What are Business Incubators?

What is a small business incubator? A generic name applied to a small business development group that provides the environment, education, methodology and resources to accelerate business growth. According to the National Business Incubation Association incubators reverse the statistic of small business failures - more than 80% of startup businesses succeed in an incubator and grow at a rate of 7 to 22 times faster than businesses started otherwise.

How does it work? A successful incubator uses a structured program that produces focus on the "what's next - what's missing" aspect of the marketing, operations, finance and administrative components of the business, then provides the "what's missing" to take the business to the next level of development and the next and so on.

What does it do? An incubator is a new type of educational institution. It teaches hands-on "entrepreneurial development" to the business owner in a very precise manner because the instructional method is not generalized. It teaches only what the business owner doesn't know or can't do. Since each business owner and each business is different, the methodology is designed to teach you what you need to know in the best way that you can learn.

Does an incubator help me start a business? Yes, but incubators don't just "start" businesses. (Assistance in starting a business can be found almost anywhere.) Incubators "quick start" businesses do this by maintaining an inventory of business experts, consultants, advisors, procedures, methodologies, state-of-the-art technologies and total resources that businesses are likely to require in the growth process.

What kinds of businesses are in an incubator? Virtually any type of business, in almost every type of industry has been grown with an incubator development program. Many incubators now have a specialized Entrepreneurial Development Program(SM) for business type, like the Software Business Center, Product Development Center,  Health-Medical Enterprise Center and International Business Center, to name a few. There are also some incubators for particular types of business owners, like the Womens Business Center and MicroEnterprise Center.

Is an incubator only for new companies? No. Emerging, growth, mature and other companies past the startup stage benefit from an Entrepreneurial Development Program without being physically located in the incubator.

Will an incubator find financing for me? Some will, like the Entrepreneurial Development Center, if you qualify according to the incubator guidelines, pass the screening and are accepted into the Development Program. Most incubators have an internal "seed fund" and access to private placements in addition to conventional forms of debt and equity financing. But, incubators traditionally accept only the "cream of the crop" type of business owner for financing. Incubators also work with well-capitalized companies that do not require financing.

Where can I find or get in touch with a business incubator? Call the Texas Business Incubator Association at 713 747-1101 and ask for Catherine James, past chair of TBIA.

What do I have to do to become part of an incubator? Almost all incubators have some sort of an entry requirement. Most of the well-established incubators with a track record of successful businesses will want to know more about you, your business and your goals before making any commitment. Be prepared to pay for incubator screening or qualification processes.

Prepared as a public service by the Incubator Self-Sufficiency Group, consultants to economic development units, incubators
and incubator developers, Houston, Texas 713-932-7495, ext. 49.

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