Business incubators have proven to be effective tools for promoting economic growth throughout the world, but not all incubation models are suitable for all communities. NBIA worked with Jim Greenwood, a seasoned incubator consultant and former incubator manager, to develop the following tips for communities that would like to develop business incubation programs:
Study the entrepreneurial climate in your community. The most successful business incubators match their services to the needs of local entrepreneurs. You can measure your community’s business development needs through feasibility studies, which identify potential incubator clients and the businesses they operate. This information can help you determine the optimal size, location and scope of your program — or help you recognize when a project has little chance for success.
Don’t expect an incubator to cure decades of community decay. Business incubators can play a vital role in a community’s economic development efforts, but seldom can they turn around a local economy single-handedly. When possible, include a business incubator as part of your larger economic development plan.
Be creative, but realistic. One of the great things about incubators is their flexibility as an economic development tool. Maybe a retail or arts-and-crafts incubator would be more effective at sparking economic growth in your community than a more traditional incubator that serves a variety of manufacturing or service clients. However, temper your creativity with a reality check — don’t fall in love with a vision for the incubator that isn’t supported by sobering considerations, like the existence of a sufficient market and the support of business, political and civic leaders.Don’t let real estate drive the project. Remember that an incubator’s location is only one of many factors that will determine whether the project will succeed. While the long-vacant landmark in the center of town might seem to be the perfect facility for your incubator, it may not be the most suitable location if the building needs costly repairs or if it does not provide the amenities your potential clients need.
Make sure you have a solid financial plan. Creating an incubation program is not an inexpensive endeavor. From conducting the feasibility study to launching the incubator, you must piece together funds from a variety of sources to increase your program’s chances of long-term success. A well-developed financial plan that identifies how you intend to fund the project goes a long way in attracting investors and other supporters.
Set realistic goals for the project. Developing a successful incubation program — or a thriving business — takes time. While it’s important to reach out to civic leaders and entrepreneurs as you plan your program (promote your incubator early and often), don’t expect to create large numbers of jobs or graduate new firms within months of your incubator’s opening. Your goal is the ongoing support of community and business leaders and the long-term success of local entrepreneurs.