Just as a newborn baby may need an incubator to help it adjust to its new environment, regulate body temperature, and encourage its growth and development, your start-up business may need nurturing of its own to be successful. Business incubators help your emerging company survive and grow during your start up period, a time that is vital to the success of your company. Incubators act as a support system to help your business achieve success.
There are about 1,200 business incubators across the country. Business incubators offer reduced rents to several businesses under one roof or in a campus setting, shared services, expert advice and support, and access to financing.
START-UPS THAT USE BUSINESS INCUBATORS HAVE A SUCCESS RATE OF ABOUT 87%, COMPARED TO 44% FOR THOSE WHO DON’T.
If you’d like to enter a business incubation program, you must apply for admission. If you have a feasible business idea and workable business plan, you are more likely to be admitted. Most business incubators are not-for-profit organizations supported by local governments and universities who want to attract and retain entrepreneurs to their communities.
Business incubators are support systems that accelerate the successful development of your fledgling company by providing you with a variety of resources and services targeted to meet your unique needs. These services are offered both in the business incubator and through its network of contacts. The main goal of the business incubator is to provide your firm with the tools to be successful so that you can leave the program ready to fly on your own. Many benefits resulting from successful business incubation include job creation, neighborhood revitalization, commercialization of new technologies, and strengthening of local and national economies.
Incubators provide management guidance, technical assistance, and consulting tailored specifically to your growing company. They provide you with access to appropriate rental space, flexible leases, shared business equipment and services, technological support, and financing assistance necessary to grow your company.
Incubators vary in how they deliver their services, in organizational structure, and in the types of clients served. Incubators may work toward reaching various goals: diversifying economies, revitalizing inner cities through job creation and increased wealth, and bringing technology from universities and major corporations to the typical consumer, improving our lives.
Early incubators targeted technology companies, or were mixed-use incubators focusing on light industrial, technology, and service firms. However, new incubators target industries including food processing, medical technologies, space and ceramics technologies, arts and crafts, and software development.
There are four common types of business incubators, but which one is best for you?
THE CLASSIC: These incubators operate out one building where tenants have subsidized rent. Tenants share access to computers, office equipment, staff members and experts. It is ideal for those who are first-timers to incubators and those looking to make new connections. The business usually leaves the incubator after 3 to 5 years.
THE UNIVERSITY: These incubators are usually limited to current students or alumni. They offer access to equipment and experienced professors and staff. Some programs offer grants or stipends. Usually, the business is expected to graduate from the incubator when the student graduates.
THE NICHE: These incubators are best for those who may need specialized instruction or access to specialized equipment, like those in the food industry. Facilities and advice are offered at a reduced cost to companies, and like The Classic model, businesses usually graduate from the incubator within 3 to 5 years.
THE ACCELERATOR: This type of incubator is run by groups of experienced business owners and investors. Usually, entrepreneurs must move to a facility for a specified amount of time. Eventually, they are given the opportunity to market their businesses to investors. Typically, $18,000 is provided in seed financing in exchange for a 6% equity stake. The program usually lasts 90 days, but access to mentors continues thereafter.
If you need more information on business incubators, contact the National Business Incubation Association at www.nbia.org.
Give your business a greater chance at being successful, and find a business incubator. Get your business plan together and apply. The contacts and referrals you will make in the incubator will be invaluable to your business, and you will have access to mentors who can unlock the keys to your success.