Business incubators are a great tool for startup companies that need business development assistance and communities with suffering economies. Business incubators are designed to support entrepreneurial development, job creation, and economic growth. They are also known for being business accelerators because they usually help speed up the growth of startups and early stage businesses. Entrepreneurs who want to minimize their risk for failure and grow their businesses quickly may be able to do so by participating in a business incubation program. Communities (such as large cities and small towns) that want to improve their economic health may benefit from launching a business incubator in their area. Business incubators often attract ambitious business owners and entrepreneurs that are eager to build successful companies in their communities. To determine if a business incubation program is right for you (or the community you live in), it’s important to know what type of companies use business incubators. It’s also important to know what type of business assistance they have to offer to determine if it will benefit your business.
Business Incubators Target Certain Industries
Business incubators are often very selective about the types of businesses they will help. In fact, most of them require you to submit an application for admission. This is mainly because many business incubators invest their own funds into the businesses they assist. According to the National Business Incubation Association, 39% of business incubation programs serve tech businesses. For example, in Silicon Valley, many of the business incubators are designed to serve startup and early stage tech businesses. This is mainly because Silicon Valley is considered the “home of tech businesses” and a good number of tech entrepreneurs go there for help. Tech incubators are not limited to Silicon Valley, there are many all over the U.S. Another good example would be TechTown, which is located in Detroit and focuses primarily on serving tech businesses. It is the city’s largest and oldest business incubator.
Don’t get discouraged! Just because a large number of business incubators focus on serving tech businesses, that doesn’t mean you can’t get help from them. Business incubators do serve other business industries (albeit on a smaller scale). Some of the other industries they prefer to serve include (but are not limited to):
- Medical Devices
- Fashion & Retail
The industries served by business incubators often depend on the area where your business is located. The International Business Innovation Association has a directory where you can search for business incubators in your area. Their directory makes it easy for you to find business incubators that cater your industry.
Services Offered by Business Incubators
Business incubators offer a variety of business and entrepreneurial development services. In most cases, many of the business owners who participate in a business incubation program wouldn’t have access to these services if they were not a member. This is largely due to the costs associated with these services. For example, marketing and advertising can be expensive for startup and early stage companies. However, if they are a member of a business incubator, they can purchase these services at lower rates. Other services are offered to members free of charge. Some of the services offered by business incubators include (but are not limited to):
- Office Space & Wi-Fi Access
- Management Consulting
- Technical Assistance
- Business Planning & Market Research
- Access to Venture Capital
- Marketing & Advertising
- Assistance with Regulatory Compliance
- Entrepreneurial Training
- Management Team Selection
- Networking Events
Overall, business incubators provide services that help manage and grow enterprises as quickly as possible. Startups and early stage companies that participate in a business incubation program may have a better chance at building a competent management team, obtaining venture capital, retaining more skilled employees, and getting more exposure for their products or services. This is all in comparison to startups an early stage companies that are not a part of any incubation programs.
Business Incubators Support More Than Just Businesses
Business incubators don’t just help build successful companies. They can be used as a tool to spur economic growth and job creation in struggling communities. A good example of this is Ozarks Small Business Incubator (OzSBI) located in West Plains, Missouri, a small community of a little over 12,000 residents. The business incubator serves small businesses in West Plains and surrounding counties.
In April 2005, the SBA (Small Business Administration) reported that most of the businesses created in the state of Missouri were based in the West Plains area. West Plains was number one in the state for business creation and number 44 in the United States. During that time, Downtown West Plains, Inc. recruited a committee to research the nature of a business incubator and how it might help the new businesses in the area become successful. It turned out to be a long but rewarding process that resulted in the development of a business resource center (OzSBI).
The Ozarks Small Business Incubator opened in January 2012 in downtown West Plains. The goal of the incubator was to help local entrepreneurs build relationships, get funding, and grow their business. That goal has been realized in many ways. Since opening, the business incubator has assisted with the development of 38 new businesses that created 85 new jobs. This has helped create a vibrant community in better economic health. The same can be done of other struggling communities. West Plains, Missouri can be used as a blueprint for success.