News Column

Small-biz Classes Cancelled

September 6, 2013

Participants in a 10-month small business training course won't get to finish their classes because of the Raleigh Business and Technology Center's financial woes.

It's the latest blow for the Southeast Raleigh incubator, which was set up by the city and several partners to nurture small minority-owned businesses. A city-led audit found unexplained cashier's checks and payments to the incubator's tenants, and they discovered that the agency's nonprofit status had been revoked. Bob Robinson, the incubator's longtime director, resigned after auditors found he had drawn $65,000 in teller checks from the incubator. Police are now investigating possible fraud.

The news prompted Raleigh leaders to cut the city's annual funding of $162,000 to the group. That money was needed to run the Pacesetters program, a series of weekly classes that aimed to teach entrepreneurs what they need to know about running a business. Twenty-two people were enrolled in the course.

Incubator board chairman Lawrence Wray said the cut left the organization without money to pay the instructor, South Carolina-based trainer Katie London.

"The city did not get us the money that we were going to pay her for the month of June," Wray said.

The final class was held in July, though the program was set to continue through the fall. On Tuesday, two Pacesetters graduates came to the Raleigh City Council, asking them to restore the program -- or at least allow participants to finish.

"With the program no longer in existence, it allows members of the community to fail," said Bo Marshall, who took the classes in 2009 and says his business is now "on the point of extreme growth."

Renee Wilson, another 2009 participant who owns a cleaning service, also spoke highly of the program. "Pacesetters saved me my sanity and my business," she said. "If it was not for this program, I may have failed and may have returned back to corporate America."

But while participants say they learned valuable skills in the classes, city auditors determined the program wasn't well managed. The program cost $106,000 last year, though only $22,995 of that went to the instructor -- much of the rest went to accounting, a share of the incubator director's salary and an awards banquet. Pacesetters weren't required to provide the center information about their revenues, number of employees and other data that could help track the success of the program.

Raleigh leaders have said they want to create a new incubator program that provides similar services; they took no action on the former Pacesetters' pleas.

Wray said the incubator could continue the program without city dollars -- if Raleigh allows the organization to stay in the city-owned building.

With rent revenues from a fully leased building, Wray said, "We probably could raise enough money to pay for the Pacesetters without any influx of money from the city of Raleigh."

But the building is largely empty now. Wray and the Raleigh Business and Technology Center board are battling the city's eviction order, issued in July. The hearing date for the legal action hasn't been set, but it's unlikely the incubator organization will be allowed to stay past December -- preventing it from leasing any additional offices or raising money.

Campbell: 919-829-4802; Twitter: @RaleighReporter

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Source: Copyright News & Observer (Raleigh, NC) 2013


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