Volkhov Business Incubator Hatches Entrepreneurs

by Grace Kennan Warnecke Fall 1996

Volkhov, population 50,000, is a typical Russian industrial town, famous for being the site of the first hydroelectric station in the USSR and the first aluminum plant. Its main businesses today are a large aluminum plant and railroad switching yards. This could change, however, if the entrepreneurs at the Volkhov International Business Incubator and Training Center capitalize on new opportunities to do business in Russia.

The idea for an incubator sprang from a meeting between Volkhov's female mayor, Nonna Mikhailovna Volchkova and Alexandra Chalif, president of the Alliance of Russian and American Women (ARAW). In operation for less than a year, it is the first business incubator designed for women-led businesses and the only one to operate in a small provincial city.

An incubator, usually a building offering space, office services, equipment, business education and individual consultations to new businesses, is a very efficient form of starting new businesses. In its supportive environment, a far higher percentage of new businesses succeed than those starting out on their own. The term incubator is used because successful businesses "hatch" and move out of the incubator making room for new tenants.

After an extensive feasibility study on the business climate of Volkhov, ARAW in cooperation with SUNY/Albany competed for and received one of the four incubator grants awarded by USAID in early 1995.

Rachel Freeman, a University of Michigan MBA with extensive Russian experience, bounced into Volkhov as General Manager with an incredible capacity for hard work, her roller blades and a new puppy, Sunder. We attracted a terrific Russian staff, one of whom, Valery Vandershaf, had spent two weeks observing a technology incubator in Texas.

By January 1996 our first three tenants were approved and moved in-a bakery, a print shop and a cafe. The life-affirming smell of fresh bread now permeates the incubator. A mushroom-growing operation, a car alarm installer, a hair dresser, a knit wear/tailor shop and a teenage employment agency are pending.

We now teach a full cycle of business courses-from "Moi Biznes" [My Business] for the neophytes, to business plan writing, financial management, marketing, advertising and public relations, women's empowerment, English and computer skills.

The need for women's empowerment became apparent when we noticed that although 70 percent of those who take our courses are women, women comprise only about 30 percent of those who actually propose to lease space. Thus, to encourage more women, we held a special six-week course from which three proposed tenants have emerged.

The incubator also received a special grant from the Eurasia Foundation to bring in one of the leaders of the incubator movement, June Lavelle and her Polish partner, Krzysztof Zasiadly. They spent a week giving a special training on incubator management, which was also attended by staff from incubators in St. Petersburg and Nizhni Novgorod. The participants realized that they are working in an economic movement that is growing and receiving world-wide recognition. Another positive outcome of this training is that representatives from several Russian incubators are meeting to organize an incubator association in Russia, so that they will be able to support each other after all the foreign assistance has gone.

After six months of hammering out a credit program with a local bank, the Volkhov Incubator is now operational. We made our first loans in July. Every day brings new challenges, some triumphs and occasional disappointments. Final results will only be apparent several years down the road, but already the incubator has sped the growth of small businesses by offering a protected environment, individual consultations and constant exposure to other small businesses at similar stages of development. The concept is ideally suited to new women entrepreneurs at this transitional stage of Russia's economic development.

Grace Kennan Warnecke is the executive vice president of the Alliance of Russian and American Women, and the president of Sovus Business Consultants.

Alliance of Russian and American Women: PO Box 328, Washington Depot, CT 06794; ph: (203) 868-9089, fax: (203) 868-9768; <sashaaarw@aol.com>