start-up firms

The idea of business incubators (some people call the business accelerators) was originally established in USA in 1959, with the Batavia Industrial Center.  Since then the idea is greatly adopted by many worldwide start up businesses.

Business incubators are programs developed and designed to increase the growth of a company while reducing the capital required to anticipate this growth.  There are a number of tactics and strategies the companies adopt to take their business to the next level and companies hire various kinds of people to increase their growth. These programs are designed to help and encourage new business entities and also help in their growth. There are many firms that provide incubation services for companies. These new entities are scheduled to be under incubation for a year or two. After this incubation period these companies are said to graduate and then they can pursue business on their own. The success rate of this process is fairly high. The companies that follow this incubation process are said to have been successful and this rate stands at a staggering 87%. This is enough to prove the effectiveness of these programs.

In short Incubators, provide the basic and advanced management to the company in all sections and they train the employees so that they can become professional and can continue the growth that these incubators have initiated in the company. The process for a company to apply for incubation is different. Unlike other business development programs, these companies have their selection criteria and select their clients based on various set of requirements.

Business incubators usually offer a wide range of services to their clients. Some of the basic services that you will be able to find in most incubation programs include:

• Basic business activities (i.e networking with other entrepreneurs, funding advice)
• Infrastructural activities (i.e. IT Support, Telephone answering, meeting rooms, libraries, secretary)
• Marketing activities (i.e. advice, special rates)
• Accounting (i.e. bookkeeping)
• Business training programs (i.e. funding, expanding your business, marketing your products)

So if you were an entrepreneur that you wanted to create your own start-up firm, instead of having to rent an office space, employee a secretary, buy and install an IT and Telephone Infrastructure and find a good accountant, you could instead find a good Incubator that could offer all of these for just a fixed monthly fee.  In reality depending on your location, you may be one of the lucky ones, that there is a non-profit incubator around you (usually developed by Universities).

A company that wishes to be incubated has to apply for incubation at the chose business incubator.  Usually incubators do not approve all start-ups firms. They usually first analyse the business plan of the company, investigate its growth potentials and then decide on whether to accepted.   Start-up businesses usually remain in an incubation stage for a period of no more than 3 years.  After this period, start-ups usually “graduate “and deploy and use their own infrastructure to anticipate growth.

But selecting an appropriate incubator is not easy. As a new entrepreneur there are quite a few information that you need to know a quite a few questions that you need to ask.  Remember that the success of your start-up could be based on the incubator that you are going to choose. The next few lines are some questions that may need to ask before selecting an incubator for your business.:

• What it the Incubator’s Track Record?
• What are the Services (i.e. financial, accounting, legal) offered by the Incubation Company?
• Are there any partners that can offer services in privileged rates?
• What fees does the incubation company asks for?
• How long does the incubation will last?
• What are the CVs of the people that offer the services (i.e. business consultants, accountants)
• What is the number of management staff that the Incubator has?
• What is the % of manages’ time advising incubation clients (or tenants) ?
• What is the survival rate of incubation clients three years after leaving the incubation program (i.e. graduating)
• Is it easy to expand (i.e. request more office space, request a dedicate secretary)

References

• Business Incubator Checklist: http://www.1000ventures.com/business_guide/business_incubator_checklist_byvk.html
• Successful Business Incubation Stories: http://www.nbia.org/resource_library/review_archive/0200_01.php and http://www.nbia.org/success_stories/success/

No related posts.

One Response to “Business Incubators”