Being a new entrepreneur in these tough economic times is challenging enough, but attempting to go it alone like some stereotypical “rugged individualist” is ill advised in today’s interconnected business world. For sound business reasons, states and municipalities have created a range of development agencies and local “incubator” support services to foster new business growth in their respective regions. The evidence for these actions is compelling. Studies show that start-up ventures that graduate from an incubation program have a success rate of 87%, compared to 44% for all other firms.
Having the odds on your side is one way to ensure success down the road, and finding a local incubation program in your area is not as difficult as it might seem. There are over 1,400 of these organizations in North America and 7,000 on a global basis, and, contrary to what most people think, they are not dedicated solely to technological enterprises. While technology may command 40% of the activity, the remaining 60% is classified as “mixed-use” and supports a variety of industries from every sector of the business community.
There is one primary reason why economic development agencies, local governments, academic institutions, and community organizations sponsor these programs – to create new jobs, the one solution that everyone agrees is the only way out of our current economic malaise. There may also be secondary reasons like revitalizing neighborhoods, diversifying the types of business ventures in an area, or simply finding a solution to commercializing a new technology, but for a new entrepreneur, these programs offer a broad base of support in necessary disciplines, the opportunity to network with fellow entrepreneurs, and another way to reduce costs during that important period of early development.
Incubation programs are also not a recent invention. While many believe they got their start in the late nineties during the Dot.com era, these specialty programs actually started back in 1959 in New York. Building upon early successes of the concept, government officials, along with the support of local investor groups, expanded both the number and type of facilities offered across all of North America. The industry has grown dramatically, as have the benefactors of its services.
Most all entrepreneurs tend to be gifted in one discipline or another. Where one may need programming support, another may need tips on marketing. Nearly all will need assistance in finding adequate funding or business working capital. Incubators do offer more than just a shared-use facility to house start-up ventures. Participants can receive specific advice in manufacturing process design, sales and distribution, and financial and human resource management. Business seminars are conducted on nearly every topic imaginable, and regular networking events are often held with businessmen and officials in the local business arena.
Every attempt is made to facilitate an entrepreneur in each step of his company’s development process. “Business incubators are service programs, not buildings,” states Dinah Adkins, president and CEO of the National Business Incubation Association (NBIA). “No building can grow companies, provide mentoring and handholding, and assist an emerging company in meeting the benchmarks necessary for growth.”
Entry into these organizations is not guaranteed. There is an application and screening process, but getting to know the staff involved, the services offered, and other participants already operating within the incubator are fostered through regular meetings and events. An applicant needs to be prepared with a well-developed business plan and an idea worthy of their support. Once accepted or moved forward from an existing waiting list, you can expect to spend an average of three years in the program.
The innovation of virtual business support services has also spread to the incubator world, acting as a prime catalyst for extended growth in today’s electronic age. The concept of housing budding entrepreneurs in a central location, providing the best of support services, facilitating access to business working capital, and then introducing these enterprises to the investment community for further development and commercialization is a formula that truly works in the current economic environment.
Providing for every possible contingency is a foremost challenge for every new entrepreneur, but having the support of an experienced team from a local incubator can simplify the task greatly.