What Can a Business Incubator do For Me?

Innovation and efficiency heavily influence business growth and success and the innovative nature of entrepreneurs plays a crucial role. Effective entrepreneurship results in the creation of profitable enterprises. Entrepreneurial attitudes have been found to stimulate economies as entrepreneurs create ways to connect resources and growth. Business incubators provide a nurturing environment that supports the evolution of the entrepreneur and his business endeavors.

What They Are

David Terry, executive director for West Texas A&M University Enterprise Center explains: an incubator is a place where a startup or early-stage business receives technical assistance to grow.

The Oxford Dictionary defines it as: something which facilitates the growth of businesses; specifically, a professional service that facilitates the growth of new businesses by providing resources, support, and advice.

The Diogenes Business Incubator at Cyprus University describes itself business incubation as:  a unique and highly flexible combination of business development processes, infrastructure and people designed to nurture new and small businesses by helping them to survive and grow through the difficult and vulnerable early stages of development.

Nash Riggins, writing for Small Business Trends describes it as: an organization that offers a range of support services and funding opportunities for startup businesses.

The Entrepreneur Small Business Encyclopedia defines an incubator as: an organization designed to accelerate growth and success of entrepreneurial companies through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections.

When these definitions are taken together and pared down, a business incubator can be looked at as an organization geared towards the growth and success of startup and early stage companies.

Some business incubators have physical space, others operate virtually. Some are not-for-profit public entities and some are for-profit. Many are related to specific industries. The basic process of joining an incubator is to apply; be accepted; work with the training or workshop schedule; achieve benchmarks; “graduate”. The application process is extremely competitive as incubators are looking for businesses with the greatest capacity for success. Business incubators are not only for brand new companies. Emerging and mature companies can also benefit from the guidance provided from business incubators or accelerators. There are those who differentiate between incubators and accelerators but some believe there is only a difference in name, not in purpose. We’ll discuss later some of the differences between traditional business incubators and accelerators.

What They Do

The goal of business incubators is to enrich the entrepreneurial vibe in a community by promoting innovation and nurturing entrepreneurship. As stated in the International Business & Economic Research Journal, they, “Create value by combining the entrepreneurial drive of a startup with resources generally available to new ventures.”

Incubators boost the chances of success for startup businesses. According to the International Business Innovation Association, they help reverse the statistic of small business failure. The survival rate with an incubator is 87% versus a 44% survival rate without.

Business Incubators provide:

Direct and targeted access to rigorous business support: low-cost, shared work space; equipment; technical services; a collaborative work environment; and skills development.

Access to established networks: industry thought leaders; accountants and lawyers; suppliers and other vendors, and the investment community.

Links to prospective funding sources: access to investors and grant programs.

Within an instructive environment, incubators mentor newer businesses to help them avoid mistakes early on. They offer advice, emotional support, and knowledge, sometimes in the form of educational workshops and certification courses. By cultivating the development of startup businesses, incubators accelerate the growth of a business – which brings us back to the term “accelerator.”

Accelerators are a type of incubator. While incubators allow businesses to develop at their own pace, accelerators have the specific goal of speeding up the startup process. They are traditionally associated with venture capitalism while traditional incubators are more often funded by public authorities or universities.

Thought of as more intensive and profit-driven (versus educationally driven), accelerators also provide access to resources, support and advice. They tend to provide more access to investors and seed capital than do traditional, non-profit incubators. Another difference is that accelerators offer intensive support for a shorter, more specified period of time. They also usually require more fees as well as a return in shares or other equity in the incubated business.

J.J. Colao, writing for Forbes, states several reasons he believes that incubators and accelerators can be more impactful than business schools. He points out that you learn only what you don’t know instead of sitting through classes on topics you have under control; you acquire seed money instead of debt in the form of school loans; investors appreciate the security of incubator-based startups; and networking opportunities are more targeted to your industry and your needs.

Whether you are looking for a small business development group that provides the necessary environment and resources to accelerate your business growth or an educational organization that tailors entrepreneurial development specifically to you, joining a business incubator may be the decision that takes you closer to success. Reach out to Strategy Driven Marketing to begin the next part of your business journey.