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|Important Incubator Startup Notes
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Incubators provide the resources, methodology and environment to accelerate
Fact: They also require resources, methodology and environment to produce.
Fact: There is considerable befuddlement associated with the industry term business incubator, to both consumers and within the industry itself.
Regarding money, should you have no budget with which to start your incubator, alas, I can't assist you further other than providing this very direct opinion based on my operational experience with the industry since 1983 where I've used not one dime of public funding.
First, I candidly wonder how it is you
could expect to get an incubator started, having no money?
However, charity is the bane of entrepreneurship. Operate your incubator as a charity and it is not an incubator. Charities do not produce successful businesses. Charities do not empower people to be independent. Remember this.
In an incubator, you are teaching people to fish so they may feed themselves. You are teaching people self-reliance.
Please don't mix charity and incubation to muddle the
industry of business incubation to the user because there is a substantial difference
in the mindset of those needing a hand out and those seeking a hand up.
Fifth, when you are having your clients enrolled in a structured development methodology based on their individual resources, attributes and aptitude for the entrepreneurial process, then you have participants. While clients can come and go and choose or not choose as they please, participants have a contractual agreement which defines commitments regarding utilization of features of the incubator and a formal reporting of progress to the incubator. When your participants have an office in your incubator, they are called residents.
Sixth, the generally accepted incubation business model is represented as teaching a new business owner the standard business wheel consisting of marketing, operations, administration and finance. The hub is entrepreneurial education; this educational process is an integral function within an incubator's main purpose.
Definition: An effective business incubator provides the resources, environment and methodology to accelerate business growth with the predictable output being client revenue and employees; both very tangible and highly measurable results.
If you are not charging fees and not
measuring and monitoring the revenues and number of employees of your
clients, you are not operating an incubator. You are operating a charity. If your
clients are not producing revenues and corresponding profits, you are not
operating an effective incubator. Finally, If you are operating an effective incubator yet
do not ensure that your clients are paying taxes, you are breaking the law. Check
it out for yourself. You are using tax money in such a manner as to permit those to whom
you are providing guidance to evade taxes.
Public funding is used to get assistance programs started in the most expedient manner, then removed as private sector steps up to the task. If you are operating an incubator that has not become self-sufficient, either you don't know what you're doing or no one has taken the time to explain these very basic rules to you or you think you are entitled to feed at the public trough.
You may know that there are increased applications for public funding going into a decreased public funding base.
You may know that more incubators have ceased operations because the funding was withdrawn than all other reasons combined.
You may know that more proposed incubators didn't get started because the intended infusion of public funding didn't happen than all other reasons combined.
Do you also know:
#3: If you think your public sector community or your government or your funding sources "owe" you and your incubated companies an incubator, your incubator will fail. This great nation provides opportunity, not guarantees.
#4: If you do not insist that your incubator clients be accountable and responsible and report to an advisory board, including complete financial statements and tax returns, your incubator will fail because you can't play any game without keeping score to demonstrate you know what you're doing.
#5: If you think your good intentions rather than
experienced entrepreneurial managers and successful business owners will grow companies in
your incubator, your incubator will fail, especially if you rely solely on SBDC staff,
another charity, to be your business experts! You can't teach what you don't know.
Bottom line #2: How much is it costing the tax-paying public to fund your incubator to produce a successful business that pays taxes and creates jobs? Where are your benchmarks? How does your incubator compare? Are you competing with private sector?
Bottom line #3: Are your graduate companies still in business after 2, 5, 10, 20 years? (Ours are.) If not, why not? Are you tracking your graduates? If not, why not?
Bottom line #4: Your successful graduate companies can be paying the fees required by your incubator out over time, as they continue to grow and prosper. If you can't produce successful graduate companies to be paying your costs, maybe you should find another calling?