by Megan Jewell
Attracting new business is a crucial part of filling the economic pie. I don’t think anyone would disagree with that. Unfortunately, with so much of the economic development focus on businesses not yet in the area, the potential new business right under our noses tends to go unnoticed. In this day and age, it is vitally important to focus not only on outside businesses that might relocate, but on local businesses looking to make a start. This is especially important to those communities that have experienced a “brain drain” from young, educated people leaving the community to go elsewhere. Some of this could be prevented by simply having the resources and tools in place to keep young entrepreneurs local.
A recent Business Week article shows startup companies the benefits of starting out in a “business incubator.” Like the machines we knew in kindergarten that kept chicks warm as they emerged from their shells and grew feathers, business incubators help new companies take wing with cost-saving measures and smart advice. Informal incubation may take many forms, from affordable office space with shared resources to financial and start-up experts willing to work with newcomers. Banks can incubate. Real estate professionals can specialize in helping start-ups. Chambers of commerce can provide insider advice on the community.
Some communities have even developed formal incubation groups that work together to assist newcomers to business. Incubators can be wonderful tools for entrepreneurs who need a little help getting their businesses up to speed. Incubation can offer solutions to funding, supply, and resource needs. Incubators may offer entrepreneurs a below-market rent rate. They could also offer a range of access to resources such as free marketing and accounting advice from local professionals, or even fax machines and copiers that are shared with other tenants. Some experts or outside consultants may be willing to work at a reduced rate.
Most formal business incubators are strict in their choice of who they allow into the group or facility. It is essential for the entrepreneur to have a well-structured and thought-out business plan. Usually they meet with the owner or board of the incubator and are asked difficult questions about the business’s growth strategy. Members of the incubator are helpful in setting goals for the business and deciding what credentials, once met, will mean the business owner “graduates” from the incubator to strike out on his or her own.
To design an incubator, imagine you’re an entrepreneur considering a business incubator, and think about your needs. You’ll want to know about the incubator’s assistance program, cost of available resources, graduation requirements, flexibility of rules, long-term lease arrangements, and fees charged by outside consultants. You may be concerned about being forced to “graduate” before you feel prepared, leaving your vulnerable business at risk. You will want to take a look at the companies that have recently graduated…are they where you want your company to be?
These are all things an entrepreneur will be looking for when searching for an incubator. They may want to know if you are a mixed-use incubator or a sector-focused incubator. Does your incubator have this information readily available? Do you have a list of recent graduates who might speak about their experience? What resources do you have available to startup companies?
If an incubator sounds right for your community, the National Business Incubation Association website has access to numerous resources ( www.nbia.org/resource_center ), with a list of resources for each state. Some of the information is for members only, but you can learn a lot without membership. Entrepreneurs can locate member incubators by state, so it may benefit you to become a member.
Having plans and tools in place to keep local talent from going elsewhere will help to ensure that entrepreneurs become invested in the future of the community. They are much more likely to stay in the area, connected to the people and roots established while they began their business. Soon, they may be helping to hatch some fledgling businesses themselves.
For the full article please go to http://www.businessweek.com/smallbiz/index.html , “Hatching For Success,” by Michael Patterson.