Subtitle: For Fledgling Businesses, joining a Business Incubator Can Be a Big Boost
As you start your business, you might be dealing with limited funds, time or personnel, and you might be wondering how entrepreneurship really works. You might wish you had more resources, a mentor or more education to help you through the process of growing your business so the operation and the finances become more easily sustainable.
If you’re ready to grow your business, but you’re not sure how to overcome these hurdles, then a business incubator might offer the resources you need to succeed. In this article, we’ll take a look at the benefits and downsides of business incubators so you can decide whether joining one is right for your business. But first, we’ll answer the question: what is a business incubator?
What is a Business Incubator?
An incubator is an organization designed to help startup businesses grow and succeed by providing free or low-cost workspace, mentorship, expertise, access to investors, and in some cases, working capital in the form of a loan. You’ll work around other entrepreneurial businesses, often with a similar focus as yours.
Joining an incubator is almost like joining a college program: You have to apply, be accepted, and then follow a schedule in order to meet benchmarks set by the incubator. You’ll also need to commit to a length of time to be a part of the incubator, typically one to two years.
Based on the definition, you can already see some of the pros an incubator can provide to businesses to get a powerful start. Make sure to research potential incubators carefully to be sure they provide the following benefits:
-Your incubator should provide a free or low-cost workspace that allows you to reduce overhead while you grow.
-Look for an incubator that will give your business access to benefits that can help accelerate your business, including office space and services, mentorship, expertise, influence, and sometimes capital.
-Incubators may also offer business development programming such as workshops and panel discussions.
-Make sure investors trust the incubator to invest in the right startups and groom them into successful businesses. Joining this type of incubator will give you an advantage when seeking funding.
-Businesses in some incubators might have access to office must-haves like internet, administrative support, and production equipment. Office services vary from program to program.
-The structured environment and curriculum of an incubator can help a new business keep focus and grow in the right direction.
-Many incubators target specific industries-such as digital education, green technology, homeland security, fashion and food-and thus offer targeted resources and expertise. It’s important to make sure you have a clear understanding of what an incubator provides before applying.
Not all incubators are equal; some provide more or better benefits than others. Here are some potential downsides:
-The application process can be rigorous and competitive. For most incubators, an applicant is required to submit a detailed business plan and disclose all business activities.
-Many incubators require a time commitment of around one to two years, plus adherence to the schedule set by the incubator, which can include many trainings and workshops. Yes, you will learn a lot, but you’ll also spend a fair amount of time doing it.
-For better or worse, an incubator is a professional environment. You can’t simply come and go as you please, and you’ll be expected to answer to someone other than yourself in regards to your progress. Think of an incubator like a boss who is invested in your success.
-As you can see, the benefits can be great for the right applicant. Make sure you are willing to dedicate yourself and your business to the program in order to reap the rewards.
How to Choose a Business Incubator
Choosing an incubator for your startup business is a big decision, especially if you’ll be giving up a hefty chunk of time and equity for its resources and expertise. Here is what you should look for in a business incubator before you choose a program:
- Incubator Perks
Research the incubator’s offerings to see if they match your needs. Learn what resources and services the company provides. Study the incubator’s mentors and advisers to determine if their expertise, skills, and networks match your business’s needs.
- Incubator Curriculum
Many incubators require rigorous training and have strict schedules. Assess the curriculum to make sure it teaches what you need to learn in order for your business to succeed. Make sure you can take it all on while still running daily operations.
- Incubator Track Record
How have similar businesses performed with the support of the incubator? If possible, contact alumni for their take on the experience. Most incubators list graduate companies on their websites.
- Incubator Cost
How much does it cost to use the workspace and the equipment? If applicable, what are the loan terms offered, or what percentage of equity will the incubator take? Make sure the cost fits with the sacrifice you’re willing to make.
- Incubator Location
As previously mentioned, joining an incubator is not unlike joining a college program. Because you’ll be going to class several times per week if not every day, you’ll need to be on campus–that is, in close proximity to the incubator. This may mean relocating to be closer to an incubator if you can’t find the right fit close enough to home.