Dan LeVan is founder and president of Energy3,...

Photo by Doug Strickland /Times Free Press.

Dan LeVan was president or financial head of four global companies before he took over Energy3 (Energy, Efficiency and Sustainability Consulting) in Chattanooga in 2014.

As a certified public accountant with a dozen other financial designations and degrees behind his name, LeVan had previously held top jobs with GE Capital, AIG, AEGON Asia and TD Bank in the Caribbean. Even after running multi million-dollar enterprises, LeVan says he has benefited greatly by moving his fledgling energy consulting business into Chattanooga's business incubator on the North Shore.

"I came into this business pretty arrogant, thinking I knew how to do everything," Levan said. "But you quickly discover in your own business, that you don't know what you don't know. Being in this facility and having all of the help and seminars that are available here has made a tremendous difference in our business."

LeVan is one of 64 small businesses housed in Hamilton County's business incubator, the biggest incubator in Tennessee and the third biggest among the more than 1,100 business incubators across America. Within the factory-turned-incubator in North Chattanooga, Energy3 has been nurtured over the past three years with low-cost rent, shared work facilities and easy access to counseling and seminars organized by the Tennessee Small Business Development Center. LeVan also was able to expand his international business last year by joining four other small businesses in a trip to Canada as part of the Centrallia business-to-business forum organized by the Chattanooga office of the Tennessee Small Business Development Center.

Last week, the online web site Thrillist highlighted Chattanooga as one of "the most underappreciated cities you should totally move to," in part, because of the presence of the North Shore incubator and other startup support programs in a relatively low-cost city to live and work in. Thrillist contributor Matt Metzler said the incubator is part of what makes Chattanooga "an outstanding place to call home."

Since its creation in 1988, Hamilton County's business incubator has "graduated" nearly 560 businesses that have created thousands of jobs.

TSBDC counsels small businesses

Within the incubator, the Tennessee Small Business Development Center (TSBDC) has aided even more small businesses across Southeast Tennessee. Lynn Chesnutt, a 57-year-old veteran banker who has headed the TSBDC in Chattanooga as managing director since January 2016, said the center helps small businesses at all stages from the entrepreneur trying to develop a business plan to a senior business owner trying to grow, change or sell his business.

"We can help people develop their business plans and avoid many of the pitfalls that cause so many businesses to fail," Chesnutt said. "We do what we can to help people to assess their business opportunities and to find ways to best succeed in their business."

Chris Bingham got help from TSBDC counselors to find a way to purchase the plumbing business where he had worked for 13 years. Bingham bought the 89-year-old Chattanooga Plumbing Co., and its Georgia subsidiary Battlefield Plumbing, in January from the previous owner, Steve Brandon.

"Steve and I had been working on him selling the business to me for two years, but to finance the purchase everybody we talked with wanted at least a 30 percent down payment, and I didn't have that kind of money. I didn't recognize it would be so hard to get a loan to buy an obviously good business that has been around since 1928," said Bingham, a 32-year-old master plumber.

Incubators boost startup odds

To limit the startup expenses for many fledgling ventures, Hamilton County's 127,000-square-foot business incubator offers clients three to five years of low-cost building space with numerous networking opportunities with other, similar small businesses. Clients range across nearly all industries, but before any business comes into the incubator, they must have developed a business plan and been recommended for the incubator by TSBDC business counselors.

Nationwide, business incubators help boost the five-year success rate for new businesses from about 50 percent for startups in the general economy to an average 87 percent to those housed in incubators, according to the National Business Incubation Association. The success rate is even higher — about 92 percent — for businesses that are in the Hamilton County Business Development Center.

"Those who come into the incubator have a business plan and we try to hold them to their own high expectations and cultivate a 'no fail' atmosphere," said Kathryn Menchetti, executive director for the business incubator.

In January, the incubator added a virtual-reality lab and a maker space to offer users the chance to tinker with VR equipment and other tools to figure ways to better develop, display or manufacture their products. Mozilla funded the VR lab.

"It's a great asset to have this virtual reality lab in an area where there are so many businesses that are looking for ideas and how to commercialize them can use this technology to play with their concepts," Menchetti said. "The maker space includes tools, tables and equipment to allow members who join the chance to tinker, build and otherwise test new products and try out new ideas."

A key to the success of many small businesses in the incubator or those attending TSBDC events is the networking and relationships built among business owners getting started. Often, businesses are able to employ one another or at least get contacts and share ideas for gaining customers or handling business needs.

"The collaboration among the clients in our incubator has proven invaluable," Menchetti said. "Our 'founders club' we added at the first of the year is a new gathering space to allow our clients to have a quick meeting or lunch, or just network with other businesses. Our clients learn a great deal from each other and I think that is another key to our success."

This story appears in the March edition of Edge magazine, which may be read online at