According to the National Business Incubation Association, there are over 1,250 business incubators in the United States, up from only 12 in 1980, and an estimated 7,000 worldwide. While 32% of US incubators are sponsored by academic institutions, over 40% are sponsored by economic development organizations and government entities. Great news for entrepreneurs and start-up businesses who want to capitalize.
Not sure what a business incubator is and how you can benefit? While incubators come in many shapes and sizes, the majority are focused on economic development and serve a range of early-stage companies, technology businesses and niche markets such as sciences or manufacturing. And yes, there is certainly a lot of misunderstanding.
I recently sat down with Frank Keith, Founder of the Incubator at BCC, to help shed some light on this topic. Based on our discussion, the following Q&A’s should provide a little clarification.
How do incubators differ from co-working or ready-to-use office space?
While incubators do provide physical work space such as professional offices, conference rooms, and labs, they provide an environment focused on creating financially viable businesses. As a result, they combine low-market rent, shared resources, support services, networking opportunities, and business development services. And through client diversity, they promote idea exchange and knowledge sharing that benefits all the entrepreneurs within the incubator.
What are some of the resources and support services?
While these will vary by incubator, most provide access to business resources such as legal, licensing and patents, training and development, marketing, mentoring and raising capital.
What type of company should consider locating in a business incubator?
This will vary by incubator and/or state. In NJ, business incubation is designed to support companies with high-growth potential – and includes entrepreneurs who (a) have developed a business plan, (b) have been legally organized (c) currently maintain home business with need to expand to a professional environment (d) need conference space, graded technology and/or professional resource connections and (e) have sufficient funds to support the efforts of the enterprise for at least one year.
When are companies expected to ‘graduate’ out of the Incubators?
The first three years of any start-up are typically most critical so companies normally take advantage of the low-market rent and business services for 3-5 years. Once the company is self-sufficient and can contribute to the economic growth in the area, new entrepreneurs take their place.
For the serious entrepreneur or small business owner, a business incubator may be the perfect option to help you create a financially viable business – one that supports your dreams and contributes to the economic growth in your community. Check them out in your local area — and schedule a tour.
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